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157802 OCTOBER
13, 2010)
Matling Industrial and Commercial Corporation vs Coros
G.R. No. 157802 October 13, 2010

Facts: After his dismissal by Matling as its Vice President for Finance and Administration, the respondent filed on
August 10, 2000 a complaint for illegal suspension and illegal dismissal against Matling and some of its corporate
officers (petitioners) in the NLRC, Sub-Regional Arbitration Branch XII, Iligan City. The petitioners moved to dismiss
the complaint, raising the ground, among others, that the complaint pertained to the jurisdiction of the Securities and
Exchange Commission (SEC) due to the controversy being intracorporate inasmuch as the respondent was a member
of Matlings Board of Directors aside from being its Vice-President for Finance and Administration prior to his
termination. The respondent opposed the petitioners motion to dismiss, insisting that his status as a member of
Matlings Board of Directors was doubtful, considering that he had not been formally elected as such; that he did not
own a single share of stock in Matling, considering that he had been made to sign in blank an undated indorsement of
the certificate of stock he had been given in 1992; that Matling had taken back and retained the certificate of stock in
its custody; and that even assuming that he had been a Director of Matling, he had been removed as the Vice President
for Finance and Administration, not as a Director, a fact that the notice of his termination dated April 10, 2000 showed.
On October 16, 2000, the LA granted the petitioners motion to dismiss, ruling that the respondent was a corporate
officer because he was occupying the position of Vice President for Finance and Administration and at the same time
was a Member of the Board of Directors of Matling; and that, consequently, his removal was a corporate act of Matling
and the controversy resulting from such removal was under the jurisdiction of the SEC, pursuant to Section 5,
paragraph (c) of Presidential Decree No. 902.

Issue: Whether or not the respondent is a corporate officer within the jurisdiction of the regular courts.

Held: No. As a rule, the illegal dismissal of an officer or other employee of a private employer is properly
cognizable by the LA. This is pursuant to Article 217 (a) 2 of the Labor Code, as amended, which provides as

Article 217. Jurisdiction of the Labor Arbiters and the Commission. – (a) Except as otherwise provided under this
Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar
days after the submission of the case by the parties for decision without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes
and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims
arising from employer-employee relations, including those of persons in domestic or household service, involving an
amount exceeding five thousand pesos (P 5,000.00) regardless of whether accompanied with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (c) Cases
arising from the interpretation or implementation of collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring
the same to the grievance machinery and voluntary arbitration as may be provided in said agreements.

Where the complaint for illegal dismissal concerns a corporate officer, however, the controversy falls under the
jurisdiction of the Securities and Exchange Commission (SEC), because the controversy arises out of intra-corporate
or partnership relations between and among stockholders, members, or associates, or between any or all of them and
the corporation, partnership, or association of which they are stockholders, members, or associates, respectively; and
between such corporation, partnership, or association and the State insofar as the controversy concerns their individual
franchise or right to exist as such entity; or because the controversy involves the election or appointment of a director,
trustee, officer, or manager of such corporation, partnership, or association. Such controversy, among others, is known
as an intra-corporate dispute.

Effective on August 8, 2000, upon the passage of Republic Act No. 8799, otherwise known as The Securities
Regulation Code, the SECs jurisdiction over all intra-corporate disputes was transferred to the RTC, pursuant to
Section 5.2 of RA No. 8799.

Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever are the corporate officers
enumerated in the by-laws are the exclusive Officers of the corporation and the Board has no power to create other
Offices without amending first the corporate By-laws. However, the Board may create appointive positions other
than the positions of corporate Officers, but the persons occupying such positions are not considered as corporate
officers within the meaning of Section 25 of the Corporation Code and are not empowered to exercise the functions
of the corporate Officers, except those functions lawfully delegated to them. Their functions and duties are to be
determined by the Board of Directors/Trustees.

Moreover, the Board of Directors of Matling could not validly delegate the power to create a corporate office to the
President, in light of Section 25 of the Corporation Code requiring the Board of Directors itself to elect the corporate
officers. Verily, the power to elect the corporate officers was a discretionary power that the law exclusively vested
in the Board of Directors, and could not be delegated to subordinate officers or agents. The office of Vice President
for Finance and Administration created by Matlings President pursuant to By Law No. V was an ordinary, not a
corporate, office.

The criteria for distinguishing between corporate officers who may be ousted from office at will, on one hand, and
ordinary corporate employees who may only be terminated for just cause, on the other hand, do not depend on the
nature of the services performed, but on the manner of creation of the office. In the respondents case, he was
supposedly at once an employee, a stockholder, and a Director of Matling. The circumstances surrounding his
appointment to office must be fully considered to determine whether the dismissal constituted an intra-corporate
controversy or a labor termination dispute. We must also consider whether his status as Director and stockholder had
any relation at all to his appointment and subsequent dismissal as Vice President for Finance and Administration.


