Facts:

The case involved Arnulfo C. Acevedo (Petitioner) against Advanstar Company Inc. (ACI) and its employees, Felipe Loi, the manager, and Tony Jalapadan, a salesman (Respondents). ACI specializes in distributing various brands of liquor, including the Tanduay brand. In a contract dated September 1, 1994, ACI engaged Jalapadan for a one-year agreement to sell ACI's products in a specified territory. Jalapadan was allowed to hire employees to assist him, which included providing a truck for deliveries. Acevedo was hired by Jalapadan on August 5, 1997, as a driver for this truck, responsible for selling, delivering goods, collecting payments, and maintaining the vehicle. His daily wage was P152, and he was paid weekly. Acevedo experienced a salary adjustment in June 1998 due to a wage increase.

In July 1998, tensions arose when Acevedo did not follow Jalapadan's directions, leading to Jalapadan's threats to abandon him. After a series of arguments, Acevedo failed to report

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Facts:

Background and Contractual Arrangements

• The Advanstar Company Inc. (ACI) was engaged in distributing and selling various brands of liquor and alcoholic spirits, including the Tanduay Brand.
• ACI employed Felipe Loi as its general manager and operated through a network of sales agents.
• Tony Jalapadan was hired as one of ACI’s salesmen to spearhead marketing operations.
• On September 1, 1994, ACI and Jalapadan entered into an Agreement for the Sale of Merchandise for a one-year term (renewable for an additional year) which defined Jalapadan’s roles such as promoting and selling ACI’s products, collecting payments, and accounting these to ACI.
• The agreement provided Jalapadan with a 6-wheeler truck and the authority to hire personnel (drivers, helper/loaders), explicitly making him liable for their compensation and expenses.

Employment of the Petitioner, Acevedo

• On August 5, 1997, Tony Jalapadan hired Arnulfo Acevedo as the driver responsible for selling and delivering stocks, collecting payments, and maintaining the truck.
• Acevedo was paid a daily wage of P152.00 on a weekly basis, with additional benefits such as sick leave convertible to cash.
• In June 1998, Acevedo received a salary differential reflecting a P15.00 increase in his daily wage, executed through approval vouchers issued by Jalapadan.

Dispute and Incidents Leading to Controversy

• In July 1998, Acevedo failed to comply with Jalapadan’s instructions while on a trip, leading to a situation where he was ordered to disembark from the truck, and later asked to resume work, to which he complied reluctantly.
• On October 7, 1998, Acevedo again failed to report for work; the following day, after being berated by Jalapadan for not checking and washing the truck, he was ordered to get his belongings and leave.
• Although Jalapadan later extended an invitation to return to work stating that “we are one big family,” Acevedo refused and subsequently, on October 10, 1998, signed a letter of resignation.
• On October 26, 1998, Acevedo filed a complaint against Jalapadan, ACI, and Felipe Loi alleging illegal dismissal and seeking recovery of backwages and other benefits.

Proceedings in Administrative Bodies

• The Labor Arbiter rendered a judgment on March 24, 1999, ruling in favor of Acevedo by:
• Recognizing an employer-employee relationship between ACI and Acevedo, with Jalapadan as its agent (labor-only contracting).
• Declaring Acevedo’s separation from employment illegal and ordering his immediate reinstatement without loss of benefits.
• Ordering the payment of backwages, salary differentials, and attorney’s fees.
• ACI and the respondents contended that Acevedo was employed by Jalapadan (an independent contractor) and maintained that Acevedo had voluntarily resigned, as evidenced by the letter appended in their position paper.
• On appeal to the National Labor Relations Commission (NLRC), the latter reversed the Labor Arbiter’s ruling by holding that Acevedo was an employee of Jalapadan and that his resignation was voluntary.
• Subsequent motions for reconsideration and appeals, including those in the Court of Appeals (CA), upheld the NLRC’s findings, maintaining that the petitioner had resigned voluntarily.

Issues on Factual Findings and Contested Evidence

• Discrepancies arose regarding the true nature of the employment relationship between Acevedo, Jalapadan, and ACI.
• Central to the dispute was whether Jalapadan was an independent contractor or a labor-only contractor, and whether the control over Acevedo’s work belonged to ACI.
• The validity of the resignation – particularly the handwritten letter (which was addressed to Tanduay Corporation and allegedly not fully understood by Acevedo due to his limited education) – became a critical point of contention.
• The petitioner maintained that his wages, though received through Jalapadan, were effectively paid by ACI, a fact supported by disparities in compensation amounts between what Jalapadan paid and what he received from ACI.

Supreme Court Proceedings and Evidentiary Review

• Acevedo filed a petition for certiorari with the Supreme Court, challenging the CA’s decision and arguing grave abuse of discretion in not reinstating the Labor Arbiter’s ruling.
• The petitioner asserted that:
• The respondents failed to adduce evidence that Jalapadan had substantial capital or investment, a requisite for classifying him as an independent contractor.
• The “control test” evidenced that ACI maintained both direct and indirect control over Jalapadan’s operations, thereby binding Acevedo’s labor relationship to ACI.
• The resignation letter was invalid given Acevedo’s inability to read or write, and the letter’s improper address to Tanduay Corporation further clouded its authenticity.
• The Supreme Court, after reviewing the record, found that the testimonies and documentary evidence contradicted the NLRC and CA findings regarding voluntary resignation and independent contractorship.

Issue:

• Whether ACI, as principal, should be held accountable as the employer of Acevedo despite Acevedo receiving wages via Jalapadan.
• Whether Tony Jalapadan was truly an independent contractor or merely a labor-only contractor acting as ACI’s agent.
• Whether Acevedo was illegally dismissed by virtue of being forced to leave his post and whether his resignation was genuine or coerced by circumstances.
• Whether the resignation letter, given Acevedo’s limited educational background (inability to read or write), ought to be given weight as evidence of voluntary resignation.
• Whether the evidentiary findings regarding the control and supervision exercised by ACI over Jalapadan are sufficient to establish an employer-employee relationship with Acevedo.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)