University of The Philippines College of Law: Arms Taxi vs. NLRC

University of the Philippines College of Law
EVB, D2021
Topic Wage- Form: agreement for compensation services

Case No. G.R. No. 104523. March 8, 1993.
Case Name Arms Taxi vs. NLRC
Ponente GRIÑO-AQUINO, J.
RELEVANT FACTS
 The spouses Tanongon own and operate taxicabs under the names of "Arms Taxi" and "Lin-lin Taxi."
However, the taxicabs are registered under the "kabit" system in the name of Aida dela Cruz who holds
a certificate of public convenience to operate a taxicab service.
 1980- Culla was hired by the Tanongon spouses to work as mechanic, shop manager, garage caretaker,
 dispatcher, and liaison man in their taxi business, at a monthly salary of P5,000.00 plus commission on
the daily or monthly gross income of the business in addition to the payment of his (SSS) premiums.
 Culla filed a complaint alleging that his ejectment from his living quarters and dismissal from
employment were illegal because there was no prior investigation or written notice of the charges
against him. His dismissal was allegedly due to his demands "for the payment of the benefits,
percentage and privileges and premiums to the SSS"
 He prayed for reinstatement with backwages, plus his commission of fifteen percent (15%) of the
 gross income of the taxi business, in the amount of P480,000.00 with legal interest, plus moral, nominal
and exemplary damages in the total sum of P300,000.00 and actual or compensatory damages and
litigation expenses.
 Tanongon spouses denied that they were the operators of the Arms Taxi and Lin-lin Taxi. They denied
 the existence of an employer-employee relationship between them and Culla. They averred that Arms
Taxi is owned and operated by Aida dela Cruz; that on April 25, 1986, they bought Lin-lin Taxi from one
Jose Lim, but its ownership has not yet been transferred to them as their application is still pending.
 For her part, Aida dela Cruz admitted ownership and operation of a fleet of taxicabs under the name
Arms Taxi and that she had entered into an agreement with Dorothea Tanongon for the latter to
manage for a fee the operation of several of her taxi units. Denying that she hired Culla, Dela Cruz
averred that at most. Culla could be considered as an independent contractor paid on a piece-work basis
and therefore, he was not entitled to regular benefits, much less to the alleged 15% commission.
 The Labor Arbiter found for Culla. He declared that Culla was an employee of the Tanongon spouses
who operate some units of the Arms Taxi and Lin-lin Taxi under the "kabit" system; that Culla was
illegally dismissed from employment and that Aida dela Cruz should be considered an indirect employer
of Culla. However, he denied Culla's claim for 15% commission on the gross earnings of the taxi business
as Culla failed "to substantially prove the same by some precise, concrete and convincing evidence" The
agreement on the commission "should have been in writing, note or memorandum, and subscribed by
the parties, to be enforceable." NLRC affirmed the decision.
 Both parties filed separate petitions for certiorari. Culla argues in his petition that the payment to him of
P5,000.00 a month for his services was in partial fulfillment of Tanongon's promise to pay him a 15%
commission, removing said agreement from coverage of the Statute of Frauds.
RATIO DECIDENDI
Issue Ratio
W/N Culla is entitledto the NO.
15% commission The payment of a P5,000.00 monthly salary to the petitioner for his services
may not be considered as partial compliance by his employers with the
alleged agreement to pay him a commission or percentage of the daily
earnings of their taxi business because, as correctly pointed out by the
University of the Philippines College of Law
EVB, D2021
Solicitor General, a salary is different from a commission.
Salary vs commission
While a salary is a fixed compensation for regular work or for continuous
service rendered over a period of time while, a commission is a percentage or
allowance made to a factor or agent for transacting business for another.
Thus, before invoking the exception to the Statute of Frauds, petitioner

should have proven that he had received a commission, or part of it, in the
past. Furthermore, as aptly noted by the NLRC, if it were true that there had
been an agreement regarding the payment of a 15% commission to him, the
petitioner would not have waited almost six (6) years to claim it. Considerably
delay in asserting one's right is strongly persuasive of the lack of merit of
one's claim
W/N CUlla was illegally YES, he was a regular employee entitled to security of tenure.
dismissed
He was a garage supervisor, liaison man, dispatcher, mechanic and driver, a
jack of all trades, doing work that was necessary and desirable in the taxi
business of the Tanongon spouses.
He was summarily dismissed from his job, he is entitled to reinstatement

without loss of seniority and other privileges and to receive three (3) years
backwages. In view, however, of the strained relations between the
petitioner and the Tanongon spouses making his reinstatement no longer
advisable nor feasible, petitioner should receive separation pay in
addition to three years backwages.
The full backwages claimed by Culla and provided in Section 34 of Republic

Act No. 6715, which took effect on March 21, 1989, cannot be granted to him
for his summary dismissal occurred on June 11, 1986, three (3) years before
R.A. 6715 took effect. The new law may not be applied retroactively.
As petitioner's dismissal was effected without prior notice and investigation

of the charges against him, in violation of his right to due process, his
employers should indemnify him for damages in the sum of P1,000.00
pursuant to Rule XIV, Secs. 2, 5 and 6 of the rules implementing Batas
Pambansa Blg. 130 and the rulings of this Court in Great Pacific Life Assurance
Corporation vs. NLRC, Shoemart, Inc. vs. NLRC and Wenphil vs. NLRC.
RULING
WHEREFORE, the assailed decision of the National Labor Relations Commission is MODIFIED by ordering the
private respondents, Norberto and Dorothea Tanongon, in G.R. No. 104526 to pay petitioner Ludivico C. Culla
damages in the sum of One Thousand Pesos (P1,000.00), in addition to the monetary awards made by the NLRC
in his favor, which are hereby AFFIRMED. The petition for certiorari of Arms Taxi and/or Dorothea Tanongon in
G.R. No. 104523 is DISMISSED for lack of merit. Costs against Norberto and Dorothea Tanongon. SO ORDERED.

University of The Philippines College of Law: Arms Taxi vs. NLRC

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University of The Philippines College of Law: Arms Taxi vs. NLRC

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University of the Philippines College of Law

Topic Wage- Form: agreement for compensation services

Solicitor General, a salary is different from a commission.

Thus, before invoking the exception to the Statute of Frauds, petitioner

He was summarily dismissed from his job, he is entitled to reinstatement

The full backwages claimed by Culla and provided in Section 34 of Republic

As petitioner's dismissal was effected without prior notice and investigation

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