ANGELINA FRANCISCO, Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN
LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA, Respondents.

Facts:

In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and
Corporate Secretary and was assigned to handle all the accounting needs of the company. She was also designated as
Liaison Officer to the City of Makati to secure business permits, construction permits and other licenses for the initial
operation of the company. 5

Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did
she attend any board meeting nor required to do so. She never prepared any legal document and never represented the
company as its Corporate Secretary. However, on some occasions, she was prevailed upon to sign documentation for
the company. 6

In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant in lieu of
petitioner. As Acting Manager, petitioner was assigned to handle recruitment of all employees and perform
management administration functions; represent the company in all dealings with government agencies, especially with
the BIR, SSS and in the city government of Makati; and to administer all other matters pertaining to the operation of
Kasei Restaurant which is owned and operated by Kasei Corporation. 7

For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00
plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. 8

In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was required to sign
a prepared resolution for her replacement but she was assured that she would still be connected with Kasei
Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting of all employees of Kasei Corporation and
announced that nothing had changed and that petitioner was still connected with Kasei Corporation as Technical
Assistant to Seiji Kamura and in charge of all BIR matters. 9

Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a
total reduction of P22,500.00 as of September 2001. Petitioner was not paid her mid-year bonus allegedly because the
company was not earning well. On October 2001, petitioner did not receive her salary from the company.

On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was informed that
she is no longer connected with the company. 11

Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal
before the labor arbiter.

Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that petitioner was
hired in 1995 as one of its technical consultants on accounting matters and act concurrently as Corporate Secretary. As
technical consultant, petitioner performed her work at her own discretion without control and supervision of Kasei
Corporation. Petitioner had no daily time record and she came to the office any time she wanted. The company never
interfered with her work except that from time to time, the management would ask her opinion on matters relating to
her profession. Petitioner did not go through the usual procedure of selection of employees, but her services were
engaged through a Board Resolution designating her as technical consultant. The money received by petitioner from the
corporation was her professional fee subject to the 10% expanded withholding tax on professionals, and that she was
not one of those reported to the BIR or SSS as one of the company’s employees. 12

Petitioner’s designation as technical consultant depended solely upon the will of management. As such, her consultancy
may be terminated any time considering that her services were only temporary in nature and dependent on the needs
of the corporation.

To prove that petitioner was not an employee of the corporation, private respondents submitted a list of employees for
the years 1999 and 2000 duly received by the BIR showing that petitioner was not among the employees reported to the
BIR, as well as a list of payees subject to expanded withholding tax which included petitioner. SSS records were also
submitted showing that petitioner’s latest employer was Seiji Corporation. 13

The Labor Arbiter found that petitioner was illegally dismissed.

On April 15, 2003, the NLRC affirmed the Decision of the Labor Arbiter

On appeal, the Court of Appeals reversed the NLRC decision.

Issue: (1) whether there was an employer-employee relationship between petitioner and private respondent Kasei
Corporation; (2) whether petitioner was illegally dismissed.

Ruling:

The right of control test is where the person for whom the services are performed reserves a right to control not only
the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-
control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the
payrolls, can help in determining the existence of an employer-employee relationship.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employer’s power to
control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the
underlying economic realities of the activity or relationship.

This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of
circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this
case where there is no written agreement or terms of reference to base the relationship on; and due to the complexity
of the relationship based on the various positions and responsibilities given to the worker over the period of the latter’s
employment.

Thus, the determination of the relationship between employer and employee depends upon the circumstances of the
whole economic activity, 22 such as: (1) the extent to which the services performed are an integral part of the employer’s
business; (2) the extent of the worker’s investment in equipment and facilities; (3) the nature and degree of control
exercised by the employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill, judgment
or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the
relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer
for his continued employment in that line of business. 23

The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his
continued employment in that line of business. By analogy, the benchmark of economic reality in analyzing possible
employment relationships for purposes of the Labor Code ought to be the economic dependence of the worker on his
employer.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was
under the direct control and supervision of Seiji Kamura, the corporation’s Technical Consultant. She reported for work
regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and
Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the
company and performing functions necessary and desirable for the proper operation of the corporation such as securing
business permits and other licenses over an indefinite period of engagement.

Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent
corporation because she had served the company for six years before her dismissal, receiving check vouchers indicating
her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security
contributions from August 1, 1999 to December 18, 2000. 26 When petitioner was designated General Manager,
respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioner’s membership in the SSS as
manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and
the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee
relationship between petitioner and respondent corporation. 27

It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued
employment in the latter’s line of business.

Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that petitioner never acted as
Corporate Secretary and that her designation as such was only for convenience. The actual nature of petitioner’s job was
as Kamura’s direct assistant with the duty of acting as Liaison Officer in representing the company to secure construction
permits, license to operate and other requirements imposed by government agencies. Petitioner was never entrusted
with corporate documents of the company, nor required to attend the meeting of the corporation. She was never privy
to the preparation of any document for the corporation, although once in a while she was required to sign prepared
documentation for the company. 30
The second affidavit of Kamura dated March 7, 2002 which repudiated the December 5, 2001 affidavit has been
allegedly withdrawn by Kamura himself from the records of the case.

Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent Kasei
Corporation. She was selected and engaged by the company for compensation, and is economically dependent upon
respondent for her continued employment in that line of business. Her main job function involved accounting and tax
services rendered to respondent corporation on a regular basis over an indefinite period of engagement. Respondent
corporation hired and engaged petitioner for compensation, with the power to dismiss her for cause. More importantly,
respondent corporation had the power to control petitioner with the means and methods by which the work is to be
accomplished.
GREGORIO V. TONGKO v. THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS

Facts:

The contractual relationship between Tongko and Manulife had two basic phases. The first phase began on July 1, 1977,
under a Career Agent’s Agreement, which provided that “the Agent is an independent contractor and nothing contained
herein shall be construed or interpreted as creating an employer-employee relationship between the Company and the
Agent.”
The second phase started in 1983 when Tongko was named Unit Manager in Manulife’s Sales Agency Organization. In
1990, he became a Branch Manager. In 1996), Tongko became a Regional Sales Manager. Tongko’s gross earnings
consisted of commissions, persistency income, and management overrides. Since the beginning, Tongko consistently
declared himself self-employed in his income tax returns. Under oath, he declared his gross business income and
deducted his business expenses to arrive at his taxable business income. Respondent Renato Vergel de Dios, sales
manager, wrote Tongko a letter dated November 6, 2001 on concerns that were brought up during the Metro North
Sales Managers Meeting, expressing dissatisfaction of Tongko’s performance in their agent recruiting business, which
resulted in some changes on how Tongko would conduct his duties, including that Tongko hire at his expense a
competent assistant to unload him of routine tasks, which he had been complaining to be too taxing for him.
On December 18, 2001, de Dios wrote Tongko another letter which served as notice of termination of his Agency
Agreement with the company effective fifteen days from the date of the letter.

Tongko filed an illegal dismissal complaint with the NLRC against Manulife for illegal dismissal, alleging that he had an
employer-employee relationship with De Dios instead of a revocable agency by pointing out that the latter exercised
control over him through directives regarding how to manage his area of responsibility and setting objectives for him
relating to the business. Tongko also claimed that his dismissal was without basis and he was not afforded due process.
The NLRC ruled that there was an employer-employee relationship as evidenced by De Dios's letter which contained the
manner and means by which Tongko should do his work. The NLRC ruled in favor of Tongko, affirming the existence of
the employer-employee relationship.The Court of Appeals, however, set aside the NLRC's ruling. It applied the four-fold
test for determining control and found the elements in this case to be lacking, basing its decision on the same facts used
by the NLRC. It found that Manulife did not exert control over Tongko, there was no employer-employee relationship
and thus the NLRC did not have jurisdiction over the case. The Supreme Court reversed the ruling of the Court of
Appeals and ruled in favor of Tongko. However, the Supreme Court issued another Resolution dated June 29, 2010,
reversing its decision. Tongko filed a motion for reconsideration, which is now the subject of the instant case.

Issue: Did the Supreme Court err in issuing the June 29, 2010 resolution, reversing its earlier decision that an
employer-employee relationship existed?

Ruling:

The Supreme Court finds no reason to reverse the June 29, 2010 decision. Control over the performance of the task of
one providing service both with respect to the means and manner, and the results of the service is the primary element
in determining whether an employment relationship exists. The Supreme Court ruled petitioners Motion against his
favor since he failed to show that the control Manulife exercised over him was the control required to exist in an
employer-employee relationship; Manulifes control fell short of this norm and carried only the characteristic of the
relationship between an insurance company and its agents, as defined by the Insurance Code and by the law of agency
under the Civil Code.

In the Supreme Courts June 29, 2010 Resolution, they noted that there are built-in elements of control specific to an
insurance agency, which do not amount to the elements of control that characterize an employment relationship
governed by the Labor Code.The Insurance Code provides definite parameters in the way an agent negotiates for the
sale of the companys insurance products, his collection activities and his delivery of the insurance contract or policy.
They do not reach the level of control into the means and manner of doing an assigned task that invariably characterizes
an employment relationship as defined by labor law.

To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually desirable result intended
by the contractual relationship; they must have the nature of dictating the means and methods to be employed in
attaining the result. Tested by this norm, Manulifes instructions regarding the objectives and sales targets, in connection
with the training and engagement of other agents, are among the directives that the principal may impose on the agent
to achieve the assigned tasks.They are targeted results that Manulife wishes to attain through its agents. Manulifes
codes of conduct, likewise, do not necessarily intrude into the insurance agents means and manner of conducting their
sales. Codes of conduct are norms or standards of behavior rather than employer directives into how specific tasks are
to be done.

In sum, the Supreme Court found absolutely no evidence of labor law control. DENIED
G.R. No. 157802 October 13, 2010

MATLING INDUSTRIAL AND COMMERCIAL CORPORATION, RICHARD K. SPENCER, CATHERINE SPENCER, AND ALEX
MANCILLA, Petitioners,
vs.
RICARDO R. COROS, Respondent.

G.R. No. 201298 February 5, 2014

RAUL C. COSARE, Petitioner,

vs.
BROADCOM ASIA, INC. and DANTE AREVALO, Respondents.

