MAM Realty Devt Corp and Centeno

vs.
NLRC and Balbastro
G.R. No. 114787 June 2, 1995
By Richard Troy A. Colmenares
USA College of Law
Start: 6/27/14 8:50:00 PM
Finish: 6/27/14 9:54:54 PM
Nature of the Case
A petition for review assailing the decision of the NLRC which reversed the labor arbiters decision.

Facts
Balbastro alleged that petitioner hired him as pump operator with a monthly salary rate for seven days a week between 6AM-6PM, and
therefore sought before the labor arbiter monetary claims [wage differentials, ECOLA, overtime pay, incentive leave 13
th
month pay, holiday
pay and rest day pay] for the years 1988 to 1989, executed against MAM and VP Centeno (director or officer of a corporation). Before the
complaint to the labor arbiter, MAM executed a Deed of Transfer, effective 01 July 1990, in favor of the Rancho Estates Phase III
Homeowners Association, Inc. (REPHA), conveying to the latter all its rights and interests over the water system in the subdivision. The
transfer was allegedly due to financial constraints. Petitioner countered that Balbastro has been previously employed by another developer
of Rancho Estates for which his services, as service contractor and not employee, were engaged for the operation of Ranchos water pump
[to open and close the water supply system in accordance with the water rationing scheme at maximum period of 3 hours] at certain fixed
rate a month [the same engagement has been arranged with a security guard] so that, said the petitioner, Balbastro was not at all subject to
control or supervision, for in fact, his work could be done by others. The labor arbiter thus dismissed the petition. On appeal, NLRC reversed
the labor arbiters decision and ordered petitioner MAM to jointly and severally pay a sum of money [from 6 March 1988 to 6 March 1991 (the
date of filing the complaint)]. Thus, this petition for review.
Issue(s)
(1). Is Balbastro an employee of MAM?
(2). Is Balbastro entitled to monetary claims?
(3). Is a corporate director or officer jointly and severally (solidarily) liable?

Held
(1). Yes.

In assessing employer-employee (E2e) relationship, it is important to determine: (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 result of the work to be done and to the means and methods by which the work is to be accomplished which is the most
important test. All of the conditions had been satisfied.

The power of control depends not on its actual exercise, but on its mere existence. No actual supervision is needed. It is
enough that the employer has a right to wield the power. MAMs contention that there is absence of control because others could
very well perform the functions of Balbastro cannot be sustained. Further, Balbastro was registered by MAM with the Social
Security System.

(2). Yes, but NLRC erred in the computation due to an incorrect reckoning period.

The facts disclose that the transfer by MAM of the water system to the Homeowners Association on 01 July 1990 when petitioner
corporation could be deemed to have ceased from the activity for which private respondent was employed. Accordingly, the
reckoning period should only be between 6 March 1988 to 1 July 1990 (not 6 March 1991).

And since petitioner showed no proof on the existence of its alleged business losses or reverses in the transfer of the water system
to REPHA so as to warrant an exception found in the law, the law operates in favor of Balbastro for monetary claims.


(3). Yes, if he is in malice or bad faith.

A corporation, being a juridical entity, may act only through its directors, officers or employees. Obligations incurred by them, acting
as such corporate agents, are not theirs but the direct accountabilities of the corporation they represent. Solidary liabilities may be
incurred in certain instances enumerated under the Corporation Code and the Trust Receipts Law. In labor cases, the Courts have
held corporate directors solidarily liable in dismissal cases due to malice or bad faith. In this case, there is no showing of malice or
bad faith on the part of Centeno. Thus, Centeno cannot be held solidarily liable.


All premises considered, the order of NLRC is modified and remanded back to NLRC for proper computation solely against MAM.