Villamaria v CA

FACTS:
Private Respondent, Jerry Bustamante, drove jeepneys for Petitioners public utility franchise
named Villamaria Motors. Both parties came into an agreement that Villamaria would sell the
Bustamantes assigned jeepney to the same by virtue of a kasunduan derived from the boundaryhulog scheme, subject to certain conditions and directives from the former to the later and any
non-compliance therewith would render the termination of that agreement.
Bustamante, however, after some time, failed to pay the boundary-hulog to Villamaria, which
prompted Villamaria to send a paalala notice to Bustamante. Ultimately, Villamaria took back
the jeepney and terminated Bustamante due to his alleged imprudence in handling the vehicle.
This prompted Bustamante to file for illegal dismissal before the Labor Arbiter.
The Labor Arbiter denied Bustamantes complaint because of the paalala notice by Villareal.
Aggrieved, Bustamante appealed to the NLRC which, likewise, dismissed the petition because
the agreement that arose from the boundary-hulog scheme turned the relation of herein parties as
vendor and vendee, a relationship outside the jurisdiction of the Labor Arbiter.
The case was, then, appealed to the CA where it reversed the NLRCs decision because it found
out that the relationship of parties herein is dual: a vendor-vendee and an employer-employee,
ordering Villamaria to pay separation wages to Bustamante by virtue of their latter relationship.
Thus, prompting petitioner herein to file the case to the SC.
PETITIONERS CONTENTION:
Petitioner avers that their employer-employee relationship had been transformed into that of a
vendor-vendee since the terms of the kasunduan entered into a conditional deed of sale to the
jeepney.
RESPONDENTS CONTENTION:
Respondent, on the other hand, contends that, despite the kasunduan, he was still engaged to
perform activities which were necessary or desirable in the usual business of petitioner; thus,
maintaining their employer-employee relationship.
ISSUE:
Whether the existence of a boundary-hulog agreement negates the employer-employee
relationship between the vendor and vendee.

RULING:
YES, there is dual juridical relationship between the parties. As held in National Labor
Union v. Dinglasan the jeepney owner/operator-driver relationship under the boundary system is
that of employer-employee and not lessor-lessee, thus, the kasunduan did not extinguish the
employer-employee relationship of the parties.
The boundary system is a scheme by an owner/operator engaged in transporting passengers as a
common carrier to primarily govern the compensation of the driver, that is, the latters daily
earnings are remitted to the owner/operator less the excess of the boundary which represents the
drivers compensation. Under this system, the owner/operator exercises control and supervision
over the driver.
Under the kasunduan, respondent was required to remit P550.00 daily to petitioner, an amount
which represented the boundary of petitioner as well as respondents partial payment (hulog) of
the purchase price of the jeepney.
Respondent was entitled to keep the excess of his daily earnings as his daily wage. Thus, the
daily remittances also had a dual purpose: that of petitioners boundary and respondents partial
payment (hulog) for the vehicle.
As correctly stated in the decision of the CA:
The existence of an employment relation is not dependent on how the worker is
paid but on the presence or absence of control over the means and method of the
work.
In other words, what is primordial is that petitioner retained control over the conduct of the
respondent as driver of the jeepney. Therefore, there is employer-employee relationship.
Wherefore, the petition is DENIED.