Air Material Wing Savings and Loan Association, Inc. v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Private respondent Luis S. Salas was appointed "notarial and legal counsel" for petitioner Air Material Wings Savings and Loan Association, Inc. (AMWSLAI) in 1980. His appointment was renewed for three years effective March 1, 1987, with a provision for termination for cause or as deemed necessary by the Board. His duties included notarization of loan and legal documents, and other legal responsibilities, with a fixed monthly compensation/retainer's fee. On January 9, 1990, AMWSLAI notified Salas of the approaching termination of his services. Procedural History: Salas filed a complaint against AMWSLAI for separation pay, benefits, allowances, refund of SSS premiums, damages, notarial services payment, and attorney's fees. AMWSLAI moved to dismiss for lack of jurisdiction, arguing no employer-employee relationship existed. The motion was denied. The labor arbiter dismissed most of Salas' claims, holding he was not illegally dismissed and not entitled to separation benefits, vacation/sick leave, allowances, or SSS refund as a managerial employee. Claims for notarial fees from 1980-1986 prescribed, but fees from 1987-1990 and attorney's fees were awarded. The National Labor Relations Commission (NLRC) affirmed the labor arbiter's decision in toto. The Petition: AMWSLAI sought relief from the Supreme Court, questioning the NLRC's ruling that an employer-employee relationship existed and its award of notarial and attorney's fees.
Issue(s)
Whether an employer-employee relationship existed between AMWSLAI and Atty. Luis S. Salas. Whether the NLRC has jurisdiction over claims for notarial fees. Whether Atty. Salas is entitled to notarial fees in addition to his monthly compensation.
Ruling
The Supreme Court affirmed the NLRC's decision that an employer-employee relationship existed between AMWSLAI and Atty. Salas. However, it modified the ruling by disallowing the award of notarial fees and attorney's fees.
Ratio Decidendi
On the existence of an employer-employee relationship: The Court reiterated the four elements defining an employer-employee relationship: (1) selection and engagement of the employee; (2) payment of wages; (3) power of dismissal; and (4) the employer's power to control the employee's conduct. The Court found that these elements were present in the case of Atty. Salas. His selection was by the board of directors, he received a monthly compensation/retainer's fee, AMWSLAI reserved the power of dismissal, and the association defined his duties and functions as legal counsel, demonstrating control over his conduct. The Court cited Hydro Resources Contractors Corp. v. Pagalilauan to emphasize that lawyers can be employees of corporations, working as in-house counsel, and that such an arrangement is not unusual. The NLRC's finding on this factual issue, being supported by substantial evidence, was accorded great respect and finality. On the jurisdiction over claims for notarial fees: The Court affirmed that labor arbiters have original and exclusive jurisdiction over money claims of workers when such claims have a reasonable connection with the employer-employee relationship, as provided in Article 217 of the Labor Code. Atty. Salas' claim for notarial fees arose from his employment as a notarial officer of AMWSLAI, thus falling within the jurisdiction of the labor arbiter. The Court rejected the contention that the NLRC was not empowered to adjudicate such claims, noting that the claim stemmed from the employment contract itself. On the entitlement to notarial fees: The Court disagreed with the NLRC's award of notarial fees from 1987 to 1990. The Court found no substantial evidence to support this finding, as the letter-contract of January 23, 1987, did not stipulate for separate payment of notarial fees in addition to his basic salary. It appeared that his notarial services were part of his regular functions and were already covered by his monthly compensation. The fact that notarial fees were paid by members-borrowers for the petitioner's account, and not directly for Salas, was not a sufficient basis for his claim in the absence of any agreement to that effect.
Main Doctrine
The existence of an employer-employee relationship is determined by the presence of four elements: selection and engagement, payment of wages, power of dismissal, and the employer's power to control the employee's conduct. A lawyer can be an employee of a corporation, and their notarial services may be considered part of their regular functions covered by their compensation unless otherwise stipulated.