Jack C. Valencia vs. Classique Vinyl Products Corporation, et al.
G.R. No. 206390, January 30, 2017


Jack C. Valencia alleged that he applied for work with Classique Vinyl but was told by the latter’s personnel office to proceed to CMS, a local manpower agency, and therein submit the requirements for employment. Upon submission thereof, CMS made him sign a contract of employment but no copy of the same was given to him.

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He then proceeded to Classique Vinyl for interview and thereafter started working for the company as fertilizer operator.

He alleged that premiums for Philhealth and Pag-Ibig Fund were not paid and his monthly deductions for Social Security System (SSS) premiums were not properly remitted. He averred that all the machineries that he was using/operating in connection with his work were all owned by Classique Vinyl; and that his work was regularly supervised by Classique Vinyl.

He further averred that he worked for Classique Vinyl for four years until his dismissal. Hence, by operation of law, he had already attained the status of a regular employee of his true employer, Classique Vinyl, since according to him, CMS is a mere labor-only contractor.

Valencia, therefore, argued that Classique Vinyl should be held guilty of illegal dismissal for failing to comply with the twin-notice requirement when it dismissed him from the service and be made to pay for his monetary claims.

Classique Vinyl, for its part, denied having hired Valencia and instead pointed to CMS as the one who actually selected, engaged, and contracted out Valencia’s services. It averred that CMS would only deploy Valencia to Classique Vinyl whenever there was an urgent specific task or temporary work and these occasions took place sometime in the years 2005, 2007, 2009 and 2010.

It stressed that Valencia’s deployment to Classique Vinyl was intermittent and limited to three to four months only in each specific year. Classique Vinyl further contended that Valencia’s performance was exclusively and directly supervised by CMS and that his wages and other benefits were also paid by the said agency.

It likewise denied dismissing Valencia from work and instead averred that on April 16, 2010, while deployed with Classique Vinyl, Valencia went on a prolonged absence work for reasons only known to him. In sum, Classique asserted that there was no employer-employee relationship between it and Valencia, hence, it could not have illegally dismissed the latter nor can it be held liable for Valencia’s monetary claims.

Even assuming that Valencia is entitled to monetary benefits, Classique Vinyl averred that it cannot be made to pay the same since it is an establishment regularly employing less than 10 workers. As such, it is exempted from paying the prescribed wage orders in its area and other benefits under the Labor Code.

At any rate, Classique Vinyl insisted that Valencia’s true employer was CMS, the latter being an independent contractor as shown by the fact that it wa5 duly incorporated and registered not only with the Securities and Exhange Commission but also with the Department of Labor and Employment; and, that it has substantial capital or investment in connection with the work performed and services rendered by its employees to clients.

LA Ruling:

The LA rendered a decision dismissing the case for lack of merit.

It held that the Certificate of Business Name Registration issued by the Department of Trade and Industry and the Renewal of PRP A License issued by the Regional Director of the National Capital Region of the Department of Labor and Employment are pieces of evidence to prove that CMS is a legitimate Private Recruitment and Placement Agency.

Pursuant to its business objective, respondent CMS entered into several Employment Contracts with complainant Valencia as Contractual Employee for deployment to respondent Classique Vinyl, the last of which was signed by Valencia. The foregoing Employment Contract for a definite period supports respondent Classique Vinyl’s assertion that Valencia was not hired continuously but intermittently ranging from 3 months to 4 months for the years 2005, 2007, 2009 and 2010.

Notably, no controverting evidence was offered to dispute respondent Clssique Vinyl’s assertion. Obviously, Valencia was deployed by CMS to Classique Vinyl for a fixed period.

The LA cited the case of Pangilinan v. General Milling Corpomtion, (G.R. No. 149329, July 12, 2004) in holding that the Supreme Court ruled that it does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the pe1f01mance of such activities. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employee’s duties.

Thus, even if respondent Classique Vinyl exercises full control and supervision over the activities performed by Valencia, the latter’s employment cannot be considered as regular. Likewise, even if Valencia is considered the regular employee of respondent CMS, the complaint for illegal dismissal cannot prosper as the employment was not terminated by respondent CMS.

