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ROYALE HOMES MARKETING CORPORATION v. FIDEL P. ALCANTARA

FACTS:

Royale Homes Marketing Corporation appointed Fidel Alcantara as its Marketing Director in 1994 and he held various positions in the company until 2003. Alcantara filed a complaint for illegal dismissal against Royale Homes, alleging that he was a regular employee and was terminated without valid cause. Royale Homes claimed that Alcantara was an independent contractor and denied any employer-employee relationship. The Labor Arbiter ruled in favor of Alcantara, declaring him an employee and ordering compensation. Both parties appealed to the NLRC.

Alcantara entered into a contract with Royale Homes in 2001 as a real estate agent. The contract stated that he was an independent contractor and not an ordinary employee. Alcantara argued that Royale Homes had control over him and terminated his employment without valid cause. The NLRC ruled that Alcantara was an independent contractor and his complaint should be resolved by the regular courts. Alcantara filed a Petition for Certiorari with the Court of Appeals (CA), which granted it and held that he was an employee of Royale Homes. The CA also ruled that Alcantara's termination was without valid cause and violated his right to due process.

Royale Homes filed a motion for reconsideration with the CA, but it was denied. The company then filed a Petition before the Supreme Court, questioning the CA's decision and seeking a reversal of Alcantara's employee status. The main issue in this case is to determine the nature of Alcantara's relationship with Royale Homes.

ISSUES:

A. Whether the Court of Appeals decided the case in accordance with the law and applicable decisions of the Supreme Court when it reversed the ruling of the NLRC dismissing the complaint for lack of jurisdiction and finding that the respondent was illegally dismissed.

B. Whether the Court of Appeals committed a serious error of law in disregarding the en banc ruling of the Supreme Court in the case of Tongko vs. Manulife, and in brushing aside applicable rulings in 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 the petitioner and in refusing to correct itself.

RULING:

The pivotal issue to be resolved was whether Alcantara was an independent contractor or an employee of Royale Homes. The Supreme Court found merit in the petition, ruling that Alcantara was indeed an independent contractor and not an employee of Royale Homes. Thus, the NLRC correctly concluded that the Labor Arbiter had no jurisdiction over the case, and that it should be cognizable by the regular courts. The June 23, 2010 Decision of the Court of Appeals was reversed and set aside, and the February 23, 2009 Decision of the National Labor Relations Commission was reinstated and affirmed.

PRINCIPLES:

  1. Employer-Employee Relationship: The four-fold test includes (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 regarding the means and methods by which the work is accomplished. The most determinative factor is the "right of control test."

  2. Right of Control Test: Not every form of control indicates employer-employee relationship. Guidelines or rules that serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it do not indicate labor law control.

  3. Independent Contractor: If the performance of tasks is subject to company rules, regulations, code of ethics, and periodic evaluation, but these do not interfere with the means and methods of accomplishing the assigned tasks, it does not constitute control indicative of an employer-employee relationship.

  4. Payment of Wages: Payment of wages, as an element of employment, involves fixed monthly salaries, payroll records, withholding tax deductions, and statutory benefits registrations (SSS, PhilHealth, Pag-Ibig). Absence of these factors signals an independent contractor relationship.

  5. Contractual Stipulations: Provisions in the contract explicitly stating there is no employer-employee relationship, and which are not countered by evidence to the contrary, are significant in determining the nature of the juridical relationship.

  6. Repeated Hiring and Exclusivity Clause: Continuous rehiring or an exclusivity clause does not necessarily establish an employer-employee relationship if the control over the means and methods by which the work is to be performed is absent.

  7. Jurisdiction: The absence of an employer-employee relationship relegates the jurisdiction over disputes to regular courts instead of labor arbiters and the NLRC.