FIRSTDIVISION

[G.R.No.126586.February2,2000]

ALEXANDERVINOYA,petitioner,vs.NATIONALLABORRELATIONSCOMMISSION,
REGENTFOODCORPORATIONAND/ORRICKYSEE(PRESIDENT),respondents.

DECISION
KAPUNAN,J.:

ThispetitionforcertiorariunderRule65seekstoannulandsetasidethedecision,[1]promulgatedon
21June1996,oftheNationalLaborRelationsCommission("NLRC")whichreversedthedecision[2]of
theLaborArbiter,renderedon15June1994,orderingRegentFoodCorporation("RFC")toreinstate
AlexanderVinoyatohisformerpositionandpayhimbackwages.

PrivaterespondentRegentFoodCorporationisadomesticcorporationprincipallyengagedinthe
manufactureandsaleofvariousfoodproducts.PrivaterespondentRickySee,ontheotherhand,is
thepresidentofRFCandisbeingsuedinthatcapacity.

PetitionerAlexanderVinoya,thecomplainant,workedwithRFCassalesrepresentativeuntilhis
serviceswereterminatedon25November1991.

Thepartiespresentedconflictingversionsoffacts.

PetitionerAlexanderVinoyaclaimsthatheappliedandwasacceptedbyRFCassalesrepresentative
on26May1990.Onthesamedate,acompanyidentificationcard[3]wasissuedtohimbyRFC.
PetitionerallegesthathereporteddailytotheofficeofRFC,inPasigCity,totakethelattersvanfor
thedeliveryofitsproducts.Accordingtopetitioner,duringhisemploy,hewasassignedtovarious
supermarketsandgrocerystoreswherehebookedsalesordersandcollectedpaymentsforRFC.For
thistask,hewasrequiredbyRFCtoputupamonthlybondofP200.00assecuritydepositto
guaranteetheperformanceofhisobligationassalesrepresentative.Petitionercontendsthathewas
underthedirectcontrolandsupervisionofMr.DanteSoandMr.SadiLim,plantmanagerandsenior
salesmanofRFC,respectively.Heaversthaton1July1991,hewastransferredbyRFCtoPeninsula
ManpowerCompany,Inc.("PMCI"),anagencywhichprovidesRFCwithadditionalcontractual
workerspursuanttoacontractforthesupplyofmanpowerservices(hereinafterreferredtoasthe
"ContractofService").[4]AfterhistransfertoPMCI,petitionerwasallegedlyreassignedtoRFCas
salesrepresentative.Subsequently,on25November1991,hewasinformedbyMs.SusanChua,
personnelmanagerofRFC,thathisserviceswereterminatedandhewasaskedtosurrenderhisID
card.PetitionerwastoldthathisdismissalwasduetotheexpirationoftheContractofService
betweenRFCandPMCI.Petitionerclaimsthathewasdismissedfromemploymentdespitethe
absenceofanynoticeorinvestigation.Consequently,on3December1991,petitionerfiledacase
againstRFCbeforetheLaborArbiterforillegaldismissalandnonpaymentof13thmonthpay.[5]

PrivaterespondentRegentFoodCorporation,ontheotherhand,maintainsthatnoemployer
employeerelationshipexistedbetweenpetitioneranditself.Itinsiststhatpetitionerisactuallyan
employeeofPMCI,allegedlyanindependentcontractor,whichhadaContractofService[6]withRFC.
Toprovethisfact,RFCpresentsanEmploymentContract[7]signedbypetitioneron1July1991,
whereinPMCIappearsashisemployer.RFCdeniesthatpetitionerwaseveremployedbyitpriorto1
July1991.ItaversthatpetitionerwasissuedanIDcardsothatitsclientsandcustomerswould
recognizehimasadulyauthorizedrepresentativeofRFC.WithregardtotheP200.00pesosmonthly
bondpostedbypetitioner,RFCassertsthatitwasrequiredinordertoguaranteetheturnoverofhis
collectionsincehehandledfundsofRFC.WhileRFCadmitsthatithadcontrolandsupervisionover
petitioner,itarguesthatsuchwasexercisedincoordinationwithPMCI.Finally,RFCcontendsthatthe
terminationofitsrelationshipwithpetitionerwasbroughtaboutbytheexpirationoftheContractof
ServicebetweenitselfandPMCIandnotbecausepetitionerwasdismissedfromemployment.