In Raul C. Cosare v. Broadcom Asia Inc. and Dante Arevalo (G.R. No. 201298, February 5, 2014), the Supreme
Court held that the mere fact that an employee was a stockholder and an officer at the time he was illegally dismissed
will not necessarily make the case an intra-corporate dispute.
Broadcom Asia Inc. (Broadcom) is engaged in the business of selling broadcast equipment needed by
television networks and production houses. One of its incorporators was Raul Cosare, having been assigned 100
shares of stock.
In October 2001, Cosare was promoted to the position of Assistant Vice President for Sales and Head of the
Technical Coordination. In 2009, however, Cosare was asked to tender his resignation in exchange for “financial
assistance” in the amount of ₱300,000.00. He refused to comply with the directive.

Thereafter, Cosare received a memo charging him of serious misconduct and wilful breach of trust and was,
thus, suspended from having access to any and all company files/records and use of company assets. He was
likewise barred from entering the company premises and prevented from retrieving his personal belongings.
Aggrieved, Cosare filed a labor complaint against Broadcom claiming that he was constructively dismissed from his

The Labor Arbiter dismissed the complaint on the ground that Cosare failed to establish that he was
constructively dismissed. On appeal, the NLRC reversed the Labor Arbiter’s decision.

Broadcom assailed the NLRC’s ruling, raising the new argument that the case involved an intra-corporate
controversy and thus, within the jurisdiction of the RTC and not of the Labor Arbiter.

The CA granted Broadcom’s petition and agreed that the case involved an intra-corporate controversy which,
pursuant to Presidential Decree No. 902-A, as amended, was within the exclusive jurisdiction of the RTC. The CA
found that Cosare was indeed a stockholder of Broadcom, and that he was listed as one of the directors. Moreover,
he held the position of AVP for Sales which is listed as a corporate office.

The Supreme Court reversed the CA and explained the definition of corporate officers for the purpose of
identifying an intra-corporate controversy. Citing Garcia v. Eastern Telecommunications Philippines Inc. (G.R. No.
173115, April 16, 2009), the Court said that corporate officers, in the context of PD 902-A, are those officers of the
corporation who are given that character by the Corporation Code or by the corporation’s by-laws. The Court further
held that an “office” is created by the charter of the corporation and the officer is elected by the directors and
stockholders of the corporation.
Thus, the Court explained that two circumstances must concur in order for an individual to be considered a
corporate officer, namely: (1) the creation of the position is under the corporation’s by-laws; and (2) the election of
the officer is by the directors or stockholders. It is only when the officer claiming to have been illegally dismissed is
classified as such corporate officer that the issue is deemed an intra-corporate dispute which falls within the
jurisdiction of the trial courts.

In Cosare, Broadcom failed to sufficiently establish that the position of AVP for Sales was created by virtue of
an act of its board of directors, and that Cosare was specifically elected or appointed to such position by the
Considering that the dispute particularly relates to Cosare’s rights and obligations as a regular officer of
Broadcom, instead of a stockholder of the corporation, the controversy cannot be deemed intra-corporate, the Court
concluded. LF©


G.R. No. 187320

January 26, 2011

For resolution is the petition for review on certiorari assailing the decision and
the resolution of the Court of Appeals.
Complainants Aprilito R. Sebolino, et al., filed several complaints for illegal
dismissal, regularization, underpayment, nonpayment of wages and other money
claims, as well as claims for moral and exemplary damages and attorney’s fees against
the petitioners Atlanta Industries, Inc. (Atlanta) and its President and Chief Operating
Officer Robert Chan. Atlanta is a domestic corporation engaged in the manufacture of
steel pipes.
The complaints were consolidated and were raffled to Labor Arbiter Daniel
Cajilig, but were later transferred to Labor Arbiter Dominador B. Medroso, Jr.
The complainants alleged that they had attained regular status as they were
allowed to work with Atlanta for more than six (6) months from the start of a
purported apprenticeship agreement between them and the company. They claimed
that they were illegally dismissed when the apprenticeship agreement expired.
In defense, Atlanta and Chan argued that the workers were not entitled to
regularization and to their money claims because they were engaged as apprentices
under a government-approved apprenticeship program. The company offered to hire
them as regular employees in the event vacancies for regular positions occur in the
section of the plant where they had trained. They also claimed that their names did not
appear in the list of employees (Master List)prior to their engagement as apprentices.
The Compulsory Arbitration Rulings

