CENTURY PROPERTIES, INC vs BABIANO and CONCEPCION

Doctrine:
The existence of an employer-employee relationship cannot be negated by expressly repudiating
it in the management contract and providing therein that the "employee" is an independent
contractor when the terms of the agreement clearly show otherwise.

The Facts:
Babiano was hired by CPI as Director for Sales who eventually was promoted for VP for Sales.
He is receiving a salary, allowance and sales commission. His employment contract contains a
clauses which bars him from disclosing confidential information to business competing with CPI
while he is employed and after 1 year from termination or resignation, otherwise his compensation
will be forfeited. Concepcion was hired as a Sales Agent who was promoted to Project Director.
She signed a Contract of Agency for Project Director and receives a monthly subsidy, commission
and incentive. She signed two contracts and both stipulated that no employee employer
relationship exist. After receiving that Babiano provided a competitor with information and being
AWOL for 5 days, CPI sent a notice to explain why he should not be charged with disloyalty,
conflict of interest and breach of trust. He tendered his resignation but later he was terminated 8
days later. He revealed he was accepted as VP in a competitor company. 2 days before Babiano
tendered, Concepcion also tendered.
Babiano and Concepcion filed before the NLRC for non-payment of commissions and damages
against CPI. CPI maintained that the they are just agents tasked with selling projects, there was
due process and termination was based on just cause.
The Labor Arbiter ruled in favor of CPI. On Appeal, the NLRC concurred with the Labor Arbtiter,
that Babianos acts constituted just cause for termination however forefeiture is confiscatory and
unreasonable. CPI went to CA, while the affirmed the NLRC ruling, it ruled that there is a proper
money claim from employee-employer relationship. Hence this appeal.

The Issue Before the Court

1. WON there was a breach of contract?
2. WON the CPI would be liable for unpaid commissions?

Ruling of the Court:

1. Yes. The Confidentiality and Non-Compete Clause is not limited to acts done after the
cessation of employer-employee relationship. Babiano categorically admitted that he
sought employment with a competitor before his formal resignation. This is a glaring
violation of the Confidentiality and Non-Compete Clause.

2. Yes. There exists an employer-employee relationship. This is proven by (a) CPI hired and
promoted Concepcion (b) the monthly "subsidy" and cash incentives that Concepcion was
receiving from CPI are actually remuneration in the concept of wages (c) CPI had the
power to discipline or even dismiss Concepcion (d) CPI possessed the power of control
because in the performance of her duties as Project Director, she did not exercise
independent discretion. While the employment contract is denominated as "Contract of
Agency for Project Director" the existence of employer-employee relations could not be
negated by the mere expedient of repudiating it in a contract. since there exists an
employer-employee relationship between Concepcion and CPI, thus the CA is correct in
ruling that Labor Code, it nonetheless failed to include all of respondents' earned
commissions thus, necessitating the increase in award of unpaid commissions in
Concepcion's favor.