On3December1991,whenpetitionerfiledacomplaintforillegaldismissalbeforetheLaborArbiter,
PMCIwasinitiallyimpleadedasoneoftherespondents.However,petitionerthereafterwithdrewhis
chargeagainstPMCIandpursuedhisclaimsolelyagainstRFC.Subsequently,RFCfiledathirdparty
complaintagainstPMCI.Afterconsideringbothversionsoftheparties,theLaborArbiterrendereda
decision,[8]dated15June1994,infavorofpetitioner.TheLaborArbiterconcludedthatRFCwasthe
trueemployerofpetitionerforthefollowingreasons:(1)PetitionerwasoriginallywithRFCandwas
merelytransferredtoPMCItobedeployedasanagencyworkerandthensubsequentlyreassignedto
RFCassalesrepresentative(2)RFChaddirectcontrolandsupervisionoverpetitioner(3)RFC
actuallypaidforthewagesofpetitioneralthoughcoursedthroughPMCIand,(4)Petitionerwas
terminatedperinstructionofRFC.Thus,theLaborArbiterdecreedasfollows:

ACCORDINGLY,premisesconsideredrespondentRFCisherebydeclaredguiltyof
illegaldismissalandorderedtoimmediatelyreinstatecomplainanttohisformerposition
withoutlossofseniorityrightsandotherbenefitsandpayhimbackwagesintheamount
ofP103,974.00.

Theclaimfor13thmonthpayisherebyDENIEDforlackofmerit.

Thiscase,insofarasrespondentPMCI[isconcerned]isDISMISSED,forlackofmerit.

SOORDERED.[9]

RFCappealedtheadversedecisionoftheLaborArbitertotheNLRC.Inadecision,[10]dated21June
1996,theNLRCreversedthefindingsoftheLaborArbiter.TheNLRCopinedthatPMCIisan
independentcontractorbecauseithassubstantialcapitaland,assuch,isthetrueemployerof
petitioner.TheNLRC,thus,heldPMCIliableforthedismissalofpetitioner.Thedispositiveportionof
theNLRCdecisionstates:

WHEREFORE,premisesconsidered,theappealeddecisionismodifiedasfollows:

1.PeninsulaManpowerCompanyInc.isdeclaredasemployerofthecomplainant

2.PeninsulaisorderedtopaycomplainanthisseparationpayofP3,354.00andhis
proportionate13thmonthpayfor1991intheamountofP2,795.00orthetotalamountof
P6,149.00.

SOORDERED.[11]

SeparatemotionsforreconsiderationoftheNLRCdecisionwerefiledbypetitionerandPMCI.Ina
resolution,[12]dated20August1996,theNLRCdeniedbothmotions.However,itwasonlypetitioner
whoelevatedthecasebeforethisCourt.

Inhispetitionforcertiorari,petitionersubmitsthatrespondentNLRCcommittedgraveabuseof
discretioninreversingthedecisionoftheLaborArbiter,andasksforthereinstatementofthelatters
decision.

Principally,thispetitionpresentsthefollowingissues:

1.WhetherpetitionerwasanemployeeofRFCorPMCI.
 2.Whetherpetitionerwaslawfullydismissed.

TheresolutionofthefirstissueinitiallyboilsdowntoadeterminationofthetruestatusofPMCI,
whetheritisalaboronlycontractororanindependentcontractor.

Inthecaseatbar,RFCallegesthatPMCIisanindependentcontractoronthesolegroundthatthe
latterisahighlycapitalizedventure.Tobuttressthisallegation,RFCpresentsacopyoftheArticlesof
IncorporationandtheTreasurersAffidavit[13]submittedbyPMCItotheSecuritiesandExchange
CommissionshowingthatithasanauthorizedcapitalstockofOneMillionPesos(P1,000,000.00),of
whichThreeHundredThousandPesos(P300,000.00)issubscribedandSeventyFiveThousand
Pesos(P75,000.00)ispaidin.AccordingtoRFC,PMCIisadulyorganizedcorporationengagedin
thebusinessofcreatingandhiringapooloftemporarypersonneland,thereafter,assigningthemto
itsclientsfromtimetotimeforsuchdurationassaidclientsmayrequire.RFCfurthercontendsthat
PMCIhasaseparateoffice,permitandlicenseanditsownorganization.

