LEGEND HOTEL (MANILA) v HERNANI REALUYO

G.R No 153511 | July 18, 2012 | Bersamin, J.

FACTS:
• Respondent Realuyo (aka Joey Roa), a pianist for a restaurant of Legend Hotel, filed a complaint for alleged unfair labor practice, constructive illegal
dismissal, and the underpayment/nonpayment of his premium pay for holidays, separation pay, service inventive leave pay, and 13111 month pay.
o He had worked there from 1992 for 3-6 times per week and he could not choose the time he would perform. In 1999, he was fired as a cost-cutting
measure. Disputing this, he insisted that Legend Hotel had been lucratively operating as of the filing of his complaint.
o Petitioner denied the existence of an employer-employee relationship with Realuyo and that he was just a talent engaged to provide live music 3 hrs
per day for 2 days per week.
• The complaint was dismissed by the Labor Arbiter for lack of merit upon finding no employer-employee relationship.
o This was supported by the service contract and Realuyo’s own admission in a letter that he was receiving a talent fee, not salary. He was also paid
the talent fee nightly, unlike regular employees who are paid monthly.
o “…absent the power to control with respect to the means and methods by which his work was to be accomplished, there is no employer-employee
relationship between the parties xxx.”
• Respondent appealed. NLRC affirmed the LA’s decision.
• Respondent assailed the NLRC decision in the CA on certiorari. CA granted his petition, holding that the elements of the employee-employer relationship are
present and Realuyo’s job was in furtherance of the restaurant business of the hotel. He was initially a contractual employee, but, because of the length of
service he rendered, he was converted into a regular employee.

ISSUES w/ HOLDING & RATIO

Procedural
1. W/N the petition for certiorari filed in the CA was the proper recourse - YES
a. Petitioner: improper remedy because it raised mainly questions of fact and did not demonstrate that NLRC was guilty of GAD.
b. The CA may pass upon such factual issues, based on Sec. 9, BP 129.

Substantive
1. W/N respondent was an employee of petitioner - YES
a. The existence of an employer-employee relationship is determined by:
i. who has the power to select the employee,
ii. who pays the employee’s wages,
iii. who has the power to dismiss the employee,
iv. who exercises control of the methods and results by which the work of the employee is accomplished
b. Petitioner wielded the power of selection at the time it entered into the service contract with respondent, evidenced by the express written
recommendation by the restaurant manager for the increase of respondent’s remuneration.
c. The service contract cannot support the petitioner because it is the law that defines and governs an employment relationship, whose terms are not
restricted to those in the written contract. The law affords protection to the employee, so any stipulation in writing can be ignored when the
employer uses this to deprive the employee of his security of tenure.
 i. The inequality that characterizes employer-employee relations is generally in favor of the employer, such that the employee is
often scarcely provided real and better options.
d. Respondent’s remuneration is included in the term wage in the sense and context of the Labor Code, Art. 97 (f), regardless of it being denominated
as talent fees by the petitioner.
e. Control test: The power of the employer to control the work of the employee is considered the most significant determinant of the existence of an
employer-employee relationship.
i. Respondent performed his work under petitioner’s supervision and control of both the end achieved and the manner and means used to
achieve that end.
ii. The employer need not actually supervise the performance of duties by the employee. It is enough that the employer has the right to wield
the power.
iii. Respondent could not choose time and place of performance, he was required sometimes to perform only Tagalog songs or wear a barong
Tagalog, and he was subjected to rules granted to other employees.
f. The memorandum informing respondent of the discontinuance of his service showed that petitioner had the power to dismiss him from employment.

2. (If yes) W/N respondent was validly terminated – NO

a. Respondent’s termination was because of retrenchment due to an authorized cause under the Labor Code. Retrenchment is an authorized cause of
dismissal and is resorted to by employers to avoid or minimize business losses (Art. 283, Labor Code)
b. Standards an employer should meet to justify retrenchment and to foil abuse:
i. The expected losses should be substantial and not merely de minimis in extent;
ii. The substantial losses apprehended must be reasonably imminent;
iii. The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and
iv. The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must be proved by sufficient and
convincing evidence.
c. Burden of proving that the dismissal was valid or authorized is on the employer, but petitioner did not submit evidence of its losses and the economic
havoc it would sustain (only claimed that it was due to its “present business/financial condition”).

Ruling: Petition denied. CA decision affirmed.