G.R. No. 221220 - Metropolitan Bank and Trust Co. vs. Cruz

Nuvoland Phils., Inc. was organized primarily “to own, use, improve, develop, subdivide, sell, exchange, lease and hold for investment or otherwise, real estate of all kinds” and was registered with the SEC on August 9, 2006.
Silvericon, Inc. was registered with the SEC on December 19, 2006, and its Articles of Incorporation similarly described it as a corporation engaged in real estate related activities.
The key corporate officers and stockholders include Ramon Bienvenida, the principal stockholder and a member of Nuvoland’s Board of Directors; Raul Martinez, its President; and Edward De Castro, who was recruited to lead the sales and marketing operations.

In 2007, respondent Raul Martinez recruited petitioner Edward De Castro, a real estate sales and marketing professional.
A Memorandum of Agreement (MOA), denominated as a “Shareholders Agreement,” was executed between Martinez and De Castro, which proposed the creation of a new corporation to process payment of compensation, benefits, and commissions.
It was stipulated that the new corporation would have an authorized capital stock of P4,000,000.00, equally subscribed by the Martinez Group and the De Castro Group, which eventually became Silvericon.
Under the MOA, De Castro was appointed President and Chief Operating Officer (COO) of Silvericon with a monthly salary of P400,000.00 and a commission structure, while Martinez was designated as Chairman, receiving a monthly allowance.
Silvericon employed a team of about forty sales and marketing personnel, including petitioner Ma. Girlie F. Platon, to sell Nuvoland’s condominium projects.

A Sales and Marketing Agreement (SMA) dated February 26, 2008, was executed between Nuvoland and Silvericon, requiring that all payments for Nuvoland’s condominium projects be handled directly by Nuvoland, with sales commissions similarly processed by Nuvoland.
Nuvoland advanced funds – up to P30 million per building – for marketing expenses, indicating heavy financial involvement.
Despite Silvericon’s nominal status as an independent contractor, Nuvoland not only dictated certain operational aspects (e.g., design of marketing materials, model units, and performance targets) but also exercised control through actions such as the payment of commissions and the authority to dismiss personnel.

Following an incident at the Nuvo City Showroom where Silvericon personnel allegedly committed an unauthorized walkout and abandonment for two days, Nuvoland terminated the SMA via a letter dated December 12, 2008, demanding a full accounting of marketing advance funds.
After the termination, Silvericon’s personnel, including De Castro and Platon, were barred from the office premises, and certain payments for wages and commissions were withheld.
Aggrieved by these actions, De Castro and Platon filed a complaint for illegal dismissal with the Labor Arbiter (LA), seeking unpaid wages, separation pay, unpaid commissions, as well as moral and exemplary damages.

The Labor Arbiter ruled on March 15, 2011, that Silvericon functioned as a labor-only contractor and found Nuvoland to be the direct employer of the petitioners, thereby ordering payment of various monetary awards.
Nuvoland, together with its officers and Silvericon, appealed before the National Labor Relations Commission (NLRC), which in its July 29, 2011 Decision reversed the LA’s findings, holding that Silvericon was an independent contractor with sufficient paid-up capital and autonomy in its operations.
The Court of Appeals (CA) affirmed the NLRC Decision on June 1, 2012, positing that the termination of the SMA did not affect petitioner employment and that, even if illegal dismissal occurred, jurisdiction under Section 5.2 of R.A. No. 8799 was implicated, thereby precluding LA review.
Petitioners then assailed the CA decision via a petition for certiorari under Rule 65, arguing grave abuse of discretion on multiple grounds related to the classification of Silvericon and the treatment of their claims.

Whether Silvericon should be classified as a labor-only contractor or an independent contractor.

Examination of Silvericon’s capitalization, investment in tools and equipment, and its operational independence.
Consideration of the advanced funds by Nuvoland and the exclusive nature of the services provided by Silvericon.

Whether an employer-employee relationship existed between Nuvoland and the petitioners despite the formal arrangement with Silvericon.

Analysis of control over employment matters including selection, payment of wages, power to dismiss, and overall supervision of work.
The implications of Nuvoland’s direct financial and operational involvement in the marketing operations.

The validity of the termination procedure and due process in the dismissal of petitioners.

Whether proper notice and opportunity to be heard were provided in compliance with the procedural due process requirements under the Labor Code.
Assessment of the substantiation or lack thereof of the alleged unauthorized walkout as a cause for dismissal.

Jurisdictional issues regarding the application of labor laws versus corporate or intra-corporate dispute resolution.

Whether the case falls within the ambit of ordinary labor disputes or should be classified as an intra-corporate controversy.
The proper forum for the resolution of the petitioners’ claims given the relationship between the parties.