Laboronlycontracting,aprohibitedact,isanarrangementwherethecontractororsubcontractor
merelyrecruits,suppliesorplacesworkerstoperformajob,workorserviceforaprincipal.[14]Inlabor
onlycontracting,thefollowingelementsarepresent:

(a)Thecontractororsubcontractordoesnothavesubstantialcapitalorinvestmentto
actuallyperformthejob,workorserviceunderitsownaccountandresponsibility

(b)Theemployeesrecruited,suppliedorplacedbysuchcontractororsubcontractorare
performingactivitieswhicharedirectlyrelatedtothemainbusinessoftheprincipal.[15]

Ontheotherhand,permissiblejobcontractingorsubcontractingreferstoanarrangementwherebya
principalagreestoputoutorfarmoutwithacontractororsubcontractortheperformanceor
completionofaspecificjob,workorservicewithinadefiniteorpredeterminedperiod,regardlessof
whethersuchjob,workorserviceistobeperformedorcompletedwithinoroutsidethepremisesof
theprincipal.[16]Apersonisconsideredengagedinlegitimatejobcontractingorsubcontractingifthe
followingconditionsconcur:

(a)Thecontractororsubcontractorcarriesonadistinctandindependentbusinessand
undertakestoperformthejob,workorserviceonitsownaccountandunderitsown
responsibilityaccordingtoitsownmannerandmethod,andfreefromthecontroland
directionoftheprincipalinallmattersconnectedwiththeperformanceofthework
exceptastotheresultsthereof

(b)Thecontractororsubcontractorhassubstantialcapitalorinvestmentand

(c)Theagreementbetweentheprincipalandcontractororsubcontractorassuresthe
contractualemployeesentitlementtoalllaborandoccupationalsafetyandhealth
standards,freeexerciseoftherighttoselforganization,securityoftenure,andsocial
andwelfarebenefits.[17]

Previously,inthecaseofNerivs.NLRC,[18]weheldthatinordertobeconsideredasajobcontractor
itisenoughthatacontractorhassubstantialcapital.Inotherwords,oncesubstantialcapitalis
establisheditisnolongernecessaryforthecontractortoshowevidencethatithasinvestmentinthe
formoftools,equipment,machineries,workpremises,amongothers.Therationalforthisisthat
Article106oftheLaborCodedoesnotrequirethatthecontractorpossessbothsubstantialcapital
andinvestmentintheformoftools,equipment,machineries,workpremises,amongothers.[19]The
decisionoftheCourtinNerithusstates:
 RespondentBCCneednotprovethatitmadeinvestmentintheformoftools,
equipment,machineries,workpremises,amongothers,becauseithasestablishedthat
ithassufficientcapitalization.TheLaborArbiterandtheNLRCbothdeterminedthat
BCChadacapitalstockofP1millionfullysubscribedandpaidfor.BCCisthereforea
highlycapitalizedventureandcannotbedeemedengagedin"laboronly"contracting.[20]

However,indeclaringthatBuildingCareCorporation("BCC")wasanindependentcontractor,the
Courtconsiderednotonlythefactthatithadsubstantialcapitalization.TheCourtnotedthatBCC
carriedonanindependentbusinessandundertooktheperformanceofitscontractaccordingtoits
ownmannerandmethod,freefromthecontrolandsupervisionofitsprincipalinallmattersexceptas
totheresultsthereof.[21]TheCourtlikewisementionedthattheemployeesofBCCwereengagedto
performspecificspecialservicesforitsprincipal.[22]Thus,theCourtruledthatBCCwasan
independentcontractor.

