JOSE MEL BERNARTE, G.R. No.

192084 On January 15, 2004, Bernarte received a letter from the Office of the
Petitioner, Commissioner advising him that his contract would not be renewed citing his
unsatisfactory performance on and off the court. It was a total shock
Present: for Bernarte who was awarded Referee of the year in 2003. He felt that the
dismissal was caused by his refusal to fix a game upon order of Ernie De Leon.
- versus - CARPIO, J., Chairperson,
BRION, On the other hand, complainant Guevarra alleges that he was invited to join the
DEL CASTILLO,* PBA pool of referees in February 2001. On March 1, 2001, he signed a contract as
PEREZ, and trainee. Beginning 2002, he signed a yearly contract as Regular Class C referee. On
SERENO, JJ. May 6, 2003, respondent Martinez issued a memorandum to Guevarra expressing
PHILIPPINE BASKETBALL dissatisfaction over his questioning on the assignment of referees officiating out-of-
ASSOCIATION (PBA), JOSE town games. Beginning February 2004, he was no longer made to sign a contract.
EMMANUEL M. EALA, and Promulgated:
PERRY MARTINEZ, Respondents aver, on the other hand, that complainants entered into two contracts
Respondents. September 14, 2011 of retainer with the PBA in the year 2003. The first contract was for the period
x-----------------------------------------------------------------------------------------x January 1, 2003 to July 15, 2003; and the second was for September 1 to December
2003. After the lapse of the latter period, PBA decided not to renew their contracts.

DECISION

CARPIO, J.:
Complainants were not illegally dismissed because they were not employees of the
PBA. Their respective contracts of retainer were simply not renewed. PBA had the
The Case prerogative of whether or not to renew their contracts, which they knew were fixed. 4

This is a petition for review1
of the 17 December 2009 Decision2
and 5 April 2010
Resolution3 of the Court of Appeals in CA-G.R. SP No. 105406. The Court of Appeals set
aside the decision of the National Labor Relations Commission (NLRC), which affirmed the
decision of the Labor Arbiter, and held that petitioner Jose Mel Bernarte is an independent
contractor, and not an employee of respondents Philippine Basketball Association (PBA),
Jose Emmanuel M. Eala, and Perry Martinez. The Court of Appeals denied the motion for
reconsideration.
In her 31 March 2005 Decision,5 the Labor Arbiter6 declared petitioner an employee whose
dismissal by respondents was illegal. Accordingly, the Labor Arbiter ordered the
reinstatement of petitioner and the payment of backwages, moral and exemplary damages
and attorneys fees, to wit:
WHEREFORE, premises considered all respondents who are here found to have
illegally dismissed complainants are hereby ordered to (a) reinstate complainants
within thirty (30) days from the date of receipt of this decision and to solidarily pay
complainants:

The Facts JOSE MEL RENATO GUEVARR

BERNARTE
The facts, as summarized by the NLRC and quoted by the Court of Appeals, are as follows: 1. backwages from January 1, 2004 up
to the finality of this Decision, which P211,250.0
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to date is P536,250.00
to join the PBA as referees. During the leadership of Commissioner Emilio 100,000.00 100,000.0
Bernardino, they were made to sign contracts on a year-to-year basis. During the 2. moral damages 50,000.00
term of Commissioner Eala, however, changes were made on the terms of their 50,000.0
employment. 3. exemplary damages
4. 10% attorneys fees 68,625.00 36,125.0
Complainant Bernarte, for instance, was not made to sign a contract during the first
conference of the All-Filipino Cup which was from February 23, 2003 to June 2003. TOTAL P754,875.00 P397,375.0
It was only during the second conference when he was made to sign a one and a half
month contract for the period July 1 to August 5, 2003. or a total of P1,152,250.00

The rest of the claims are hereby dismissed for lack of merit or basis.
SO ORDERED.7
In its 28 January 2008 Decision,8 the NLRC affirmed the Labor Arbiters judgment. The
dispositive portion of the NLRCs decision reads:
WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor
Arbiter Teresita D. Castillon-Lora dated March 31, 2005 is AFFIRMED.
SO ORDERED.9
Respondents filed a petition for certiorari with the Court of Appeals, which overturned the
decisions of the NLRC and Labor Arbiter. The dispositive portion of the Court of Appeals
decision reads:
WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated
January 28, 2008 and Resolution dated August 26, 2008 of the National Labor
Relations Commission are ANNULLED and SET ASIDE. Private respondents
complaint before the Labor Arbiter is DISMISSED.
SO ORDERED.10
The Court of Appeals Ruling
The Court of Appeals found petitioner an independent contractor since respondents did not
exercise any form of control over the means and methods by which petitioner performed his
work as a basketball referee. The Court of Appeals held:
While the NLRC agreed that the PBA has no control over the referees acts of
blowing the whistle and making calls during basketball games, it, nevertheless,
theorized that the said acts refer to the means and methods employed by the
referees in officiating basketball games for the illogical reason that said acts refer
only to the referees skills. How could a skilled referee perform his job without
blowing a whistle and making calls? Worse, how can the PBA control the
performance of work of a referee without controlling his acts of blowing the whistle
and making calls?
Moreover, this Court disagrees with the Labor Arbiters finding (as affirmed by the
NLRC) that the Contracts of Retainer show that petitioners have control over
private respondents.
xxxx
Neither do We agree with the NLRCs affirmance of the Labor Arbiters conclusion
that private respondents repeated hiring made them regular employees by
operation of law.11
The Issues
The main issue in this case is whether petitioner is an employee of respondents, which in
turn determines whether petitioner was illegally dismissed.
