Bulanon vs. Mendco Development Corporation

No employer-employee relationship exists where the petitioner fails to prove by substantial evidence the presence of all four elements of the four-fold test — selection and engagement, payment of wages, power of dismissal, and power of control — and where the evidence relied upon consists of dubious, unauthenticated daily time records and a self-serving affidavit, which are insufficient to overcome company payroll records excluding the claimant.

Petitioner Anselmo Bulanon claimed to have been hired as a Welder/Fabricator in the furniture business of respondent Eric Ng Mendoza, who owns several corporate entities — Mendco Development Corporation, Pinnacle Casting Corporation, Mastercraft Phil. Inc., Jacquer International — all operating in the same compound in Mandaue City. Respondents denied any employment relationship, asserting that petitioner's services were engaged only on a task basis to perform masonry and handyman work at the residences of Eric and his family. The dispute required determining whether petitioner's engagement with these entities constituted regular employment or independent, task-based contracting.

Petitioner Anselmo Bulanon alleged that he was hired as a Welder/Fabricator in the furniture business of respondent Eric Ng Mendoza. Eric owns several furniture businesses — Mendco Development Corporation, Pinnacle Casting Corporation, Mastercraft Phil. Inc., and Jacquer International — collectively referred to as respondents. On January 6, 2006, petitioner filed a complaint before the Department of Labor and Employment (DOLE) for non-payment of overtime pay, legal holiday pay, 13th month pay, holiday and rest day premium pay, and non-inclusion in SSS, Philhealth, and PAG-IBIG coverage. Acting on the complaint, the DOLE inspected the premises of respondent Pinnacle on January 13, 2006, and found that petitioner was not paid his 13th month pay, legal holiday pay, service incentive leave pay, and overtime pay.

On January 14, 2006, petitioner reported for work, but a Human Resources representative named Raquel allegedly gave his salary and instructed him not to report for work anymore. Petitioner returned on January 16, 2006, but the security guard on duty prevented him from entering the premises. This prompted petitioner to file complaints before the National Labor Relations Commission, Regional Arbitration Branch VII (NLRC-RAB) for illegal suspension and illegal dismissal, with claims for backwages, separation pay, attorney's fees, and moral and exemplary damages. Respondents denied petitioner's allegations and countered that he was not their employee, asserting that his services were engaged by Eric and his family members to perform masonry works at their residences, located in the same compound in Burgos Street, Mandaue City.

The Labor Arbiter, in a decision dated June 17, 2008, found that petitioner was illegally dismissed. The Labor Arbiter treated respondents' position paper as a mere scrap of paper because it lacked the required Certification of Non-Forum Shopping and was not properly verified — the verification was signed by a certain Edgardo Albia, alleged Human Resource Manager of Mendco and Pinnacle, without any authority from the Board of Directors. With respondents' position paper deemed invalid, the allegations in the complaint were considered admitted, and the Labor Arbiter awarded backwages of ₱268,450.00, separation pay of ₱72,800.00, and 10% attorney's fees, totaling ₱375,375.00.

Respondents appealed to the NLRC, which reversed the Labor Arbiter's decision on October 30, 2009, and dismissed the complaint. The NLRC held that it was physically and legally impossible for petitioner to be a regular employee of five different employers, and that petitioner failed to establish the existence of an employer-employee relationship, characterizing him instead as a mere neighborhood carpenter, plumber, or electrician engaged on a task basis. Petitioner elevated the matter to the Court of Appeals via a petition for certiorari, arguing that respondents' appeal was not perfected for failure to furnish him with a certified true copy of the surety bond, and that his daily time records and affidavit constituted clear evidence of employment. The Court of Appeals dismissed the petition on April 30, 2014, sustaining the NLRC's ruling that no employer-employee relationship existed, and characterizing petitioner as an independent operator or freelance service contractor. Petitioner's motion for reconsideration was denied on July 2, 2015.