On April 24, 2006, Labor Arbiter Medroso dismissed the complaint with respect
to dela Cruz, Magalang, Zaño and Chiong, but found the termination of service of the
remaining nine to be illegal.Consequently, the arbiter awarded the dismissed workers
backwages, wage differentials, holiday pay and service incentive leave pay amounting
to P1,389,044.57 in the aggregate.
Atlanta appealed to the National Labor Relations Commission (NLRC). In the
meantime, or on October 10, 2006, Ramos, Alegria, Villagomez, Costales and
Almoite allegedly entered into a compromise agreement with Atlanta. The agreement
provided that except for Ramos, Atlanta agreed to pay the workers a specified amount
as settlement, and to acknowledge them at the same time as regular employees.
On December 29, 2006,the NLRC rendered a decision, on appeal,
modifying the ruling of the labor arbiter, as follows: (1) withdrawing the illegal
dismissal finding with respect to Sagun, Mabanag, Sebolino and Pedregoza; (2)
affirming the dismissal of the complaints of dela Cruz, Zaño, Magalang and Chiong;
(3) approving the compromise agreement entered into by Costales, Ramos,
Villagomez, Almoite and Alegria, and (4) denying all other claims.
Sebolino, Costales, Almoite and Sagun moved for the reconsideration of the
decision, but the NLRC denied the motion in its March 30, 2007[9] resolution. The
four then sought relief from the CA through a petition for certiorari
under Rule 65 of the Rules of Court. They charged that the NLRC
committed grave abuse of discretion in: (1) failing to recognize their prior
employment with Atlanta; (2) declaring the second apprenticeship agreement valid;
(3) holding that the dismissal of Sagun, Mabanag, Sebolino and Melvin Pedregoza is
legal; and (4) upholding the compromise agreement involving Costales, Ramos,
Villagomez, Almoite and Alegria.
The CA Decision

The CA granted the petition.

Atlanta and Chan moved for reconsideration, but the CA denied the motion in a
resolution rendered on March 25, 2009.[15] Hence, the present petition.
The Petition

Atlanta seeks a reversal of the CA decision, contending that the appellate court erred
in (1) concluding that Costales, Almoite, Sebolino and Sagun were employed by
Atlanta before they were engaged as apprentices; (2) ruling that a second
apprenticeship agreement is invalid; (3) declaring that the respondents were illegally
dismissed; and (4) disregarding the compromise agreement executed by Costales and
The Court’s Ruling

