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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.
!t hired Emelita Leonardo and others for various positions in the company.
and #!$!TEL entered into a management contract, under the terms of the
contract, #!$!TEL %as to provide&
o personnel, consultancy and technical e'pertise in the management,
administration, and operation of BALTEL(s telephone service in Balagtas,
o undertoo) to improve the internal and e'ternal plants of BALTEL(s telephone
system and to handle customer relations.
o *andle other matters necessary for the efficient management and operation of the
telephone system.
+,,-, BALTEL informed the NTC that it %ould cease to operate effective ./ 0e1ruary
+,,- 1ecause it %as no longer in a financial position to continue its operations. !t
assigned to #!$!TEL its 1uildings and other improvements on a parcel of land in
Balagtas, Bulacan %here BALTEL conducted its 1usiness operations, %hish assignment
%as in partial payment of BALTEL(s o1ligation to #!$!TEL.
Leonardo(s employment ceased.
They e'ecuted separate, undated and similarly %orded 2uitclaims ac)no%ledging receipt
of various amounts representing their claims from BALTEL.
o !n their 2uitclaims, petitioners a1solved and released BALTEL from all monetary
claims that arose out of their employer3employee relationship %ith the company.
o 4etitioners also ac)no%ledged that BALTEL closed its operations due to serious
1usiness losses.
Leonardo filed a compalaint against BALTEL for recovery of salary differential and
attorney(s fees. !t also included illegal dismissal as additional cause of action and to
implead #!$!TEL as additional respondent.
o #!$!TEL denied having any lia1ility on the ground that it %as not petitioners(
LAB56 A6B!TE6 67LE#&
o #ecision favored Leonardo. !nstructed #!$!TEL to pay for salary differential and
to reinstate all the complainants to their former or e2uivalent positions.
#!$!TEL appealed to NL6C 1ut it denied the motion for recommendation.
CA 67LE#&
o 6eversed the decision of NL6C insofar as it held #!$!TEL severally lia1le %ith
o #!$!TEL is not the successor in interest of BALTEL nor did it 1ecome the
a1solute o%ner of BALTEL or that #!$!TEL a1sor1ed the employess of
o No sho%ing of #!$!TEL ac2uiring franchise of BALTEL.
Whether an employer-employee relationship exists between petitioners and DIGITEL?
NO, the decision o !o"rt o #ppeals is airmed$
To determine the existence o employer-employee relationship, it has to be resol%ed who
has the power to select employees, pay or their wa&es, etc$
The most important element is the !ONT'OL TE(T$ There is employer-employee
relationship when the person or whom the ser%ices are perormed reser%es the ri&ht to
control not only the end achie%ed b"t also the manner and means "sed to achie%e the
DIGITEL has the power to control, howe%er, this power lows rom the manaement
!ontra!t which incl"des pro%idin& or personnel, cons"ltancy, etc$ the control test
cannot be applied$
DIGITEL did not hire petitioners$ )#LTEL had already employed them when it entered
into an a&reement with DIGITEL$ *ence, it has no power to dismiss )#LTEL+s