Petitioner raises the procedural issue of whether the Labor Arbiters decision has become
final and executory for failure of respondents to appeal with the NLRC within
the reglementary period.
The Ruling of the Court
The petition is bereft of merit.
The Court shall first resolve the procedural issue posed by petitioner.
Petitioner contends that the Labor Arbiters Decision of 31 March 2005 became final
and executory for failure of respondents to appeal with the NLRC within the prescribed
period. Petitioner claims that the Labor Arbiters decision was constructively served on
respondents as early as August 2005 while respondents appealed the Arbiters decision only
on 31 March 2006, way beyond the reglementary period to appeal. Petitioner points out that
service of an unclaimed registered mail is deemed complete five days from the date of first
notice of the post master. In this case three notices were issued by the post office, the last
being on 1 August 2005. The unclaimed registered mail was consequently returned to
sender. Petitioner presents the Postmasters Certification to prove constructive service of the
Labor Arbiters decision on respondents. The Postmaster certified:
xxx
That upon receipt of said registered mail matter, our registry in charge,
Vicente Asis, Jr., immediately issued the first registry notice to claim on July 12,
2005 by the addressee. The second and third notices were issued on July 21 and
August 1, 2005, respectively.
That the subject registered letter was returned to the sender (RTS) because the
addressee failed to claim it after our one month retention period elapsed. Said
registered letter was dispatched from this office to Manila CPO (RTS) under bill #6,
line 7, page1, column 1, on September 8, 2005.12
Section 10, Rule 13 of the Rules of Court provides:
SEC. 10. Completeness of service. Personal service is complete upon actual delivery.
Service by ordinary mail is complete upon the expiration of ten (10) days after
mailing, unless the court otherwise provides. Service by registered mail is complete
upon actual receipt by the addressee, or after five (5) days from the date he received
the first notice of the postmaster, whichever date is earlier.

The rule on service by registered mail contemplates two situations: (1) actual service the
completeness of which is determined upon receipt by the addressee of the registered mail;
and (2) constructive service the completeness of which is determined upon expiration of five
days from the date the addressee received the first notice of the postmaster.13
Insofar as constructive service is concerned, there must be conclusive proof that a first notice
was duly sent by the postmaster to the addressee.14 Not only is it required that notice of the
registered mail be issued but that it should also be delivered to and received by the
addressee.15 Notably, the presumption that official duty has been regularly performed is not
applicable in this situation. It is incumbent upon a party who relies on constructive service to
prove that the notice was sent to, and received by, the addressee.16
The best evidence to prove that notice was sent would be a certification from the postmaster,
who should certify not only that the notice was issued or sent but also as to how, when and to
whom the delivery and receipt was made. The mailman may also testify that the notice was
actually delivered.17
In this case, petitioner failed to present any concrete proof as to how, when and to whom the
delivery and receipt of the three notices issued by the post office was made. There is no
conclusive evidence showing that the post office notices were actually received by
respondents, negating petitioners claim of constructive service of the Labor Arbiters decision
on respondents. The Postmasters Certification does not sufficiently prove that the three
notices were delivered to and received by respondents; it only indicates that the post office
issued the three notices. Simply put, the issuance of the notices by the post office is not
equivalent to delivery to and receipt by the addressee of the registered mail. Thus, there is no
proof of completed constructive service of the Labor Arbiters decision on respondents.
At any rate, the NLRC declared the issue on the finality of the Labor Arbiters decision moot
as respondents appeal was considered in the interest of substantial justice. We agree with the
NLRC. The ends of justice will be better served if we resolve the instant case on the merits
rather than allowing the substantial issue of whether petitioner is an independent contractor
or an employee linger and remain unsettled due to procedural technicalities.
The existence of an employer-employee relationship is ultimately a question of fact. As a
general rule, factual issues are beyond the province of this Court. However, this rule admits
of exceptions, one of which is where there are conflicting findings of fact between the Court
of Appeals, on one hand, and the NLRC and Labor Arbiter, on the other, such as in the
present case.18
To determine the existence of an employer-employee relationship, case law has consistently
applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employee on the means and methods by which the work is accomplished. The so-
called control test is the most important indicator of the presence or absence of an
employer-employee relationship.19
In this case, PBA admits repeatedly engaging petitioners services, as shown in the retainer
contracts. PBA pays petitioner a retainer fee, exclusive of per diem or allowances, as
stipulated in the retainer contract. PBA can terminate the retainer contract for petitioners
violation of its terms and conditions.
However, respondents argue that the all-important element of control is lacking in this case,
making petitioner an independent contractor and not an employee of respondents.
Petitioner contends otherwise. Petitioner asserts that he is an employee of respondents since
the latter exercise control over the performance of his work. Petitioner cites the following
stipulations in the retainer contract which evidence control: (1) respondents classify or rate a
referee; (2) respondents require referees to attend all basketball games organized or
authorized by the PBA, at least one hour before the start of the first game of each day; (3)
respondents assign petitioner to officiate ballgames, or to act as alternate referee or
substitute; (4) referee agrees to observe and comply with all the requirements of the PBA
governing the conduct of the referees whether on or off the court; (5) referee agrees (a) to
keep himself in good physical, mental, and emotional condition during the life of the
contract; (b) to give always his best effort and service, and loyalty to the PBA, and not to
officiate as referee in any basketball game outside of the PBA, without written prior consent
of the Commissioner; (c) always to conduct himself on and off the court according to the
highest standards of honesty or morality; and (6) imposition of various sanctions for
violation of the terms and conditions of the contract.
