G.R. No. 104523 and G.R. No. 104526. March 8, 1993.
ARMS TAXI AND/OR DOROTHEA TANONGON, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND LUDIVICO C. CULLA, respondents.

LUDIVICO C. CULLA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER, SPOUSES NORBERTO TANONGON AND DOROTHEA TANONGON and/or ARMS TAXI and AIDA DELA CRUZ, respondents.

FACTS

Spouses Norberto and Dorothea Tanongon owned and operated taxicabs under the names “Arms Taxi” and “Lin-lin Taxi,” registered under the “kabit” system in the name of Aida dela Cruz. In early 1980, they hired Ludivico C. Culla to work as a mechanic, shop manager, garage caretaker, dispatcher, and liaison man for their taxi business at a monthly salary of P5,000.00, plus a commission on the daily or monthly gross income, and payment of his SSS premiums. On June 11, 1986, the Tanongon spouses, without Culla’s consent, had his living quarters forcibly opened and his belongings removed, effectively dismissing him. Culla filed a complaint for illegal dismissal, seeking reinstatement, backwages, a 15% commission on gross income, and damages. The Tanongon spouses denied being operators of the taxi businesses and an employer-employee relationship with Culla, claiming Arms Taxi was owned by Aida dela Cruz and that Culla was an independent contractor. Aida dela Cruz admitted owning Arms Taxi but denied hiring Culla, stating he was at most an independent contractor. The Labor Arbiter found Culla to be an employee of the Tanongon spouses, illegally dismissed, and held Aida dela Cruz jointly and severally liable as an indirect employer under the Labor Code. The Labor Arbiter awarded Culla P195,000.00 as three years’ backwages and separation pay but denied his claim for a 15% commission for lack of proof. The NLRC affirmed the Labor Arbiter’s decision. Both parties filed separate petitions for certiorari, which were consolidated.

ISSUE

1. Whether an agreement for a commission on services rendered falls under the Statute of Frauds and must be in writing to be enforceable.
2. Whether the monthly salary paid to Culla constituted partial compliance with an alleged agreement for a commission.
3. Whether the NLRC’s factual finding of an employer-employee relationship is binding.
4. Whether Culla, as a regular employee, was illegally dismissed and entitled to reinstatement, backwages, and separation pay.
5. Whether the full backwages provision under Republic Act No. 6715 applies retroactively to Culla’s dismissal in 1986.
6. Whether the employer is liable for damages due to non-observance of due process in dismissal.

RULING

1. No. An agreement for compensation of services rendered is not among the contracts enumerated in Article 1403 of the Civil Code that must be in writing to be enforceable under the Statute of Frauds.
2. No. A salary is distinct from a commission. A salary is a fixed compensation for regular work over a period, while a commission is a percentage allowance for transacting business for another. The payment of a monthly salary cannot be considered partial compliance with an alleged agreement to pay a commission.
3. Yes. The NLRC’s finding of an employer-employee relationship is a factual issue supported by substantial evidence. In the absence of grave abuse of discretion, such findings are accorded respect and finality.
4. Yes. Culla was a regular employee, performing necessary and desirable functions in the taxi business as a garage supervisor, liaison man, dispatcher, mechanic, and driver, entitling him to security of tenure. His summary dismissal without just cause and due process was illegal. He is entitled to reinstatement without loss of seniority and three years’ backwages. However, due to strained relations, reinstatement is no longer feasible; thus, he is awarded separation pay in addition to three years’ backwages.
5. No. Republic Act No. 6715 , which provides for full backwages, took effect on March 21, 1989. Culla was dismissed on June 11, 1986. The law cannot be applied retroactively; therefore, he is not entitled to full backwages under this act.
6. Yes. Since Culla’s dismissal was effected without prior notice and investigation, violating his right to due process, his employers are liable to indemnify him for damages in the sum of One Thousand Pesos (P1,000.00).
The Supreme Court MODIFIED the NLRC decision by ordering the Tanongon spouses to pay Culla P1,000.00 as indemnity for damages in addition to the affirmed monetary awards. The petition of Arms Taxi and/or Dorothea Tanongon was DISMISSED for lack of merit.