G.R. No. L-9110 - Vda. de Cruz vs. Manila Hotel Co.

From May 22, 1954, and for several years prior, Tirso Cruz with his orchestra furnished musical services to the Manila Hotel.
The Manila Hotel was a corporation that owned and managed the Hotel at the time.
On May 22, 1954, the hotel corporation issued a written notice to its employees that the Hotel would be leased to the Bay View Hotel beginning July 1, 1954.
The notice stated that employees to be laid off would receive a separation gratuity computed under specified terms and conditions.
Tirso Cruz and his musicians (plaintiffs) claimed entitlement to said gratuity, but the Manila Hotel management denied their claims, arguing they were not employees of the Hotel.
Consequently, plaintiffs filed an action in the Manila Court of First Instance in December 1954, asserting their rights as employees under the separation gratuity offer.

The trial court issued an order dismissing the complaint on the ground that the plaintiffs were not employees of the Manila Hotel and thus had no cause of action against the defendant.
Tirso Cruz, the bandleader, died in the interim and was substituted by his legal heirs; however, for convenience, references continued to be made as if he were still a party.
Plaintiffs alleged in the complaint that they were members of the orchestra employed by the Manila Hotel to furnish music, were employees, and were entitled to the gratuity promised in the Hotel's announcement (Annex A).
Annex A indicated the payment of separation gratuity to "employees to be laid off" who were not yet entitled to retirement insurance under Republic Act No. 660 (GSIS coverage).
The defendant Manila Hotel filed a motion to dismiss supported by Exhibit 1, a contract that outlined the terms of engagement between the Hotel and Tirso Cruz’s orchestra.
Plaintiffs did not dispute the terms of Exhibit 1 or their non-membership with the Government Service Insurance System (GSIS) but insisted that they were employees.

Exhibit 1 showed that the Manila Hotel contracted the services of the orchestra led by Tirso Cruz, composed of fifteen musicians including Ric Cruz as a vocalist, for P250 per day.
The orchestra was to play music daily from 7:30 p.m. until closing time.
The orchestra had discretion over the music selection, arrangement, intervals, and other details.
The Hotel did not furnish musical instruments or sheet music; these belonged to the orchestra.
The musicians were not selected or directly hired by the Hotel; payment was made only in lump sum to Tirso Cruz, who then distributed salaries to orchestra members.
The Hotel reserved no power to discharge individual musicians.

Whether Tirso Cruz and his orchestra musicians were employees of the Manila Hotel under the terms of the engagement.
Whether plaintiffs fell within the class of employees entitled to separation gratuity under the Hotel’s written announcement (Annex A).
Whether the contract and factual circumstances denoted an employer-employee relationship or an independent contractor relationship.