G.R. No.

206390

JACK C. VALENCIA, Petitioner,

vs.
CLASSIQUE VINYL PRODUCTS CORPORATION, JOHNNY CHANG
(Owner) and/or CANTINGAS MANPOWER SERVICES, Respondents.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari assails the December 5, 2012

Decision1 and March 18, 2013 Resolution2 of the Court of Appeals (CA) in CA-
G.R. SP No. 120999, which respectively denied the Petition for Certiorari filed
therewith by petitioner Jack C. Valencia (Valencia) and the motion for
reconsideration thereto.

Factual Antecedents

On March 24, 2010, Valencia filed with the Labor Arbiter a Complaint3 for
Underpayment of Salary and Overtime Pay; Non-Payment of Holiday Pay,
Service Incentive Leave Pay, 13th Month Pay; Regularization; Moral and
Exemplary Damages; and, Attorney's Fees against respondents Classique Vinyl
Products Corporation (Classique Vinyl) and its owner Johnny Chang (Chang)
and/or respondent Cantingas Manpower Services (CMS). When Valencia,
however, asked permission from Chang to attend the hearing in connection the
said complaint on April 17, 2010, the latter allegedly scolded him and told him
not to report for work anymore. Hence, Valencia amended his complaint to
include illegal dismissal.4

In his Sinumpaang Salaysay, 5 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 employment6 but
no copy of the same was given to him. He then proceeded to Classique Vinyl
for interview and thereafter started working for the company in June 2005 as
felitizer operator. Valencia claimed that he worked 12 hours a day from Monday
to Saturday and was receiving ₱187.52 for the first eight hours and an overtime
pay of ₱117.20 for the next four hours, or beyond the then minimum wage
mandated by law. Five months later, he was made to serve as extruder operator
but without the corresponding increase in sa1aiy. He was neither paid his
holiday pay, service incentive leave pay, and 13thmonth pay. Worse, 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 was
also being deducted the amounts of ₱100.00 and ₱60.00 a week for Cash Bond
and Agency Fee, respectively. Valencia averred that his salary was paid on a
weekly basis but his pay slips neither bore the name of Classique Vinyl nor of
CMS; 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 from work for reasons only known to him. In sum, Classique
Vinyl 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 was 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.

CMS, on the other hand, denied any employer-employee relationship between it

and Valencia. It contended that after it deployed Valencia to Classique Vinyl, it
was already the latter which exercised full control and supervision over him.
Also, Valencia's wages were paid by Classique Vinyl only that it was CMS
which physically handed the same to Valencia.

Ruling of the Labor Arbiter

On September 13, 2010, the Labor Arbiter issued a Decision,7 the pertinent
portions of which read:

Is [Valencia] a regular employee of respondent (Classique

Vinyl]?

The Certificate of Business Name Registration issued by the

Department of Trade and Industry dated 17 August 2007 and
the Renewal of PRP A License No. M-08-03-269 for the period
29 August 2008 to 28 August 2010 issued by the Regional
Director of the National Capital Region of the Department of
Labor and Employment [on the] 1st day of September 2008 are
pieces of evidence to prove that respondent [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] on 06 February
2010.

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 [Classique Vinyl's] assertion.

Obviously, [Valencia] was deployed by CMS to [Classique Vinyl]

for a fixed period.

In Pangilinan v. General Milling Corporation, G.R. No. 149329,

July 12, 2004, 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 performance 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 perfom1ed 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
elementary 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.

With regard to underpayment of salary, respondent CMS

admitted that it received from respondent [Classique Vinyl] the
salary for [Valencia's] deployment. Respondent CMS never
contested that the amount received was sufficient for the
payment of [Valencia's] salary.
 Furthermore, respondent [Classique Vinyl] cannot be obliged to
pay [Valencia's] overtime pay, holiday pay, service incentive
leave and 13th month pay as well as the alleged illegal deduction
on the following grounds:

a) [Valencia] is not a rank-and-file employee of [Classique Vinyl];

b) No proof was offered to establish that [Valencia] actually

rendered overtime services;

c) [Valencia had] not [worked] continuously or even intermittently

for [one whole] (1) year[-]period during the specific year of his
deployment with respondent [Classique Vinyl] to be entitled to
service incentive leave pay.

d) [Valencia] failed to offer substantial evidence to prove that

respondent [Classique Vinyl] illegally deducted from his
sala.7 the alleged agency and cash bond.

