04 Legend Hotel V Realuyo

04 Legend Hotel v Realuyo
G.R. No. 153511. July 18, 2012

Bersamin, J. / fyn
SUBJECT MATTER: Labor 1 – Minimum Wages – Form: agreement for compensation of services- Art. 97
SUMMARY: Realuyo is a pianist employed to perform in the restaurant of petitioner. The question involved is WON Realuyo is
an employee of the said hotel. SC ruled in the positive and held that there was an employer-employee relationship, using the
four-fold test. As to the test on power of giving the wages, SC held that the Realuyo’s remuneration denominated as talent fees
was fixed on the basis of his talent and skill and the quality of the music he played during the hours of performance each night,
taking into account the prevailing rate for similar talents in the entertainment industry. Hence, it 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. SC also ruled that Realuyo was illegally dismissed from work. Petition is denied.
DOCTRINES:
• Any stipulation in writing can be ignored when the employer utilizes the stipulation to deprive the employee of his
security of tenure.
• 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
FACTS:
Petitioner LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or, NELSON
NAPUD, in his capacity as the President of Petitioner Corporation, petitioner
Respondents HERNANI S. REALUYO, also known as JOEY ROA
 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 and exemplary damages.
 Respondent averred that
o he had worked as a pianist at the Legend Hotel’s Tanglaw Restaurant from September 1992 with an initial rate of
P400.00/night that was given to him after each night’s performance;
o his rate had increased to P750.00/night;
o during his employment, he could not choose the time of performance, which had been fixed from 7:00 pm to 10:00 pm
for three to six times/week;
o the Legend Hotel’s restaurant manager had required him to conform with the venue’s motif;
o he had been subjected to the rules on representation checks and chits, a privilege granted to other employees;
o on July 9, 1999, the management had notified him that as a cost-cutting measure his services as a pianist would no
longer be required effective July 30, 1999;
o he disputed the excuse, insisting that Legend Hotel had been lucratively operating as of the filing of his complaint; and
that the loss of his employment made him bring his complaint
 Petitioner
o denied the existence of an employer-employee relationship with respondent
o insisted 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;
o stated that the economic crisis that had hit the country constrained management to dispense with his services;
o (IMPORTANT to the topic) argued that whatever remuneration was given to respondent were only his talent fees
that were not included in the definition of wage under the Labor Code and that such talent fees were but the
consideration for the service contract entered into between them.
 LA – dismissed the complaint (no employee-employer relationship)
 NLRC – affirmed LA decision
 CA – reversed NLRC and LA
ISSUES: WON respondent was an employee of petitioner. (Y)
RATIO: YES. An 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.
Although no particular form of evidence is required to prove the existence of the relationship, and any competent and
relevant evidence may be admitted, 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.
Circumstances why he is an employee (4-fold test):

 FIRST: Petitioner actually wielded the power of selection at the time it entered into the service contract dated
September 1, 1992 with respondent. This is true, notwithstanding petitioner’s insistence that respondent had only
offered his services to provide live music at petitioner’s Tanglaw Restaurant. The power of selection was firmly
evidenced by, among others, the express written recommendation dated January 12, 1998 by Christine Velazco,
petitioner’s restaurant manager, for the increase of his remuneration.
It is the law that defines and governs an employment relationship, whose terms are not restricted to those fixed in the
written contract.
 SECOND: There is no denying that the remuneration denominated as talent fees was fixed on the basis of his
talent and skill and the quality of the music he played during the hours of performance each night, taking into
account the prevailing rate for similar talents in the entertainment industry. 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. SC cited Art. 97 of LC.
It is notable that under the Rules Implementing the Labor Code and as held in Tan v. Lagrama, every employer is
required to pay his employees by means of a payroll, which should show in each case the employee’s rate of
pay, deductions made from such pay, and the amounts actually paid to the employee . Yet, petitioner did not
present the payroll of its employees to bolster its insistence of respondent not being its employee.
That respondent worked for less than eight hours/day was of no consequence. Art. 83 of LC only set a maximum of
number of hours as “normal hours of work” but did not prohibit work of less than eight hours.
 THIRD: 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. This is the so-called control test.
Respondent performed his work as a pianist under petitioner’s supervision and control. Specifically, petitioner
controlled both the end achieved and the manner and means used to achieve that end. It sufficed that the employer
has the right to wield that power.
a. He could not choose the time of his performance, which petitioners had fixed.
b. He could not choose the place of his performance;
c. The restaurant’s manager required him at certain times to perform only Tagalog songs or music, or to wear
barong Tagalog to conform to the Filipiniana motif; and
d. He was subjected to the rules on employees’ representation check and chits
 FOURTH: The memorandum informing respondent of the discontinuance of his service because of the present
business or financial condition of petitioner showed that the latter had the power to dismiss him from
employment.
As to illegal dismissal: SC concluded that there was no valid cause for the retrenchment of respondent. No sufficient evidence
was present by petitioner.
DISPOSITIVE: Petition DENIED.

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G.R. No. 153511. July 18, 2012

Circumstances why he is an employee (4-fold test):

DISPOSITIVE: Petition DENIED.

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