G.R. No. 97492 December 8, 1992
CANLUBANG SECURITY AGENCY CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, ARSENIO A. BARTOLAY, REYNALDO ACOSTA, JANUARIO AGUADA, AUGUSTIA E. AGUILA, LEONCIO AGUILA, RODEL APOSTOL, CELSO ARANA, SITO BANNA, RODOLFO BELLEZA, NICOLAS BENEDICTO, SALVADOR BORSIGUE, LUISITO BROSOTO, ROLANDO CABUNOC, ALFREDO CARIAGA, PAQUITO CARSON, MACARIO DEL CASTILLO, JULIET B. CONCEPCION, SANTIAGO CONTRERAS, MANALO CRUZIN, MATIAS DAGSA, EFRAIM DOMAGAS, ARMANDO DORIA, JESUS ERESE, ANGELITO ESCATRON, EDWIN ESCURO, ROBERTO EVARDO, LAMBERTO FIGURACION, OSCAR GARCIA, ARNULFO GENETIA, HENRY GULLON, CECILIA DE GUZMAN, ANTONIO ISORENA, ARDEN LUBUGUIN, NOE MANALO, CONFESSOR MANZALA, ALBERTO MEDALLO, HELEN DJ. MEDALLO, MAGNO MONIS, ALEX NOGRALES, ARNULFO NOJOR, REOM ONIO, EUFROCINA G. PATION, ALFREDO QUINDOZA, SANTOS ROSANTO, CRISPIN SANTIAGO, ROMMEL SERQUIÑA, FERMILIANO SUILIN, RANULFO TOGONON, RODOLFO UGAY, MILA VILLASAYA, TEOFILO ZARATE and CANLUBANG AUTOMOTIVE RESOURCES CORPORATION, respondents.

FACTS

Canlubang Automotive Resources Corporation (CARCO) had a security service contract with Canlubang Security Agency Corporation (CSA). In February 1985, CARCO notified CSA it was terminating their contract to engage another agency. Several security guards, supervisors, and officers (private respondents) filed a complaint for illegal termination against both CSA and CARCO. However, on May 14, 1985, the private respondents filed a Motion to Dismiss the complaint against CSA, stating they were convinced CSA was not their employer but CARCO, and they executed a quitclaim/waiver releasing CSA from all claims. The Labor Arbiter granted the motion. CARCO appealed. The NLRC set aside the Arbiter’s order and remanded the case, ruling CSA was an indispensable party. In subsequent proceedings, the Labor Arbiter found the dismissals illegal but held only CSA liable, dismissing the case against CARCO for lack of employer-employee relationship. On appeal, the NLRC initially dismissed the complaint against both, but upon reconsideration, reinstated the Arbiter’s decision holding CSA solely liable. CSA’s motion for reconsideration was denied.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in ruling that petitioner Canlubang Security Agency Corporation, and not Canlubang Automotive Resources Corporation, was the employer of the private respondents.

RULING

The petition is without merit. The NLRC did not commit grave abuse of discretion. The existence of an employer-employee relationship is determined by four elements: (1) selection and engagement; (2) payment of wages; (3) power of dismissal; and (4) the power of control, which is the most important. The security service contract between CSA and CARCO vested control in CSA, stipulating that CSA would provide firearms, replace guards, discipline and dismiss them, that the guards were employees of the agency, that CSA was solely responsible for their wages and benefits, and that CARCO was held free from any liability from claims by the guards. Applying the control test and citing the precedent of American President Lines vs. Clave, the Court found that an employer-employee relationship existed between CSA and the private respondents, not between the private respondents and CARCO. The quitclaim/waiver executed by the private respondents was invalid as it was premised on an erroneous unilateral belief about who their employer was, a factual and judicial determination they could not make. The findings of fact by the labor arbiter and the NLRC on the existence of the employer-employee relationship are binding. No grave abuse of discretion was committed. The petition was dismissed.