The foregoing stipulations hardly demonstrate control over the means and methods by
which petitioner performs his work as a referee officiating a PBA basketball game. The
contractual stipulations do not pertain to, much less dictate, how and when petitioner will
blow the whistle and make calls. On the contrary, they merely serve as rules of conduct or
guidelines in order to maintain the integrity of the professional basketball league. As
correctly observed by the Court of Appeals, how could a skilled referee perform his job
without blowing a whistle and making calls? x x x [H]ow can the PBA control the
performance of work of a referee without controlling his acts of blowing the whistle and
making calls?20
In Sonza v. ABS-CBN Broadcasting Corporation,21 which determined the relationship
between a television and radio station and one of its talents, the Court held that not all rules
imposed by the hiring party on the hired party indicate that the latter is an employee of the
former. The Court held:
We find that these general rules are merely guidelines towards the achievement of
the mutually desired result, which are top-rating television and radio programs that
comply with standards of the industry. We have ruled that:
Further, not every form of control that a party reserves to himself over the conduct
of the other party in relation to the services being rendered may be accorded the
effect of establishing an employer-employee relationship. The facts of this case fall
squarely with the case of Insular Life Assurance Co., Ltd. v. NLRC. In said case, we
held that:
Logically, the line should be drawn between rules that merely serve as guidelines
towards the achievement of the mutually desired result without dictating the means
or methods to be employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such means. The first,
which aim only to promote the result, create no employer-employee relationship
unlike the second, which address both the result and the means used to achieve it.22
We agree with respondents that once in the playing court, the referees exercise their own
independent judgment, based on the rules of the game, as to when and how a call or decision
is to be made. The referees decide whether an infraction was committed, and the PBA cannot
overrule them once the decision is made on the playing court. The referees are the only,
absolute, and final authority on the playing court. Respondents or any of the PBA officers
cannot and do not determine which calls to make or not to make and cannot control the
referee when he blows the whistle because such authority exclusively belongs to the referees.
The very nature of petitioners job of officiating a professional basketball game undoubtedly
calls for freedom of control by respondents.
Moreover, the following circumstances indicate that petitioner is an independent contractor:
(1) the referees are required to report for work only when PBA games are scheduled, which is
three times a week spread over an average of only 105 playing days a year, and they officiate
games at an average of two hours per game; and (2) the only deductions from the fees
received by the referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work eight hours per day
for five days a week, petitioner is required to report for work only when PBA games are
scheduled or three times a week at two hours per game. In addition, there are no deductions
for contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual
deductions from employees salaries. These undisputed circumstances buttress the fact that
petitioner is an independent contractor, and not an employee of respondents.
Furthermore, the applicable foreign case law declares that a referee is an independent
contractor, whose special skills and independent judgment are required specifically for such
position and cannot possibly be controlled by the hiring party.
In Yonan v. United States Soccer Federation, Inc.,23 the United States District Court of
Illinois held that plaintiff, a soccer referee, is an independent contractor, and not an
employee of defendant which is the statutory body that governs soccer in the United States.
As such, plaintiff was not entitled to protection by the Age Discrimination in Employment
Act. The U.S. District Court ruled:
Generally, if an employer has the right to control and direct the work of an
individual, not only as to the result to be achieved, but also as to details by which
the result is achieved, an employer/employee relationship is likely to exist. The
Court must be careful to distinguish between control[ling] the conduct of another
party contracting party by setting out in detail his obligations consistent with the
freedom of contract, on the one hand, and the discretionary control an employer
daily exercises over its employees conduct on the other.
Yonan asserts that the Federation closely supervised his performance at each soccer
game he officiated by giving him an assessor, discussing his performance, and
controlling what clothes he wore while on the field and traveling. Putting aside that
the Federation did not, for the most part, control what clothes he wore, the
Federation did not supervise Yonan, but rather evaluated his performance after
matches. That the Federation evaluated Yonan as a referee does not mean that he
was an employee. There is no question that parties retaining independent
contractors may judge the performance of those contractors to determine if the
contractual relationship should continue. x x x
It is undisputed that the Federation did not control the way Yonan refereed his
games. He had full discretion and authority, under the Laws of the Game, to call the
game as he saw fit. x x x In a similar vein, subjecting Yonan to qualification
standards and procedures like the Federations registration and training
requirements does not create an employer/employee relationship. x x x
A position that requires special skills and independent judgment weights in favor of
independent contractor status. x x x Unskilled work, on the other hand, suggests an
employment relationship. x x x Here, it is undisputed that soccer refereeing,
especially at the professional and international level, requires a great deal of skill
and natural ability. Yonan asserts that it was the Federations training that made
him a top referee, and that suggests he was an employee. Though substantial
training supports an employment inference, that inference is dulled significantly or
negated when the putative employers activity is the result of a statutory
requirement, not the employers choice. x x x
In McInturff v. Battle Ground Academy of Franklin,24 it was held that the
umpire was not an agent of the Tennessee Secondary School Athletic
Association (TSSAA), so the players vicarious liability claim against the
association should be dismissed. In finding that the umpire is an independent
contractor, the Court of Appeals of Tennesse ruled:
The TSSAA deals with umpires to achieve a result-uniform rules for all baseball
games played between TSSAA member schools. The TSSAA does not supervise
regular season games. It does not tell an official how to conduct the game beyond
the framework established by the rules. The TSSAA does not, in the vernacular of
the case law, control the means and method by which the umpires work.
