IT IS THE LAW THAT DEFINES AND GOVERNS EMPLOYER-EMPLOYEE RELATIONSHIP

Allan Bazar vs. Carlos A. Buizol
G.R. No. 198782, October 19, 2016

Facts:

Respondent Carlos Ruizol was a mechanic at Norkis Distributors and assigned at the Surigao City branch. He was terminated from work. Thus, he filed a complaint for illegal dismissal.

Petitioner, on the other hand, alleged that Norkis Distributors, Inc. (NDI) is a corporation engaged in the sale, wholesale and retail of Yamaha motorcycle units. Petitioner countered that respondent is not an employee but a franchised mechanic of NDI pursuant to a retainership agreement.

Petitioner averred that respondent, being the owner of a motor repair shop, performed repair warranty service, back repair of Yamaha units, and ordinary repair at his own shop. Petitioner maintained that NDI terminated the retainership contract with respondent because they were no longer satisfied with the latter’s services.

LA Ruling:

Executive Labor Arbiter Noel Augusto S. Magbanua ruled in favor of respondent declaring him a regular employee of NDI and that he was illegally dismissed. The Labor Arbiter stressed that an employer-employee relationship existed in this case. He did not give any weight to the unsworn contract of retainership based on the reason that it is a clear circumvention of respondent’s security of tenure.

On appeal, petitioner reiterated that there is no employer-employee relationship between NDI and respondent because the latter is only a retainer mechanic of NDI.

NLRC Ruling:

Finding merit in the appeal, the NLRC reversed the ruling of the Labor Arbiter and dismissed the case for lack of cause of action. The NLRC held that respondent failed to refute petitioner’s allegation that he personally owns a motor shop offering repair and check-up services to other customers and that he worked on the units referred by NDI either at his own motor shop or at NDl’s service shop. The NLRC also ruled that NDI had no power of control and supervision over the means and method by which respondent performed job as mechanic. The NLRC concluded that respondent is bound to adhere to and respect the retainership contract wherein he declared and acknowledged that he is not an employee of NDI.

Respondent filed a petition for certiorari before the Court of Appeals, submitting that the Labor Arbiter’s ruling had become final with respect to NDI because the latter failed to appeal the same. Respondent asserted that the NLRC erred in ruling that there is no employer-employee relationship between the parties. Respondent also prayed for reinstatement.

CA Ruling:

The Court of Appeals granted the petition. The Court of Appeals ruled that petitioner had no legal personality to make the appeal for NDI. The Court of Appeals held that the labor arbiter’s decision with respect to NDI is final. The Court of Appeals found that there was employer-employee relationship between respondent and NDI and that respondent was unlawfully dismissed. Petitioner sought reconsideration of the decision but its motion for reconsideration was denied. Hence, the petition.

Issue/s:

Whether or not the owner of a company, which did not contest the decision, have the personality to appeal in behalf of the corporation.

Whether or not there was no employer-employee relationship and there was only retainership agreement

SC Ruling:

The SC partly granted the petition.

The SC held that the Court of Appeals correctly held that the Labor Arbiter’s ruling with respect to NDI has become final and executory for the latter’s failure to appeal within the reglementary period; and that petitioner had no legal personality to appeal for and/or behalf of the corporation.

The four-fold test used in determining the, existence of employer-employee relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee with respect to the means and method by which the work is to be accomplished.

Assuming that respondent signed the retainership agreement, it is not indicative of his employment status. It is the law that defines and governs an employment relationship, whose terms are not restricted by those fixed in the written contract, for other factors, like the nature of the work the employee has been called upon to perform, are also considered.

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The law affords protection to an employee, and does not countenance any attempt to subvert its spirit and intent. Any stipulation in writing can be ignored when the employer utilizes the stipulation to deprive the employee of his security of tenure. The inequality that characterizes employer-employee relations generally tips the scales in favor of the employer, such that the employee is often scarcely provided real and better options.

Petitioner claims that respondent was receiving P2,050.00 as his monthly retainer’s fee as of his termination. This fee is covered by the term “wages” and defined as remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract ‘of employment for work done or to be done, or for service rendered or to be rendered. For services rendered to NDI, respondent received compensation.

The control test is the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end.

Petitioner asserts that NDI did not exercise the power of control over respondent because he is free to use his own means and methods by which his work is to be accomplished. The records show the contrary.

It was shown that respondent had to abide by the standards sets by NDI in conducting repair work on Yamaha motorbikes done in NDI’s service shop. As a matter of fact, on allegations that respondent failed to live up to the demands of the work, he was sent several memoranda by NDI.