Facts:

Cosare claimed that sometime in April 1993, he was employed as a salesman by Arevalo, who was then in the business
of selling broadcast equipment needed by television networks and production houses. In December 2000, Arevalo set up
the company Broadcom, still to continue the business of trading communication and broadcast equipment. Cosare was
named an incorporator of Broadcom, having been assigned 100 shares of stock with par value of ₱1.00 per share.5 In
October 2001, Cosare was promoted to the position of Assistant Vice President for Sales (AVP for Sales) and Head of the
Technical Coordination, having a monthly basic net salary and average commissions of ₱18,000.00 and ₱37,000.00,
respectively.6

Sometime in 2003, Alex F. Abiog (Abiog) was appointed as Broadcom’s Vice President for Sales and thus, became
Cosare’s immediate superior. On March 23, 2009, Cosare sent a confidential memo7 to Arevalo to inform him of the
anomalies which were allegedly being committed by Abiog against the company. Cosare ended his memo by clarifying
that he was not interested in Abiog’s position, but only wanted Arevalo to know of the irregularities for the
corporation’s sake.

Apparently, Arevalo failed to act on Cosare’s accusations. Cosare claimed that he was instead called for a meeting by
Arevalo on March 25, 2009, wherein he was asked to tender his resignation in exchange for "financial assistance" in the
amount of ₱300,000.00.8 Cosare refused to comply with the directive.

On March 30, 2009, Cosare received from Roselyn Villareal (Villareal), Broadcom’s Manager for Finance and
Administration, a memo10 signed by Arevalo, charging him of serious misconduct and willful breach of trust.

Cosare was given forty-eight (48) hours from the date of the memo within which to present his explanation on the
charges. He was also "suspended from having access to any and all company files/records and use of company assets
effective immediately."12 Thus, Cosare claimed that he was precluded from reporting for work on March 31, 2009, and
was instead instructed to wait at the office’s receiving section. Upon the specific instructions of Arevalo, he was also
prevented by Villareal from retrieving even his personal belongings from the office.

On April 1, 2009, Cosare was totally barred from entering the company premises, and was told to merely wait outside
the office building for further instructions.

Cosare filed the subject labor complaint, claiming that he was constructively dismissed from employment by the
respondents. He further argued that he was illegally suspended, as he placed no serious and imminent threat to the life
or property of his employer and co-employees.15

In refuting Cosare’s complaint, the respondents argued that Cosare was neither illegally suspended nor dismissed from
employment. The LA rendered his Decision19 dismissing the complaint on the ground of Cosare’s failure to establish
that he was dismissed, constructively or otherwise, from his employment. For the LA, what transpired on March 30,
2009 was merely the respondents’ issuance to Cosare of a show-cause memo, giving him a chance to present his side on
the charges against him.

Cosare appealed the LA decision to the NLRC. The NLRC reversed the Decision of the LA.

The respondents’ motion for reconsideration was denied.24 Dissatisfied, they filed a petition for certiorari with the CA
founded on the following arguments: (1) the respondents did not have to prove just cause for terminating the
employment of Cosare because the latter’s complaint was based on an alleged constructive dismissal; (2) Cosare
resigned and was thus not dismissed from employment; (3) the respondents should not be declared liable for the
payment of Cosare’s monetary claims; and (4) Arevalo should not be held solidarily liable for the judgment award.

In a manifestation filed by the respondents during the pendency of the CA appeal, they raised a new argument, i.e., the
case involved an intra-corporate controversy which was within the jurisdiction of the RTC, instead of the LA.25 They
argued that the case involved a complaint against a corporation filed by a stockholder, who, at the same time, was a
corporate officer. The CA granted the petition. It agreed with the respondents’ contention that the case involved an
intra-corporate.

Issue: (1) whether or not the case instituted by Cosare was an intra-corporate dispute that was within the original
jurisdiction of the RTC, and not of the LAs; and (2) whether or not Cosare was constructively and illegally dismissed from
employment by the respondents.

Ruling:

The petition is impressed with merit.

Jurisdiction over the controversy

It is the LA, and not the regular courts, which has the original jurisdiction over the subject controversy. An intra-
corporate controversy, which falls within the jurisdiction of regular courts, has been regarded in its broad sense to
pertain to disputes that involve any of the following relationships: (1) between the corporation, partnership or
association and the public; (2) between the corporation, partnership or association and the state in so far as its
franchise, permit or license to operate is concerned; (3) between the corporation, partnership or association and its
stockholders, partners, members or officers; and (4) among the stockholders, partners or associates, themselves.29
Settled jurisprudence, however, qualifies that when the dispute involves a charge of illegal dismissal, the action may fall
under the jurisdiction of the LAs upon whose jurisdiction, as a rule, falls termination disputes and claims for damages
arising from employer-employee relations as provided in Article 217 of the Labor Code. Consistent with this
jurisprudence, the mere fact that Cosare was a stockholder and an officer of Broadcom at the time the subject
controversy developed failed to necessarily make the case an intra-corporate dispute.

In Matling Industrial and Commercial Corporation v. Coros,30 the Court distinguished between a "regular employee"
and a "corporate officer" for purposes of establishing the true nature of a dispute or complaint for illegal dismissal and
determining which body has jurisdiction over it. Succinctly, it was explained that "[t]he determination of whether the
dismissed officer was a regular employee or corporate officer unravels the conundrum" of whether a complaint for
illegal dismissal is cognizable by the LA or by the RTC. "In case of the regular employee, the LA has jurisdiction;
otherwise, the RTC exercises the legal authority to adjudicate.31

Applying the foregoing to the present case, the LA had the original jurisdiction over the complaint for illegal dismissal
because Cosare, although an officer of Broadcom for being its AVP for Sales, was not a "corporate officer" as the term is
defined by law.

As may be deduced from the foregoing, there are two circumstances which must concur in order for an individual to be
considered a corporate officer, as against an ordinary employee or officer, namely: (1) the creation of the position is
under the corporation’s charter or 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.

To support their argument that Cosare was a corporate officer, the respondents referred to Section 1, Article IV of
Broadcom’s by-laws, which reads:

ARTICLE IV
OFFICER

Section 1. Election / Appointment – Immediately after their election, the Board of Directors shall formally organize by
electing the President, the Vice-President, the Treasurer, and the Secretary at said meeting.

The Board may, from time to time, appoint such other officers as it may determine to be necessary or proper. Any two
(2) or more compatible positions may be held concurrently by the same person, except that no one shall act as President
and Treasurer or Secretary at the same time.37 (Emphasis ours)

This was also the CA’s main basis in ruling that the matter was an intra-corporate dispute that was within the trial
courts’ jurisdiction.
The Court disagrees with the respondents and the CA. As may be gleaned from the aforequoted provision, the only
officers who are specifically listed, and thus with offices that are created under Broadcom’s by-laws are the following:
the President, Vice-President, Treasurer and Secretary. Although a blanket authority provides for the Board’s
appointment of such other officers as it may deem necessary and proper, the respondents failed to sufficiently establish
that the position of AVP for Sales was created by virtue of an act of Broadcom’s board, and that Cosare was specifically
elected or appointed to such position by the directors. No board resolutions to establish such facts form part of the case
records.

The CA’s heavy reliance on the contents of the General Information Sheets41, which were submitted by the respondents
during the appeal proceedings and which plainly provided that Cosare was an "officer" of Broadcom, was clearly
misplaced. The said documents could neither govern nor establish the nature of the office held by Cosare and his
appointment thereto. Furthermore, although Cosare could indeed be classified as an officer as provided in the General
Information Sheets, his position could only be deemed a regular office, and not a corporate office as it is defined under
the Corporation Code.

Finally, the mere fact that Cosare was a stockholder of Broadcom at the time of the case’s filing did not necessarily make
the action an intra- corporate controversy. "Not all conflicts between the stockholders and the corporation are classified
as intra-corporate. There are other facts to consider in determining whether the dispute involves corporate matters as
to consider them as intra-corporate controversies."42 Time and again, the Court has ruled that in determining the
existence of an intra-corporate dispute, the status or relationship of the parties and the nature of the question that is
the subject of the controversy must be taken into account.43 Considering that the pending dispute particularly relates to
Cosare’s rights and obligations as a regular officer of Broadcom, instead of as a stockholder of the corporation, the
controversy cannot be deemed intra-corporate.

The charge of constructive dismissal

Towards a full resolution of the instant case, the Court finds it appropriate to rule on the correctness of the NLRC’s ruling
finding Cosare to have been illegally dismissed from employment.

In filing his labor complaint, Cosare maintained that he was constructively dismissed, citing among other circumstances
the charges that were hurled and the suspension that was imposed against him via Arevalo’s memo dated March 30,
2009. Even prior to such charge, he claimed to have been subjected to mental torture, having been locked out of his files
and records and disallowed use of his office computer and access to personal belongings.47 While Cosare attempted to
furnish the respondents with his reply to the charges, the latter refused to accept the same on the ground that it was
filed beyond the 48-hour period which they provided in the memo.

Cosare further referred to the circumstances that allegedly transpired subsequent to the service of the memo,
particularly the continued refusal of the respondents to allow Cosare’s entry into the company’s premises.

It is also worth mentioning that a few days before the issuance of the memo dated March 30, 2009, Cosare was allegedly
summoned to Arevalo’s office and was asked to tender his immediate resignation from the company, in exchange for a
financial assistance of ₱300,000.00.49 The directive was said to be founded on Arevalo’s choice to retain Abiog’s
employment with the company.50 The respondents failed to refute these claims.

Given the circumstances, the Court agrees with Cosare’s claim of constructive and illegal dismissal. "[C]onstructive
dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable,
or unlikely as when there is a demotion in rank or diminution in pay or when a clear discrimination, insensibility, or
disdain by an employer becomes unbearable to the employee leaving the latter with no other option but to quit."51

It is clear from the cited circumstances that the respondents already rejected Cosare’s continued involvement with the
company. Even their refusal to accept the explanation which Cosare tried to tender on April 2, 2009 further evidenced
the resolve to deny Cosare of the opportunity to be heard prior to any decision on the termination of his employment.
The respondents allegedly refused acceptance of the explanation as it was filed beyond the mere 48-hour period which
they granted to Cosare under the memo dated March 30, 2009. However, even this limitation was a flaw in the memo or
notice to explain which only further signified the respondents’ discrimination, disdain and insensibility towards Cosare,
apparently resorted to by the respondents in order to deny their employee of the opportunity to fully explain his
defenses and ultimately, retain his employment.
The clear intent of the respondents to find fault in Cosare was also manifested by their persistent accusation that Cosare
abandoned his post, allegedly signified by his failure to report to work or file a leave of absence beginning April 1, 2009.
This was even the subject of a memo56 issued by Arevalo to Cosare on April 14, 2009, asking him to explain his absence
within 48 hours from the date of the memo. As the records clearly indicated, however, Arevalo placed Cosare under
suspension beginning March 30, 2009. The suspension covered access to any and all company files/records and the use
of the assets of the company, with warning that his failure to comply with the memo would be dealt with drastic
management action. The charge of abandonment was inconsistent with this imposed suspension. "Abandonment is the
deliberate and unjustified refusal of an employee to resume his employment. To constitute abandonment of work, two
elements must concur: ‘(1) the employee must have failed to report for work or must have been absent without valid or
justifiable reason; and (2) there must have been a clear intention on the part of the employee to sever the employer-
employee relationship manifested by some overt act.’"57 Cosare’s failure to report to work beginning April 1, 2009 was
neither voluntary nor indicative of an intention to sever his employment with Broadcom. It was illogical to be requiring
him to report for work, and imputing fault when he failed to do so after he was specifically denied access to all of the
company’s assets.
G.R. No. 187320 January 26, 2011

ATLANTA INDUSTRIES, INC. and/or ROBERT CHAN, Petitioners,

vs.
APRILITO R. SEBOLINO, KHIM V. COSTALES, ALVIN V. ALMOITE, and JOSEPH S. SAGUN, Respondents.