In addition, the fact that PBA repeatedly hired petitioner does not by itself prove that
petitioner is an employee of the former. For a hired party to be considered an employee, the
hiring party must have control over the means and methods by which the hired party is to
perform his work, which is absent in this case. The continuous rehiring by PBA of petitioner
simply signifies the renewal of the contract between PBA and petitioner, and highlights the
satisfactory services rendered by petitioner warranting such contract renewal. Conversely, if
PBA decides to discontinue petitioners services at the end of the term fixed in the contract,
whether for unsatisfactory services, or violation of the terms and conditions of the contract,
or for whatever other reason, the same merely results in the non-renewal of the contract, as
in the present case. The non-renewal of the contract between the parties does not constitute
illegal dismissal of petitioner by respondents.
WHEREFORE, we DENY the petition and AFFIRM the assailed decision of the Court of
Appeals.
SO ORDERED.
MARTICIO SEMBLANTE and G.R. No. 196426 and last until 12:00 midnight, or until the early hours of the morning depending on the needs
DUBRICK PILAR, of the cockpit. Petitioners had both been issued employees� identification cards[5] that they
Petitioners, Present: wear every time they report for duty. They alleged never having incurred any infraction and/or
violation of the cockpit rules and regulations.
CARPIO,* J.
- versus - VELASCO, JR., Chairperson, On November 14, 2003, however, petitioners were denied entry into the cockpit upon
BRION,** the instructions of respondents, and were informed of the termination of their services
PERALTA, and effective that date. This prompted petitioners to file a complaint for illegal dismissal against
COURT OF APPEALS, 19THDIVISION, now SERENO,*** JJ. respondents.
SPECIAL FORMER 19TH DIVISION, GALLERA
DE MANDAUE / In answer, respondents denied that petitioners were their employees and alleged that
SPOUSES VICENTE and MARIA Promulgated: they were associates of respondents� independent contractor, Tomas Vega. Respondents
LUISA LOOT, claimed that petitioners have no regular working time or day and they are free to decide for
Respondents. August 15, 2011 themselves whether to report for work or not on any cockfighting day. In times when there are
few cockfights in Gallera de Mandaue, petitioners go to other cockpits in the vicinity. Lastly,
petitioners, so respondents assert, were only issued identification cards to indicate that they
were free from the normal entrance fee and to differentiate them from the general public.[6]

In a Decision dated June 16, 2004, Labor Arbiter Julie C. Rendoque found petitioners
to be regular employees of respondents as they performed work that was necessary and
indispensable to the usual trade or business of respondents for a number of years. The Labor
x-----------------------------------------------------------------------------------------x Arbiter also ruled that petitioners were illegally dismissed, and so ordered respondents to pay
petitioners their backwages and separation pay.[7]
DECISION Respondents� counsel received the Labor Arbiter�s Decision on September 14, 2004.
And within the 10-day appeal period, he filed the respondents� appeal with the NLRC on
September 24, 2004, but without posting a cash or surety bond equivalent to the monetary
VELASCO, JR., J.:
award granted by the Labor Arbiter.[8]

It was only on October 11, 2004 that respondents filed an appeal bond dated October 6,
Before Us is a Petition for Review on Certiorari under Rule 45, assailing and seeking
2004. Hence, in a Resolution[9] dated August 25, 2005, the NLRC denied the appeal for its
to set aside the Decision[1] and Resolution[2] dated May 29, 2009 and February 23, 2010,
non-perfection.
respectively, of the Court of Appeals (CA) in CA-G.R. SP No. 03328. The CA affirmed the
October 18, 2006 Resolution[3] of the National Labor Relations Commission (NLRC), Fourth
Subsequently, however, the NLRC, acting on respondents� Motion for
Division (now Seventh Division), in NLRC Case No. V-000673-2004.
Reconsideration, reversed its Resolution on the postulate that their appeal was meritorious
and the filing of an appeal bond, albeit belated, is a substantial compliance with the rules. The
Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that
NLRC held in its Resolution of October 18, 2006 that there was no employer-employee
they were hired by respondents-spouses Vicente and Maria Luisa Loot, the owners of Gallera
relationship between petitioners and respondents, respondents having no part in the selection
de Mandaue (the cockpit), as the official masiador and sentenciador, respectively, of the
and engagement of petitioners, and that no separate individual contract with respondents was
cockpit sometime in 1993.
ever executed by petitioners.[10]
As the masiador, Semblante calls and takes the bets from the gamecock owners and
Following the denial by the NLRC of their Motion for Reconsideration, per
other bettors and orders the start of the cockfight. He also distributes the winnings after
Resolution dated January 12, 2007, petitioners went to the CA on a petition for certiorari. In
deducting the arriba, or the commission for the cockpit. Meanwhile, as the sentenciador, Pilar
support of their petition, petitioners argued that the NLRC gravely abused its discretion in
oversees the proper gaffing of fighting cocks, determines the fighting cocks� physical
entertaining an appeal that was not perfected in the first place. On the other hand, respondents
condition and capabilities to continue the cockfight, and eventually declares the result of the
argued that the NLRC did not commit grave abuse of discretion, since they eventually posted
cockfight.[4]
their appeal bond and that their appeal was so meritorious warranting the relaxation of the
rules in the interest of justice.[11]
For their services as masiador and sentenciador, Semblante receives PhP 2,000 per
week or a total of PhP 8,000 per month, while Pilar gets PhP 3,500 a week or PhP 14,000 per
In its Decision dated May 29, 2009, the appellate court found for respondents, noting
month. They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding
that referees and bet-takers in a cockfight need to have the kind of expertise that is
monthly derbies and cockfights held on special holidays. Their working days start at 1:00 p.m.
characteristic of the game to interpret messages conveyed by mere gestures. Hence,
petitioners are akin to independent contractors who possess unique skills, expertise, and
talent to distinguish them from ordinary employees. Further, respondents did not supply
petitioners with the tools and instrumentalities they needed to perform work. Petitioners only
needed their unique skills and talents to perform their job
as masiador and sentenciador.[12] The CA held:
In some circumstances, the NLRC is allowed to be liberal in the
interpretation of the rules in deciding labor cases. In this case, the appeal
bond was filed, although late. Moreover, an exceptional circumstance
obtains in the case at bench which warrants a relaxation of the
bond requirement as a condition for perfecting the appeal. This
case is highly meritorious that propels this Court not to strictly apply the
rules and thus prevent a grave injustice from being done.
