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COCA COLA BOTTLERS v. DR. DEAN N. CLIMACO

FACTS:

The case involves the employment relationship between Dr. Dean Climaco and Coca-Cola Bottlers Phils., Inc. (Coca-Cola). Dr. Climaco was hired by Coca-Cola under a Retainer Agreement that specified the terms and conditions of their engagement. The agreement lasted for one year, and either party had the right to terminate the contract with a 30-day written notice. Dr. Climaco's compensation was fixed at PESOS: Three Thousand Eight Hundred (P3,800.00) per month, and he could charge professional fees for hospital services rendered. The agreement explicitly stated that no employer-employee relationship existed between the parties.

Despite the non-renewal of the Retainer Agreement, Dr. Climaco continued to work as the company doctor for Coca-Cola. However, he received a termination letter from Coca-Cola, effective 30 days after receipt of the letter. Dr. Climaco filed a complaint against Coca-Cola, claiming illegal dismissal and asserting the existence of an employer-employee relationship. The labor arbiter ruled in favor of Dr. Climaco, declaring that an employer-employee relationship did exist and that he was illegally dismissed. The Court of Appeals affirmed the decision, prompting Coca-Cola to file a petition for review on certiorari with the Supreme Court.

Additional facts show that Dr. Climaco had been continuously rendering services as a physician for Coca-Cola for four years. He inquired about his employment status with the company, and a letter from Dr. Willie Sy confirmed that Dr. Climaco should be considered a regular part-time physician entitled to the benefits and privileges of an employee under the Labor Code. The Director of the Legal Service of the Department of Labor also expressed a belief that an employer-employee relationship existed between the parties. The Social Security System confirmed that Dr. Climaco's services were akin to those of a regular company doctor and that he should be subject to social security coverage. Despite these confirmations, Coca-Cola refused to recognize Dr. Climaco as a regular employee. Dr. Climaco filed a complaint seeking recognition as a regular employee and the payment of benefits. While the complaint was pending, Coca-Cola terminated the retainership agreement, leading to a separate complaint for illegal dismissal. The Labor Arbiter dismissed both complaints, finding that Coca-Cola lacked control over Dr. Climaco's duties and recognizing the validity of the Retainer Agreement. The NLRC affirmed the dismissal on appeal, but the Court of Appeals ruled in favor of Dr. Climaco, finding that an employer-employee relationship existed based on the four-fold test and the provisions of the Retainer Agreement.

ISSUES:

  1. Whether an employer-employee relationship exists between the petitioner company and the respondent.

  2. Whether the termination of the respondent's services constitutes illegal dismissal.

  3. Whether the Court of Appeals committed reversible error in reversing the findings of the Labor Arbiters and the NLRC, contrary to the decisions of the Supreme Court on the matter.

  4. Whether the Court of Appeals committed reversible error in holding that the work of the respondent is necessary and desirable to the business of soft drinks manufacturing, contrary to the rulings of the Supreme Court in analogous cases.

  5. Whether the Court of Appeals committed reversible error in finding that the petitioner exercised control over the work of the respondent.

  6. Whether the Court of Appeals committed reversible error in finding that there existed an employer-employee relationship pursuant to Article 280 of the Labor Code.

  7. Whether the Court of Appeals committed reversible error in finding that there existed illegal dismissal when the employment of the respondent was terminated without just cause.

  8. Whether the Court of Appeals committed reversible error in finding that the respondent is a regular part-time employee who is entitled to proportionate benefits as a regular part-time employee according to the petitioner's CBA.

  9. Whether the Court of Appeals committed reversible error in finding that the respondent is entitled to moral and exemplary damages.

  10. Whether an employer-employee relationship existed between the petitioner company and the respondent

  11. Whether the termination of the Retainership Agreement constituted illegal dismissal

  12. Whether the grant of moral and exemplary damages was proper

RULING:

  1. Yes, an employer-employee relationship exists between the petitioner company and the respondent. The Court of Appeals applied the four-fold test to determine the existence of an employer-employee relationship: (1) the power to hire the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. The Retainer Agreement, when read together with the Comprehensive Medical Plan and the actual services rendered by the petitioner, showed that all the elements of the four-fold test were present.

  2. The termination of the respondent's services without any just or authorized cause constituted illegal dismissal. The Court of Appeals declared that the respondent should be classified as a regular employee, having rendered six years of service as a plant physician by virtue of several renewed retainer agreements. The Court relied on Article 280 of the Labor Code, which provides that any employee who has rendered at least one year of service shall be considered a regular employee with respect to the activity in which he is employed. Additionally, the Court of Appeals found that the respondent's dismissal was oppressive and was effected in a wanton, oppressive, or malevolent manner, entitling the respondent to moral and exemplary damages.

  3. The main issue in this case is whether or not there exists an employer-employee relationship between the parties. The Court, in determining the existence of an employer-employee relationship, adhered to the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct, or the "control test".

  4. The Court agreed with the finding of the Labor Arbiters and the NLRC that no employer-employee relationship exists between the parties. The Court found that petitioner company lacked the power of control over the performance of respondent's duties. The guidelines provided by petitioner company were merely to ensure the desired end result was achieved and did not control how the tasks should be performed. Therefore, the termination of respondent's employment was deemed legal.

  5. The Court affirmed the findings of the Labor Arbiter and the NLRC that there was no employer-employee relationship between the petitioner company and the respondent. The Court held that the guidelines provided by the company merely ensured that the desired end result was achieved, but did not control the means and methods by which the respondent performed his tasks. Therefore, the petitioner company did not have power of control over the respondent.

  6. The Court upheld the termination of the Retainership Agreement, which was in accordance with the provisions stated in the Agreement. Since there was no employer-employee relationship, the termination did not constitute illegal dismissal.

  7. The Court ruled that since there was no illegal dismissal, there was no basis for the grant of moral and exemplary damages to the respondent.

PRINCIPLES:

  • An employer-employee relationship exists when there is a power to hire, payment of wages, power of dismissal, and control over the employee's work.

  • Article 280 of the Labor Code provides that an employee who has rendered at least one year of service shall be considered a regular employee with respect to the activity in which he is employed.

  • Termination of an employee's services without any just or authorized cause constitutes illegal dismissal.

  • Dismissal done in a wanton, oppressive, or malevolent manner may entitle the employee to moral and exemplary damages.

  • Existence of an employer-employee relationship is determined by the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct, or the "control test".

  • The guidelines provided by the employer should only ensure that the desired end result is achieved and should not control how the tasks should be performed.

  • Termination of employment deemed legal when no employer-employee relationship exists.

  • The existence of an employer-employee relationship is determined by the presence of control over the means and methods of work.

  • The mere presence of guidelines to achieve a desired result does not necessarily establish an employer-employee relationship.

  • Termination of a contract not constituting an employer-employee relationship does not amount to unlawful dismissal.

  • Moral and exemplary damages are not warranted in the absence of illegal dismissal.