The merits of the case

We find no merit in the petition. The CA committed no
reversible error in nullifying the NLRC decision and in affirming
the labor arbiter’s ruling, as it applies to Costales, Almoite,
Sebolino and Sagun. Specifically, the CA correctly ruled that the
four were illegally dismissed because (1) they were already
employees when they were required to undergo apprenticeship and
(2) apprenticeship agreements were invalid.
The following considerations support the CA ruling.
First. Based on company operations at the time material to the case, Costales,
Almoite, Sebolino and Sagun were already rendering service to the company as
employees before they were made to undergo apprenticeship. The company itself
recognized the respondents’ status through relevant operational records – in the case
of Costales and Almoite, the CPS monthly report for December 2003 which the
NLRC relied upon and, for Sebolino and Sagun, the production and work schedule for
March 7 to 12, 2005 cited by the CA.
Under the CPS monthly report, Atlanta assigned Costales and Almoite to the
first shift (7:00 a.m. to 3:00 p.m.) of the Section’s work. The Production and Work
Schedules, in addition to the one noted by the CA, showed that Sebolino and Sagun
were scheduled on different shifts vis-à-vis the production and work of the company’s
PE/Spiral Section for the periods July 5-10, 2004; October 25-31, 2004; November 8-
14, 2004; November 16-22, 2004; January 3-9, 2005;January 10-15, 2005; March 7-
12, 2005 and March 17-23, 2005.
We stress that the CA correctly recognized the authenticity of
the operational documents, for the failure of Atlanta to raise a challenge against
these documents before the labor arbiter, the NLRC and the CA itself.
The appellate court, thus, found the said documents sufficient to establish the
employment of the respondents before their engagement as apprentices.
Second. The Master List (of employees) that the petitioners heavily rely upon as
proof of their position that the respondents were not Atlanta’s employees, at the time
they were engaged as apprentices, is unreliable and does not inspire belief.
The list, consisting of several pages, is hardly legible. It requires extreme effort
to sort out the names of the employees listed, as well as the other data contained in the
list. For this reason alone, the list deserves little or no consideration. As the
respondents also pointed out, the list itself contradicts a lot of Atlanta’s claims and
allegations, thus: it lists only the names of inactive employees; even the names of
those the NLRC found to have been employed by Atlanta, like Costales and Almoite,
and those who even Atlanta claims attained regular status on January 11, 2006, do not
appear in the list when it was supposed to account for all employees “as of May 6,
2006.” Despite the “May 6, 2006” cut off date, the list contains no entries of
employees who were hired or who resigned in 2005 and 2006. We note that the list
contains the names of employees from 1999 to 2004.
We cannot fault the CA for ignoring the Master List even if Bernardo, its head
office accountant, swore to its correctness and authenticity. Its substantive
unreliability gives it very minimal probative value. Atlanta would have been better
served, in terms of reliable evidence, if true copies of the payroll (on which the list
was based, among others, as Bernardo claimed in her affidavit) were presented
Third. The fact that Costales, Almoite, Sebolino and Sagun were already
rendering service to the company when they were made to undergo apprenticeship (as
established by the evidence) renders the apprenticeship agreements irrelevant as far as
the four are concerned. This reality is highlighted by the CA finding that the
respondents occupied positions such as machine operator, scaleman and extruder
operator – tasks that are usually necessary and desirable in Atlanta’s usual business or
trade as manufacturer of plastic building materials. These tasks and their nature
characterized the four as regular employees under Article 280 of the Labor
Code. Thus, when they were dismissed without just or authorized cause, without
notice, and without the opportunity to be heard, their dismissal was illegal under the
Even if we recognize the company’s need to train its employees through
apprenticeship, we can only consider the first apprenticeship agreement for the
purpose. With the expiration of the first agreement and the retention of the employees,
Atlanta had, to all intents and purposes, recognized the completion of their training
and their acquisition of a regular employee status. To foist upon them the second
apprenticeship agreement for a second skill which was not even mentioned in the
agreement itself, is a violation of the Labor Code’s implementing rules and is an act
manifestly unfair to the employees, to say the least. This we cannot allow.
Fourth. The compromise agreement allegedly entered into by Costales and
Almoite, together with Ramos, Villagomez and Alegria, purportedly in settlement of
the case before the NLRC, is not binding on Costales and Almoite because they did
not sign it. The company itself admitted that while Costales and Almoite were initially
intended to be a part of the agreement, it did not pursue their inclusion “due to their
regularization as early as January 11, 2006.”
WHEREFORE, premises considered, we hereby DENY the
petition for lack of merit. The assailed decision and resolution of
the Court of Appeals are AFFIRMED. Costs against the petitioner
Atlanta Industries, Inc.

G.R. No. 200575 : February 5, 2014





Cabiles was initially hired by Intel Phil. on April 16, 1997 as an Inventory Analyst. He was
subsequently promoted several times over the years and was also assigned at Intel Arizona and
Intel Chengdu. He later applied for a position at Intel Semiconductor Limited Hong Kong (Intel
HK). He received a letter offering the position of Finance Manager by Intel HK. Before accepting
the offer, he inquired from Intel Phil., through an email the consequences of accepting the newly
presented opportunity in Hong Kong. He asked the process he need to go through regarding the
benefits and clearances in Intel Phils and would an email notification be enough. He also clarified
whether he will receive retirement benefits considering he will be in the service for 10 years on
April 16, 2007 with Intel and should he accept the offer of Intel HK, will the 9.5 years in the
service be rounded of to 10 years.
Intel Phil., through Penny Gabronino (Gabronino), replied that he will not be eligible to receive his
retirement benefit not having reached 10 years of service at the time he moved to Hong Kong.
Further, Intel do not round up the years of service.

In case he move back to the Philippines his total tenure of service will be computed less on the
period that you are out of Intel Philippines.

On January 31, 2007, Cabiles signed the job offer.

On March 8, 2007, Intel Phil. issued Cabiles his "Intel Final Pay Separation Voucher" indicating a
net payout ofP165,857.62. On March 26, 2007, Cabiles executed a Release, Waiver and
Quitclaim in favor of Intel Phil. acknowledging receipt of P165,857.62 as full and complete
settlement of all benefits due him by reason of his separation from Intel Phil.

On September 8, 2007, after seven (7) months of employment, Cabiles resigned from Intel HK.

About two years thereafter, Cabiles filed a complaint for non-payment of retirement benefits and
for moral and exemplary damages with the NLRC. He insisted that he was employed by Intel for
10 years and 5 months from April 1997 to September 2007 a period which included his seven (7)
month stint with Intel HK. Thus, he believed he was qualified to avail of the benefits under the
company's retirement policy allowing an employee who served for 10 years or more to receive
retirement benefits.

The LA held that Cabiles did not sever his employment with Intel Phil. when he moved to Intel
HK, similar to the instances when he was assigned at Intel Arizona and Intel Chengdu.

