Image via WikipediaEMPLOYER-EMPLOYEE RELATIONSHIP
By Beverly Caboteja
A basic notion and well-discussed concept in labor law is that of “employer-employee relationship”. Numerous labor cases have been decided as to the determination of the existence of employment relationship which depends on whether the four-fold test (as explained later) is present or not. The determination of the existence of employer-employee relationship is important because the conditions of employment in Labor Standards apply only if employer-employee relationship exists.
We pose then the question, when is an employer-employee relationship deemed to exist? The Supreme Court had once again occasion to answer this question in the case of Air Material Wing Services and Loan (AMWSLAI vs. NLRC, G.R. No. 111870, June 30, 1994). This case is an illustrative situation where employer-employee is found to exist. The case involves a complaint for illegal dismissal and non-payment of benefits filed by Atty. Salas against AMWSLAI.
The facts of the case show that private respondent Salas was appointed notarial and legal counsel for petitioner. The said appointment was renewed for three (3) years. The petitioner issued an order reminding Salas of the approaching termination of his legal services under their contract. This prompted Salas to lodge a compliant against petitioner for separation pay, vacation and sick leave benefits and others. Petitioner moved to dismiss for lack of jurisdiction alleging that there was no employer-employee relationship between the two parties.
Most of Salas’ claims were dismissed by the labor arbiter. It held that Salas was not illegally dismissed and so not entitled to collect separation benefits. His claims for vacation leave, sick leave, medical and dental allowances and refund of SSS premiums were further denied on the ground that he was a managerial employee. He was also denied moral and exemplary damages for lack of evidence of bad faith on the part of AMWSLAI. Neither was he allowed to collect his notarial fees from 1980 up to 1986 because the claim therefore had already prescribed.
On appeal, the decision was affirmed by the respondent Commission, prompting the petitioner to seek relief in this Court.
This now leads us to the threshold issue whether or not Salas can be considered an employee of the petitioner company.
Well-settled is the doctrine that the existence of an employer-employee relationship is ultimately a question of fact and that the findings by the labor arbiter and the National Labor Relations Commission shall be accorded not only respect but even finality when supported by substantial evidence.
In the case at bar, the terms and conditions in the contract show that respondent was an employee of petitioner. The Supreme Court also made use of the four-fold test to resolve the issue of employer-employee relationship: (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.
The Court observed that these factors were present in the case.
First, as to the selection and engagement of the employee:
“Clearly, his selection as the company counsel was done by the board directors in one of its regular meetings.
Second, as to the payment of wages:
“The petitioner paid him a monthly compensation/retainer’s fee for his services.”
Thirdly, as to the power of dismissal:
“Although his appointment was fixed for three years, the petitioner reserves its power of dismissal as may be deemed necessary for its interest and protection.”
And finally, as to the power of control, which is the most important test:
AMWSLAI also exercised its power of control over Salas by defining his duties and functions as its legal counsel such as acting on all legal matters and seeking remedies to effect collection of overdue accounts.
Further, it was also raised, as cited in the case of Hydro resources vs. Pangilinan, that “a lawyer like any other professional (doctors, nurses, dentists, public relations practitioners), may very well be an employee of a private corporation or even the government. It is not unusual for a big corporation to hire a staff of lawyers as its in-house counsel, pay them regular salaries, rank them and treat them like its other officers and employees.”
Considering that these four factors in determining the existence of an employer-employee relationship are present, the conclusion is well-nigh inevitable that an employer-employee relationship exists in the present case.
With regard to Salas’ claims of notarial fees, it is based on his employment as a notarial officer of the petitioner and thus labor arbiters have the original and exclusive jurisdiction. As provided under paragraph 3 of Article 217 of the Labor Code, claims which have reasonable connection with employer-employee relationship are under the jurisdiction of the labor arbiter.
In respect to the separate payment of notarial fees to Salas, the contract does not contain any stipulation about such. Hence, absence of such stipulation does not entitle the respondent to collect separate payment of notarial fees.