• Perfection of Appeal: Petitioner argued that respondents' appeal before the NLRC was not perfected because they failed to furnish him with a certified true copy of the Surety Bond and its supporting documents.
• Regular Employment Status: Petitioner maintained that it was not impossible for him to be a regular employee of five different employers because these employers referred to one and the same owner, Eric, who is the President of all the companies.
• Evidentiary Value of DTRs and Affidavit: Petitioner contended that the Daily Time Records and Affidavit he submitted were clear evidence of his employment, which respondents failed to rebut in view of their submission of an invalid Position Paper before the Labor Arbiter.
• Invalid Position Paper: Petitioner asserted that respondents' Position Paper before the Labor Arbiter was unaccompanied by a Certification of Non-Forum Shopping and a board resolution authorizing Albia to sign the Verification, rendering the allegations in the complaint deemed admitted.

• No Employer-Employee Relationship: Respondents denied petitioner's allegations and countered that he was not their employee, asserting that his services were engaged by Eric and his family members to perform masonry works at their residences, which are located in the same compound in Mandaue City.
• Task-Based Engagement: Respondents maintained that petitioner was a handyman whose services were engaged from time to time to perform masonry works either at their residences or at the company premises, as shown by the irregular nature of his work.

• Burden of Proof: Whether petitioner was able to prove by substantial evidence his employment with respondents.
• Validity of Position Paper: Whether the NLRC properly considered the evidence belatedly submitted by respondents on appeal, notwithstanding the invalid Position Paper filed before the Labor Arbiter.
• Perfection of Appeal: Whether respondents' appeal before the NLRC was properly perfected despite the alleged failure to furnish petitioner with a certified true copy of the Surety Bond.

• Burden of Proof: No. Petitioner failed to establish the existence of an employer-employee relationship by substantial evidence, as his DTRs were dubious and unauthenticated, his affidavit was self-serving, and the nature of the work he described was consistent with task-based engagement rather than regular employment.
• Validity of Position Paper: The rules on verification and certification of non-forum shopping may be relaxed when rigidity would result in a defeat of substantial justice. The NLRC properly considered respondents' additional evidence on appeal, as labor proceedings are non-litigious in nature and not bound by technical rules of procedure.
• Perfection of Appeal: No error was committed. The requirement to furnish the opposing party with a certified true copy of the Surety Bond is not mandatory for the perfection of an appeal.

• Burden of Proof: The existence of an employer-employee relationship is a question of fact, and in labor cases where the factual findings of the Labor Arbiter, NLRC, and Court of Appeals are conflicting, the Supreme Court may review and re-evaluate the factual issues. Before a case for illegal dismissal can prosper, an employer-employee relationship must first be established, and the burden rests on the party claiming the relationship to prove it by substantial evidence. The Court of Appeals applied the four-fold test — (a) selection and engagement of the employee; (b) payment of wages; (c) power to discipline and dismiss; and (d) power of control over the means and methods by which the work is to be accomplished — and found no employer-employee relationship existed. Petitioner's affidavit was self-serving, as no other witnesses corroborated it. His DTRs were mere photocopies, not certified true copies, and those from Mastercraft and Jacquer bore no signatures of any representatives, while the signatories on the DTRs from Pinnacle were neither identified nor their authority established. The DTRs also described varying tasks — installation of gates, hanging carpets, fabrication of partitions, chipping of concrete — consistent with handyman work performed on a task basis. As to payment of wages, petitioner admitted receiving his salary from Terry Godinez, Eric's personal assistant, rather than from the accounting or cash department of the respondent companies. Petitioner also conceded working for all five respondents alternately within a single week, which the Court found highly improbable for a regular employee. As to the element of control, the DTRs provided no evidentiary value, and the fact that petitioner was subjected to definite working hours did not necessarily establish the power of control, which addresses the details of day-to-day work. Respondents rebutted petitioner's claim by presenting company payroll records that did not include petitioner as an employee.

• Validity of Position Paper: While the verification and certification of non-forum shopping are basic, necessary, and mandatory requirements for procedural orderliness, the Court has relaxed these rules where there is a sufficient and justifiable ground compelling a liberal application. The Court found a compelling reason to relax the rules, as it would be unjust to burden respondents with petitioner's claims when he was not in fact their employee. The NLRC's consideration of respondents' additional evidence on appeal was proper, as proceedings before the Labor Arbiter and NLRC are non-litigious in nature and are encouraged to ascertain the facts without regard to technicalities of law or procedure.

• Perfection of Appeal: The Court of Appeals correctly sustained the NLRC's act of giving due course to respondents' appeal, holding that the requirement to furnish petitioner with a certified true copy of the Surety Bond is not mandatory for the perfection of an appeal.

