Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83279:57273&catid=1585&Itemid=566
Timestamp: 2019-04-23 04:36:54+00:00

Document:
G.R. No. 195190, July 28, 2014 - ROYALE HOMES MARKETING CORPORATION, Petitioner, v. FIDEL P. ALCANTARA [DECEASED], SUBSTITUTED BY HIS HEIRS, Respondent.
ROYALE HOMES MARKETING CORPORATION, Petitioner, v. FIDEL P. ALCANTARA [DECEASED], SUBSTITUTED BY HIS HEIRS, Respondent.
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 is the January 18, 2011 Resolution5 of the CA denying Royale Homes’ Motion for Reconsideration,6 as well as its Supplemental7 thereto.
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 P1.2 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 acts of 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 also impleaded the corporate officers who, he averred, effected his dismissal in bad faith and in an oppressive manner.
Alcantara prayed to be reinstated to his 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 is clear that it engaged his services as an independent sales contractor for a fixed term of one year only. He never received any salary, 13th month pay, overtime pay or holiday pay from Royale Homes as he was 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 appropriate and 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 connected with 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 wife and pursue their own brokerage business. Royale Homes accepted Alcantara’s decision. It then threw a despedida party in his honor and, subsequently, appointed a new independent contractor.
Two months after he relinquished his post, however, Alcantara appeared in Royale Homes and submitted a letter claiming that he was illegally dismissed.
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.
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 (P277,000.00) representing his compensation/commission for the unexpired term of his contract.
Both parties appealed the Labor Arbiter’s Decision to the NLRC. Royale Homes claimed that the Labor Arbiter grievously erred in ruling that there exists an employer-employee relationship between the parties. It insisted that the contract between them expressly states that Alcantara is an independent contractor and not an ordinary employee. It had no control over the means and methods by which he performed his work. Royale Homes likewise assailed the award of P277,000.00 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.
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 is cognizable by the regular courts.
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.
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 part of 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.
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 that Alcantara 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 an employee of said company.
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.
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.
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, that his 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. Royale Homes maintains that it is expected to exercise some degree of control over its independent contractors, but that does not automatically result in the existence of employer-employee relationship. For control to be considered as a proof tending to establish employer-employee relationship, the same must pertain 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 an employee of Royale Homes.
This will confirm your appointment as Division 5 VICE[-]PRESIDENT-SALES 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 conditions of sale, the nature of property sold, etc., attendance of which shall be a condition precedent for their accreditation by us.
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 to periodic evaluation based on factors which shall be determined by the management.
Since “the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations should control.”28 No construction is even needed as they 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 P1.2 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.
In concluding that Alcantara is an employee of Royale Homes, 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 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.
The element of payment of wages is also absent in this case. 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 P100,000.00, more or less. All of these indicate an independent contractual relationship.44 Besides, if Alcantara indeed considered himself 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 to those 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.
1Insular Life Assurance Co., Ltd. v. National Labor Relations Commission, 259 Phil. 65, 70-71 (1989).
3 CA rollo, pp. 209-229; penned by Associate Justice Mariflor P. Punzalan Castillo and concurred in by Associate Justices Josefina Guevara-Salonga and Franchito N. Diamante.
4Rollo, pp. 241-248; penned by Presiding Commissioner Gerardo C. Nograles and concurred in by Commissioners Perlita B. Velasco and Romeo L. Go.
5 CA rollo, pp. 288-294.
8 See Contract dated January 24, 2003, id. at 36.
10 See [Alcantara’s] Position Paper, id. at 106-110.
15 See Motion for Reconsideration, id. at 249-251.
17 CA rollo, pp. 3-13.
24 Bernarte v. Philippine Basketball Association (PBA), G.R. No. 192084, September 14, 2011, 657 SCRA 745, 754.
25 G.R. No. 167622, June 29, 2010, 622 SCRA 58.
27 CA rollo, p. 36.
28 CIVIL CODE OF THE PHILIPPINES, Article 1370.
29Bernarte v. Philippine Basketball Association (PBA), supra note 24; Sandigan Savings and Loan Bank, Inc. v. National Labor Relations Commission, 324 Phil. 348, 358 (1996); Sonza v. ABS-CBN Broadcasting Corporation, G.R. No. 138051, June 10, 2004, 431 SCRA 583, 594-595.
31Sandigan Savings and Loan Bank, Inc. v. National Labor Relations Commission, supra note 29.
32Cosmopolitan Funeral Homes, Inc. v. Maalat, G.R. No. 86693, July 2, 1990, 187 SCRA 108, 112.
34 Tongko v. The Manufacturers Life Insurance Co. (Phils.), Inc., supra note 25 at 85; Sonza v. ABS-CBN Broadcasting Corporation, supra note 29 at 603.
37 Supra note 25 at 86-87.
38Javier v. Fly Ace Corporation, G.R. No. 192558, February 15, 2012, 666 SCRA 382, 397-398.
39 See Consulta v. Court of Appeals, 493 Phil. 842, 848 (2005); Sonza v. ABS-CBN Broadcasting Corporation, supra note 29 at 600.
40 See Chavez v. National Labor Relations Commission, 489 Phil. 444, 457-458 (2005).
41Bernarte v. Philippine Basketball Association (PBA), supra note 24 at 759.
44Bernarte v. Philippine Basketball Association (PBA), supra note 24 at 757; Consulta v. Court of Appeals, supra note 39 at 851.

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