Moreover, as against respondent CMS[,] the record is bereft of

factual basis for the exact computation of [Valencia's] money
claims as it has remained uncontroverted that [Valencia] was not
deployed continuously neither with respondent [Classique Vinyl]
and/or to such other clientele.

WHEREFORE, premises considered, judgment is hereby

rendered [d]ismissing the above-entitled case for lack of merit
and/or factual basis

SO ORDERED,8

Ruling of the National Labor Relations Commission

Valencia promptly appealed to the National Labor Relations Commission

(NLRC). Applying the four-fold test, the NLRC, however, declared CMS as
Valencia's employer in its Resolution9 dated April 14, 2011, viz.:

In Order to determine the existence of an employer-employee

relationship, the following yardstick had been consistently
applied: (l) the selection and engagement; (2) payment of
wages; (3) power of dismissal and; (4) the power to control the
employee[']s conduct.

In this case, [Valencia] admitted that he applied for work with

respondent [CMS] x x x. Upon the acceptance of his application,
he was made to sign an employment contract x x x. [Valencia]
also admitted that he received his wages from respondent
[CMS] x x x. As a matter of fact, respondent [CMS] argued that
[Valencia] was given a non-cash wage in the approximate
amount of Php3,000.00 x x x.
 Notably, it is explicitly stated in the employment contract of
[Valencia] that he is required to observe all the rules and
regulations of the company as well as [the] lawful instructions of
the management during his employment. That failure to do so
would cause the termination of his employment contract. The
pertinent provision of the contract reads:

2. The employee shall observe all the rules and

regulations of the company during the period of
employment and [the] lawful instructions of the
management or its representatives. Failure to do
so or if performance is below company
standards, management [has] the right to
immediatelycancel this contract. x x x

The fact that [Vale1icia] was subjected to such restriction is an

evident exercise of the power of control over [Valencia].

The power of control of respondent [CMS] over Valencia was

further bolstered by the declaration of the former that they will
not take against [Valencia] his numerous tardiness and
absences at work and[;] his nonobservance of the company
rules,· The statement of [CMS] reads:

Needless to say that [Valencia] in the course of

his employment has incurred many infractions
like tardiness and absences, non-observance of
company rules, but respondent [CMS], in
reiteration will not take this up as leverage
against [Valencia]. x x x

Though [Valencia] worked in the premises of Classique Vinyl x x

x and that the [equipment] he used in the performance of his
work was provided by the between [Valencia] and Classique
Vinyl x x x in view of the foregoing circumstances earlier
reflected. Besides, as articulated by jurisprudence, the power of
control does not require actual exercise of the power but the
power to wield that power x x x.

With the foregoing chain of events, it is evident that [Valencia] is

an employee of respondent [CMS].

x x x x10

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 in the Resolution11 dated June 8, 2011.
Ruling of the Court of Appeals

When Valencia sought recourse from the CA, the said court rendered a
Decision12 dated December 5, 2012 denying his Petition for Certiorari and
affirming the ruling of the NLRC.

Valencia's motion for reconsideration was likewise denied in a

Resolution 13 dated March 18, 2013.

Hence, this Petition for Review on Certiorari imputing upon the CA the following
errors:

WITH DUE RESPECT, IT IS A SERIOUS ERROR WHICH CONSTITUTE[S]

GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION ON THE PART OF THE HONORABLE COURT OF APPEALS
TO HAVE RULED THAT PETITIONER IS AN EMPLOYEE OF CMS AND
FURTHER RULED THAT HE IS NOT ENTITLED TO HIS MONETARY
CLAIMS.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS['] DECISION