TheCourtfurtherclarifiedtheimportoftheNeridecisioninthesubsequentcaseofPhilippineFuji
XeroxCorporationvs.NLRC.[23]Inthesaidcase,petitionerFujiXeroximploredtheCourttoapplythe
Neridoctrinetoitsallegedjobcontractor,Skillpower,Inc.,anddeclarethesameasanindependent
contractor.FujiXeroxallegedthatSkillpower,Inc.wasahighlycapitalizedventureregisteredwiththe
SecuritiesandExchangeCommission,theDepartmentofLaborandEmployment,andtheSocial
SecuritySystemwithassetsexceedingP5,000,000.00possessingatleast29typewriters,office
equipmentandservicevehicles,anditsownpoolofemployeeswith25clerksassignedtoitsclients
onatemporarybasis.[24]DespitetheevidencepresentedbyFujiXeroxtheCourtrefusedtoapplythe
Nericaseandexplained:

PetitionerscitethecaseofNeriv.NLRC,inwhichitwasheldthattheBuildingCare
Corporation(BCC)wasanindependentcontractoronthebasisoffindingthatithad
substantialcapital,althoughtherewasnoevidencethatithadinvestmentsintheformof
tools,equipment,machineriesandworkpremises.ButtheCourtinthatcaseconsidered
notonlythecapitalizationoftheBCCbutalsothefactthatBCCwasprovidingspecific
specialservices(radio/telexoperatorandjanitor)totheemployerthatinanothercase,
theCourthadalreadyfoundthatBCCwasanindependentcontractorthatBCC
retainedcontrolovertheemployeesandtheemployerwasactuallyjustconcernedwith
theendresultthatBCChadthepowertoreassigntheemployeesandtheirdeployment
wasnotsubjecttotheapprovaloftheemployerandthatBCCwaspaidinlumpsumfor
theservicesitrendered.Thesefeaturesofthatcasemakeitdistinguishablefromthe
presentone.[25]

NothavingshowntheabovecircumstancespresentinNeri,theCourtdeclaredSkillpower,Inc.tobe
engagedinlaboronlycontractingandwasconsideredasamereagentoftheemployer.

Fromthetwoaforementioneddecisions,itmaybeinferredthatitisnotenoughtoshowsubstantial
capitalizationorinvestmentintheformoftools,equipment,machineriesandworkpremises,among
others,tobeconsideredasanindependentcontractor.Infact,jurisprudentialholdingsaretotheeffect
thatindeterminingtheexistenceofanindependentcontractorrelationship,severalfactorsmightbe
consideredsuchas,butnotnecessarilyconfinedto,whetherthecontractoriscarryingonan
independentbusinessthenatureandextentoftheworktheskillrequiredthetermanddurationof
therelationshiptherighttoassigntheperformanceofspecifiedpiecesofworkthecontroland
supervisionoftheworkersthepoweroftheemployerwithrespecttothehiring,firingandpaymentof
theworkersofthecontractorthecontrolofthepremisesthedutytosupplypremises,tools,
appliances,materialsandlaborandthemode,mannerandtermsofpayment.[26]

Giventheabovestandardsandthefactualmilieuofthecase,theCourthastoagreewiththe
conclusionoftheLaborArbiterthatPMCIisengagedinlaboronlycontracting.
Firstofall,PMCIdoesnothavesubstantialcapitalizationorinvestmentintheformoftools,
equipment,machineries,workpremises,amongothers,toqualifyasanindependentcontractor.While
ithasanauthorizedcapitalstockofP1,000,000.00,onlyP75,000.00isactuallypaidin,which,toour
mind,cannotbeconsideredassubstantialcapitalization.InthecaseofNeri,whichwaspromulgated
in1993,BCChadacapitalstockofP1,000,000.00whichwasfullysubscribedandpaidfor.Moreover,
whentheNericasewasdecidedin1993,therateofexchangebetweenthedollarandthepesowas
onlyP27.30to$1[27]whilepresentlyitisatP40.390to$1.[28]TheCourttakesjudicialnoticeofthefact
thatin1993,theeconomicsituationinthecountrywasnotasadverseasthepresent,asshownby
thedevaluationofourpeso.Withthecurrenteconomicatmosphereinthecountry,thepaidin
capitalizationofPMCIamountingtoP75,000.00cannotbeconsideredassubstantialcapitaland,as
such,PMCIcannotqualifyasanindependentcontractor.