On appeal, the NLRC affirmed the LA decision. It determined that his decision to move to Intel HK
was not definitive proof of permanent severance of his ties with Intel Phil. It treated his transfer to
Hong Kong as akin to his overseas assignments in Arizona and Chengdu. As to the email
exchange between Cabiles and Intel Phil., the NLRC considered the same as insufficient to
diminish his right over retirement benefits under the law. Meanwhile, the NLRC disregarded the
Waiver because at the time it was signed, the retirement pay due him had not yet accrued.

Aggrieved, Intel Phil. elevated the case to the CA via a petition for certiorari with application for a
Temporary Restraining Order (TRO). The application for TRO was denied. A motion for
reconsideration, was filed, but it was also denied in a Resolution, which also dismissed the
petition for certiorari.

Intel Phil. filed a motion for reconsideration.

The NLRC issued a writ of execution against Intel Phil. to pay P3,201,398.60 and P31,510.00
representing the execution fees.

Intel Phil. satisfied the judgment on by paying the amount of P3,201,398.60 which included the
applicable withholding taxes due and paid to the BIR. Cabiles received a net amount
ofP2,485,337.35, covered by a BPI Managers check.

Intel Phil. filed restitution of all the amounts paid by them pursuant to the NLRC's writ of execution
and the NLRC order.

Intel filed a petition for review, however, the CA dismissed the same, affirming the NLRC

ISSUE: Whether the CA erred in ruling that private respondent was entitled to retire under Intel
Philippines retirement plan.

HELD: The Court of Appeals decision is reversed.

LABOR LAW Resignation

Resignation is the formal relinquishment of an office,the overt act of which is coupled with an
intent to renounce. This intent could be inferred from the acts of the employee before and after
the alleged resignation.

In contemplating whether to accept the offer from Intel HK, Cabiles wrote Intel Phil. through
Gabronino. This communication manifested two of his main concerns: a) clearance procedures;
and b) the probability of getting his retirement pay despite the non-completion of the required 10
years of employment service. Beyond these concerns, however, was his acceptance of the fact
that he would be ending his relationship with Intel Phil. as his employer. The words he used -
local hire, close, clearance denote nothing but his firm resolve to voluntarily disassociate himself
from Intel Phil. and take on new responsibilities with Intel HK.

His acceptance of the offer meant letting go of the retirement benefits he now claims as he was
informed through email correspondence that his 9.5 years of service with Intel Phil. would not be
rounded off in his favor. He, thus, placed himself in this position, as he chose to be employed in a
company that would pay him more than what he could earn in Chengdu or in the Philippines.

LABOR LAW Theory of Secondment

Cabiles views his employment in Hong Kong as an assignment or an extension of his

employment with Intel Phil.

The continuity, existence or termination of an employer-employee relationship in a typical

secondment contract or any employment contract for that matter is measured by the following
yardsticks: 1. the selection and engagement of the employee; 2. the payment of wages; 3. the
power of dismissal; and 4. the employers power to control the employees conduct. Victorio
Meteor v. Creative Creatures Inc, G.R. No. 171275, July 13, 2009

As applied, all of the above benchmarks ceased upon Cabiles assumption of duties with Intel HK
on February 1, 2007. Intel HK became the new employer.

Undoubtedly, Cabiles decision to move to Hong Kong required the abandonment of his
permanent position with Intel Phil. in order for him to assume a position in an entirely different
company. Clearly, the "transfer" was more than just an assignment. It constituted a severance of
Cabiles relationship with Intel Phil., for the assumption of a position with a different employer,
rank, compensation and benefits.

Hence, Cabiles theory of secondment must fail.

What distinguishes Intel Chengdu and Intel Arizona from Intel HK is the lack of intervention of
Intel Phil. on the matter. In the two previous transfers, Intel Phil. remained as the principal
employer while Cabiles was on a temporary assignment.
LABOR LAW - Release, Waiver and Quitclaim

Not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement, it is binding on the parties and
may not later be disowned simply because of a change of mind. It is only where there is clear
proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of
settlement are unconscionable on its face, that the law will step in to annul the questionable
transaction. But where it is shown that the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as a valid and binding undertaking. Goodrich
Manufacturing Corporation, v. Ativo, G.R. No. 188002, February 1, 2010

Suffice it to state that nothing is clearer than the words used in the Waiver duly signed by Cabiles
- that all claims, in the present and in the future, were waived in consideration of his receipt of the
amount of P165,857.62. Because the waiver included all present and future claims, the non-
accrual of benefits cannot be used as a basis in awarding retirement benefits to him.

