G.R. No. 201494 , July 29, 2015.
MARITES R. CUSAP, Petitioner, vs. ADIDAS PHILIPPINES, INC. (ADIDAS), PROMOTION RESOURCES & INTER-MARKETING EXPONENTS, INC. (PRIME) and JC ATHLETES, INC. (JCA), Respondents.

FACTS

On January 21, 2003, petitioner Marites R. Cusap and 27 other employees filed a complaint for illegal dismissal against respondents Adidas Philippines, Inc. (Adidas) and Promotion Resources Inter-Marketing Exponents, Inc. (PRIME), later amended to include JC Athletes, Inc. (JCA). They prayed for reinstatement, back wages, separation pay, 13th month pay, service incentive leave pay, and damages.
The complainants alleged they were regular employees of Adidas, having worked as promo girls and stockmen at Adidas outlets for years (petitioner hired October 28, 1995). They claimed they were dismissed on December 9, 2002, when the service contract between PRIME and JCA was terminated. They asserted Adidas was their real employer, with PRIME acting as a mere recruitment agency and JCA as an alter ego or dummy, both used to conceal the employment relationship. They pointed out they worked under Adidas’ supervision and control, their work was related to Adidas’ principal business, Adidas provided the warehouse, leased outlets, conducted training, sales proceeds were deposited to Adidas’ account, and their payslips indicated salaries were charged to Adidas. They also contended PRIME was not a registered corporation or labor recruiter when it contracted with JCA and was a labor-only contractor.
Adidas defended that it amended its Articles to engage in retail directly, thus not renewing its Distribution Agreement with JCA upon its expiry on December 31, 2002, leading to the termination of the PRIME-JCA Promotion Contract and the complainants’ dismissal. It claimed PRIME was the employer who exercised control. JCA argued it had a valid job contract with PRIME, the employer, and its liability was limited. PRIME denied liability, contending it hired the complainants as contractual employees for its project with JCA, and their employment ended with the contract’s expiry.
The Labor Arbiter dismissed the complaint, finding PRIME as the employer and the dismissal valid due to contract termination, but awarded financial assistance. The NLRC denied the petitioner’s appeal. The Court of Appeals affirmed, holding PRIME was a legitimate job contractor and the complainants’ employer based on the four-fold test, and their dismissal was valid.

ISSUE

Whether the Court of Appeals seriously erred in holding that petitioner was an employee of PRIME, not Adidas, and was validly dismissed.

RULING

The Supreme Court denied the petition and affirmed the CA decision. The Court held that PRIME was a legitimate independent contractor and the direct employer of the petitioner. The four-fold test for employer-employee relationship was applied: (1) PRIME hired the complainants; (2) PRIME paid their wages, as evidenced by payslips; (3) PRIME had the power to dismiss them upon contract expiry; and (4) PRIME exercised control over their work, as stipulated in its contract with JCA stating no employer-employee relationship between JCA and PRIME’s assignees and that JCA had no control over the manner and means of performance. The certificates of attendance at Adidas seminars only established product knowledge training, not employer control. The Court found no evidence that PRIME was a labor-only contractor, noting it had substantial capital and was registered with relevant agencies. The termination of the petitioner’s employment was for a lawful cause—the expiration of the fixed-term employment contract under which she was hired by PRIME for a specific project or undertaking. Therefore, she was not illegally dismissed.