Second,PMCIdidnotcarryonanindependentbusinessnordiditundertaketheperformanceofits
contractaccordingtoitsownmannerandmethod,freefromthecontrolandsupervisionofits
principal,RFC.TheevidenceathandshowsthattheworkersassignedbyPMCItoRFCwereunder
thecontrolandsupervisionofthelatter.TheContractofServiceitselfprovidesthatRFCcanrequire
theworkersassignedbyPMCItorenderservicesevenbeyondtheregulareighthourworkingday
whendeemednecessary.[29]Furthermore,RFCundertooktoassistPMCIinmakingsurethatthedaily
timerecordsofitsallegedemployeesfaithfullyreflecttheactualworkinghours.[30]Withregardto
petitioner,RFCadmittedthatitexercisedcontrolandsupervisionoverhim.[31]Thesearetelltale
indicationsthatPMCIwasnotleftalonetosuperviseandcontrolitsallegedemployees.Consequently,
itcanbeconcludedthatPMCIwasnotanindependentcontractorsinceitdidnotcarryadistinct
businessfreefromthecontrolandsupervisionofRFC.

Third,PMCIwasnotengagedtoperformaspecificandspecialjoborservice,whichisoneofthe
strongindicatorsthatanentityisanindependentcontractorasexplainedbytheCourtinthecasesof
NeriandFuji.AsstatedintheContractofService,thesoleundertakingofPMCIwastoprovideRFC
withatemporaryworkforceabletocarryoutwhateverservicemayberequiredbyit.[32]Suchventure
wascompliedwithbyPMCIwhentherequiredpersonnelwereactuallyassignedtoRFC.Apartfrom
that,nootherparticularjob,workorservicewasrequiredfromPMCI.Obviously,withsuchan
arrangement,PMCImerelyactedasarecruitmentagencyforRFC.SincetheundertakingofPMCIdid
notinvolvetheperformanceofaspecificjob,butratherthesupplyofmanpoweronly,PMCIclearly
conducteditselfaslaboronlycontractor.

Lastly,inlaboronlycontracting,theemployeesrecruited,suppliedorplacedbythecontractorperform
activitieswhicharedirectlyrelatedtothemainbusinessofitsprincipal.Inthiscase,theworkof
petitionerassalesrepresentativeisdirectlyrelatedtothebusinessofRFC.Beinginthebusinessof
foodmanufacturingandsales,itisnecessaryforRFCtohireasalesrepresentativelikepetitionerto
takechargeofbookingitssalesordersandcollectingpaymentsforsuch.Thus,theworkofpetitioner
assalesrepresentativeinRFCcanonlybecategorizedasclearlyrelatedto,andinthepursuitofthe
lattersbusiness.Logically,whenpetitionerwasassignedbyPMCItoRFC,PMCIactedmerelyasa
laboronlycontractor.

Basedontheforegoing,PMCIcanonlybeclassifiedasalaboronlycontractorand,assuch,cannot
beconsideredastheemployerofpetitioner.

However,evengrantingthatPMCIisanindependentcontractor,asRFCadamantlysuggests,still,a
findingofthesamewillnotsavethedayforRFC.AperusaloftheContractofServiceenteredinto
betweenRFCandPMCIrevealsthatpetitionerisactuallynotincludedintheenumerationofthe
workerstobeassignedtoRFC.Thefollowingaretheworkersenumeratedinthecontract:

1.Merchandiser

2.PromoGirl
 3.FactoryWorker

4.Driver[33]

Obviously,theaboveenumerationdoesnotincludethepositionofpetitionerassalesrepresentative.
Thisonlyshowsthatpetitionerwasneverintendedtobeapartofthosetobecontractedout.
However,RFCinsiststhatdespitetheabsenceofhispositionintheenumeration,petitioneris
deemedincludedbecausethishasbeenagreeduponbetweenitselfandPMCI.Suchcontention
deservesscantconsideration.Haditreallybeentheintentionofbothpartiestoincludethepositionof
petitionertheyshouldhaveclearlyindicatedthesameinthecontract.However,thecontractistotally
silentonthispointwhichcanonlymeanthatpetitionerwasneverreallyintendedtobecoveredbyit.

Evenifweusethe"fourfoldtest"toascertainwhetherRFCisthetrueemployerofpetitionerthe
sameresultwouldbeachieved.Indeterminingtheexistenceofemployeremployeerelationshipthe
followingelementsofthe"fourfoldtest"aregenerallyconsidered,namely:(1)theselectionand
engagementoftheemployeeorthepowertohire(2)thepaymentofwages(3)thepowertodismiss
and(4)thepowertocontroltheemployee.[34]Ofthesefour,the"controltest"isthemostimportant.[35]
AcarefulstudyoftheevidenceathandshowsthatRFCpossessestheearmarksofbeingthe
employerofpetitioner.