As elucidated by the NLRC, the circumstances obtaining in
this case wherein no actual employer-employee exists between
the petitioners and the private respondents [constrain] the
relaxation of the rules. In this regard, we find no grave abuse
attributable to the administrative body.
xxxx
Petitioners are duly licensed �masiador� and �sentenciador� in
the cockpit owned by Lucia Loot. Cockfighting, which is a part of our
cultural heritage, has a peculiar set of rules. It is a game based on the
fighting ability of the game cocks in the cockpit. The referees and bet-
takers need to have that kind of expertise that is characteristic of
the cockfight gambling who can interpret the message conveyed
even by mere gestures. They ought to have the talent and skill to get the
bets from numerous cockfighting aficionados and decide which cockerel to
put in the arena. They are placed in that elite spot where they can control
the game and the crowd. They are not given salaries by cockpit
owners as their compensation is based on the �arriba�. In fact,
they can offer their services everywhere because they are duly licensed by
the GAB. They are free to choose which cockpit arena to enter and offer their
expertise. Private respondents cannot even control over the
means and methods of the manner by which they perform their
work. In this light, they are akin to independent contractors who possess
unique skills, expertise and talent to distinguish them from ordinary
employees.
Furthermore, private respondents did not supply petitioners with the
tools and instrumentalities they needed to perform their work. Petitioners
only needed their talent and skills to be a �masiador� and
�sentenciador�. As such, they had all the tools they needed to perform
their work. (Emphasis supplied.)
The CA refused to reconsider its Decision. Hence, petitioners came to this Court,
arguing in the main that the CA committed a reversible error in entertaining an appeal, which
was not perfected in the first place.
Indeed, the posting of a bond is indispensable to the perfection of an appeal in cases
involving monetary awards from the Decision of the Labor Arbiter.[13] Article 223 of the Labor
Code provides:
Article 223. Appeal. � Decisions, awards, or orders of the Labor Arbiter
are final and executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only on
any of the following grounds:
xxxx
In case of a judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by
the Commission in the amount equivalent to the monetary award in the
judgment appealed from. (Emphasis supplied.)
Time and again, however, this Court, considering the substantial merits of the case,
has relaxed this rule on, and excused the late posting of, the appeal bond when there are strong
and compelling reasons for the liberality,[14] such as the prevention of miscarriage of justice
extant in the case[15] or the special circumstances in the case combined with its legal merits or
the amount and the issue involved.[16] After all, technical rules cannot prevent courts from
exercising their duties to determine and settle, equitably and completely, the rights and
obligations of the parties.[17] This is one case where the exception to the general rule lies.
While respondents had failed to post their bond within the 10-day period provided
above, it is evident, on the other hand, that petitioners are NOT employees of respondents,
since their relationship fails to pass muster the four-fold test of employment We have
repeatedly mentioned in countless decisions: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control
the employee�s conduct, which is the most important element.[18]
As found by both the NLRC and the CA, respondents had no part in petitioners�
selection and management;[19] petitioners� compensation was paid out of the arriba (which
is a percentage deducted from the total bets), not by petitioners;[20]and petitioners
performed their functions as masiador and sentenciador free from the
direction and control of respondents.[21] In the conduct of their work, petitioners relied
mainly on their �expertise that is characteristic of the cockfight gambling,�[22] and were
never given by respondents any tool needed for the performance of their work.[23]
Respondents, not being petitioners� employers, could never have dismissed, legally
or illegally, petitioners, since respondents were without power or prerogative to do so in the
first place. The rule on the posting of an appeal bond cannot defeat the substantive rights of
respondents to be free from an unwarranted burden of answering for an illegal dismissal for
which they were never responsible.
Strict implementation of the rules on appeals must give way to the factual and legal
reality that is evident from the records of this case.[24] After all, the primary objective of our
laws is to dispense justice and equity, not the contrary.
 WHEREFORE, We DENY this petition and AFFIRM the May 29, 2009 Decision subsequently gave the petitioners two receipts issued by the repair shop. The latter suspected
and February 23, 2010 Resolution of the CA, and the October 18, 2006 Resolution of the that the receipts were falsified and stopped talking to him and giving him work
NLRC. assignments. The petitioners, however, still paid him P700.00 and P500.00 on April 15 and
30, 2004, respectively, but no longer gave him any salary after that. As a result, the respondent
SO ORDERED. and his family moved out of the petitioners compound and relocated to a nearby place. The
respondent claimed that the petitioners paid him a daily wage of P175.00, but did not give him
service incentive leave, holiday pay, rest day pay, and overtime pay. He also alleged that the
CRC AGRICULTURAL TRADING and G.R. No. 177664 petitioners did not send him a notice of termination.