• Four-Fold Test for Employer-Employee Relationship — The existence of an employer-employee relationship is determined by the presence of four elements: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power of control over the employee with respect to the means and methods by which the work is to be accomplished. The Court applied this test and found that none of the elements were sufficiently established, as petitioner's evidence was dubious, his wages were paid by Eric's personal assistant rather than the company's payroll system, and no control over the means and methods of work was shown.

• Burden of Proof in Establishing Employer-Employee Relationship — He who asserts the affirmative of an issue has the burden of proof. In an illegal dismissal case, while the onus probandi rests on the employer to prove that the dismissal was for a valid cause, an employer-employee relationship must first be established before a case for illegal dismissal can prosper. The burden of proving the relationship rests on the claimant, who must adduce substantial evidence — such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.

• Relaxation of Rules on Verification and Certification of Non-Forum Shopping — As outlined in Altres vs. Empleo, non-compliance with verification does not necessarily render a pleading fatally defective, as the court may order its submission or correction or act on the pleading if strict compliance may be dispensed with to serve the ends of justice. Non-compliance with the certification against forum shopping is generally not curable, unless there is a need to relax the rule on the ground of substantial compliance or presence of special circumstances or compelling reasons. The Court relaxed the rules here because it would be unjust to burden respondents with petitioner's claims when he was not in fact their employee.

• Evidentiary Value of Daily Time Records — DTRs that are mere photocopies, unsigned by the employer or its representatives, or whose signatories are not identified or their authority not established, have doubtful or dubious probative value and may be disregarded as mere scraps of paper, following Jarcia Machine Shop and Auto Supply, Inc. vs. National Labor Relations Commission.

• "In this case, a scrutiny of the record reveals that petitioner failed to substantiate his claim that he was a regular employee of respondents. Hence, there exists a compelling reason to relax the rules as it would be unjust to burden the respondents with the claims of petitioner when he is not in fact their employee." — This passage articulates the Court's rationale for relaxing the procedural rules on verification and certification of non-forum shopping, tying the relaxation to the substantive finding that no employment relationship existed.

• "It is difficult to fathom how petitioner managed to render work for five different employers simultaneously in a span of one week. To Our minds, it is highly improbable that an employer would permit an employee, regular at that, to joggle from one workplace to another." — This passage captures the Court's reasoning on the improbability of concurrent regular employment with five separate employers, supporting the finding that petitioner was engaged on a task basis.

• "No matter how petitioner puts it, it is undeniable that he was engaged by the respondents to perform work only when the need arose. As aptly held by the NLRC and the CA, it is both legally and physically impossible for petitioner to be a regular employee of all five respondents." — This statement crystallizes the Court's conclusion on the nature of petitioner's engagement and affirms the concurrent findings of the NLRC and the Court of Appeals.

• Altres vs. Empleo, 594 Phil. 246 (2008) — Controlling precedent on the rules governing compliance with verification and certification against forum shopping. The Court restated the jurisprudential pronouncements distinguishing non-compliance with verification (curable, may be relaxed) from non-compliance with certification against forum shopping (generally not curable, unless substantial compliance or compelling reasons exist).

• Jarcia Machine Shop and Auto Supply, Inc. vs. National Labor Relations Commission, 334 Phil. 84 (1997) — Followed. The Court applied the same rationale in disregarding petitioner's DTRs, which were mere photocopies and were not signed by the employer or its representatives, as having doubtful or dubious probative value.

• Marsman & Company, Inc. vs. Sta. Rita, 830 Phil. 470 (2018) — Cited for the definition of the power of control, which addresses the details of day-to-day work such as assigning particular tasks, monitoring the way tasks are done and their results, and determining the time during which the employee must report for work.

• Manila Hotel Corporation vs. Court of Appeals, 433 Phil. 911 (2002) — Cited for the principle that the application of procedural rules may be relaxed when rigidity would result in a defeat of equity and substantial justice.

• Rule 45, Rules of Court — Governs petitions for review on certiorari before the Supreme Court. The Court noted that while Rule 45 generally precludes resolution of factual issues, the rule admits exceptions in labor cases where the factual findings of the Labor Arbiter, NLRC, and Court of Appeals are conflicting.

Gesmundo, C.J. (Chairperson), Zalameda, Rosario, and Marquez, JJ., concurred.