G.R. No. 114733 . January 2, 1997.
AURORA LAND PROJECTS CORP., doing business under the name “AURORA PLAZA” and TERESITA T. QUAZON, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and HONORIO DAGUI, respondents.

FACTS

Private respondent Honorio Dagui was hired in 1953 by Doña Aurora Suntay Tanjangco to perform carpentry, plumbing, electrical, and masonry work for the maintenance of Tanjangco apartments and buildings. Upon Doña Aurora’s death in 1982, her daughter, petitioner Teresita Tanjangco Quazon, assumed administration of the properties. On June 8, 1991, Quazon abruptly terminated Dagui’s services, stating he had no more work effective immediately. Dagui, then 62 years old, filed a complaint for illegal dismissal.
The Labor Arbiter ruled in Dagui’s favor, ordering petitioners to pay separation pay and attorney’s fees. The National Labor Relations Commission (NLRC) affirmed the decision but modified the monetary award. Petitioners appealed to the Supreme Court, contending that no employer-employee relationship existed as Dagui was merely an independent job contractor hired per specific task, and thus, his dismissal was not illegal.

ISSUE

The primary issues were: (1) Whether an employer-employee relationship existed between petitioners and Dagui; and (2) If so, whether Dagui was illegally dismissed.

RULING

The Supreme Court denied the petition and affirmed the NLRC ruling, finding the existence of an employer-employee relationship and illegal dismissal. On the first issue, the Court applied the four-fold test, emphasizing the control test. Dagui performed tasks integral to the petitioners’ business of property maintenance under their direct supervision and control, receiving a daily wage. The Court rejected the claim that Dagui was an independent job contractor, as defined by the Labor Code’s Implementing Rules. To qualify, a contractor must have substantial capital or investment in tools and equipment. Dagui, earning a modest daily wage, possessed no such capital, and petitioners provided no proof of his independent business operations.
On the second issue, the Court found the dismissal illegal. Petitioners failed to substantiate their claim of unsatisfactory performance as a just or authorized cause for termination under the Labor Code. The sudden termination without due process violated Dagui’s security of tenure. Consequently, as Dagui was over 60 and reinstatement was impracticable, the award of separation pay in lieu of reinstatement was proper. The Court upheld the factual findings of the Labor Arbiter and NLRC, noting that the determination of an employer-employee relationship is a question of fact generally binding when supported by substantial evidence.