ROLANDO B. CATINDIG,
Petitioners, Present: In opposing the complaint, the petitioners claimed that the respondent was a
seasonal driver; his work was irregular and was not fixed. The petitioners paid the
CARPIO, J., Chairperson, respondent P175.00 daily, but under a no work no pay basis. The petitioners also gave him a
LEONARDO-DE CASTRO, daily allowance of P140.00 to P200.00. In April 2003, the respondent worked only for 15 days
- versus - BRION, for which he was paid the agreed wages. The petitioners maintained that they did not anymore
DEL CASTILLO, and engage the respondents services after April 2003, as they had already lost trust and confidence
ABAD, JJ. in him after discovering that he had forged receipts for the vehicle parts he bought for
them. Since then, the respondent had been working as a driver for different jeepney
operators.[7]
NATIONAL LABOR Promulgated:
RELATIONS COMMISSION and The Labor Arbiter Ruling
ROBERTO OBIAS, December 23, 2009
Respondents. Labor Arbiter Rennell Joseph R. Dela Cruz, in his decision of April 15, 2005, ruled in the
x ------------------------------------------------------------------------------------------x respondents favor declaring that he had been illegally dismissed. The labor arbiter held that
as a regular employee, the respondents services could only be terminated after the observance
of due process. The labor arbiter likewise disregarded the petitioners charge of abandonment
DECISION against the respondent. He thus decreed:

BRION, J.: WHEREFORE, premises considered, judgment is hereby rendered

ordering respondents CRC AGRICULTURAL TRADING and ROLANDO
CATINDIG to pay complainant jointly and severally the following:
Before this Court is the Petition for Review on Certiorari under Rule 45 of the Rules of Court
assailing the Decision[1] of the Court of Appeals (CA) dated February 20, 2007 and its related Separation Pay - P64,740.00
Resolution dated April 30, 2007[2] in CA-G.R. SP No. 95924. The assailed decision reversed
and set aside the August 15, 2006 Resolution[3] of the National Labor Relations Commission Backwages
(NLRC), and reinstated the Labor Arbiters April 15, 2005 Decision[4] finding respondent Basic pay - P146,491.80
Roberto Obias (respondent) illegally dismissed from his employment. 13th month pay - 12,207.65
SIL - 2,347.63
ANTECEDENT FACTS Salary Differential - 47,944.00
Unpaid SIL - 3,467.00
The present petition traces its roots to the complaint[5] for illegal dismissal filed by the __________
respondent against petitioners CRC Agricultural Trading and its owner, Rolando B. Catindig P277,198.08
(collectively, petitioners), before the Labor Arbiter on June 22, 2004. 10% attorneys fees - 27,719.80
__________
In his Sinumpaang Salaysay,[6] the respondent alleged that the petitioners employed him as GRAND TOTAL - P304,917.80
a driver sometime in 1985. The respondent worked for the petitioners until he met an accident
in 1989, after which the petitioners no longer allowed him to work. After six years, or in SO ORDERED.[8]
February 1995, the petitioners again hired the respondent as a driver and offered him to stay
inside the companys premises. The petitioners gave him a P3,000.00 loan to help him build a
hut for his family. The NLRC Ruling

Sometime in March 2003, the petitioners ordered respondent to have the alternator The petitioners and the respondent both appealed the labor arbiters decision to the NLRC. The
of one of its vehicles repaired. The respondent brought the vehicle to a repair shop and petitioners specifically questioned the ruling that the respondent was illegally dismissed. The
respondent, for his part, maintained that the labor arbiter erred when he ordered the payment
of separation pay in lieu of reinstatement.
The NLRC, in its resolution of August 15, 2006,[9] modified the labor arbiters decision. The
NLRC ruled that the respondent was not illegally dismissed and deleted the labor arbiters
award of backwages and attorneys fees. The NLRC reasoned out that it was respondent himself
who decided to move his family out of the petitioners lot; hence, no illegal dismissal
occurred. Moreover, the respondent could not claim wages for the days he did not work, as he
was employed by the petitioners under a no work no pay scheme.
The CA Decision
The petitioners filed on August 30, 2006 a petition for certiorari with the CA alleging that the
NLRC erred in awarding the respondent separation pay and salary differentials. They argued
that an employee who had abandoned his work, like the respondent, is no different from one
who voluntarily resigned; both are not entitled to separation pay and to salary
differentials. The petitioners added that since they had already four regular drivers, the
respondents job was already unnecessary and redundant. They further argued that they could
not be compelled to retain the services of a dishonest employee.
The CA, in its decision dated February 20, 2007, reversed and set aside the NLRC resolution
dated August 15, 2006, and reinstated the labor arbiters April 15, 2005 decision.
The CA disregarded the petitioners charge of abandonment against the respondent for their
failure to show that there was deliberate and unjustified refusal on the part of the respondent
to resume his employment. The CA also ruled that the respondents filing of a complaint for
illegal dismissal manifested his desire to return to his job, thus negating the petitioners charge
of abandonment. Even assuming that there had been abandonment, the petitioners denied the
respondent due process when they did not serve him with two written notices, i.e., (1) a notice
which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) a subsequent notice which advises the employee of the employers decision to
dismiss him. Thus, the respondent is entitled to full backwages without deduction of earnings
derived elsewhere from the time his compensation was withheld from him, up to the time of
his actual reinstatement. The CA added that reinstatement would no longer be beneficial to
both the petitioners and respondent, as the relationship between them had already been
strained.
Petitioners moved to reconsider the decision, but the CA denied the motion for lack of merit
in its Resolution dated April 30, 2007.
In the present petition, the petitioners alleged that the CA erred when it awarded the
respondent separation pay, backwages, salary differentials, and attorneys fees. They reiterated
their view that an abandoning employee like respondent is not entitled to separation benefits
because he is no different from one who voluntarily resigns.
THE COURTS RULING
We do not find the petition meritorious.
The existence of an employer-employee relationship
A paramount issue that needs to be resolved before we rule on the main issue of illegal
dismissal is whether there existed an employer-employee relationship between the petitioners
and the respondent. This determination has been rendered imperative by the petitioners
denial of the existence of employer-employee relationship on the reasoning that they only
called on the respondent when needed.