Facts:

In the months of February and March 2005, complainants Aprilito R. Sebolino, Khim V. Costales, Alvin V. Almoite, Joseph
S. Sagun, Agosto D. Zaño, Domingo S. Alegria, Jr., Ronie Ramos, Edgar Villagomez, Melvin Pedregoza, Teofanes B. Chiong,
Jr., Leonardo L. dela Cruz, Arnold A. Magalang, and Saturnino M. Mabanag 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 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)5 prior to
their engagement as apprentices.

On May 24, 2005, dela Cruz, Magalang, Zaño and Chiong executed a Pagtalikod at Pagwawalang Saysay before Labor
Arbiter Cajilig.

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.

Atlanta appealed to the NLRC. In the meantime, or on October 10, 2006, Ramos, Alegria, Villagomez, Costales and
Almoite allegedly entered into a compromise agreement with Atlanta.7 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.

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.
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 based on the following findings:10

1. The respondents were already employees of the company before they entered into the first and second
apprenticeship agreements – Almoite and Costales were employed as early as December 2003 and,
subsequently, entered into a first apprenticeship agreement from May 13, 2004 to October 12, 2004; before this
first agreement expired, a second apprenticeship agreement, from October 9, 2004 to March 8, 2005 was
executed. The same is true with Sebolino and Sagun, who were employed by Atlanta as early as March 3, 2004.
Sebolino entered into his first apprenticeship agreement with the company from March 20, 2004 to August 19,
2004, and his second apprenticeship agreement from August 20, 2004 to January 19, 2005. Sagun, on the other
 hand, entered into his first agreement from May 28, 2004 to October 8, 2004, and the second agreement from
October 9, 2004 to March 8, 2005.

3. The positions occupied by the respondents – machine operator, extruder operator and scaleman – are usually
necessary and desirable in the manufacture of plastic building materials, the company’s main business. Costales,
Almoite, Sebolino and Sagun were, therefore, regular employees whose dismissals were illegal for lack of a just
or authorized cause and notice.

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 Almoite. It submits the following arguments:

First. The CA’s conclusion that the respondent workers were company employees before they were engaged as
apprentices was primarily based on the Monthly Report16 and the Production and Work Schedule for March 7-12,
2005,17 in total disregard of the Master List18 prepared by the company accountant, Emelita M. Bernardo. The names of
Costales, Almoite, Sebolino and Sagun do not appear as employees in the Master List which "contained the names of all
the persons who were employed by and at petitioner."19

Atlanta faults the CA for relying on the Production and Work Schedule and the Monthly Report which were not sworn to,
and in disregarding the Master List whose veracity was sworn to by Bernardo and by Alex Go who headed the company’s
accounting division. It maintains that the CA should have given more credence to the Master List.

Second. There was no illegal dismissal as the respondent workers’ tenure ended with the expiration of the
apprenticeship agreement they entered into. There was, therefore, no regular employer-employee relationship between
Atlanta and the respondent workers.

The Case for Costales, Almoite, Sebolino and Sagun

In a Comment filed on August 6, 2009,23 Costales, Almoite, Sebolino and Sagun pray for a denial of the petition for being
procedurally defective and for lack of merit.

The respondents posit that the CA committed no error in holding that they were already Atlanta’s employees before
they were engaged as apprentices, as confirmed by the company’s Production and Work Schedule.24 They maintain that
the Production and Work Schedule meets the requirement of substantial evidence as the petitioners failed to question
its authenticity. They point out that the schedule was prepared by Rose A. Quirit and approved by Adolfo R. Lope, head
of the company’s PE/Spiral Section. They argue that it was highly unlikely that the head of a production section of the
company would prepare and assign work to the complainants if the latter had not been company employees.

The respondent workers reiterate their mistrust of the Master List25 as evidence that they were not employees of the
company at the time they became apprentices. They label the Master List as "self-serving, dubious and even if
considered as authentic, its content contradicts a lot of petitioner’s claim and allegations,"26 thus -

1. Aside from the fact that the Master List is not legible, it contains only the names of inactive employees. Even
those found by the NLRC to have been employed in the company (such as Almoite, Costales and Sagun) do not
appear in the list. If Costales and Almoite had been employed with Atlanta since January 11, 2006, as the
company claimed,27 their names would have been in the list, considering that the Master List accounts for all
employees "as of May 2006" – the notation carried on top of each page of the document.

2. There were no entries of employees hired or resigned in the years 2005 and 2006 despite the "as of May
2006" notation; several pages making up the Master List contain names of employees for the years 1999 - 2004.

3. The fact that Atlanta presented the purported Master List instead of the payroll raised serious doubts on the
authenticity of the list.

In sum, the respondent workers posit that the presentation of the Master List revealed the "intention of the herein
petitioner[s] to perpetually hide the fact of [their] prior employment."28

On the supposed apprenticeship agreements they entered into, Costales, Almoite, Sebolino and Sagun refuse to accept
the agreements’ validity, contending that the company’s apprenticeship program is merely a ploy "to continually deprive
[them] of their rightful wages and benefits which are due them as regular employees."29 They submit the following
"indubitable facts and ratiocinations:"30

1. The apprenticeship agreements were submitted to TESDA only in 2005 (with dates of receipt on "1/4/05" &
"2/22/05"31 ), when the agreements were supposed to have been executed in April or May 2004. Thus, the
submission was made long after the starting date of the workers’ apprenticeship or even beyond the
agreement’s completion/termination date, in violation of Section 23, Rule VI, Book II of the Labor Code.

3. The respondents were already skilled workers prior to the apprenticeship program as they had been
employed and made to work in the different job positions where they had undergone training. Sagun and
Sebolino, together with Mabanag, Pedregoza, dela Cruz, Chiong, Magalang and Alegria were even given
production assignments and work schedule at the PE/Spiral Section from May 11, 2004 to March 23, 2005, and
some of them were even assigned to the 3:00 p.m. – 11:00 p.m. and graveyard shifts (11:00 p.m. – 7:00 a.m.)
during the period.33

4. The respondent workers were required to continue as apprentices beyond six months. The TESDA certificate
of completion indicates that the workers’ apprenticeship had been completed after six months. Yet, they were
suffered to work as apprentices beyond that period.

Costales, Almoite, Sebolino and Sagun resolutely maintain that they were illegally dismissed, as the reason for the
termination of their employment – notice of the completion of the second apprenticeship agreement – did not
constitute either a just or authorized cause under Articles 282 and 283 of the Labor Code.

Ruling:

The procedural issue

The respondent workers ask that the petition be dismissed outright for the petitioners’ failure to attach to the petition a
copy of the Production and Work Schedule and a copy of the compromise agreement Costales and Almoite allegedly
entered into — material portions of the record that should accompany and support the petition, pursuant to Section 4,
Rule 45 of the Rules of Court.

The merits of the case

We find no merit in the petition. The CA committed no reversible error in nullifying the NLRC decision42 and in affirming
the labor arbiter’s ruling,43 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 200344 which the NLRC relied upon and, for Sebolino and Sagun, the production and work
schedule for March 7 to 12, 200545 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.53

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 List54 (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.
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.57 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 law.58

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,59 is a violation of the Labor Code’s implementing rules60 and is an act manifestly
unfair to the employees, to say the least. This we cannot allow.
*****G.R. No. 200575 February 5, 2014

INTEL TECHNOLOGY PHILIPPINES, INC., Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND JEREMIAS CABILES, Respondents.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner Intel Technology
Philippines, Inc. (Intel Phil.). It assails the October 28, 20111 and February 3, 20122 Resolutions of the Court of Appeals
(CA) in CA-G.R. SP No.118880, which dismissed the petition for certiorari filed by Intel Phil. thereby affirming the
September 2, 2010 Decision3 of the National Labor Relations Commission (NLRC) and its February 9, 2011 Resolution.
The NLRC decision modified the March 18, 2010 Decision4 of the Labor Arbiter (LA), and held Intel Phil. solely liable for
the retirement benefits of respondent Jeremias Cabiles (Cabiles).

The Facts

This case concerns the eligibility of Cabiles to receive retirement benefits from Intel Phil. granted to employees who had
complied with the ten (10)-year service period requirement of the company.

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).

In a letter,5 dated December 12, 2006, Cabiles was offered 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, to wit:

Are there any clearance requirements I need to fulfil as I move as a local hire to Hong Kong starting February 1?? I am
still on my expat assignment in Chengdu till it ends January 31. Then immediately I become a HK local employee so I
don’t technically repatriate and work back to my home site Philippines at all. Nevertheless, I still need to close I think my
employment there and so that all my ES benefits and clearance will be closed like conversion of my vacation leaves to
cash, carry over of my service tenure in CV to HK etc. Please do let me know what process I need to go through or would
an email notification be enough?

Another issue I would like to clarify is with regard to my retirement benefits. I will celebrate my 10th year of service with
Intel on April 16, 2007. However, because I will be moving to Hong Kong as a local hire starting February 1, would I still
be entitled to retirement benefits?? Do we roundup the years of service if its close enough to 10 years?? If not, what
other alternatives I have or do I just lose my years of service at Intel Philippines? Any possibility that I keep my 9.5 years
and start from there when I work in the Philippines again in the future??6

On January 23, 2007, Intel Phil., through Penny Gabronino (Gabronino), replied as follows:

Jerry – you are not eligible to receive your retirement benefit given that you have not reached 10 years of service at the
time you moved to Hong Kong. We do not round up the years of service.