Withregardtothefirstelement,thepowertohire,RFCdeniesanyinvolvementintherecruitmentand
selectionofpetitionerandassertsthatpetitionerdidnotpresentanyproofthathewasactuallyhired
andemployedbyRFC.

Itshouldbepointedoutthatnoparticularformofproofisrequiredtoprovetheexistenceofan
employeremployeerelationship.[36]Anycompetentandrelevantevidencemayshowtherelationship.
[37]
Ifonlydocumentaryevidencewouldberequiredtodemonstratethatrelationship,noscheming
employerwouldeverbebroughtbeforethebarofjustice.[38]Inthecaseatbar,petitionerpresented
theidentificationcardissuedtohimon26May1990byRFCasproofthatitwasthelatterwho
engagedhisservices.Toourmind,theIDcardisenoughproofthatpetitionerwaspreviouslyhiredby
RFCpriortohistransferasagencyworkertoPMCI.ItmustbenotedthattheEmploymentContract
betweenpetitionerandPMCIwasdated1July1991.Ontheotherhand,theIDcardissuedbyRFCto
petitionerwasdated26May1990,ormorethanoneyearbeforetheEmploymentContractwas
signedbypetitionerinfavorofPMCI.Itmakesonewonderwhy,ifpetitionerwasindeedrecruitedby
PMCIasitsownemployeeon1July1991,howcomehehadalreadybeenissuedanIDcardbyRFC
ayearearlier?WhiletheEmploymentContractindicatestheword"renewal,"presumablyanattempt
toshowthatpetitionerhadpreviouslysignedasimilarcontractwithPMCI,noevidenceofaprior
contractenteredintobetweenpetitionerandPMCIwaseverpresentedbyRFC.Infact,despitethe
demandmadebythecounselofpetitionerfortheproductionofthecontractwhichpurportedlyshows
thatpriorto1July1991petitionerwasalreadyconnectedwithPMCI,RFCnevermadeamoveto
furnishthecounselofpetitioneracopyoftheallegedoriginalEmploymentContract.Theonlylogical
conclusionwhichmaybederivedfromsuchinactionisthattherewasnosuchcontractandthatthe
onlyEmploymentContractenteredintobetweenPMCIandpetitionerwasthe1July1991contract
andnoother.Since,asshownbytheIDcard,petitionerwasalreadywithRFCon26May1990,prior
tothetimeanyEmploymentContractwasagreeduponbetweenPMCIandpetitioner,itfollowsthatit
wasRFCwhoactuallyhiredandengagedpetitionertobeitsemployee.

Withrespecttothepaymentofwages,RFCdisputestheargumentofpetitionerthatitpaidhiswages
onthegroundthatpetitionerdidnotsubmitanyevidencetoprovethathissalarywaspaidbyit,or
thathewasissuedpayslipbythecompany.OnthecontraryRFCassertsthattheinvoices[39]
presentedbyit,showthatitwasPMCIwhopaidpetitionerhiswagesthroughitsregularmonthly
billingschargedtoRFC.
TheCourttakesjudicialnoticeofthepracticeofemployerswho,inordertoevadetheliabilitiesunder
theLaborCode,donotissuepayslipsdirectlytotheiremployees.[40]Underthecurrentpractice,a
thirdperson,usuallythepurportedcontractor(serviceormanpowerplacementagency),assumesthe
actofpayingthewage.[41]Forthisreason,thelowlyworkerisunabletoshowproofthatitwasdirectly
paidbythetrueemployer.Nevertheless,fortheworkers,itisenoughthattheyactuallyreceivetheir
pay,obliviousoftheneedforpayslips,unawareofitslegalimplications.[42]Applyingthisprincipleto
thecaseatbar,eventhoughthewageswerecoursedthroughPMCI,wenotethatthefundsactually
camefromthepocketsofRFC.Thus,intheend,RFCisstilltheonewhopaidthewagesofpetitioner
albeitindirectly.

