Case Summary (G.R. No. 200555)
Key Dates
• January 6, 1993 – Pedro begins work as caretaker.
• 1995 – Pedro briefly partners in fishpond business for two harvests.
• 2001 – Maricel is hired to manage the resort store.
• July 2008 – Emmarck notifies both that their services are no longer required.
• January 26, 2009 – Labor Arbiter dismisses complaint for lack of employee status.
• August 27, 2009 – NLRC declares petitioners to be employees and awards benefits.
• May 23, 2011 – CA reverses NLRC, finding no employer–employee relationship.
• January 27, 2012 – CA denies reconsideration.
• January 20, 2021 – Supreme Court decides under the 1987 Constitution.
Applicable Law
• 1987 Philippine Constitution (labor rights provisions)
• Labor Code of the Philippines, Articles 97 (definition of wages) and 298 (authorized causes for termination)
• Civil Code of the Philippines, Articles 1767–1769 (partnership rules)
• Rule 45, Rules of Court (certiorari review)
Antecedents and Dispute
Pedro worked daily, from 5 a.m. to 9 p.m., cleaning, securing and servicing guests at Ralco Beach, initially for ₱100 weekly, later ₱239. In 2001, Maricel joined for ₱1,000 monthly plus 15% commission on rentals, with identical hours. When profitability declined, Emmarck decided to lease out the resort and ceased their engagement in July 2008. The Dusols filed for illegal dismissal, underpayment and related damages.
Procedural History
The Labor Arbiter found no employee relationship, citing absence of control and documentary evidence of wages. The NLRC applied the four-fold test, concluded control existed, and awarded separation pay, wage differentials, 13th-month pay, nominal damages and attorney’s fees. The Court of Appeals reversed, holding that petitioners operated with full autonomy and no employer-imposed guidelines. The Supreme Court granted certiorari to resolve conflicting factual findings.
Issue
Whether the Dusols were employees or industrial partners of Emmarck, and if employees, whether their dismissal complied with due process under the Labor Code.
Partnership Versus Employment Analysis
Under Civil Code Article 1767, partnership requires contribution of money, property or industry to a common fund and intent to share profits. Article 1769 presumes partnership from profit sharing unless shares are wages. The SC found no written or circumstantial evidence of a bona fide partnership: no inventory of contributions, no net-profit distribution, and no mutual management rights. Conversely, employment exists under Labor Code jurisprudence when the employer selects and engages, pays remuneration, can dismiss, and exercises control over means and methods of work. Although Emmarck granted operational latitude, control resided with him as owner. His unilateral imposition of a 20% st
...continue readingCase Syllabus (G.R. No. 200555)
Antecedents
- Petitioners Pedro and Maricel Dusol filed a complaint for illegal dismissal, underpayment of benefits, damages, and attorney’s fees against respondent Emmarck A. Lazo, owner of Ralco Beach resort.
- Pedro began as sole caretaker on January 6, 1993, cleaning, securing, and entertaining guests from 5 a.m. to 9 p.m. daily; received a weekly allowance of ₱100, later increased to ₱239 (2001).
- In 1995, Pedro joined a fishpond business as an industrial partner for seven months, sharing harvest-based income; the venture ceased due to unprofitability.
- Maricel was employed on January 28, 2007 to manage the resort store, working the same hours as Pedro; paid ₱1,000 monthly plus 15% commission on cottage/rest house rentals.
- In July 2008, Emmarck decided to lease out Ralco Beach, terminating Pedro’s and Maricel’s services; they stopped working on July 31, 2008 and filed their complaint.
- Petitioners submitted resort rental and store sales records showing mark-ups and deductions for their allowances and commissions.
- Emmarck denied an employment relationship, claiming Pedro and Maricel were industrial partners sharing business profits and living rent-free on the property; asserted lack of power to dismiss and absence of control.
Labor Arbiter’s Findings
- The Labor Arbiter dismissed for lack of jurisdiction: petitioners failed to prove an employment relationship.
- No evidence of supervision, time records, regulations, or sanctions imposed by respondent.
- Accounting records did not distinguish wages from commissions or profit shares.
- Emmarck need not prove negative allegations; burden lay on petitioners to establish employment.
NLRC Ruling
- The NLRC granted the appeal, declaring petitioners as employees engaged as overseers and caretakers of the fishpond and beach resort.
- Applied the four-fold test: selection/engagement, payment of wages, power of dismissal, and control—finding all elements satisfied.
- Determined petitioners received salaries, allowances, and commissions (treated as wages).
- Rejected partnership theory for lack of pari