There will [be] no gap in your years of service. So in case that you move back to the Philippines your total tenure of
service will be computed less on the period that you are out of Intel Philippines.7 [Emphasis supplied]

On January 31, 2007, Cabiles signed the job offer.8

On March 8, 2007, Intel Phil. issued Cabiles his "Intel Final Pay Separation Voucher" indicating a net payout of
₱165,857.62. On March 26, 2007, Cabiles executed a Release, Waiver and Quitclaim (Waiver)9 in favor of Intel Phil.
acknowledging receipt of ₱165,857.62 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, or on August 18, 2009, Cabiles filed a complaint for non-payment of retirement benefits and
for moral and exemplary damages with the NLRC Regional Arbitration Branch-IV. 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 Labor Arbiter’s Decision

On March 18, 2010, the LA ordered Intel Phil. together with Grace Ong, Nida delos Santos, Gabronino, and Pia Viloria, to
pay Cabiles the amount of HKD 419,868.77 or its peso equivalent as retirement pay with legal interest and attorney’s
fees. 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. Despite the clarification made by Intel Phil.
regarding his ineligibility to receive retirement benefits, the LA stated that Cabiles could not be faulted if he was made to
believe his non-entitlement to retirement benefits. Thus, it should not prevent him from asserting his right to receive
them. Finally, the Waiver executed by Cabiles when he left Intel Phil., was treated by the LA as no bar for claiming his
retirement pay because it merely covered the last salary and commutation of sick leaves and vacation leaves to the
exclusion of retirement benefits. The dispositive portion of the LA decision reads:

WHEREFORE, premises considered, Respondents are hereby ordered to pay complainant the amount of Four Hundred
Nineteen Thousand Eight Hundred Sixty-Eight and 77/100 Hong Kong Dollars (HKD419,868.77) or its Peso equivalent as
retirement pay with legal interest until satisfied, and to pay attorney’s fees equivalent to ten percent (10%) of the
judgment award.

SO ORDERED.10

The NLRC Ruling

On appeal, the NLRC affirmed with modification the LA decision. In its September 2, 2010 Decision, the NLRC held Intel
Phil. solely liable to pay Cabiles his retirement benefits. 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. Hence:

WHEREFORE, the appealed Decision is MODIFIED. Respondent-appellant Intel Technology Phil., Inc. is ordered to pay
complainant-appellee Jeremias Cabiles the sum [xx] of Four Hundred Nineteen Thousand Eight Hundred Sixty Eight and
77/100 Hong Kong Dollars (HKD419,868.77) or its equivalent in Philippine peso as retirement pay together with legal
interest thereon and attorney’s fees computed at ten percent (10%) of the award.

The individual respondents-appellants Grace Ong, Nida delos Santos, Penny Gabronino and Pia Viloria are RELIEVED
from any personal liability resulting from the foregoing.

SO ORDERED.11

Intel Phil. moved for reconsideration but its motion was denied in the NLRC Resolution,12 dated February 9, 2011.

The CA Decision

Aggrieved, Intel Phil. elevated the case to the CA via a petition for certiorari with application for a Temporary Restraining
Order (TRO) on April 5, 2011. The application for TRO was denied in a Resolution, dated July 5, 2011. A motion for
reconsideration, dated July 27, 2011, was filed, but it was denied in a Resolution, dated October 28, 2011, which also
dismissed the petition for certiorari.13

On December 1, 2011, Intel Phil. filed a motion for reconsideration.

Earlier, on September 19, 2011, pending disposition of the petition before the CA, the NLRC issued a writ of execution14
against Intel Phil.:

NOW, THEREFORE, you are commanded to proceed to the premises of respondent INTEL TECHNOLOGY PHILIPPINES,
INCORPORATED located at Gateway Business Park, Javalera, General Trias, Cavite or anywhere in the Philippines where
it could be located to collect the amount of Three Million Two Hundred One Thousand Three Hundred Ninety Eight
Pesos and Sixty Centavos (₱3,201,398.60) and turn over the same to this Office for appropriate disposition.

You are likewise directed to collect from the respondents the amount of Thirty One Thousand Five Hundred Ten Pesos
(₱31,510.00) representing the execution fees pursuant to the provisions of the NLRC Manual of Execution of Judgment.
In case you fail to collect the said amount in cash, you are directed to cause the satisfaction of the same out of the
respondents’ chattels or movable goods or in the absence thereof, out of the immovable properties not exempt from
execution and return this Writ of Execution to the undersigned not more than five (5) years from receipt hereof together
with the report not later than thirty (30) days from receipt and every thirty (30) days thereafter pursuant to Section 12,
Rule XI of the 2001 NLRC Rules of Procedures.15

As ordered by the NLRC, Intel Phil. satisfied the judgment on December 13, 2011 by paying the amount of ₱3,201,398.60
which included the applicable withholding taxes due and paid to the Bureau of InternalRevenue. Cabiles received a net
amount of ₱2,485,337.35, covered by the Bank of the Philippine Islands Manager’s Check No. 0000000806.16

By reason thereof, Intel Phil. filed on December 21, 2011 a Supplement to the Petition for Certiorari17 praying, in
addition to the reliefs sought in the main, that the CA order the restitution of all the amounts paid by them pursuant to
the NLRC’s writ of execution, dated September 19, 2011.

In its February 3, 2012 Resolution,18 the CA noted without action the supplement to the petition for certiorari of Intel
Phil. and denied the December 21, 2011 motion for reconsideration.

Hence, this petition.

ISSUES

The Court of Appeals committed serious error in dismissing the Petition for Certiorari without expressing clearly and
distinctly the facts and the law on which its decision was based.

II

The Court of appeals committed serious and reversible error in not finding that respondent NLRC gravely abused its
discretion when it ruled that private respondent was entitled to retire under Intel Philippines’ retirement plan.

III

The Court of Appeals committed serious and reversible error in not finding that respondent NLRC gravely abused its
discretion in annulling private respondent’s quitclaim.

IV

The Court of Appeals committed serious and reversible error in not finding that Cabiles has the legal obligation to return
all the amounts paid by Intel pursuant to the writ of execution.19

Intel Phil. insists as serious error the CA’s affirmation of the NLRC decision holding it liable for the retirement benefits
claimed by Cabiles. It contends that he is disqualified to receive the benefits for his failure to complete the required
minimum ten (10) years of service as he resigned to assume new responsibilities with Intel HK effective February 1,
2007.

Respondent’s Position

In his Comment,20 Cabiles submits (1) that the petition presents questions of fact which cannot be reviewed via Rule 45;
and (2) that the CA did not err when it affirmed the NLRC ruling:

(a) for his entitlement to retirement pay as he was under the employ of Intel Phil. for more than ten (10) years in
accordance with the prevailing retirement policy;

(b) for the nullity of the quitclaim as he was misled to believe that he was disqualified to receive retirement
benefits; and

(c) for his right to receive legal interest, damages and attorney’s fees.

Cabiles views his employment with Intel HK as a continuation of his service with Intel Phil. alleging that it was but an
assignment by his principal employer, similar to his assignments to Intel Arizona and Intel Chengdu. Having rendered 9.5
years of service with Intel Phil. and an additional seven months with Intel HK, he claims that he had completed the
required 10 year continuous service21 with Intel Phil., thus, qualifying him for retirement benefits.
In its Reply, Intel Phil. reiterates the arguments contained in its petition.

The Court’s Ruling

Review of Factual Findings

As a general rule, this Court is not a trier of facts and a petition for review on certiorari under Rule 45 of the Rules of
Court must exclusively raise questions of law.22 Nevertheless, this Court will not hesitate to deviate from what are
clearly procedural guidelines and disturb and strike down the findings of the CA and those of the labor tribunals if there
is a showing that they are unsupported by the evidence on record or there was a patent misappreciation of facts.
Indeed, that the impugned decision of the CA is consistent with the findings of the labor tribunals does not per se
conclusively demonstrate its correctness. By way of exception to the general rule, this Court will scrutinize the facts if
only to rectify the prejudice and injustice resulting from an incorrect assessment of the evidence presented.23

It is in this wise that the Court agrees with Intel Phil. that the CA seriously erred in affirming the findings of the NLRC on
the face of substantial evidence showing Cabiles’ disqualification to receive the retirement benefits. The Court,
therefore, reverses the ruling of the CA for the reasons hereinafter discussed.

Cabiles Resigned from Intel Philippines

Cabiles calls the attention of the Court to the lack of evidence proving his resignation. On the contrary, he states that no
severance of relationship was made upon his transfer to Intel HK.

The Court is not convinced.

Resignation is the formal relinquishment of an office,24 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.25

In this case, Cabiles, while still on a temporary assignment in Intel Chengdu, was offered by Intel HK the job of a Finance
Manager.

In contemplating whether to accept the offer, Cabiles wrote Intel Phil. providing details and asking as follows:

Are there any clearance requirements I need to fulfil as I move as a local hire to Hong Kong starting February 1?? I am
still on my expat assignment in Chengdu till it ends January 31. Then immediately I become a HK local employee so I
don’t technically repatriate and work back to my home site Philippines at all.

Nevertheless, I still need to close I think my employment there and so that all my ES benefits and clearance will be
closed like conversion of my vacation leaves to cash, carry over of my service tenure in CV to HK etc. Please do let me
know what process I need to go through or would an email notification be enough?

Another issue I would like to clarify is with regard to my retirement benefits. Will celebrate my 10th year of service with
Intel on April 16, 2007. However, because I will be moving to Hong Kong as a local hire starting February 1, would I still
be entitled to retirement benefits?? Do we roundup the years of service if its close enough to 10 years?? If not, what
other alternatives I have or do I just lose my years of service at Intel Philippines? Any possibility that I keep my 9.5 years
and start it from there when I work in the Philippines again in the future??26 [Emphases supplied]

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.

Despite a non-favorable reply as to his retirement concerns, Cabiles still accepted the offer of 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.

The choice of staying with Intel Phil. vis-à-vis a very attractive opportunity with Intel HK put him in a dilemma. If he
would wait to complete ten (10) years of service with Intel Phil. (in about 4 months) he would enjoy the fruits of his
retirement but at the same time it would mean forfeiture of Intel HK’s compensation offer in the amount of HK $
942,500.00, an amount a lot bigger than what he would receive under the plan. He decided to forfeit and became Intel
HK’s newest hire.

