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OSCAR VILLAMARIA v. VS.CA

FACTS:

Petitioner Oscar Villamaria, Jr. owned Villamaria Motors, a sole proprietorship engaged in assembling passenger jeepneys. In August 1997, Villamaria agreed to sell a jeepney to respondent Jerry V. Bustamante under a "boundary-hulog scheme." The agreement stipulated that Bustamante would remit a certain amount daily for four years and eventually become the owner of the vehicle. Bustamante made daily remittances according to the agreement. In 1999, Bustamante failed to pay certain fees but was still allowed to drive the jeepney. In July 2000, Villamaria took back the jeepney and barred Bustamante from driving it. Bustamante filed a complaint for illegal dismissal and sought reinstatement and the execution of a deed of sale for the jeepney.

The parties entered into a "Kasunduan" on August 7, 1997, wherein it was agreed that Bustamante would pay a daily boundary-hulog and after four years, the jeepney would be transferred to his ownership. Villamaria claimed that Bustamante failed to pay the required payments as agreed upon. Bustamante argued that Villamaria exercised control and supervision over his employment, making him an employee and not a mere vendee under the Kasunduan. The Labor Arbiter dismissed Bustamante's complaint, ruling in favor of the Villamarias and stating that the Kasunduan established a vendor-vendee relationship between the parties. The NLRC affirmed the decision of the Labor Arbiter. Bustamante then filed a Petition for Certiorari with the Court of Appeals, arguing that the NLRC erred in dismissing his appeal and disregarding existing labor laws and jurisprudence. The CA issued a temporary restraining order to enjoin the NLRC from enforcing its decision.

The petitioner, Oscar Villamaria, Jr., owns and operates a jeepney manufacturing and selling business. Respondent Jerry Bustamante was employed by Villamaria under a boundary-hulog system, whereby Bustamante would make daily payments to Villamaria for the use of the vehicle. Bustamante filed a complaint against Villamaria for illegal dismissal, claiming that he was terminated without just cause and without due process. The Labor Arbiter dismissed Bustamante's complaint, ruling that their relationship was that of a vendee and vendor, and not employer-employee. The NLRC affirmed the decision of the Labor Arbiter. The CA reversed the NLRC decision, ruling that the relationship between Villamaria and Bustamante was dual: that of vendor-vendee and employer-employee. Villamaria filed a petition for review on certiorari before the Supreme Court, arguing that the CA committed grave abuse of discretion in reversing the decision of the Labor Arbiter and the NLRC.

The petitioner filed a petition for certiorari under Rule 65 of the Rules of Court assailing the decision of the Court of Appeals (CA). The respondent argues that the proper remedy for the petitioner was a petition for review on certiorari under Rule 45 of the Rules of Court. The CA denied the petitioner's motion for reconsideration of its decision. The Court emphasizes that the proper remedy is a petition for review on certiorari under Rule 45, and that the recourse to a special civil action under Rule 65 is proscribed by the remedy of appeal under Rule 45.

ISSUES:

  1. Whether the relationship between Villamaria and Bustamante under the "Kasunduan" was that of employer-employee or vendor-vendee

    • Ruled as a dual relationship: a combination of employer-employee and vendor-vendee.

  2. Whether the Labor Arbiter had jurisdiction over the illegal dismissal complaint filed by Bustamante

    • Ruled in the affirmative, under Article 217 of the Labor Code which vests the Labor Arbiter with jurisdiction over all cases filed involving employer-employee relations.

RULING:

  1. Dual Relationship

    • The Supreme Court affirmed the CA ruling that the relationship under the "Kasunduan" was dual: respondent Bustamante was both an employee and a vendee. The employer-employee relationship was not extinguished by the boundary-hulog scheme in the Kasunduan. Villamaria retained control and supervision over Bustamante.

  2. Labor Arbiter Jurisdiction

    • The Supreme Court held that the Labor Arbiter had jurisdiction over the complaint for illegal dismissal since the parties had an employer-employee relationship alongside the vendor-vendee relationship. Villamaria failed to prove Bustamante’s dismissal was for a valid reason.

PRINCIPLES:

  1. Employer-Employee Relationship and Boundary System

    • The employer-employee relationship is determined by control and supervision over the worker, not necessarily by how payment or remuneration is structured (boundary system, boundary-hulog system).

  2. Novation of Contracts

    • An obligation is not novated merely by an instrument that changes only the terms of payment but does not extinguish the old obligations or add new ones incompatible with old provisions.

  3. Jurisdiction of Labor Arbiters

    • Labor Arbiters have jurisdiction over disputes arising from employer-employee relationships, as per Article 217 of the Labor Code.

  4. Procedural Rules - Rule 65 vs. Rule 45

    • A Rule 65 petition must show that the CA acted with grave abuse of discretion; it should not be used when an appeal (Rule 45) is available unless compelling circumstances justify it.