The elements to determine the existence of an employment relationship are: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the employers power to control the employees conduct. The most
important element is the employers control of the employees conduct, not only as to the result
of the work to be done, but also as to the means and methods to accomplish it. All the four
elements are present in this case.[10]
First, the petitioners engaged the services of the respondent in 1995. Second, the
petitioners paid the respondent a daily wage of P175.00, with allowances ranging
from P140.00 to P200.00 per day. The fact the respondent was paid under a no work no pay
scheme, assuming this claim to be true, is not significant. The no work no pay scheme is merely
a method of computing compensation, not a basis for determining the existence or absence of
employer-employee relationship. Third, the petitioners power to dismiss the respondent was
inherent in the fact that they engaged the services of the respondent as a driver. Finally, a
careful review of the record shows that the respondent performed his work as driver under the
petitioners supervision and control. Petitioners determined how, where, and when the
respondent performed his task. They, in fact, requested the respondent to live inside their
compound so he (respondent) could be readily available when the petitioners needed his
services. Undoubtedly, the petitioners exercised control over the means and methods by which
the respondent accomplished his work as a driver.
We conclude from all these that an employer-employee relationship existed between
the petitioners and respondent.
The respondent did not abandon his job
In a dismissal situation, the burden of proof lies with the employer to show that the
dismissal was for a just cause. In the present case, the petitioners claim that there was no
illegal dismissal, since the respondent abandoned his job. The petitioners point out that the
respondent freely quit his work as a driver when he was suspected of forging vehicle parts
receipts.
Abandonment of work, or the deliberate and unjustified refusal of an employee to
resume his employment, is a just cause for the termination of employment under paragraph
(b) of Article 282 of the Labor Code, since it constitutes neglect of duty.[11] The jurisprudential
rule is that abandonment is a matter of intention that cannot be lightly presumed from
equivocal acts. To constitute abandonment, two elements must concur: (1) the failure to report
for work or absence without valid or justifiable reason, and (2) a clear intent, manifested
through overt acts, to sever the employer-employee relationship. The employer bears the
burden of showing a deliberate and unjustified
refusal by the employee to resume his employment without any intention of returning.[12]
In the present case, the petitioners did not adduce any proof to show that the
respondent clearly and unequivocally intended to abandon his job or to sever the employer-
employee relationship. Moreover, the respondents filing of the complaint for illegal dismissal
on June 22, 2004 strongly speaks against the petitioners charge of abandonment; it is illogical
for an employee to abandon his employment and, thereafter, file a complaint for illegal
dismissal. As we held in Samarca v. Arc-Men Industries, Inc.:[13]
Abandonment is a matter of intention and cannot lightly be
presumed from certain equivocal acts. To constitute abandonment, there
must be clear proof of deliberate and unjustified intent to sever the
employer-employee relationship. Clearly, the operative act is still the
employees ultimate act of putting an end to his
employment. [Emphasis in the original]
Respondent was constructively dismissed
Case law defines constructive dismissal as a cessation of work because continued employment has been
rendered impossible, unreasonable, or unlikely, as when there is a demotion in rank or diminution in pay
or both or when a clear discrimination, insensibility, or disdain by an employer becomes
unbearable to the employee.[14]
The test of constructive dismissal is whether a reasonable person in the employees position
would have felt compelled to give up his position under the circumstances. It is an act amounting to
dismissal but is made to appear as if it were not. In fact, the employee who is constructively dismissed might
have been allowed to keep coming to work. Constructive dismissal is therefore a dismissal in disguise. The
law recognizes and resolves this situation in favor of employees in order to protect their rights and interests
from the coercive acts of the employer.[15]
In the present case, the petitioners ceased verbally communicating with the respondent and
giving him work assignment after suspecting that he had forged purchase receipts. Under this situation, the
respondent was forced to leave the petitioners compound with his family and to transfer to a nearby
place. Thus, the respondents act of leaving the petitioners premises was in reality not his choice
but a situation the petitioners created.
The Due Process Requirement
Even assuming that a valid ground to dismiss the respondent exists, the petitioners failed to
comply with the twin requirements of notice and hearing under the Labor Code.
The long established jurisprudence holds that to justify the dismissal of an employee
for a just cause, the employer must furnish the worker with two written notices. The first is
the notice to apprise the employee of the particular acts or omissions for which his dismissal is
sought. This may be loosely considered as the charge against the employee. The second is the
notice informing the employee of the employers decision to dismiss him. This decision,
however, must come only after the employee is given a reasonable period from receipt of the
first notice within which to answer the charge, and ample opportunity to be heard and defend
himself with the assistance of his representative, if he so desires. The requirement of notice is
not a mere technicality, but a requirement of due process to which every employee is entitled.
The petitioners clearly failed to comply with the two-notice requirement. Nothing in
the records shows that the petitioners ever sent the respondent a written notice informing him
of the ground for which his dismissal was sought. It does not also appear that the petitioners
held a hearing where the respondent was given the opportunity to answer the charges of
abandonment. Neither did the petitioners send a written notice to the respondent informing
the latter that his service had been terminated and the reasons for the termination of
employment. Under these facts, the respondents dismissal was illegal.[16]
Backwages, Separation Pay, and Attorneys Fees
The respondents illegal dismissal carries the legal consequence defined under Article
279 of the Labor Code: the illegally dismissed employee is entitled to reinstatement without loss
of seniority rights and other privileges and to his full backwages, inclusive of allowances and
other benefits or their monetary equivalent, computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. Thus, an illegally dismissed
employee is entitled to two reliefs: backwages and reinstatement. Where reinstatement is no
longer viable as an option, backwages shall be computed from the time of the illegal termination
up to the finality of the decision.[17] Separation pay equivalent to one month salary for every year
of service should likewise be awarded as an alternative in case reinstatement in not possible.[18]
In the present case, reinstatement is no longer feasible because of the strained
relations between the petitioners and the respondent. Time and again, this Court has
recognized that strained relations between the employer and employee is an exception to the
rule requiring actual reinstatement for illegally dismissed employees for the practical reason
that the already existing antagonism will only fester and deteriorate, and will only worsen with
possible adverse effects on the parties, if we shall compel reinstatement; thus, the use of a viable
substitute that protects the interests of both parties while ensuring that the law is respected.