Astothethirdelement,thepowertodismiss,RFCaversthatitwasPMCIwhoterminatedthe
employmentofpetitioner.Thefactsonrecord,however,disprovetheallegationofRFC.Firstofall,the
ContractofServicegaveRFCtherighttoterminatetheworkersassignedtoitbyPMCIwithoutthe
lattersapproval.QuotedhereunderistheportionofthecontractstatingthepowerofRFCtodismiss,
towit:

7.TheFirstparty("RFC")reservestherighttoterminatetheservicesofanyworker
foundtobeunsatisfactorywithoutthepriorapprovalofthesecondparty("PMCI").[43]

Infurtheranceoftheaboveprovision,RFCrequestedPMCItoterminatepetitionerfromhis
employmentwiththecompany.InresponsetotherequestofRFC,PMCIterminatedpetitionerfrom
service.AsfoundbytheLaborArbiter,towhichweagree,thedismissalofpetitionerwasindeed
madeundertheinstructionofRFCtoPMCI.

Thefourthandmostimportantrequirementinascertainingthepresenceofemployeremployee
relationshipisthepowerofcontrol.Thepowerofcontrolreferstotheauthorityoftheemployerto
controltheemployeenotonlywithregardtotheresultofworktobedonebutalsotothemeansand
methodsbywhichtheworkistobeaccomplished.[44]Itshouldbeborneinmind,thatthe"controltest"
callsmerelyfortheexistenceoftherighttocontrolthemannerofdoingthework,andnotnecessarily
totheactualexerciseoftheright.[45]Inthecaseatbar,weneednotbelaborourselvesindiscussing
whetherthepowerofcontrolexists.RFCalreadyadmittedthatitexercisedcontrolandsupervision
overpetitioner.[46]RFC,however,raisesthedefensethatthepowerofcontrolwasjointlyexercised
withPMCI.TheLaborArbiter,ontheotherhand,foundthatpetitionerwasunderthedirectcontroland
supervisionofthepersonnelofRFCandnotPMCI.Weareinclinedtobelievethefindingsofthe
LaborArbiterwhichissupportednotonlybytheadmissionofRFCbutalsobytheevidenceon
record.Besides,toourmind,theadmissionofRFCthatitexercisedcontrolandsupervisionover
petitioner,thesamebeingadeclarationagainstinterest,issufficientenoughtoprovethatthepower
ofcontroltrulyexists.

We,therefore,holdthatanemployeremployeerelationshipexistsbetweenpetitionerandRFC.

Havingdeterminedtherealemployerofpetitioner,wenowproceedtoascertainthelegalityofhis
dismissalfromemployment.

Sincepetitioner,duetohislengthofservice,alreadyattainedthestatusofaregularemployee,[47]he
isentitledtothesecurityoftenureprovidedunderthelaborlaws.Hence,hemayonlybevalidly
terminatedfromserviceuponcompliancewiththelegalrequisitesfordismissal.UndertheLabor
Code,therequirementsforthelawfuldismissalofanemployeearetwofold,thesubstantiveandthe
proceduralaspects.Notonlymustthedismissalbeforavalidorauthorizedcause,[48]therudimentary
requirementsofdueprocessnoticeandhearing[49]must,likewise,beobservedbeforeanemployee
maybedismissed.Withouttheconcurrenceofthetwo,theterminationwould,intheeyesofthelaw,
beillegal.[50]
Astheemployer,RFChastheburdenofprovingthatthedismissalofpetitionerwasforacause
allowedunderthelawandthatpetitionerwasaffordedproceduraldueprocess.Sadtosay,RFCfailed
todischargethisburden.Indeed,RFCneverpointedtoanyvalidorauthorizedcauseundertheLabor
Codewhichallowedittoterminatetheservicesofpetitioner.Itsloneallegationthatthedismissalwas
duetotheexpirationorcompletionofcontractisnotevenoneofthegroundsforterminationallowed
bylaw.NeitherdidRFCshowthatpetitionerwasgivenampleopportunitytocontestthelegalityofhis
dismissal.Infact,nonoticeofsuchimpendingterminationwasevergivenhim.Petitionerwas,thus,
surprisedthathewasalreadyterminatedfromemploymentwithoutanyinklingastohowandwhyit
cameabout.Petitionerwasdefinitelydenieddueprocess.Havingfailedtoestablishcompliancewith
therequirementsonterminationofemploymentundertheLaborCode,thedismissalofpetitioneris
taintedwithillegality.