All these are indicative of the clearest intent of Cabiles to sever ties with Intel Phil. He chose to forego his tenure with
Intel Phil., with all its associated benefits, in favor of a more lucrative job for him and his family with Intel HK.

The position of Cabiles that he was being merely assigned leads the Court to its next point.

No Secondment Contract Exists

Cabiles views his employment in Hong Kong as an assignment or an extension of his employment with Intel Phil. He cited
as evidence the offer made to him as well as the letter, dated January 8, 2007,27 both of which used the word
"assignment" in reference to his engagement in Hong Kong as a clear indication of the alleged continuation of his ties
with Intel Phil.

The foregoing arguments of Cabiles, in essence, speak of the "theory of secondment."

The Court, however, is again not convinced.

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 employer’s power to control the employee’s conduct.28

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. It provided Cabiles his compensation. Cabiles then became subject to Hong Kong
labor laws, and necessarily, the rights appurtenant thereto, including the right of Intel HK to fire him on available
grounds. Lastly, Intel HK had control and supervision over him as its new Finance Manager. Evidently, Intel Phil. no
longer had any control over him.

Although in various instances, his move to Hong Kong was referred to as an "assignment," it bears stressing that it was
categorized as a "permanent transfer." In Sta. Maria v. Lopez,29 the Court held that "no permanent transfer can take
place unless the officer or employee is first removed from the position held, and then appointed to another position."
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.

The NLRC, however, was of the view that the transfer of Cabiles to Intel HK was similar to his assignments in Intel
Chengdu and Intel Arizona.

The Court finds this conclusion baseless.

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. By virtue of which, it still assumed responsibility for the payment of compensation and benefits due him.
The assignment to Intel HK, on the other hand, was a permanent transfer and Intel Phil. never participated in any way in
the process of his employment there. It was Cabiles himself who took the opportunity and the risk. If it were indeed
similar to Intel Arizona and Intel Chengdu assignments, Intel Philippines would have had a say in it.

Release, Waiver and Quitclaim Valid Terms Are Clear

Contrary to the conclusion affirmed by the CA, the Waiver executed by Cabiles was valid.
In Goodrich Manufacturing Corporation, v. Ativo,30 the Court reiterated the standards that must be observed in
determining whether a waiver and quitclaim had been validly executed:

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.

In Callanta v. National Labor Relations Commission,31 this Court ruled that:

It is highly unlikely and incredible for a man of petitioner’s position and educational attainment to so easily succumb to
private respondent company’s alleged pressures without even defending himself nor demanding a final audit report
before signing any resignation letter. Assuming that pressure was indeed exerted against him, there was no urgency for
petitioner to sign the resignation letter. He knew the nature of the letter that he was signing, for as argued by
respondent company, petitioner being "a man of high educational attainment and qualification, x x x he is expected to
know the import of everything that he executes, whether written or oral.32

Here, the NLRC concluded in its February 9, 2011 Resolution33 that the Waiver was executed merely to allow Intel Phil.
to escape its obligation to pay the retirement benefits, thus, violative of law, morals, and public policy. The Court,
however, sees no clear evidence in the records showing that Cabiles was constrained into signing the document. Also, it
cannot be said that Cabiles did not fully understand the consequences of signing the Waiver. Being a person well-versed
in matters of finance, it would have been impossible for him not to have comprehended the consequences of signing a
waiver. Failing to see any evidence to warrant the disregard of the Waiver, the Court is unable to affirm the CA and,
hence, declares it as valid and binding between Cabiles and Intel Phil..

Assuming the Waiver was valid, the NLRC contended that it could not be construed to cover the claims for the
retirement pay because it had not yet accrued at the time the document was signed by Cabiles.

The Court finds Itself unable to agree.

The terms of the Waiver are clear:

I, Jeremias P. Cabiles, Filipino, of legal age and a resident of xxx hereby acknowledge receipt from Intel Technology
Philippines, Inc. (the Company) the amount of xxx, in full and complete settlement of all benefits due me by reason of
my lawful separation from the Company effective February 1, 2007.

In consideration of the foregoing:

1. I release, remise and forever discharge the Company, its successors-in-interest, its stockholders, its officers, directors,
agents or employees from any action, sum of money, damages, claims and demands whatsoever, which in law or in
equity I ever had, now have, or which I, my heirs, successors and assigns hereafter may have by reason of any matter,
cause or thing whatsoever, up to the time of these presents, the intention thereof being to completely and absolutely
release the Company, its successors-in-interest, xxx from all liabilities arising wholly, partially, or directly from my
employment with the Company.

xxx xxx xxx

5. I acknowledge that I have received all amounts that are now or in the future may be due me from the Company. I also
acknowledge that during the entire period of my employment with the Company, I received or was paid all
compensation, benefits and privileges, to which I am entitled under all laws and policies of the Company by reason of
my past employment and/or engagement therewith, and if I hereafter be found in any manner to be entitled to any
amount, the aforementioned monetary amount is a full and final satisfaction of any and all such undisclosed claims.
(Emphasis supplied)34

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 ₱165,857.62. 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.
Lastly, even if the Court assumes that the Waiver was invalid, Cabiles nonetheless remains disqualified as a recipient of
retirement benefits because, as previously discussed, the ten-year minimum requirement was not satisfied on account
of his early resignation.

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, dated September 19, 2011.

WHEREFORE, the petition is GRANTED. The assailed October 28, 2011 and February 3, 2012 Resolutions of the Court of
Appeals are hereby REVERSED and SET ASIDE.

Respondent Jeremias P. Cabiles is ordered to make restitution to petitioner Intel Technology Philippines Inc. for
whatever amounts he received pursuant to the Writ of Execution issued by the National Labor Relations Commission,
dated September 19, 2011.

SO ORDERED
*****G.R. No. 195190 July 28, 2014

ROYALE HOMES MARKETING CORPORATION, Petitioner,

vs.
FIDEL P. ALCANTARA [deceased], substituted by his heirs, Respondent.

DECISION

DEL CASTILLO, J.:

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.1

This Petition for Review on Certiorari2 assails the June 23, 2010 Decision3 of the Court of Appeals (CA) in CA-G.R. SP No.
109998 which (i) reversed and set aside the February 23, 2009 Decision4 of the National Labor Relations Commission
(NLRC), (ii) ordered petitioner Royale Homes Marketing Corporation (Royale Homes) to pay respondent Fidel P.
Alcantara (Alcantara) backwages and separation pay, and (iii) remanded the case to the Labor Arbiter for the proper
determination and computation of said monetary awards.

Also assailed in this Petition isthe January 18, 2011 Resolution5 of the CA denying Royale Homes’ Motion for
Reconsideration,6 as well as its Supplemental7 thereto.

Factual Antecedents

In 1994, Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara asits Marketing Director
for a fixed period of one year. His work consisted mainly of marketing Royale Homes’ realestate inventories on an
exclusive basis. Royale Homes reappointed him for several consecutive years, the last of which covered the period
January 1 to December 31, 2003 where he held the position of Division 5 Vice-President-Sales.8

Proceedings before the Labor Arbiter

On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal9 against Royale Homes and its President Matilde
Robles, Executive Vice-President for Administration and Finance Ma. Melinda Bernardino, and Executive Vice- President
for Sales Carmina Sotto. Alcantara alleged that he is a regular employee of Royale Homes since he is performing tasks
that are necessary and desirable to its business; that in 2003 the company gave him ₱1.2 million for the services he
rendered to it; that in the first week of November 2003, however, the executive officers of Royale Homes told him that
they were wondering why he still had the gall to come to office and sit at his table;10 and that the actsof the executive
officers of Royale Homes amounted to his dismissal from work without any valid or just cause and in gross disregard of
the proper procedure for dismissing employees. Thus, he alsoimpleaded the corporate officers who, he averred,
effected his dismissal in bad faith and in an oppressive manner.

Alcantara prayed to be reinstated tohis former position without loss of seniority rights and other privileges, as well as to
be paid backwages, moral and exemplary damages, and attorney’s fees. He further sought that the ownership of the
Mitsubishi Adventure with Plate No. WHD-945 be transferred to his name.

Royale Homes, on the other hand, vehemently denied that Alcantara is its employee. It argued that the appointment
paper of Alcantara isclear that it engaged his services as an independent sales contractorfor a fixed term of one year
only. He never received any salary, 13th month pay, overtime pay or holiday pay from Royale Homes as hewas paid
purely on commission basis. In addition, Royale Homes had no control on how Alcantara would accomplish his tasks and
responsibilities as he was free to solicit sales at any time and by any manner which he may deem appropriateand
necessary. He is even free to recruit his own sales personnel to assist him in pursuance of his sales target.

According to Royale Homes, Alcantara decided to leave the company after his wife, who was once connectedwith it as a
sales agent, had formed a brokerage company that directly competed with its business, and even recruited some of its
sales agents. Although this was against the exclusivity clause of the contract, Royale Homes still offered to accept
Alcantara’s wife back so she could continue to engage in real estate brokerage, albeit exclusively for Royale Homes. In a
special management committee meeting on October 8,2003, however, Alcantara announced publicly and openly that he
would leave the company by the end of October 2003 and that he would no longer finish the unexpired term of his
contract. He has decided to join his wifeand pursue their own brokerage business. Royale Homes accepted Alcantara’s
decision. It then threw a despedidaparty in his honor and, subsequently, appointed a new independent contractor. Two
months after herelinquished his post, however, Alcantara appeared in Royale Homes and submitted a letter claiming
that he was illegally dismissed.
Ruling of the Labor Arbiter

On September 7, 2005,the Labor Arbiter rendered a Decision11 holding that Alcantara is an employee of Royale Homes
with a fixed-term employment period from January 1 to December 31, 2003 and that the pre-termination of his contract
was against the law.Hence, Alcantara is entitled to an amount which he may have earned on the average for the
unexpired portion of the contract. With regard to the impleaded corporate officers, the Labor Arbiter absolved them
from any liability.

The dispositive portion of the Labor Arbiter’s Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Royale Homes Marketing
Corp. to pay the complainant the total amount of TWO HUNDRED SEVENTY SEVEN THOUSAND PESOS (₱277,000.00)
representing his compensation/commission for the unexpired term of his contract.

All other claims are dismissed for lack of merit.

