LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or,

NELSON NAPUD, in his capacity as the President of Petitioner

Corporation, Petitioner, 
vs. HERNANI S. REALUYO, also known as JOEY ROA, Respondent. G.R. No.
153511               July 18, 2012

Facts:

This labor case for illegal dismissal involves a pianist employed to perform in the
restaurant of a hotel. On August 9, 1999, respondent, whose stage name was Joey R.
Roa, filed a complaint for alleged unfair labor practice, constructive illegal dismissal, and
the underpayment/nonpayment of his premium pay for holidays, separation pay, service
incentive leave pay, and 13th month pay. He prayed for attorney's fees, moral damages
off P100,000.00 and exemplary damages for P100,000.00.

In its defense, petitioner denied the existence of an employer-employee relationship

with respondent, insisting that he had been only a talent engaged to provide live music
at Legend Hotel’s Madison Coffee Shop for three hours/day on two days each week;
and stated that the economic crisis that had hit the country constrained management to
dispense with his services.

On December 29, 1999, the Labor Arbiter (LA) dismissed the complaint for lack of merit
upon finding that the parties had no employer-employee relationship.

And thus, 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.

WHEREFORE, this case must be, as it is hereby, DISMISSED for lack of merit.

Respondent appealed, but the National Labor Relations Commission (NLRC) affirmed
the LA on May 31, 2001.5

Respondent assailed the decision of the NLRC in the Court of Appeals (CA) on
certiorari.

Well settled is the rule that of the four (4) elements of employer-employee relationship, it
is the power of control that is more decisive.

i. xxx when it ruled that there is the existence of employer-employee relationship

between the petitioner hotel and respondent roa.
 ii. xxx in finding that roa is a regular employee and that the termination of his
services was illegal. the ca likewise erred when it declared the reinstatement of
roa to his former position or be given a separation pay equivalent to one month
for every year of service from september 1999 until july 30, 1999 considering the
absence of an employment relationship between the parties.

iii. xxx when it declared that roa is entitled to backwages, service incentive leave
and other benefits considering that there is no employer employee relationship
between the parties.

iv. xxx when it nullified the decision dated may 31, 2001 in nlrc ncr ca no.
023404-2000 of the nlrc as well as its resolution dated june 29, 2001 in favor of
herein petitioner hotel when herein respondent roa failed to show proof that the
nlrc and the labor arbiter have committed grave abuse of discretion or lack of
jurisdiction in their respective decisions.

v. xxx when it overlooked the fact that the petition which roa filed is improper
since it raised questions of fact.

vi. xxx when it gave due course to the petition filed by roa when it is clearly
improper and should have been dismissed outright considering that a petition for
certiorari under rule 65 is limited only to questions or issues of grave abuse of discretion
or lack of jurisdiction committed by the nlrc or the labor arbiter, which issues are not
present in the case at bar.

The assigned errors are divided into the procedural issue of whether or not the petition
for certiorari filed in the CA was the proper recourse; and into two substantive issues,
namely: (a) whether or not respondent was an employee of petitioner; and (b) if
respondent was petitioner’s employee, whether he was validly terminated.

Ruling

The appeal fails.

Procedural Issue:

Certiorari was a proper recourse.

There is no longer any doubt that a petition for certiorari brought to assail the decision of
the NLRC may raise factual issues, and the CA may then review the decision of the
NLRC and pass upon such factual issues in the process.8 The power of the CA to
review factual issues in the exercise of its original jurisdiction to issue writs of certiorari
is based on Section 9 of Batas Pambansa Blg. 129, which pertinently provides that the
CA "shall have the power to try cases and conduct hearings, receive evidence and
perform any and all acts necessary to resolve factual issues raised in cases falling
within its original and appellate jurisdiction, including the power to grant and conduct
new trials or further proceedings."

Substantive Issue No. 1:

Employer-employee relationship existed between the parties.

The factors that determine the issue include who has the power to select the employee,
who pays the employee’s wages, who has the power to dismiss the employee, and who
exercises control of the methods and results by which the work of the employee is
accomplished, a finding that the relationship exists must nonetheless rest on substantial
evidence, which is that amount of relevant evidence that a reasonable mind might
accept as adequate to justify a conclusion.

Generally, the Court does not review factual questions, primarily because the Court is
not a trier of facts. However, where, like here, there is a conflict between the factual
findings of the Labor Arbiter and the NLRC, on the one hand, and those of the CA, on
the other hand, it becomes proper for the Court, in the exercise of its equity jurisdiction.

Respondent’s remuneration, albeit denominated as talent fees, was still considered as

included in the term wage in the sense and context of the Labor Code, regardless of
how petitioner chose to designate the remuneration. Anent this, Article 97(f) of the
Labor Code clearly states:

xxx wage paid to any employee shall mean the 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 services rendered or to be
rendered, and includes the fair and reasonable value, as determined by the Secretary of
Labor, of board, lodging, or other facilities customarily furnished by the employer to the
employee.

Respondent worked for less than eight hours/day was of no consequence and did not
detract from the CA’s finding on the existence of the employer-employee relationship. In
providing that the " normal hours of work of any employee shall not exceed eight (8)
hours a day," Article 83 of the Labor Code only set a maximum of number of hours as
"normal hours of work" but did not prohibit work of less than eight hours.

Thirdly, 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.18 This is the so-called control test, and is premised on whether the person
for whom the services are performed reserves the right to control both the end achieved
and the manner and means used to achieve that end.
Substantive Issue No. 2:

Validity of the Termination.

Having established that respondent was an employee whom petitioner terminated to

prevent losses, the conclusion that his termination was by reason of retrenchment due
to an authorized cause under the Labor Code is inevitable.

Article 283. Closure of establishment and reduction of personnel. – The employer may
also terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. xxx. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1) month pay
or at least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.

In termination cases, the burden of proving that the dismissal was for a valid or
authorized cause rests upon the employer. Here, petitioner did not submit evidence of
the losses to its business operations and the economic havoc it would thereby
imminently sustain. It only claimed that respondent’s termination was due to its "present
business/financial condition. Not every loss incurred or expected to be incurred by an
employer can justify retrenchment.1âwphi1 The employer must prove, among others,
that the losses are substantial and that the retrenchment is reasonably necessary to
avert such losses. Thus, by its failure to present sufficient and convincing evidence to
prove that retrenchment was necessary, respondent’s termination due to retrenchment
is not allowed.

The Court realizes that the lapse of time since the retrenchment might have rendered
respondent's reinstatement to his former job no longer feasible.

WHEREFORE, we DENY the petition for review on certiorari, and AFFIRM the decision
of the Court of Appeals promulgated on February 11, 2002, subject to the modification
that should reinstatement be no longer feasible, petitioner shall pay to respondent
separation pay of one month for every year of service computed from September 1992
until the finality of this decision, and full backwages from the time his compensation was
withheld until the finality of this decision.