LABOR LAW Retirement benefits

Cabiles is not entitled to the Retirement Benefits

Having effectively resigned before completing his 10th year anniversary with Intel Phil. and after
having validly waived all the benefits due him, if any, Cabiles is hereby declared ineligible to
receive the retirement pay pursuant to the retirement policy of Intel Phil.

For that reason, Cabiles must return all the amounts he received from Intel Phil. pursuant to the
Writ of Execution issued by the NLRC.

The petition is granted.

.Royale Homes v. Alcantara, G.R. No. 195190, July 28, 2014 (Four-fold test) Not every form of control
that a hiring party imposes on the hired party is indicative of employee-employer relationship. Rules and
regulations that merely serve as guidelines towards the achievement of a mutually desired result
without dictating the means and methods of accomplishing it do not establish employer-employee
relationship. FACTS: Alcantara filed a Complaint for Illegal Dismissal against Royale Homes et al..He
contended among others that he is a regular employee of Royal Homes since he is performing tasks that
are necessary and desirable to its business and that his performance is subject to company rules and
regulations, code of ethics, periodic evaluation, and exclusivity clause of contract. Royale Homes
however argued that its contract with Alcantara is clear and unambiguous −it engaged his services as an
independent contractor as can be seen from their contract stating that no employer-employee
relationship exists between the parties; that Alcantara was free to solicit sales at any time and by any
manner he may deem appropriate; that he may recruit sales personnel to assist him in marketing Royale
Homes’ inventories; and, thathis remunerations are dependent on his sales performance.Royale
Homeslikewise contended that CA grievously erred in ruling that it exercised control over Alcantara
based on a shallow ground that his performance is subject to company rules and regulations, code of
ethics, periodic evaluation, and exclusivity clause of contract. RoyaleHomes alleged that it is expected to
exercise some degree of control over its independent contractors,but that does not automatically result
in the existence ofemployer-employee relationship. For control to be consideredas a proof tending to
establish employer-employee relationship, the same mustpertain to the means and method of
performing the work; not on the relationship of the independent contractors among themselves or their
persons or their source of living.

The Labor Arbiter declared Alcantara as employee of Royale Homes with a fixed-term employment. The
NLRC however ruled that he is an independent contractor. The Court of Appeals reversed the decision of
NLRC and further ruled that Alcantara’s termination from employment was without any valid or just
cause, and it was carried out in violation of his right to procedural due process. ISSUE: Whether
Alcantara was an independent contractor or an employee of Royale Homes. RULING: Alcantara was an
independent contractor. In view of the conflicting findings of the tribunals the court is constrained to go
over the factual matters involved in this case and examined the juridical relationship of the parties
based on their written contract. The court also determined the juridical relationship of the parties based
on Control Test. In this case, the contract, duly signed and not disputed by the parties, conspicuously
provides that "no employer-employee relationship exists between" Royale Homes and Alcantara, as well
as his sales agents. It is clear that they did not want to be bound by employer-employee relationship
atthe time ofthe signing of the contract.Since "the terms of the contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning of its stipulations should control." No
construction is even needed asthey already expressly state their intention. In determining the existence
of an employer-employee relationship, the Court has generally relied on the four-fold test, to wit: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and
(4) the employer’s power to control the employee with respect to the means and methods by which the
work is to be accomplished.Among the four, the most determinative factor in ascertaining the existence
of employer-employee relationship is the "right of control test".It is deemed to be such an important
factor that the other requisites may even be disregarded.This holds true where the issues to be resolved
iswhether a person who performs work for another is the latter’s employee or is an independent
contractor, as in this case. For where the person for whom the services are performed reserves the right
to control not only the end to beachieved, but also the means by which such end is reached, employer-
employee relationship is deemed to exist

As such, not every form of control is indicative of employer-employee relationship. A person who
performs work for another and is subjected to its rules, regulations, and code of ethics does not
necessarily become an employee.As long as the level of control does not interfere with the means and
methods of accomplishing the assigned tasks, the rules imposed by the hiring party on the hired party
do not amount to the labor law concept of control that is indicative of employer-employee relationship.
In Insular Life Assurance Co., Ltd. v. National Labor Relations Commission it was pronounced
that:Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use
of such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it. x x In
this case, the Court agrees with Royale Homes that the rules, regulations, code of ethics, and periodic
evaluation alluded to byAlcantara do not involve control over the means and methods by which he was
to performhis job. Royale Homes has to fix the price, impose requirements on prospective buyers, and
lay down the terms and conditionsof the sale, including the mode of payment, which the independent
contractors must follow. It is also necessary for Royale Homes to allocateits inventories among its
independent contractors, determine who has priority in selling the same, grant commission or
allowance based on predetermined criteria, and regularly monitor the result of their marketing and
sales efforts. But tothe mind of the Court, these do not pertain to the means and methods of how
Alcantara was to perform and accomplish his task of soliciting sales. They do not dictate upon him the
details of how he would solicit sales or the manner as to how he would transact business with
prospective clients. Guidelines or rules and regulations that do notpertain to the means or methodsto
be employed in attaining the result are not indicative of control as understood in labor law.Lastly, the
court ruled that exclusivity of contract does not necessarily result in employer-employee relationship
and noted that the element of payment of wages is also absent in this case