AND RESOLUTION ARE CONTRARY TO LAW AND WELL-SETTLED
RULE.14

Valencia points out that the CA, in ruling that he was an employee of CMS,
relied heavily on the employment contract which the latter caused him to sign.
He argues, however, that the said contract deserves scant consideration since
aside from being improperly filled up (there were many portions without entries),
the same was not notarized. Valencia likewise stresses that ti.11e burden of
proving that CMS is a legitimate job contractor lies with respondents. Here,
neither Classique Vinyl nor CMS was able to present proof that the latter has
substantial capital to do business as to be considered a legitimate independent
contractor. Hence, CMS is presumed to be a mere labor-only contractor and
Classique Vinyl, as CMS' principal, was Valencia's true employer. As to his
alleged dismissal, Valencia argues that respondents failed to establish just or
authorized cause, thus, his dismissal was illegal. Anent his monetary claims,
Valencia invokes the principle that he who pleads payment has the burden of
proving it. Since respondents failed to present even a single piece of evidence
that he has been paid his labor standards benefits, he believes that he is
entitled to recover them from respondents who must be held jointly and
severally liable for the same. Further, Valencia contends that respondents
should be assessed moral and exemplary damages for circumventing pertinent
labor laws by preventing him from attaining regular employment status. Lastly,
for having been compelled to engage the services of counsel, Valencia claims
that he is likewise entitled to attorney's fees.

For their part, respondents Classique Vinyl and Chang point out that the issues
raised by Valencia involve questions of fact which are not within the ambit of a
petition for review on certiorari. Besides, findings of facts of the labor tribunals
when affirmed by the CA are generally binding on this Court. At any rate, the
said respondents reiterate the argun1ents they raised before the labor tribunals
and the CA.
With respect to respondent CMS, the Court dispensed with the filing of its
comment15 when the resolution requiring it to file one was returned to the Court
unserved 16 and after Valencia informed the Court that per Certification 17 of
the Office of the Treasurer of Valenzuela City where CMS's office was located,
the latter had already closed down its business on March 21, 2012.

Our Ruling

There is no merit in the Petition.

The core issue here is whether there exists an employer-employee relationship

between Classique Vinyl and Valencia. Needless to state, it is from the said
detennination that the other issues raised, i.e., whether Valencia was illegally
dismissed by Classique Vinyl and whether the latter is liable for his monetary
claims, hinge. However, as correctly pointed out by Classique Vinyl, "[t]he issue
of whether or not an employer-employee relationship existed between
[Valencia] and [Classique Vinyl] is essentially a question of fact." 18 "The Court
is not a trier of facts and will not review the factual findings of the lower tribunals
as these are generally binding and conclusive."'19 While there are recognized
exceptions,20 none of them applies in this case.

Even if otherwise, the Court is not inclined to depart from the uniform findings of
the Labor Arbiter, the NLRC and the CA.

"It is an oft-repeated rule that in labor cases, as in other administrative and

quasi-judicial proceedings, 'the quantum of proof necessary is substantial
evidence, or such amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.’ ‘The burden of proof rests upon the
party who asserts the affirmative of an issue’."21 Since it is Valencia here who
is claiming to be an employee of Classique Vinyl, it is thus incumbent upon him
to proffer evidence to prove the existence of employer-employee relationship
between them. He "needs to show by substantial evidence that he was indeed
an employee of the company against which he claims illegal
dismissal."22Corollary, the burden to prove the elements of an employer-
employee 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 aforementioned
elements of employer-employee relationship.23 "Any competent and relevant
evidence to prove the relationship may be admitted."24 In this case, however,
Valencia failed to present competent evidence, documentary or otherwise, to
support his claimed employer-employee 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.25 The CA, therefore, did not err in relying on the said employment
contract in its determination of the merits of this case. For another, Valencia
himself acknowledged that the pay slips26 he submitted do not bear the name
of Classique Vinyl. While the Court in Vinoya v. National Labor Relations
Commission27took judicial notice of the practice of employer to course through
the purported contractor the act of paying wages to evade liabilities under the
Labor Code, hence, the non-appearance of employer's name in the pay slip, the
Court is not inclined to rule that such is the case here. This is conside1ing that
although CMS claimed in its supplemental Position Paper/Comment that the
money it used to pay Valencia's wages came from Classique Vinyl,28 the same
is a mere allegation without proof Moreover, such allegation is inconsistent with
CMS's earlier assertion in its Position Paper29 that Valencia received from it
non-cash wages in an approximate amount of ₱3,000.00. 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, viz.:

xxxx

2. That the employee shall observe all rules and regulations of

the company during the period of employment and [the] lawful
instructions of the management or its representatives. Failure to
do so or if performance is below company standards,
management [has] the right to immediately cancel this contract.

x x x x30

Clearly, therefore, no error can be attributed on the part of the labor tribunals
and the CA in ruling out the existence of employer-employee relationship
between Valencia and Classique Vinyl.

