BALIWAG TRANSIT, INC. VS.

COURT OF APPEALS AND ROMAN MARTINEZ

GR NO. 57493 | January 7, 1987 | Paras, J.
Kabit System

DOCTRINE:
The determining factor is the possession of a franchise to operate which negates the existence of the "Kabit System"
and not the issuance of one SSS ID Number for both bus lines from which the existence of said system was inferred.

FACTS:
 Baliwag Transit, owned by the late Tuazon, and Baliwag Transit, Inc (BTI), owned by de Tengco, are bus lines
w/ similar buses and routes operating under different grants of franchises by the Public Service Commission
(PSC) but were issued only one ID number by SSS.
 Martinez, claiming to be an employee of both, filed a petition with Social Security Commission (SSC) to
compel BTI to remit his SSS premium contributions. Alleging that BTI deducted contributions but remitted
a lesser amount.
 BTI denied having employed Martinez, who was in fact employed by Tuazon until his bankruptcy. Moreover,
Martinez allowed 17 years to elapse and at a time when Tuazon was already dead before filing the petition.
 SSC: Favor of BTI, case dismissed. No ER-EE relationsip.
 CA: Reversed. Tuazon operated his buses under the Kabit System. BTI to remit contributions. MR denied.

ISSUE:
Whether the issuance by the SSS of one SS-ID-Number to 2 bus lines necessarily indicates that one of them operates
under the Kabit System.

HELD:
No. The "Kabit System" is an arrangement whereby a person who has been granted a certificate of convenience
allows another person who owns motor vehicles to operate under such franchise for a fee. The determining factor
is the possession of a franchise to operate which negates the existence of the "Kabit System" and not the issuance
of one SSS ID Number for both bus lines from which the existence of said system was inferred.

Here, SSS witness who had access to the records regarding applications and grant of franchises of public utility
vehicles testified that de Tengco and Tuazon were granted separate franchises to operate public utility vehicle buses,
both operating between Manila and Baliwag routes. However, Tuazon’s were cancelled when he terminated his
operations. BTI oped to retain the firm name of Baliwag Transit to take advantage of the goodwill the firm name
enjoys with the riding public. Moreover, while it is admitted that BTI remitted Martinez’s contributions, it was only
to accommodate the request of Tuazon, who was the unlce of de Tengco, and from whom the money came from.

As regards the one responsible for the contributions

Martinez was employed by, worked for and took orders from Tuazon and was authorized to get vales from the
conductors of the trucks of Tuazon. Thus, the employer-employee relationship between the Tuazon and Martinez,
having been established, the remittance of SSS contributions of the latter, is the responsibility of his employer
Tuazon, regardless of the existence or non-existence of the "Kabit System".

CA reversed and set aside. SSC reinstated.