Case Digest: Olympia Housing, Inc. v. Allan

Lapastora and Irene Ubalubao
November 3, 2017
Nathalie Pattugalan

G.R. No. 187691

January 13, 2016

A complaint for illegal dismissal, payment of backwages and other benefits, and
regularization of employment filed by Allan Lapastora (Lapastora) and Irene Ubalubao
(Ubalubao) against Olympic Housing, Inc. (OHI), the entity engaged in the management
of the Olympia Executive Residences (OER), a condominium hotel building situated in
Makati City. Lapastora and Ubalubao alleged that they worked as room attendants of OHI
from March 1995 and June 1997, respectively, until they were placed on floating status
on February 24, 2000, through a memorandum sent by Fast

To establish employer-employee relationship with OHI, Lapastora and Ubalubao alleged

that they were directly hired by the company and received salaries directly from it. They
also claimed that OHI exercised control over them as they were issued time cards,
disciplinary action reports and checklists of room assignments. It was also OHI which
terminated their employment after they petitioned for regularization. Prior to their
dismissal, they were subjected to investigations for their alleged involvement in the theft
of personal items and cash belonging to hotel guests and were summarily dismissed by
OHI despite lack of evidence.chanroblesvirtuallawlibrary

For their part, OHI and Limcaoco alleged that Lapastora and Ubalubao were not
employees of the company but of Fast Manpower, an independent contractor with which
it had a contract of services, particularly, for the provision of room attendants.

Reinforcing OHI's claims, Fast Manpower reiterated that it is a legitimate manpower

agency and that it had a valid contract of services with OHI, pursuant to which Lapastora
and Ubalubao were deployed as room attendants. Lapastora and Ubalubao were,
however, found to have violated house rules and regulations and were reprimanded
accordingly. It denied the employees' claim that they were dismissed and maintained they
were only placed on floating status for lack of available work assignments.

During the pendency of the case, Ubalubao, on her own behalf, filed a Motion to
Dismiss/Withdraw Complaint and Waiver.

Whether or not Lapastora was illegally dismissed.

The court ruled in the affirmative.

Indisputably, Lapastora was a regular employee of OHI. As found by the LA, he has been
under the continuous employ of OHI since March 3, 1995 until he was placed on floating
status in February 2000. His uninterrupted employment by OHI, lasting for more than a
year, manifests the continuing need and desirability of his services, which characterize
regular employment.

By the nature of its petitioner’s business, it is necessary that it maintains a pool of

housekeeping staff to ensure that the premises remain an uncluttered place of comfort
for the occupants. It is no wonder why Lapastora, among several others, was continuously
employed by OHI precisely because of the indispensability of their services to its

The argument that formal notices of investigation were not complied with since he was
not an employee of OHI but of Fast Manpower does not hold because Lapastora was
under the effective control and supervision of OHI through the company supervisor. She
gave credence to the pertinent records of Lapastora's employment, i.e., timecards,
medical records and medical examinations, which all indicated OHI as his employer. That
there is an existing contract of services between OHI and Fast Manpower where both
parties acknowledged the latter as the employer of the housekeeping staff, including
Lapastora, did not alter established facts proving the contrary.

To justify fully the dismissal of a regular employee, the employer must, as a rule, prove
that the dismissal was for a just cause and that the employee was afforded due process
prior to dismissal. As a complementary principle, the employer has the burden of proving
with clear, accurate, consistent, and convincing evidence the validity of the dismissal.

It appears that OHI failed to prove that Lapastora's dismissal was grounded on a just or
authorized cause. While it claims that it had called Lapastora's attention several times for
his infractions, it does not appear from the records that the latter had been notified of the
company's dissatisfaction over his performance and that he was not given an opportunity
to explain. In the same manner, allegations regarding Lapastora's involvement in the theft
of personal items and cash belonging to hotel guests remained unfounded suspicions as
they were not proven despite OHI's probe into the incidents.

