FACTS:

Antonio Valeroso and Allan Legatona (petitioners) filed a complaint against Skycable Corporation (respondent) for illegal dismissal, non-payment of 13th month pay, separation pay, and illegal deduction. The complaint was subsequently amended to include regularization and payment of moral and exemplary damages. Petitioners alleged that they started working for respondent as account executives and received commissions and allowances. They were later transferred to Skill Plus Manpower Services without any agreement. In 2009, they were informed of reduced commissions due to the introduction of prepaid cards. They notified their manager of their intention to file a labor case, and as a result, they were dropped from the roster of account executives. Petitioners also claimed non-payment and underpayment of 13th month pay and that Legatona signed a release and quitclaim for a loyalty bonus. Respondent claimed that petitioners were not its employees but independent contractors engaged through a sales agency agreement. The Labor Arbiter dismissed the complaint for failure to establish an employer-employee relationship. However, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter's ruling and declared petitioners illegally dismissed. The Court of Appeals (CA) granted respondent's petition for certiorari and reversed the NLRC's decision. Petitioners filed a petition for review on certiorari before the Supreme Court, raising issues of whether the CA erred in its decision and whether petitioners were regular employees of respondent.

ISSUES:

1. Whether the Court of Appeals erred in rendering its decision dated November 11, 2011.

2. Whether the petitioners were respondent's regular employees, whose dismissal from employment was illegal.

RULING:

1. The Court of Appeals did not err in rendering its decision, as the evidence presented by the petitioners failed to substantiate the existence of an employer-employee relationship between the parties. Therefore, the dismissal of the petitioners' Complaint for illegal dismissal against the respondent was justified.

PRINCIPLES:

• To establish employer-employee relationship, the burden of proof rests on the party asserting the existence of such relationship.

• The length of service and nature of work are relevant factors in determining the existence of an employer-employee relationship.

• Independent contractorship must be proven by competent evidence, such as substantial capitalization or investment.