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Royal Homes Marketing Corporation v.

Alcantara unexpired term of his contract anymore (which was

Employment Contract | July 28, 2014 |Del Castillo, J supposedly until December 2003).
o Two months after leaving, PET appeared in RH and submitted a
Nature of Case: Petition for review on certiorari letter claiming he was illegally dismissed.
Digest maker: Bles Neri DECISIONS:
o Labor Arbiter rendered a decision in 2005 holding that PET is an
SUMMARY: Royal Homes appointed Alcantara as its Marketing Director, and employee of RESP and that the pretermination of his contract is
consequently Vice President-Sales. When he left in 2003, he claimed that he had against the law. Hence, PET is entitled to backwages. Corporate
been illegally dismissed, and that he was an employee of RH. RH denied these officers absolved of any liability.
allegations, saying he was an independent contractor, and that there was no o NLRC rendered its decision in 2009 saying that RESP is NOT an
employer-employee relationship between them. Also, it was actually Alcantara employee but a mere independent contractor. Ruling mainly based
who LEFT Royal Homes without finishing his contract. Labor Arbiter ruled in favor on the contract which does not require PET to observe
of RESP. NLRC ruled in favor of PET. CA reversed NLRC. Thus, the petition. The regular working hours, that he is free to adopt selling
Court held that there was no employer-employee relationship between them, as methods of his choice, and that he was not being paid a
evidenced by the terms of their contract. salary but just commission. Being an independent contractor,
NLRC ruled that complaint is cognizable by regular courts.
DOCTRINE: (the one related to the topic of employment contract) While the o CA reversed NLRCs decision, holding that PET is an employee of
existence of an employer-employee relationship is a matter of law, the RESP: RH exercised some degree of control over Alcantara
characterization made by the parties in their contract as to the nature since he is subject to company rules, regulations, and
of their juridical relationship cannot be simply ignored, particularly in evaluations, he is bound by company code of ethics, and
the case where the parties written contract unequivocally states their he is economically dependent on RH because of the
intention at the time they entered into it. exclusivity clause of the contract.
Thus, this petition.
(On juridical relationship) 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 toward the achievement of a ISSUE/S & RATIO:
mutually desired result without dictating the means and methods of 1. WoN the contract between Royal Homes Marketing Corporation
accomplishing it do not establish employer-employee relationship. and Fidel P. Alcantara constitutes an employer-employee
relationship between them. NO
FACTS: a. While the existence of an employer-employee relationship is a
1994 Royale Homes (PET) appointed Fidel Alcantara (RESP) as its matter of law, the characterization made by the parties in
Marketing Director for a fixed period of one year. His work consisted mainly their contract as to the nature of their juridical
of marketing real estate inventories. RH reappointed him for several relationship cannot be simply ignored, particularly in the
consecutive years. case where the parties written contract unequivocally
December 2003 Alcantara filed a complaint for illegal dismissal against states their intention at the time they entered into it.
b. Tongko v Manufacturers Life Insurance Co. (Phils.) Inc.: x x
RH and its corporate officers. He alleged that he is a regular employee of
x the characterization the parties gave to their relationship in the
RH since he is performing tasks that are necessary and desirable to its
Agreement cannot simply be brushed aside because it embodies
business that in 2003 the company gave him 1.2M for his services, but
their intent at the time they entered the Agreement, and they
that in the first week of November 2003, the officers of RH were wondering
were governed by this understanding throughout their
why he still had the gall to come to office and sit at his table.
relationship. At the very least, the provision on the absence of
RESP prayed to be reinstated to his former position as well as to be paid
employer-employee relationship between the parties can be an aid
backwages and damages, as well as to have the ownership of the in considering the Agreement and its implementation, and in
Mitsubishi Adventure transferred to his name. appreciating the other evidence on record.
PET on the other had vehemently denied that RESP was its employee. c. In this case, the contract, duly signed and not disputed by
o Appointment paper of PET is clear that it engaged his services as the parties, conspicuously provides that no employer-
an independent sales contractor and not as an employee. employee relationship exists between RH and Alcantara,
o Accdg. To PET, RESP decided to leave the company when his wife as well as his sales agents.
who was once connected with said company decided to form her d. It is clear that they did not want to be bound by employer-
own brokerage firm. Despite it being against the exclusivity clause employee relationship at the time of the signing of the contract.
of the contract, they still took her back when she wanted to e. Since the terms of the contract are clear and leave no
continue to work there. doubt upon the intention of the contracting parties, the
o However, they decided for real that they would leave the company literal meaning of its stipulations should control. No
to pursue their own brokerage business. construction is even needed as they already expressly
o October 2003 PET announced publicly that he would leave the state their intention.
company by the end of the month and would not finish the
RULING: Wherefore, the instant petition is hereby GRANTED. The June 23, 2010 o As long as the level of control does not interfere with the
Decision of the Court of Appeals is REVERSED and SET ASIDE. The February 23, means and methods of accomplishing the assigned tasks,
2009 decision of the NLRC is REINSTATED and AFFIRMED. SO ORDERED. the rules imposed by the hiring party on the hired party
do not amount to the labor law concept of control that is
NOTES: indicative of an employer-employee relationship.
In determining the existence of an employer-employee relationship, this Court has o Guidelines indicative of labor law control, as the first Insular Life
generally relied on the four-fold test, to wit: 1) the selection and engagement of case tells us, should not merely relate to the mutually desirable
the employee; 2) the payment of wages; 3) the power of dismissal; 4) the result intended by the contractual relationship; they must have
employers power to control the employee with respect to the means and methods the nature of dictating the means or methods to be employed in
by which the work is to be accomplished. attaining the result, or of fixing the methodology and of binding or
Among the four, the most determinative is the fourth one. restricting the party hired to the use of these means.
o Not every form of control is indicative of employer-
employee relationship. A person who performs work for
another and is subjected to its rules, regulations, and code of
ethics does not necessarily become and employee.