SO ORDERED.12

Both parties appealed the Labor Arbiter’s Decision to the NLRC. Royale Homes claimed that the Labor Arbiter grievously
erred inruling that there exists an employer-employee relationship between the parties. It insisted that the contract
between them expressly statesthat Alcantara is an independent contractor and not an ordinary employee. Ithad no
control over the means and methods by which he performed his work. RoyaleHomes likewise assailed the award of
₱277,000.00 for lack of basis as it did not pre-terminate the contract. It was Alcantara who chose not to finish the
contract.

Alcantara, for his part, argued that the Labor Arbiter erred in ruling that his employment was for a fixed-term and that
he is not entitled to backwages, reinstatement, unpaid commissions, and damages.

Ruling of the National LaborRelations Commission

On February 23, 2009, the NLRC rendered its Decision,13 ruling that Alcantara is not an employee but a mere
independent contractor of Royale Homes. It based its ruling mainly on the contract which does not require Alcantara to
observe regular working hours. He was also free to adopt the selling methods he deemed most effective and can even
recruit sales agents to assist him in marketing the inventories of Royale Homes. The NLRC also considered the fact that
Alcantara was not receiving monthly salary, but was being paid on commission basis as stipulated in the contract. Being
an independent contractor, the NLRC concluded that Alcantara’s Complaint iscognizable by the regular courts.

The falloof the NLRC Decision reads:

WHEREFORE, premises considered, the Decision of Labor Arbiter Dolores Peralta-Beley dated September 5, 2005 is
REVERSED and SET ASIDE and a NEW ONE rendered dismissing the complaint for lack of jurisdiction.

SO ORDERED.14

Alcantara moved for reconsideration.15 In a Resolution16 dated May 29, 2009, however, the NLRC denied his motion.

Alcantara thus filed a Petition for Certiorari17 with the CA imputing grave abuse of discretion on the partof the NLRC in
ruling that he is not an employee of Royale Homes and that it is the regular courts which have jurisdiction over the issue
of whether the pre-termination of the contract is valid.

Ruling of the Court of Appeals

On June 23, 2010, the CA promulgated its Decision18 granting Alcantara’s Petition and reversing the NLRC’s Decision.
Applying the four-fold and economic reality tests, it held thatAlcantara is an employee of Royale Homes. Royale Homes
exercised some degree of control over Alcantara since his job, as observed by the CA, is subject to company rules,
regulations, and periodic evaluations. He was also bound by the company code of ethics. Moreover, the exclusivity
clause of the contract has made Alcantara economically dependent on Royale Homes, supporting the theory that he is
anemployee of said company.

The CA further held 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. Thus, the CA ruled that he isentitled to backwages and
separation pay, in lieu of reinstatement. Considering,however, that the CA was not satisfied with the proofadduced to
establish the amount of Alcantara’s annual salary, it remanded the caseto the Labor Arbiter to determine the same and
the monetary award he is entitled to. With regard to the corporate officers, the CA absolved them from any liability for
want of clear proof that they assented to the patently unlawful acts or that they are guilty of bad faith orgross
negligence. Thus:

WHEREFORE, in view of the foregoing, the instant PETITION is GRANTED. The assailed decision of the National Labor
Relations Commission in NLRC NCR CASE NO. 00-12-14311-03 NLRC CA NO. 046104-05 dated February 23, 2009 as well
as the Resolution dated May 29, 2009 are hereby SET ASIDE and a new one is entered ordering the respondent company
to pay petitioner backwages which shall be computed from the time of his illegal termination in October 2003 up to the
finality of this decision, plus separation pay equivalent to one month salary for every year of service. This case is
REMANDED to the Labor Arbiter for the proper determination and computation of back wages, separation pay and other
monetary benefits that petitioner is entitled to.

SO ORDERED.19

Royale Homes filed a Motion for Reconsideration20 and a Supplemental Motion for Reconsideration.21 In a
Resolution22 dated January 18, 2011, however, the CA denied said motions.

Issues

Hence, this Petition where Royale Homes submits before this Court the following issues for resolution:

A.

WHETHER THE COURT OF APPEALS HAS DECIDED THE INSTANT CASE NOT IN ACCORD WITH LAW AND
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT REVERSED THE RULING OF THE NLRC DISMISSING
THE COMPLAINT OF RESPONDENT FOR LACK OF JURISDICTION AND CONSEQUENTLY, IN FINDING THAT
RESPONDENT WAS ILLEGALLY DISMISSED[.]

B.

WHETHER THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN DISREGARDING THE EN
BANCRULING OF THIS HONORABLE COURT IN THE CASEOF TONGKO VS. MANULIFE, AND IN BRUSHING ASIDE
THE APPLICABLE RULINGS OF SONZA VS. ABS CBN AND CONSULTA V. CA[.]

C.

WHETHER THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN DENYING THE MOTION FOR
RECONSIDERATION OF PETITIONER AND IN REFUSING TO CORRECT ITSELF[.]23

Royale Homes contends that its contract with Alcantara is clear and unambiguous −it engaged his services as an
independent contractor. This can be readily seen from the 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 Homes likewise argues that the 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 maintains 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.

Royale Homes further asserts that it neither hired nor wielded the power to dismiss Alcantara. It was Alcantara who
openly and publicly declared that he was pre-terminating his fixed-term contract.

The pivotal issue to be resolved in this case is whether Alcantara was an independent contractor or anemployee of
Royale Homes.

Our Ruling

The Petition is impressed with merit.

The determination of whether a party who renders services to another is an employee or an independent contractor
involves an evaluation of factual matters which, ordinarily, is not within the province of this Court. In view of the
conflicting findings of the tribunals below, however, this Court is constrained to go over the factual matters involved in
this case.24

The juridical relationship of the parties based on their written contract

The primary evidence of the nature of the parties’ relationship in this case is the written contract that they signed and
executed in pursuanceof their mutual agreement. While the existence of employer-employee relationship is a matter of
law, the characterization made by the parties in their contract as to the nature of their juridical relationship cannot be
simply ignored, particularly in this case where the parties’ written contractunequivocally states their intention at the
time they entered into it. In Tongko v. The Manufacturers LifeInsurance Co. (Phils.), Inc.,25 it was held that:

To be sure, the Agreement’s legal characterization of the nature of the relationship cannot be conclusive and binding on
the courts; x x x the characterization of the juridical relationship the Agreement embodied is a matter of law that is for
the courts to determine. At the same time, though, the characterization the parties gave to their relationship in the
Agreement cannot simply be brushed aside because it embodiestheir intent at the time they entered the Agreement,
and they were governed by this understanding throughout their relationship. At the very least, the provision on the
absence of employer- employee relationship between the parties can be an aid in considering the Agreement and its
implementation, and in appreciating the other evidence on record.26

In this case, the contract,27 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. Thus:

January 24, 2003

MR. FIDEL P. ALCANTARA

13 Rancho I

Marikina City

Dear Mr. Alcantara,

This will confirm yourappointment as Division 5 VICE[-]PRESIDENTSALES of ROYALE HOMES MARKETING CORPORATION
effective January 1, 2003 to December 31, 2003.

Your appointment entails marketing our real estate inventories on an EXCLUSIVE BASIS under such price, terms and
condition to be provided to you from time to time.

As such, you can solicit sales at any time and by any manner which you deem appropriate and necessary to market our
real estate inventories subject to rules, regulations and code of ethics promulgated by the company. Further, you are
free to recruit sales personnel/agents to assist you in marketing of our inventories provided that your personnel/agents
shall first attend the required seminars and briefing to be conducted by us from time to time for the purpose of
familiarizing them of terms and conditionsof sale, the natureof property sold, etc., attendance of which shall be a
condition precedent for their accreditation by us.

That as such Division 5 VICE[-]PRESIDENT-SALES you shall be entitled to:

1. Commission override of 0.5% for all option sales beginning January 1, 2003 booked by your sales agents.

2. Budget allocation depending on your division’s sale performance as per our budget guidelines.

3. Sales incentive and other forms of company support which may be granted from time to time. It is
understood, however, that no employer-employee relationship exists between us, that of your sales
personnel/agents, and that you shall hold our company x x x, its officers and directors, free and harmless from
any and all claims of liability and damages arising from and/or incident to the marketing of our real estate
inventories.

We reserve, however, our right to terminate this agreement in case of violation of any company rules and regulations,
policies and code of ethics upon notice for justifiable reason.
Your performance shall be subject toperiodic evaluation based on factors which shall be determined by the
management.

If you are amenable to the foregoing terms and conditions, please indicate your conformity by signing on the space
provided below and return [to] us a duplicate copy of this letter, duly accomplished, to constitute as our agreement on
the matter.(Emphasis ours)

Since "the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of itsstipulations should control."28 No construction is even needed asthey already expressly state their
intention. Also, this Court adopts the observation of the NLRC that it is rather strange on the part of Alcantara, an
educated man and a veteran sales broker who claimed to be receiving ₱1.2 million as his annual salary, not to have
contested the portion of the contract expressly indicating that he is not an employee of Royale Homes if their true
intention were otherwise.

The juridical relationship of the parties based on Control Test

In determining the existence of an employer-employee relationship, this 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.29 Among the four, the most determinative factor in ascertaining the existence of employeremployee
relationship is the "right of control test".30 "It is deemed to be such an important factor that the other requisites may
even be disregarded."31 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,32 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.33

In concluding that Alcantara is an employee of RoyaleHomes, the CA ratiocinated that since the performance of his tasks
is subject to company rules, regulations, code of ethics, and periodic evaluation, the element of control is present.

The Court disagrees.

