Sometime in 1974, the marble company realized that its business was losing heavily. So, it started to wind up their operation preparatory to closing shop. But to keep the machinery in good working condition while it was winding up, the company agreed to enter into an arrangement with Luis wherein Luis could use the plant and get contracts from end-users for the installation of marble products in which the company would not interfere. In addition, Luis was to receive an amount equivalent to 25 percent of the net profits which the company would realize, should there be any.
And so Luis took over the plant. He decided for himself what was to be done and worked at his own pleasure. He did not work fixed hours and he was compensated according to the results of his own efforts. Initially he used to earn an average of P3,000.00 but he was not included in the company payroll nor in the list of company employees furnished to the Social Security System.
Later, no more end-users contracted Luis and he did not earn anything for the past three months. He eventually abandoned the plant after the company owners discovered that he collected some of the company’s old receivables which he converted to his own personal use. When the owners reassumed management of the marble plant, Luis then filed a complaint for recovery of unpaid salaries for the last three months claiming that he was appointed plant manager with a monthly compensation of P3,000 or 25 percent of the monthly net income of the company.
Can Luis recover?
No.
Luis was not an employee of the marble company. He was not in the payroll of the company and the company had no control over his conduct. He worked at his own pleasure and had a free hand in running the plant so much so that the owners did not know, until very much later, that he had collected old account receivables not covered by their agreement which he converted to his own use.
Without the power to control Luis with respect to the means and methods by which his work was to be accomplished, there was no employer-employee relationship between him and the marble company. There is therefore no basis for an award of unpaid salaries (Continental vs. NLRC 161 SCRA 157).