G.R. No. 197899 March 6, 2017
JOAQUIN LU, Petitioner vs. TIRSO ENOPIA, ET AL., Respondents

FACTS

Petitioners (now respondents) were crew members of the fishing mother boat F/B MG-28 owned by Joaquin Lu, sole proprietor of Mommy Gina Tuna Resources. They operated under an income-sharing arrangement where 55% went to Lu and 45% to the crew, with an additional 4% as a “backing incentive.” Expenses for boat maintenance and fishing materials were equally shared. In August 1997, Lu proposed a Joint Venture Fishing Agreement with a one-year term, which the crew refused to sign. Lu alleged the crew, through their master fisherman, decided to return the vessel, while the crew claimed Lu terminated their services during a dialogue for refusing the agreement. The crew subsequently filed a complaint for illegal dismissal and monetary claims.
The Labor Arbiter dismissed the complaint, finding no employer-employee relationship but a joint venture or industrial partnership. This was affirmed by the NLRC. The Court of Appeals initially dismissed the crew’s petition for certiorari on procedural grounds, but the Supreme Court remanded the case. On remand, the CA reversed the NLRC, finding an employer-employee relationship and declaring the crew’s dismissal illegal.

ISSUE

Whether an employer-employee relationship existed between Joaquin Lu and the crew members, making their dismissal illegal.

RULING

Yes, an employer-employee relationship existed. The Supreme Court affirmed the CA’s ruling, applying the four-fold test: (1) selection and engagement of employees, (2) payment of wages, (3) power of dismissal, and (4) power of control. The Court found that Lu ultimately engaged the crew, as the master fisherman who hired them was Lu’s agent. Wages were present in the form of the crew’s share in the catch, which was essentially their compensation for labor. Lu held the power to dismiss, as evidenced by the termination following the crew’s refusal to sign the new agreement.
Most critically, the element of control was established. Lu exercised control over the crew’s conduct through company policies, memoranda, and directives. The presence of a checker and radio communication for monitoring operations, logistics, and catch recording demonstrated Lu’s right to control not just the results but the means and methods of the work. The income and expense-sharing arrangement did not negate this control nor convert the relationship into a joint venture, as the crew contributed only their labor, not capital or industry in the entrepreneurial sense. Consequently, the crew were regular employees illegally dismissed for a cause not recognized by law. Lu was ordered to reinstate them and pay full backwages and benefits.