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Almirante: Employer-employee relationship

RESPONDENT Carlos A. Ruizol was a mechanic at Norkis Distributors assigned at its Surigao City branch where petitioner Allan Bazar was the manager. He was paid a monthly salary of P2,050 and worked from 8 a.m. to 5 p.m. with a one-hour meal break for six days in a week. He was dismissed from the service effective March 27, 2002. He filed a complaint for illegal dismissal and other monetary claims, which he amended, changing the name of the petitioner from Norkis Display Center to Norkis Distributors, Inc. (NDI).

Petitioner alleged that NDI is a corporation engaged in the sale, wholesale and retail of Yamaha motorcycle units.

Respondent is not an employee but a franchised mechanic of NDI pursuant to a retainership agreement. Being the owner of a motor repair shop, he 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.

Does an employer-employee relationship exist between NDI and respondent?

Ruling: Yes.

The Supreme Court agreed with the Labor Arbiter on the following points: Paragraphs 5 and 6 of the unsworn contract of Retainership between respondent and NDI and petitioner dated March 1, 1989 states as follows:

“5.) That the franchised mechanic, though not an employee of the NDI agrees to observe and abide by the rules and regulations by the NDI aims to maintain a good quality and efficient service to customer. 6.) Franchised mechanic hereby acknowledges that he is not an employee of NDI, hence, not entitled to Labor Standard benefits.”

The contents of the unsworn Contract of Retainership are a clear circumvention of the security of tenure pursuant to Articles 279 and 280 of the Labor Code. The agreement embodied in the contract is contrary to law. Thus respondent is not bound to comply with the same.

NDI admitted to have engaged the services of respondent, although under the guise of a retainership agreement. The fact of engagement does not exclude the power of NDI to hire respondent as its employee.

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. 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 as his monthly retainer’s fee as of his termination in March 2002. 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, payable by an employer to an employee under a written or unwritten contract of employment for work or service rendered or to be rendered. For services rendered to NDI, respondent received compensation. NDI could have easily disproved that respondent was its employee by presenting the manner by which such compensation was paid to respondent. NDI did not do so.

That NDI had the power to dismiss respondent was clearly evidenced by the fact that respondent’s services were terminated. (Perez, J., 3rd Division, Allan Bazar v. Carlos A. Ruizol, G.R. No. 198782, Oct. 19, 2016).


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