On the other hand, there is no substantial evidence to support Valencia’s view that he was actually dismissed from his employment by respondent Classique Vinyl. After all, it is elementray that he who makes an affirmative allegation has the burden of proof. On this score, Valencia failed to establish that he was actually dismissed from his job by respondent Classique Vinyl, aside from his bare allegation.

Valencia promptly appealed to the National Labor Relations Commission (NLRC).

NLRC Ruling:

Applying the four-fold test, the NLRC, however, declared CMS as Valencia’s employer.

Accordingly, the NLRC held that there is no basis for Valencia to hold Classique Vinyl liable for his alleged illegal dismissal as well as for his money claims.

Hence, the NLRC dismissed Valencia’s appeal and affirmed the decision of the Labor Arbiter, Valencia’s motion for reconsideration thereto was likewise denied for lack of merit.

CA Ruling:

When Valencia sought recourse from the CA, the said court rendered a Decision denying his Petition for Certiorari and affirming the ruling of the NLRC.

Valencia’s motion for reconsideration was likewise denied.

Hence, this Petition for Review on Certiorari


Whether or not there is employer-employee relationship between Valencia and Classique Vinyl

Whether or not CMS is a labor-only contractor

SC Ruling:

The SC did not find merit in the petition.

The burden to prove the elements of an relationship, viz.: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control, lies upon Valencia. Indeed, there is no hard and fast rule designed to establish the afore-mentioned elements of employer-employee relationship.

Any competent and relevant evidence to prove the relationship may be admitted. In this case, however, Valencia failed to present competent evidence, documentary or otherwise, to support his claimed relationship between him and Classique Vinyl. All he advanced were mere factual assertions unsupported by proof.

In fact, most of Valencia’s allegations even militate against his claim that Classique Vinyl was his true employer. For one, Valencia stated in his Sinumpaang Salaysay that his application was actually received and processed by CMS which required him to submit the necessary requirements for employment.

Upon submission thereof, it was CMS that caused him to sign an employment contract, which upon perusal, is actually a contract between him and CMS. It was only after he was engaged as a contractual employee of CMS that he was deployed to Classique Vinyl.

Clearly, Valencia’s selection and engagement was undertaken by CMS and conversely, this negates the existence of such element insofar as Classique Vinyl is concerned. It bears to state, in addition, that as opposed to Valencia’s argument, the lack of notarization of the said employment contract did not adversely affect its veracity and effectiveness since significantly, Valencia does not deny having signed the same.

For another, Valencia himself acknowledged that the pay slips he submitted do not bear the name of Classique Vinyl. A clear showing of the element of payment of wages by Classique Vinyl is therefore absent. Aside from the afore-mentioned inconsistent allegations of Valencia, his claim that his work was supervised by Classique Vinyl does not hold water.

Again, the Court finds the same as a self-serving assertion unworthy of credence. On the other hand, the employment contract which Valencia signed with CMS categorically states that the latter possessed not only the power of control but also of dismissal over him.

Further, the Court finds untenable Valencia’s argument that neither Classique Vinyl nor CMS was able to present proof that the latter is a legitimate independent contractor and therefore, unable to rebut the presumption that a contractor is presumed to be a labor-only contractor.

Generally, the presumption is that the contractor is a labor-only [contractor] unless such contractor overcomes the burden of proving that it has the substantial capital, investment, tools and the like.

Here, to prove that CMS was a legitimate contractor, Classique Vinyl presented the former’s Certificate of Registration with the Department of Trade and Industry and, License as private recruitment and placement agency from the Department of Labor and Employment.

Indeed, these documents are not conclusive evidence of the status of CMS as a contractor. However, such fact of registration of CMS prevented the legal presumption of it being a mere labor-only contractor from arising.

In any event, it must be stressed that “in labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.

The principal employer therefore becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees. The facts of this case, however, failed to establish that there is any circumvention of labor laws as to call for the creation by the statute of an employer-employee relationship between Classique Vinyl and Valencia. In fact, even as against CMS, Valencia’s money claims has been debunked by the labor tribunals and the CA.

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