Facts
Jack C. Valencia applied directly to Classique Vinyl Products Corporation, but was referred to Cantingas Manpower Services (CMS), a manpower agency. He signed an employment contract with CMS but was not given a copy. Starting in June 2005, he worked as a felitizer and later an extruder operator without a salary increase. Valencia worked 12-hour shifts, six days a week, and received ₱187.52 for regular hours and ₱117.20 for overtime. He alleged non-payment of holiday pay, service incentive leave, 13th month pay, and improper deductions for government contributions. Payslips had no agency or company branding. Valencia was supervised by Classique Vinyl staff and operated their equipment. On April 17, 2010, he was allegedly scolded by the owner and told not to report back to work. He then filed a complaint for illegal dismissal and unpaid benefits. Classique Vinyl denied employing Valencia, claiming his assignments were short-term and sporadic, and that CMS was his employer. CMS, in turn, argued that Classique Vinyl controlled Valencia’s work and paid his wages.
Issues
Was Valencia a regular employee of Classique Vinyl Products Corporation?
Was Valencia illegally dismissed?
Who was Valencia’s lawful employer — Classique Vinyl or Cantingas Manpower Services?
Decision / Supreme Court Ruling
The Supreme Court ruled that Cantingas Manpower Services was Valencia’s legitimate employer. Applying the four-fold test (selection, payment of wages, power to dismiss, and control over work), the Court found that CMS met the legal standards for a job contractor with substantial capital and operational independence. Valencia’s employment was intermittent and based on fixed-term contracts, supporting the view that he was not a regular employee of Classique Vinyl. Regarding the claim of illegal dismissal, the Court held that Valencia failed to provide substantial evidence—his statements alone were insufficient proof. The Court ultimately dismissed his complaint for lack of merit and upheld the rulings of the Labor Arbiter, NLRC, and Court of Appeals.
This case underscored several key principles in Philippine labor law. First is the four-fold test used to determine the existence of an employer-employee relationship, which considers (1) selection and hiring, (2) payment of wages, (3) power of dismissal, and (4) control over the worker's conduct. Second, it clarified the distinction between legitimate job contracting and labor-only contracting, stressing that agencies must have substantial capital and genuine control over the work process to be considered lawful contractors. Third, the ruling emphasized that allegations alone are insufficient—workers must present substantial evidence when claiming illegal dismissal. Finally, the Court reaffirmed that in labor disputes, legal compliance and proper documentation carry more weight than assumptions or oral agreements. These principles guide both employers and employees in ensuring fair and lawful working relationships.
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