G.R. No. 144516 - Development Bank of the Philippines vs. Commission on Audit

Corazon Almirez was hired as a Refinery Senior Process Design Engineer by Infinite Loop Technology Corporation through its General Manager/President, Edwin R. Rabino.
The appointment was confirmed by Rabino’s letter dated September 30, 1999, which explicitly stated that Almirez’s professional services were to commence on October 18, 1999 and continue for 12 continuous months or until completion of the scope of services, or until a mutually agreed date.
The said letter contained an attachment detailing the terms and conditions which the parties agreed upon.

The attachment provided an elaborate scope of professional services which included:

Preparation of the Process Design Terms of Reference or Basis of Design for the proposed 1,200,000 BPSD Petroleum Refinery.
Reviewing and improving the conceptual process block diagram or Process Flow Scheme.
Considering various capacity combinations and implementing new process technologies to meet diverse international standards and the Philippine Clean Air Act provisions.
Coordinating with a Basic Design Engineering Company, participating in project-related discussions, and providing regular updates and reports to the company management team.
Representing the company in technical meetings and serving as a technical consultant for other relevant works as required.

A professional fee of US$2,000.00 per month (net of tax) to be paid in a 50/50 split in US dollars or its peso equivalent on the 15th and 30th of every month.
A transportation allowance of US$300.00 per month, and a project bonus to be mutually agreed upon at the end of the contract.

Additional benefits included provision of equipment such as a laptop computer, printer/scanner, and process simulation software.

Records show that Almirez was paid various amounts on several dates (from November 1999 to January 2000) which cumulatively amounted to P77,000.00.
On February 2, 2000, Almirez expressed her disappointment in a letter, contending that:

The agreed salary of P30,000.00 monthly (net of tax) was being affected by deductions for SSS, Philhealth, and withholding tax—it was lower than what was contractually promised.
She noted that since she was paying her SSS contributions voluntarily, the company should not have been deducting these amounts from her salary.

Responding to her letter, Rabino advised that her letter deviated from the verbal agreement and indicated that project deferral was necessary due to financial uncertainties.
Consequently, Rabino suspended Almirez’s professional services as of February 7, 2000, with the promise of resumption upon receipt of the initial payment for the project.
On August 9, 2000, through counsel, Almirez demanded compensation for the total contractual amount, arguing that the suspension and underpayment constituted a breach of contract.

Almirez filed a complaint with the NLRC on December 12, 2000, alleging breach of contract of employment and seeking payment of back salaries, moral damages, exemplary damages, and attorney’s fees.
The Labor Arbiter determined that there existed an employer-employee relationship based on factors including the company’s control over her work, and ordered Infinite Loop and Rabino to pay damages, although it dismissed claims for additional damages.
The NLRC affirmed this decision.
Infinite Loop and Rabino then elevated the case to the Court of Appeals, arguing that the NLRC lacked jurisdiction because the contract was for professional services and not employment.
The Court of Appeals, in its decision dated October 20, 2003, reversed the NLRC ruling by holding that there was no employer-employee relationship since Almirez was engaged under a contract of professional services, and consequently, the NLRC and Labor Arbiter lacked jurisdiction.

Whether the NLRC and the Labor Arbiter had jurisdiction over the complaint considering the nature of the contract signed by Almirez as one for professional services rather than employment.

Whether the contractual engagement, which included payment of salaries and deductions, actually created an employer-employee relationship.
Whether the details of the agreement, particularly the scope of professional services and the control (or lack thereof) exercised by Infinite Loop, were sufficient to establish such a relationship.

Whether the suspension of Almirez’s services by Infinite Loop and Rabino amounted to a breach of the terms and conditions of the contract.
Whether the payment amounts received (and the deductions applied) were in compliance with the agreed contractual terms.

Whether the designation of payment as “salaries” and the inclusion of deductions inherently indicate an employment relationship.
Whether the performance of services based on an expert’s qualifications and discretion should be treated as an employment scenario under labor laws.