Villamaria v. CA, April 19, 2006

Villamaria v.
CA, April 19, 2006

Doctrine: The jurisdiction of Labor Arbiters and the NLRC under Art. 217 of the Labor Code is
limited to disputes arising from an employer-employee relationship which can only be resolved
by reference to the Labor Code, other labor statutes or their collective bargaining agreement.
Not every dispute between an employer and employee involves matters that only the Labor
Arbiter and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers.
Actions between employers and employees where the employer-employee relationship is
merely incidental is within the exclusive original jurisdiction of the regular courts. When the
principal relief is to be granted under labor legislation or a collective bargaining agreement, the
case falls within the exclusive jurisdiction of the Labor Arbiter and the NLRC even though a
claim for damages might be asserted as an incident to such claim.
Facts: Petitioner Oscar Willamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship
engaged in assembling passenger jeepneys with a public utility franchise to operate along the
Baclaran-Sucat route. By 1995, Villamaria stopped assembling jeepneys and retained only 9, 4
of which he operated by employing drivers on a “boundary basis.” One of the drivers was
respondent Jerry Bustamante.
Bustamante remitted P450 a day to Villamaria as boundary and kept the residue of his daily
earnings as compensation for driving the vehicle. In August 1997, Villamaria verbally agreed to
sell the jeepney to Bustamante under the “boundary-hulog scheme,” where Bustamante would
remit to Villarama P550 a day for 4 years. After which, Bustamante would become the owner of
the jeepney. They also agreed on the downpayment in the amount of P10,000. Both parties
later executed a contract entitled “Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng
Boundary-Hulog.” The parties further agreed on the following, among others: (1) if Bustamante
failed to pay the boundary-hulog for 3 days, Villamaria Motors would hold on to the vehicle
until Bustamante paid his arrears, including a penalty of P50 a day; (2) in case Bustamante
failed to remit the boundary-hulog for a period of 1 week, the Kasunduan would cease to have
legal effect and Bustamante should return the vehicle; (3) Bustamante will the cost of replacing
any damaged or lost part of the vehicle due to his negligence, the annual registration fees, and
the insurance premium of the vehicle. In case of serious damage, Bustamante must notify
Villamaria Motors before making any repairs.
In 1999, Bustamante and other drivers who also had the same arrangement with Villamaria
Motors failed to pay their respective boundary-hulog. Hence, Villamaria served a “Paalala”
reminding them of the consequences of the failure to pay. In 2000, Villamaria took back the
jeepney driven by Bustamante and barred him from driving the said vehicle.
On Aug. 15, 2000, Bustamante filed a Complaint for Illegal Dismissal against Villamaria and his
wife, Teresita.
LA: rendered judgment in favor of spouses Villamaria
NLRC: dismissed the appeal for lack of merit. NLRC further ruled that under the Kasunduan, the
juridical relationship between Bustamante and Villamaria was that of vendor-vendee, hence,
the LA had no jurisdiction over the complaint
CA: reversed the NLRC ruling. It ruled that the LA had jurisdiction over Bustamante’s complaint.
Under the Kasunduan, the relationship between the parties was dual: vendor-vendee and
employer-employee.
Issue:
1. Whether the existence of a boundary-hulog agreement negates the employer-employee
relationship between the vendor and vendee? NO
2. Whether the LA has jurisdiction over a complaint for illegal dismissal in such case? YES
Ruling:
1. No, the juridical relationship of employer-employee was not negated by the stipulations
in the Kasunduan, considering that petitioner retained control over respondent’s
conduct as driver of the vehicle.
Neither is such juridical relationship negated by petitioner’s claim that the terms and
conditions in the Kasunduan relative to respondent’s behavior and deportment as driver
was for his and respondent’s benefit: to insure that respondent would be able to pay
the requisite daily installment of P550, and that the vehicle would still be in good
condition despite the lapse of 4 years. What is primordial is that petitioner retained
control over the conduct of the respondent as driver of the jeepney.
Indeed, petitioner as the owner of the vehicle and the holder of the franchise, is entitled
to exercise supervision and control over the respondent, by seeing to it that the route
provided in his franchise, and the rules and regulations of the Land Transportation
Regulatory Board are duly complied with.
2. Yes, Art. 217 of the Labor Code, as amended, vests on the Labor Arbiters exclusive
jurisdiction over the cases listed under said provision. In those cases, an employer-
employee relationship is an indispensable jurisdictional requisite. The jurisdiction of
Labor Arbiters and the NLRC under Art. 217 of the Labor Code is limited to disputes
arising from an employer-employee relationship which can only be resolved by
reference to the Labor Code, other labor statutes or their collective bargaining
agreement. Not every dispute between an employer and employee involves matters
that only the Labor Arbiter and the NLRC can resolve in the exercise of their
adjudicatory or quasi-judicial powers. Actions between employers and employees where
the employer-employee relationship is merely incidental is within the exclusive original
jurisdiction of the regular courts. When the principal relief is to be granted under labor
legislation or a collective bargaining agreement, the case falls within the exclusive
jurisdiction of the Labor Arbiter and the NLRC even though a claim for damages might
be asserted as an incident to such claim.

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