Not every form of control is indicative of employer-employee relationship.1âwphi1 A person who performs work for
another and is subjected to its rules, regulations, and code of ethics does not necessarily become an employee.34 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 Commission35 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 employeremployee relationship unlike the second, which address both the result and the means
used to achieve it. x x x36

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.
Understandably, 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 this 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. In Tongko, this Court
held that 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 inlabor law. Thus:

From jurisprudence, an important lesson that the first Insular Lifecase teaches us is that a commitment to abide by the
rules and regulations of an insurance company does not ipso factomake the insurance agent an employee. Neither do
guidelines somehow restrictive of the insurance agent’s conduct necessarily indicate "control" as this term is defined in
jurisprudence. Guidelines indicative of labor law "control," as the first Insular Lifecase tells us, should not merely relate
to the mutually desirable result intended by the contractual relationship; they must have the nature of dictating the
means or methods to beemployed in attaining the result, or of fixing the methodology and of binding or restricting the
party hired to the use of these means.In fact, results-wise, the principal can impose production quotas and can
determine how many agents, with specific territories, ought to be employed to achieve the company’s objectives. These
are management policy decisions that the labor law element of control cannot reach. Our ruling in these respects in the
first Insular Lifecase was practically reiterated in Carungcong. Thus, as will be shown more fully below, Manulife’s codes
of conduct, all of which do not intrude into the insurance agents’ means and manner of conducting their sales and only
control them as to the desired results and Insurance Code norms, cannot be used as basis for a finding that the labor law
concept of control existed between Manulife and Tongko.37 (Emphases in the original)

As the party claiming the existence of employer-employee relationship, it behoved upon Alcantara to prove the
elements thereof, particularly Royale Homes’ power of control over the means and methods of accomplishing the
work.38 He, however, failed to cite specificrules, regulations or codes of ethics that supposedly imposed control on his
means and methods of soliciting sales and dealing with prospective clients. On the other hand, this case is replete with
instances that negate the element of control and the existence of employer-employee relationship. Notably, Alcantara
was not required to observe definite working hours.39 Except for soliciting sales, RoyaleHomes did not assign other
tasks to him. He had full control over the means and methods of accomplishing his tasks as he can "solicit sales at any
time and by any manner which [he may] deem appropriate and necessary." He performed his tasks on his own account
free from the control and direction of Royale Homes in all matters connected therewith, except as to the results
thereof.40

Neither does the repeated hiring of Alcantara prove the existence of employer-employee relationship.41 As discussed
above, the absence of control over the means and methodsdisproves employer-employee relationship. The continuous
rehiring of Alcantara simply signifies the renewal of his contract with Royale Homes, and highlights his satisfactory
services warranting the renewal of such contract. Nor does the exclusivity clause of contract establish the existence of
the labor law concept of control. In Consulta v. Court of Appeals,42 it was held that exclusivity of contract does not
necessarily result in employer-employee relationship, viz:

x x x However, the fact that the appointment required Consulta to solicit business exclusively for Pamana did not mean
that Pamana exercised control over the means and methods of Consulta’s work as the term control is understood in
labor jurisprudence. Neither did it make Consulta an employee of Pamana. Pamana did not prohibit Consulta from
engaging in any other business, or from being connected with any other company, for aslong as the business [of the]
company did not compete with Pamana’s business.43

The same scenario obtains in this case. Alcantara was not prohibited from engaging in any other business as long as he
does not sell projects of Royale Homes’ competitors. He can engage in selling various other products or engage in
unrelated businesses.

Payment of Wages

The element of payment of wages is also absent in thiscase. As provided in the contract, Alcantara’s remunerations
consist only of commission override of 0.5%, budget allocation, sales incentive and other forms of company support.
There is no proof that he received fixed monthly salary. No payslip or payroll was ever presented and there is no proof
that Royale Homes deducted from his supposed salary withholding tax or that it registered him with the Social Security
System, Philippine Health Insurance Corporation, or Pag-Ibig Fund. In fact, his Complaint merely states a ballpark figure
of his alleged salary of ₱100,000.00, more or less. All of these indicate an independent contractual relationship.44
Besides, if Alcantara indeed consideredhimself an employee of Royale Homes, then he, an experienced and professional
broker, would have complained that he was being denied statutorily mandated benefits. But for nine consecutive years,
he kept mum about it, signifying that he has agreed, consented, and accepted the fact that he is not entitled tothose
employee benefits because he is an independent contractor.

This Court is, therefore,convinced that Alcantara is not an employee of Royale Homes, but a mere independent
contractor. The NLRC is, therefore, correct in concluding that the Labor Arbiter has no jurisdiction over the case and that
the same is cognizable by the regular courts.

WHEREFORE, the instant Petition is hereby GRANTED. The June 23, 2010 Decision of the Court of Appeals in CA-G.R. SP
No. 109998 is REVERSED and SET ASIDE. The February 23, 2009 Decision of the National Labor Relations Commission is
REINSTATED and AFFIRMED. SO ORDERED
*****G.R. No.187691

OLYMPIA HOUSING, INC., Petitioner,

vs.
ALLAN LAPASTORA and IRENE UBALUBAO, Respondents.

DECISION

REYES, J.:

This is a Petition for Review on Certiorari1 filed under Rule 45 of the Rules of Court, assailing the Decision2 dated April
28, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 103699, which affirmed the Decision dated December 28, 2007
and Resolution3 dated February 29, 2008 of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 30-
03-00976-00.

The instant case stemmed from 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, owned by a Philippine-registered corporation known as the Olympia
Condominium Corporation (OCC). The complaint, which was docketed as NLRC NCR Case No. 30-03-00976-00 (NLRC NCR
CA No. 032043-02), likewise impleaded as defendants the part owner of OHI, Felix Limcaoco (Limcaoco), and Fast
Manpower and Allied Services Company, Inc. (Fast Manpower). 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 Manpower.4

To establish employer-employee relationship with OHI, Lapastora and Ubalubao alleged that they were directly hired by
the company and received salaries directly from its operations clerk, Myrna Jaylo (Jaylo). 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.5

For their part, OHI and Limcaoco alleged that Lapastora and Ubalubao were not employees of the company but of Fast
Manpower, with which it had a contract of services, particularly, for the provision of room attendants. They claimed that
Fast Manpower is an independent contractor as it (1) renders janitorial services to various establishments in Metro
Manila, with 500 janitors under its employ; (2) maintains an office where janitors assemble before they are dispatched
to their assignments; (3) exercises the right to select, refuse or change personnel assigned to OHI; and (4) supervises and
pays the wages of its employees.6

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.7

Subsequently, on August 22, 2000, a memorandum of agreement was executed, stipulating the transfer of management
of the OER from OHI to HSAI-Raintree, Inc. (HSAI-Raintree). Thereafter, OHI informed the Department of Labor and
Employment (DOLE) of its cessation of operations due to the said change of management and issued notices of
termination to all its employees. This occurrence prompted some union officers and members to file a separate
complaint for illegal dismissal and unfair labor practice against OHI, OCC and HSAI-Raintree, docketed as NLRC NCR CN
30-11-04400-00 (CA No. 032193-02), entitled Malonie D. Ocampo, et al. v. Olympia Housing, Inc., et al. (Ocampo v. OHI).
This complaint was, however, dismissed for lack of merit. The complainants therein appealed the said ruling to the
NLRC.8

Meanwhile, on May 10, 2002, the Labor Arbiter (LA) rendered a Decision9 in the instant case, holding that Lapastora and
Ubalubao were regular employees of OHI and that they were illegally dismissed. The dispositive portion of the decision
reads as follows:

WHEREFORE, finding complainants to have been illegally dismissed and as regular employees of [OHI] the latter is
ordered to reinstate complainants to their former position or substantially equal position without loss of seniority rights
and benefits. [OHI] is further ordered to pay complainants backwages, service incentive leave pay and attorney’s fees as
follows:
 1. Backwages:

[Lapastora] - P171,616.60 and

[Ubalubao] - P170,573.44 from February 24, 2000 to date of decision which shall further be adjusted
until their actual reinstatement.

2. P3,305.05 - ILP for Lapastora

3. P3,426.04 - SILP for Ubalubao

4. 10% of the money awards as attorney’s fees.

Other claims are dismissed for lack of merit.

The claim against [Limcaoco] is hereby dismissed for lack of merit.

SO ORDERED.10

In ruling for the existence of employer-employee relationship, the LA held that OHI exercised control and supervision
over Lapastora and Ubalubao through its supervisor, Anamie Lat. The LA likewise noted that documentary evidence
consisting of time cards, medical cards and medical examination reports all indicated OHI as employer of the said
employees.

Moreover, the affidavit of OHI’s housekeeping coordinator, Jaylo, attested to the fact that OHI is the one responsible for
the selection of employees for its housekeeping department. OHI also paid the salaries of the housekeeping staff by
depositing them to their respective ATM accounts. That there is a contract of services between OHI and Fast Manpower
did not rule out the existence of employer-employee relationship between the former and Lapastora and Ubalubao as it
appears that the said contract was a mere ploy to circumvent the application of pertinent labor laws particularly those
relating to security of tenure. The LA pointed out that the business of OHI necessarily requires the services of
housekeeping aides, room boys, chambermaids, janitors and gardeners in its daily operations, which is precisely the line
of work being rendered by Lapastora and Ubalubao.11

Both parties appealed to the NLRC. OHI asseverated that the reinstatement of Lapastora and Ubalubao was no longer
possible in view of the transfer of the management of the OER to HSAI-Raintree.12

On December 28, 2007, the NLRC rendered a decision, dismissing the appeal for lack of merit, the dispositive portion of
which reads as follows:

WHEREFORE, premises considered, the appeals of both the respondents and the complainants are DISMISSED, and the
Decision of the [LA] is hereby AFFIRMED. All other claims are dismissed for lack of merit.13

The NLRC held that OHI is the employer of Lapastora and Ubalubao since Fast Manpower failed to establish the fact that
it is an independent contractor. Further, it ruled that the memorandum of agreement between OCC and HSAI-Raintree
did not render the reinstatement of Lapastora and Ubalubao impossible since a change in the management does not
automatically result in a change of personnel especially when the memorandum itself did not include a provision on that
matter.14

Unyielding, OHI filed its Motion for Reconsideration15 but the NLRC denied the same in a Resolution16 dated February
29, 2008.

In the meantime, in Ocampo v. OHI, the NLRC rendered a Decision17 dated November 22, 2002, upholding the validity of
the cessation of OHI’s operations and the consequent termination of all its employees. It stressed that the cessation of
business springs from the management’s prerogative to do what is necessary for the protection of its investment,
notwithstanding adverse effect on the employees. The discharge of employees for economic reasons does not amount
to unfair labor practice.18 The said ruling of the NLRC was elevated on petition for certiorari to the CA, which dismissed
the same in Resolutions dated November 28, 200319 and June 23, 2004.20 The mentioned resolutions were appealed to
this Court and were docketed as G.R. No. 164160, which was, however, denied in the Resolution21 dated July 26, 2004
for failure to comply with procedural rules and lack of reversible error on the part of the CA.