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. "Genera1ly, 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 lik.e."31 Here, to prove that CMS was a legitimate
contractor, Classique Vinyl presented the former's Certificate of
Registration32 with the Department of Trade and Industry and, License33 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.34 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."35 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. Again, the Court is not inclined to disturb the same.

In view of the above disquisition, the Court finds no necessity to dwell on the
issue of whether Valencia was illegally dismissed by Classique Vinyl and
whether the latter is liable for Valencia's money claims.

WHEREFORE, the Petition for Review on Certiorari is DENIED. 'The assailed

December 5, 2012 Decision and March 18, 2013 Resolution of the Court of
Appeals in CA-G.R. SP No. 120999 are AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:

MARIA LOURDES P.A. SERENO

Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO

Associate JusticeESTELA M. PERLAS-BERNABE
Associate Justice

ALFREDO BENJAMIN S. CAGUIOA

Associate Justice

CERTIFICATION

Pursuant to the Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.

MARIA LOURDES P.A. SERENO

Chief Justice
Footnotes

1 CA rollo, pp. 325-336; penned by Associate Justice Leoncia Real-Dimagiba

and concurred in by Associate Justices Rosmari D. Carandang and Ricardo R.
Rosario.

2 Id. at 389-390.

3 NLRC records, pp. 1-3.

4 Id. at 7-8.

5 Id. at 27-29.

6 Id. at 139.

7 Id. at 208-215; penned by Labor Arbiter Geobel A. Bartolabac.

8 Id. at 213-215.

9 Id. at 263-273; penned by Commissioner Teresita D. Castillon-Lora and

concurred in by Presiding Commissioner Raul T. Aquino and Commissioner
Napoleon M. Menese.

10 Id. at 270-272.

11 Id. at 3i7-318.

12 CA rollo, pp. 325-336.

13 Id. at 396-397.

14 Rollo, p. 8.

15 Id. at 448-449.

16 Id. at 441-442.

17 Id. at 448-449.

18 Legend Hotel (Manila) v. Realuyo, 691 Phil. n6, 236 (2012).

19 Cavite Apparel, Incorporated v. Marquez, 703 Phil. 46, 53 (2013).

20 These exceptions are: (1) when the conclusion is a finding grounded entirely
on speculation, surmises or conjectures; (2) when the inference made is
manifestly mistaken, absurd or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on a misapprehension of facts; (5)
when the findings of facts are conflicting; (6) when the Court of Appeals, in
making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee; (7) the findings of the
Court of Appeals an: contrary to those of the trial court; (8) when the findings of
fact are conclusions without citation of specific evidence on which they am
based; (9) when the facts set forth in the petition as well as in the petitioner's
main and reply briefs are not disputed by the respondent; and (10) the findings
of fact of the Court of Appeals is premised on the supposed absence of
evidence and is contradicted by the evidence on record, (Pascual v.
Burgos, G.R. No. 171722, January 11, 2016, 778 SCRA 189, 205-206)

21 Tenazas v. R. Villegas Taxi Transport, G,R. No. 192998, April 2, 2014, 720
SCRA 467, 480-481.

22 Javier v. Fly Ace Corporation, 682 Phil. 359, 372 (2012).

23 Tenazas v. R. Villegas Taxi Transport, supra at 481.

24 Id.

25 Gelos v. Court of Appeals, 284-A Phil. 114, 120 (1992)

26 NLRC records, pp. 30-3 l.

27 381 Phil. 460, 480 (2000).

28See CMS' Position Paper/Comment, Supplemental, NLRC records, pp. 144-

147 at 146.

29 Id. at 36-39.

30 Id. at 139.

31 Garden of Memories Park and Life Plan, Inc. v. National Labor Relations
Commission, 681 Phil. 299, 311 (2012),

32NLRC records. p. 183.

33 Id. at 184.

34 Babas v. Lorenzo Shipping Corporation, 653 Phil. 421, 433 (2010).

35 7K Corporation v. National Labor Relations Commission, 537 Phil. 664, 680-

681 (2006).