11 Royale Homes Marketing Corporation v.

Alcantara AUTHOR: Hernandez

G.R. No. 195190 July 28, 2014 Notes:
TOPIC: General Concepts: ER-EE relationship- Control
PONENTE: Del Castillo
CASE LAW/ DOCTRINE: Rules and regulations that merely serve as guidelines towards the achievement of a mutually desired
result without dictating the means and methods of accomplishing it do not establish employer-employee relationship.
Emergency Recit: Alcantara filed a complaint for illegal dismissal. He asserts that he was a fixed-term employee due to the
remuneration he received, he performed tasks necessary and desirable to its business and his contract was renewed several
times. SC ruled that he was an independent contractor as characterized under their contract. Company regulations, code of ethics
and evaluation imposed on him did not constitute control indicative of ER-EE relationship since it did not dictate the means and
methods of accomplishing his marketing and sales solicitation.
FACTS:
1. Royale Homes is a corporation engaged in marketing real estate. In 1994, it appointed Alcantara as its Marketing Director
for a fixed period of 1 yr. His work consisted of marketing its real estate inventories on an exclusive basis.
2. He was reappointed for several consecutive years. In 2003, he held the position of Div. 5, Vice-President-Sales.
3. He filed a Complaint for Illegal Dismissal against Royale Homes and its executive officers. He prayed for his
reinstatement, sought ownership of a Mitsubishi Adventure and payment of backwages and damages. He alleged the ff:
a) That he is a regular employee because he performed tasks necessary and desirable to its business;
b) That he was paid P1.2m for his services;
c) That the executive officers told him they were wondering why he had the gall to still come to office;
d) That their acts amounted to dismissal w/o just cause and in gross disregard of the proper procedure for dismissal.
4. Royale Homes argued that:
a) Alcantara was hired as an independent sales contractor for a fix term of 1 yr and paid purely on commission basis;
b) They had no control on how he accomplished his tasks as he was free to solicit sales in any time and by any manner;
c) Alcantara publicly announced that he would leave the company to join his wife’s brokerage company which also
hired Royale’s former sales agents. He began claiming that he was illegally dismissed 2 months later.
5. LA: Alcantara was a fixed-term employee until 2003. The pre-termination of his contract was against the law. So, he was
entitled to compensation for the unexpired term. The corporate officers were absolved from liability.
6. NLRC: Alcantara was not an employee but a mere independent contractor. This was based on the contract which did not
require him to observe regular working hours, freedom to choose his own selling methods and payment on a commission
basis. So, his Complaint was instead cognizable by regular courts.
7. CA: Alcantara was an employee based on the four-fold and economic reality tests. He was subjected to company
regulations and the exclusivity clause made him economically dependent on Royale Homes. Case was remanded to LA to
determine his annual salary and monetary award. Corporate officers were absolved from liability.
ISSUE(S): W/N Alcantara was an employee of Royale Homes

HELD: No. The contract and the extent of control exercised by Royale Homes indicates that he is only an independent contractor.
RATIO:
 The written contract serves as the primary evidence of their intention and the nature of their juridical relationship.
o Undisputed contract provides that no ER-EE relationship exists between Royale Homes, Alcantara and its sales
agents. The literal meaning of its stipulations should control since the terms are clear and leave no doubt upon their
intention.
o He was an educated man and veteran sales broker who would have contested it if their true intention was
otherwise.
 The most determinative factor in the four-fold test is the “right of control test”. Not every form of control is indicative of
ER-EE relationship. As long as the level of control does not interfere with the means of accomplishing the tasks, the rules
imposed by the hiring party do not amount to the concept of control that is indicative of ER-EE relationship.
o The regulations, code of ethics and periodic evaluation by Royale Homes do not involve control over the methods. It
was necessary for Royale Homes to fix the price, requirements on prospective buyers, conditions of the sale, allocate
inventories among independent contractors, grand commissions and monitor the result of their marketing.
o First Insular Life case: Commitment to abide by rules does not ipso factor make the agent an employee. The principal
can determine quotas, number of agents and specify territories as management policies for mutually desired results.
 Alcantara has the burden to prove the existence of ER-EE relationship. He failed to cite specific rules that controlled his
methods of soliciting sales. He was not required to observe definite working hours. He was not assigned to other tasks.
 The continued rehiring simply signifies his satisfactory services warranting renewal of his contract.
 Exclusivity clause not indicative of an ER-EE relationship: He was not prohibited from engaging in unrelated businesses.
 No payment of backwages. His remunerations consisted only of a commission override, budget allocation, sales incentive
and other forms of company support. There is no proof that he ever received a fixed monthly salary nor was he
registered with SSS, PhilHealth or Pag-Ibig by Royale Homes. He did not complain about his remuneration for 9
consecutive years.