Ruling of the CA
OHI, upon receipt of the adverse decision in NLRC NCR Case No. 30-03-00976-00, filed a Petition for Certiorari22 with
the CA, praying that the Decision dated December 28, 2007 and Resolution dated February 29, 2008 of the NLRC be set
aside. It pointed out that in the related case of Ocampo v. OHI, the NLRC took into consideration the supervening events
which transpired after the supposed termination of Lapastora and Ubalubao, particularly OHI’s closure of business on
October 1, 2000. The NLRC then likewise upheld the validity of the closure of business and the consequent termination
of employees in favor of OHI, holding that the measures taken by the company were proper exercises of management
prerogative. OHI argued that since the said disposition of the NLRC in Ocampo v. OHI was affirmed by both the CA and
the Supreme Court, the principle of stare decisis becomes applicable and the issues that had already been resolved in
the said case may no longer be relitigated.23 At any rate, OHI argued that it could not be held liable for illegal dismissal
since Lapastora and Ubalubao were not its employees.24

On April 28, 2009, the CA rendered a Decision25 dismissing the petition, the dispositive portion of which reads as
follows:

WHEREFORE, the petition for certiorari is DISMISSED. The NLRC’s Decision dated December 28, 2007 and Resolution
dated February 29, 2008 in NLRC NCR Case No. 30-03-00976-00 (NLRC NCR CA No. 032043-02) are AFFIRMED.

SO ORDERED.26

The CA ruled that OHI’s cessation of operations on October 1, 2000 is not a supervening event because it transpired long
before the promulgation of the LA’s Decision dated May 10, 2002 in the instant case. In the same manner, the ruling of
the NLRC in Ocampo v. OHI does not constitute stare decisis to the present petition because of the apparent
dissimilarities in the attendant circumstances. For instance, Ocampo v. OHI was founded on the union members’
allegation that OHI’s claim of substantial financial losses to support closure of business lacked evidence, while in the
instant case, Lapastora and Ubalubao claimed illegal dismissal on account of their being placed on floating status after
they were implicated in a theft case. The differences in the facts and issues in the two cases rule out the invocation of
the doctrine. The CA added that the prevailing jurisprudence is that the NLRC decision upholding the validity of the
closure of business and retrenchment of employees resulting therefrom will not preclude it from decreeing the illegality
of an employee’s dismissal. Considering that OHI failed to prove that the memorandum of agreement between OCC and
HSAI-Raintree had any effect on the employment of Lapastora and Ubalubao or that there is any other valid or
authorized cause for their termination from employment, the CA concluded that they were unlawfully dismissed.27

Unyielding, OHI filed the instant petition, reiterating its arguments before the CA. It added that, even assuming that the
facts warrant a finding of illegal dismissal, the cessation of operations of the company is a supervening event that should
limit the award of backwages to Lapastora and Ubalubao until October 1, 2000 only and justify the deletion of the order
of reinstatement. After all, it complied with the notice requirements of the DOLE for a valid closure of business.28

On April 4, 2011, Ubalubao, on her own behalf, filed a Motion to Dismiss/Withdraw Complaint and Waiver,29 stating
that she has decided to accept the financial assistance in the amount of ₱50,000.00 offered by OHI, in lieu of all the
monetary claims she has against the company, as full and complete satisfaction of any judgment that may be
subsequently rendered in her favor. She likewise informed the Court that she had willingly and knowingly executed a
quitclaim and waiver agreement, releasing OHI from any liability. She thus prayed for the dismissal of the complaint she
filed against OHI.

In a Resolution30 dated January 16, 2012, the Court granted Ubalubao’s motion and considered the case closed and
terminated as to her part, leaving Lapastora as the lone respondent in the present petition.

Ruling of the Court

Lapastora was illegally dismissed

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. Article 280 of the Labor Code provides as follows:

Art. 280. Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall continue
while such activity exists.

Based on records, OHI is engaged in the business of managing residential and commercial condominium units at the
OER. By the nature of its business, it is imperative 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 business. The
fact alone that Lapastora was allowed to work for an unbroken period of almost five years is all the same a reason to
consider him a regular employee.

The attainment of a regular status of employment guarantees the employee’s security of tenure that he cannot be
unceremoniously terminated from employment. "To justify fully the dismissal of an 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 onus of proving with clear, accurate, consistent, and convincing
evidence the validity of the dismissal."31

OHI miserably failed to discharge its burdens thus making Lapastora’s termination illegal.

On the substantive aspect, 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 tardiness, unexplained
absences and loitering, 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 made to explain his supposed infractions. It does not even show
from the records that Lapastora was ever disciplined because of his alleged tardiness. 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.

On the procedural aspect, OHI admittedly failed to observe the twin notice rule in termination cases. As a rule, the
employer is required to furnish the concerned employee two written notices: (1) a written notice served on the
employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within
which to explain his side; and (2) a written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination.32 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 employment.

OHI argues that no formal notices of investigation, notice of charges or termination was issued to Lapastora since he was
not an employee of the company but of Fast Manpower.

The issue of employer-employee relationship between OHI and Lapastora had been deliberated and ruled upon by the
LA and the NLRC in the affirmative on the basis of the evidence presented by the parties. The LA ruled that 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. She likewise noted Fast Manpower’s failure to establish its capacity as independent
contractor based on the standards provided by law.

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. The parties cannot evade the application of labor laws by mere expedient of a contract considering that labor
and employment are matters imbued with public interest. It cannot be subjected to the agreement of the parties but
rather on existing laws designed specifically for the protection of labor. Thus, it had been repeatedly stressed in a
number of jurisprudence that "[a] party cannot dictate, by the mere expedient of a unilateral declaration in a contract,
the character of its business, i.e., whether as labor-only contractor or as job contractor, it being crucial that its character
be measured in terms of and determined by the criteria set by statute."33

The Court finds no compelling reason to deviate from the findings of the LA and NLRC, especially in this case when the
same was affirmed by the CA. It is settled that findings of fact made by LAs, when affirmed by the NLRC, are entitled not
only to great respect but even finality and are binding on this Court especially when they are supported by substantial
evidence.34

The principle of stare decisis is not applicable

Still, OHI argues that the legality of the closure of its business had been the subject of the separate case of Ocampo v.
OHI, where the NLRC upheld the validity of the termination of all the employees of OHI due to cessation of operations. It
asserts that since the ruling was affirmed by the CA and, eventually by this Court, the principle of stare decisis becomes
applicable. Considering the closure of its business, Lapastora can no longer be reinstated and should instead be awarded
backwages up to the last day of operations of the company only, specifically on October 1, 2000.35

In Ting v. Velez-Ting,36 the Court elaborated on the principle of stare decisis, thus:

The principle of stare decisis enjoins adherence by lower courts to doctrinal rules established by this Court in its final
decisions. It is based on the principle that once a question of law has been examined and decided, it should be deemed
settled and closed to further argument. Basically, it is a bar to any attempt to relitigate the same issues, necessary for
two simple reasons: economy and stability. In our jurisdiction, the principle is entrenched in Article 8 of the Civil Code.37
(Citations omitted)

Verily, the import of the principle is that questions of law that have been decided by this Court and applied in resolving
earlier cases shall be deemed the prevailing rule which shall be binding on future cases dealing on the same intricacies.
Apart from saving the precious time of the Court, the application of this principle is essential to the consistency of the
rulings of the Court which is significant in its role as the final arbiter of judicial controversies.

The CA correctly ruled that the principle of stare decisis finds no relevance in the present case. To begin with, there is no
doctrine of law that is similarly applicable in both the present case and in Ocampo v. OHI. While both are illegal dismissal
cases, they are based on completely different sets of facts and involved distinct issues. In the instant case, Lapastora
cries illegal dismissal after he was arbitrarily placed on a floating status on mere suspicion that he was involved in theft
incidents within the company premises without being given the opportunity to explain his side or any formal
investigation of his participation. On the other hand, in Ocampo v. OHI, the petitioners therein questioned the validity of
OHI’s closure of business and the eventual termination of all the employees. Thus, the NLRC ruled upon both cases
differently.

Nonetheless, the Court finds the recognition of the validity of OHI’s cessation of business in the Decision dated
November 22, 2002 of the NLRC, which was affirmed by the CA and this Court, a supervening event which inevitably
alters the judgment award in favor of Lapastora. The NLRC noted that OHI complied with all the statutory requirements,
including the filing of a notice of closure with the DOLE and furnishing written notices of termination to all employees
effective 30 days from receipt.38 OHI likewise presented financial statements substantiating its claim that it is operating
at a loss and that the closure of business is necessary to avert further losses.39 The action of the OHI, the NLRC held, is a
valid exercise of management prerogative.

Thus, while the finding of illegal dismissal in favor of Lapastora subsists, his reinstatement was rendered a legal
impossibility with OHI’s closure of business.1âwphi1 In Galindez v. Rural Bank of Llanera, Inc.,40 the Court noted:

Reinstatement presupposes that the previous position from which one had been removed still exists or there is an
unfilled position more or less of similar nature as the one previously occupied by the employee. Admittedly, no such
position is available. Reinstatement therefore becomes a legal impossibility. The law cannot exact compliance with what
is impossible.41

Considering the impossibility of Lapastora’s reinstatement, the payment of separation pay, in lieu thereof, is proper. The
amount of separation pay to be given to Lapastora must be computed from March 1995, the time he commenced
employment with OHI, until the time when the company ceased operations in October 2000.42 As a twin relief,
Lapastora is likewise entitled to the payment of backwages, computed from the time he was unjustly dismissed, or from
February 24, 2000 until October 1, 2000 when his reinstatement was rendered impossible without fault on his part.43

Finally, for OHI’s failure to prove the fact of payment, the Court sustains the award for the payment of service incentive
leave pay and 13th month pay. The rule, as stated in Mantle Trading Services, Inc. and/or Del Rosario v. NLRC, et al.,44 is
that "the burden rests on the employer to prove payment, rather than on the employee to prove nonpayment. The
reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents —
which will show that overtime, differentials, service incentive leave and other claims of workers have been paid — are
not in the possession of the employee but in the custody and absolute control of the employer."45 Considering that OHI
did not dispute Lapastora’s claim for nonpayment of the mentioned benefits and opted to disclaim employer-employee
relationship, the presumption is that the said claims were not paid.

The award for attorney’s fees of 10% of the monetary awards is likewise sustained considering that Lapastora was
forced to litigate and, thus, incurred expenses to protect his rights and interests.46
WHEREFORE, the Decision dated April 28, 2009 of the Court of Appeals in CA-G.R. SP No. 103699 is AFFIRMED with
MODIFICATION in that OHI is hereby ORDERED to pay Allan Lapastora the following: (1) separation pay, in lieu of
reinstatement, computed from the time of his employment until the time of its closure of business, or from March 1995
to October 2000; (2) backwages, computed from the time of illegal dismissal until cessation of business, or from
February 24, 2000 to October 1, 2000; (3) service incentive leave pay and 13th month pay; and (4) attorney's fees.

SO ORDERED