LEONARDO vs CA

FACTS:

BALTEL holds the franchise from the Municipality of Balagtas, Bulacan

to operate a telephone service in the municipality. BALTEL also has
authority from the National Telecommunications Commission (NTC) to
operate in the municipality.
It hired Emelita Leonardo and others for various positions in the
company.

BALTEL6 and DIGITEL entered into a management contract, under the

terms of the contract, DIGITEL was to provide:

o personnel, consultancy and technical expertise in the

management, administration, and operation of BALTELs
telephone service in Balagtas, Bulacan.

o undertook to improve the internal and external plants of

BALTELs telephone system and to handle customer relations.

o Handle other matters necessary for the efficient management

and operation of the telephone system.

1994, BALTEL informed the NTC that it would cease to operate effective
28 February 1994 because it was no longer in a financial position to
continue its operations. It assigned to DIGITEL its buildings and other
improvements on a parcel of land in Balagtas, Bulacan where BALTEL
conducted its business operations, whish assignment was in partial
payment of BALTELs obligation to DIGITEL.

Leonardos employment ceased.

They executed separate, undated and similarly worded quitclaims

acknowledging receipt of various amounts representing their claims
from BALTEL.

o In their quitclaims, petitioners absolved and released BALTEL

from all monetary claims that arose out of their employer-
employee relationship with the company.

o Petitioners also acknowledged that BALTEL closed its operations

due to serious business losses.
 Leonardo filed a compalaint against BALTEL for recovery of salary
differential and attorneys fees. It also included illegal dismissal as
additional cause of action and to implead DIGITEL as additional
respondent.

o DIGITEL denied having any liability on the ground that it was not
petitioners employer.

LABOR ARBITER RULED:

o Decision favored Leonardo. Instructed DIGITEL to pay for salary

differential and to reinstate all the complainants to their former
or equivalent positions.

DIGITEL appealed to NLRC but it denied the motion for

recommendation.

CA RULED:

o Reversed the decision of NLRC insofar as it held DIGITEL

severally liable with BALTEL.

o DIGITEL is not the successor in interest of BALTEL nor did it

become the absolute owner of BALTEL or that DIGITEL absorbed
the employess of BALTEl.

o No showing of DIGITEL acquiring franchise of BALTEL.

ISSUE:

Whether an employer-employee relationship exists between petitioners and

DIGITEL?

HELD:

NO, the decision of Court of Appeals is affirmed.

RATIO:

To determine the existence of employer-employee relationship, it has to be

resolved who has the power to select employees, pay for their wages, etc.
The most important element is the CONTROL TEST. There is employer-
employee relationship when the person for whom the services are
performed reserves the right to control not only the end achieved but also the
manner and means used to achieve the end.
 DIGITEL has the power to control, however, this power flows from the
management contract which includes providing for personnel, consultancy,
etc. the control test cannot be applied.
DIGITEL did not hire petitioners. BALTEL had already employed them when it
entered into an agreement with DIGITEL. Hence, it has no power to dismiss
BALTELs employees.