In the present case, Lapastora was not informed of the charges against him and was
denied the opportunity to disprove the same. He was summarily terminated from

G.R. No. 206390 January 30, 2017

Jack C. Valencia, Petitioner vs. Classique Vinyl Products Corporation, Johnny Chang
(Owner) And/Or Cantingas Manpower Services, Respondents
Commercial law; Labor Law; Burden of Proof. The burden of proof rests upon the party who asserts the affirmative of
an issue. Since Valencia is claiming to be an employee of Classique Vinyl, it is thus incumbent upon him to proffer
evidence to prove the existence of employer-employee relationship between them. He needs to show by substantial
evidence that he was indeed an employee of the company against which he claims illegal dismissal. In order to determine
the existence of an employer-employee relationship, the following elements had been consistently applied: (1) the selection
and engagement; (2) payment of wages; (3) power of dismissal and; (4) the power of control. The burden to prove such
elements lies upon Valencia.
same; same; Labor-only contracting creates employer-employee relationship. In any event, it must be stressed that “in
labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a
circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is
responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal
employer. The principal employer therefore becomes solidarily liable with the labor-only contractor for all the rightful
claims of the employees.”
Valencia applied for work with Classique Vinyl through the intervention of CMS, a local manpower
agency. The CMS made him sign a contract of employment and thereafter, he then proceeded to
work for Classique Vinyl as a fertilizer operator and extruder operator. He alleged that he was
neither paid his holiday pay, service incentive leave pay, and 13th month pay and that his benefits
were either not paid or not properly remitted. He further averred that he worked for Classique Vinyl
for four years until his dismissal. Hence, by operation of law, he had already attained the status of a
regular employee of Classique Vinyl. Valencia, therefore, argued that Classique Vinyl should be held
guilty of illegal dismissal for failing to comply with the twin-notice requirement when it dismissed
him from the service and be made to pay for his monetary claims.
On the other hand, Classique Vinyl asserted that there was no employer-employee relationship
between it and Valencia, hence, it could not have illegally dismissed the latter nor can it be held
liable for Valencia’s monetary claims. Classique Vinyl insisted that Valencia’s true employer was
CMS. However, any employer-employee relationship between CMS and Valencia was also being
denied by CMS on the ground that it was Classique Vinyl which exercised full control and
supervision over him.
Petitioner Valencia filed with the Labor Arbiter (LA) a Complaint for Underpayment of Salary and
Overtime Pay; Non-Payment of Holiday Pay, Service Incentive Leave Pay, 13th Month Pay;
Regularization; and illegal dismissal against respondents. The LA dismissed the said complaint on
the ground that there is no substantial evidence to prove the petitioner’s complaint. Valencia
promptly appealed to the National Labor Relations Commission (NLRC), which held lack of basis
for Valencia to hold Classique Vinyl liable for his alleged illegal dismissal as well as for his money
claims. NLRC affirmed the decision of the Labor Arbiter. Valencia appealed to the CA which,
however, also affirmed the ruling of the NLRC.
Whether or not an employer-employee relationship existed between Valencia and Classique Vinyl?
NEGATIVE. In labor cases, the quantum of proof necessary is substantial evidence. The burden of
proof rests upon the party who asserts the affirmative of an issue. Since Valencia is claiming to be an
employee of Classique Vinyl, it is thus incumbent upon him to proffer evidence to prove the
existence of employer-employee relationship between them. He needs to show by substantial
evidence that he was indeed an employee of the company against which he claims illegal dismissal.
In order to determine the existence of an employer-employee relationship, the following elements
had been consistently applied: (1) the selection and engagement; (2) payment of wages; (3) power of
dismissal and; (4) the power of control. The burden to prove such elements lies upon Valencia.
Valencia was first engaged as a contractual employee of CMS before he was deployed to Classique
Vinyl. Petitioner’s selection and engagement was undertaken by CMS and conversely, this negates
the existence of such element insofar as Classique Vinyl is concerned. Moreover, Valencia failed to
present competent evidence, documentary or otherwise, to support his claimed employer-employee
relationship between him and Classique Vinyl. Also, the employment contract which Valencia signed
with CMS categorically states that the latter possessed not only the power of control but also of
dismissal over him.
The presentation of CMS’s Certificate of Registration with the DTI and, License as private
recruitment and placement agency from the DOLE prevented the legal presumption of it being a
mere labor-only contractor from arising. In any event, it must be stressed that “in labor-only
contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to
prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal
employer and the latter is responsible to the employees of the labor-only contractor as if such
employees had been directly employed by the principal employer. The principal employer therefore
becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees.”
The facts of this case, however, failed to establish that there is any circumvention of labor laws as to
call for the creation by the statute of an employer-employee relationship between Classique Vinyl
and Valencia.