Anemployeewhohasbeenillegallydismissedisentitledtoreinstatementtohisformerposition
withoutlossofseniorityrightsandtopaymentoffullbackwagescorrespondingtotheperiodfromhis
illegaldismissaluptoactualreinstatement.[51]Petitionerisentitledtonoless.

WHEREFORE,thepetitionisGRANTED.ThedecisionoftheNLRC,dated21June1996,aswellas
itsresolution,promulgatedon20August1996,areANNULLEDandSETASIDE.Thedecisionofthe
LaborArbiterrenderedon15June1994,isherebyREINSTATEDandAFFIRMED.

SOORDERED.

Davide,Jr.,C.J.,(Chairman),Puno,Pardo,andYnaresSantiago,JJ.,concur.

[1] PennedbyCommissionerJoaquinA.TanodraandconcurredinbyPresidingCommissionerLourdesC.JavierandCommissioner
IreneoB.Bernardo.
[2] PennedbyLaborArbiterAlexArcadioLopez.
[3] Annex"F,"Rollo,p.45.
[4] Annex"D,"Rollo,pp.4143.
[5] CommentoftheOfficeoftheSolicitorGeneral,Rollo,pp.147,148.
[6] Annex"2,"Rollo,pp.79,8284.
[7] Id.,at79,8687.
[8] DecisionoftheLaborArbiter,Rollo,pp.3640.
[9] Ibid.
[10] DecisionoftheNLRC,Rollo,pp.1532.
[11] Ibid.
[12] ResolutionoftheNLRC,Rollo,pp.3335.
[13] Annex"5,"Rollo,pp.121,131137.
[14] Section4(f),RuleVIIIA,BookIII,oftheOmnibusRulesImplementingtheLaborCode.
[15] Ibid.
[16] Section4(d),RuleVIIIA,BookIII,oftheOmnibusRulesImplementingtheLaborCode.
[17] Ibid.
[18] 224SCRA717(1993).
[19] Id.,at721.
[20] Id.,at720.
[21] Id.,at724.
[22] Id.
[23] 254SCRA294(1996).
[24] Id.,at303.
[25] Id.
[26] Ponce,etal.vs.NLRC,etal.,293SCRA366(1998).
[27] Source:TheManilaChronicle,Vol.XXXIII,No.536,Friday,July23,1993.
[28] Source:Today,No.2,198,Tuesday,1February2000.
[29] Annex"2,"Rollo,pp.79,8284.
[30] Ibid.
[31] Memorandum,Rollo,pp.182,191.
[32] Annex"2,"Rollo,pp.79,8284.
[33] Id.,AnnexAoftheContractofService,at84.
[34] RhonePoulencAgrochemicalsInc.,vs.NLRC,etal.,217SCRA249,255(1993).
[35] Ibid.
[36] CaurdanetaanPieceWorkersUnionvs.Laguesma,etal.,286SCRA401,426(1998).
[37] Ibid.
[38] Id.,citingOpulenciaIcePlantandStoragevs.NLRC,228SCRA473(1993).
[39] Annex"2,"Rollo,pp.79,8889.
[40] JangLim,etal.vs.NLRC,etal.,G.R.No.124630,February19,1999.
[41] Ibid.
[42] Id.
[43] Annex"2,"Rollo,pp.79,8284.
[44] ZanotteShoesvs.NLRC,241SCRA261(1995)Tiuvs.NLRC,254SCRA1(1996)
[45] Ibid.
[46] Memorandum,supranote31.
[47] Article280,LaborCode.
[48] Articles279,281,282284,LaborCode.
[49] Salawvs.NLRC,202SCRA7,11(1991).
[50] Id.,at12,citingSanMiguelCorporationvs.NLRC,173SCRA314(1989).
[51] Article279oftheLaborCodeJudyPhilippines,Inc.vs.NLRCandVirginiaAntiola,289SCRA755,(1998)PaguioTransport
Corporationvs.NLRCandWilfredoMelchor,294SCRA657(1998).