In this case, the antagonism between the parties cannot be doubted, evidenced by the
petitioners refusal to talk to the respondent after their suspicion of fraudulent
misrepresentation was aroused, and by the respondents own decision to leave the petitioners
compound together with his family. Under these undisputed facts, a peaceful working
relationship between them is no longer possible and reinstatement is not to the best interest of
the parties. The payment of separation pay is the better alternative as it liberates the respondent
from what could be a highly hostile work environment, while releasing the petitioners from the
grossly unpalatable obligation of maintaining in their employ a worker they could no longer
trust.
The respondent having been compelled to litigate in order to seek redress, the CA
correctly affirmed the labor arbiters grant of attorneys fees equivalent to 10% of the total
monetary award.[19]
The records of this case, however, are incomplete for purposes of computing the exact
monetary award due to the respondent. Thus, it is necessary to remand this case to the Labor
Arbiter for the sole purpose of computing the proper monetary award.
WHEREFORE, premises considered, we hereby DENY the petition. The Decision of
the Court of Appeals dated February 20, 2007 and its Resolution dated April 30, 2007 in CA-
G.R. SP No. 95924 are AFFIRMED and the case is REMANDED to the Labor Arbiter for the
sole purpose of computing the full backwages, inclusive of allowances and other benefits of
respondent Roberto Obias, computed from the date of his dismissal up to the finality of the
decision, and separation pay in lieu of reinstatement equivalent to one month salary for every
year of service, computed from the time of his engagement up to the finality of this decision.
SO ORDERED.
 DEALCO FARMS, INC., G.R. No. 153192
Petitioner,
Present:
AUSTRIA-MARTINEZ, J.,
- versus - Acting Chairperson,
TINGA,*
CHICO-NAZARIO,
NACHURA, and
NATIONAL LABOR RELATIONS COMMISSION PERALTA, JJ.
(5th DIVISION), CHIQUITO BASTIDA, and ALBERT
CABAN, Promulgated:
Respondents.
January 30, 2009
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
Under review are Resolutions[1] of the Court of Appeals (CA) in CA-G.R. SP No. 68972 denying
due course to and dismissing petitioner Dealco Farms, Inc.s petition for certiorari.
Petitioner is a corporation engaged in the business of importation, production, fattening and
distribution of live cattle for sale to meat dealers, meat traders, meat processors, canned good
manufacturers and other dealers in Mindanao and in Metro Manila. Petitioner imports cattle
by the boatload from Australia into the ports of General Santos City, Subic, Batangas,
or Manila. In turn, these imported cattle are transported to, and housed in, petitioners farms
in Polomolok, South Cotabato, or in Magalang, Pampanga, for fattening until the cattle
individually reach the market weight of 430 to 450 kilograms.
Respondents Albert Caban and Chiquito Bastida were hired by petitioner on June 25, 1993
and October 29, 1994, respectively, as escorts or comboys for the transit of live cattle
from General Santos City to Manila. Respondents work entailed tending to the cattle during
transportation. It included feeding and frequently showering the cattle to prevent dehydration
and to develop heat resistance. On the whole, respondents ensured that the cattle would be
safe from harm or death caused by a cattle fight or any such similar incident.
Upon arrival in Manila, the cattle are turned over to and received by the duly
acknowledged buyers or customers of petitioner, at which point, respondents work ceases. For
every round trip travel which lasted an average of 12 days, respondents were each
paid P1,500.00. The 12-day period is occasionally extended when petitioners customers are
delayed in receiving the cattle. In a month, respondents usually made two trips.
On October 15, 1999, respondents Bastida and Caban, together with Ramon Maquinsay and
Roland Parrocha, filed a Complaint for illegal dismissal with claims for separation pay with
full backwages, salary differentials, service incentive leave pay, 13th month pay, damages, and
attorneys fees against petitioner, Delfin Alcoriza[2] and Paciano Danilo Ramis[3] before the
National Labor Relations Commission (NLRC), Sub-Regional Arbitration Branch No.
XI, General Santos City. Although the four complainants collectively filed a case against
petitioner, Maquinsay and Parrocha never appeared in any of the conferences and/or hearings
before the Labor Arbiter. Neither did they sign the verification page of complainants position
paper. Most importantly, Maquinsay and Parrocha executed affidavits in favor of petitioner
praying for the dismissal of the complaint insofar as they were concerned.
It appears that, on August 19, 1999, respondents were told by a Jimmy Valenzuela, a hepe de
viaje, that he had been instructed by Ramis to immediately effect their replacement.
Valenzuela proffered no reason for respondents replacement. Respondents repeated attempts
to see and meet with Ramis, as well as to write Alcoriza, proved futile, compelling them to file
an illegal dismissal case against petitioner and its officers.
In all, respondents alleged in their position paper that: (1) they were illegally dismissed, as
they never violated any of petitioners company rules and policies; (2) their dismissal was not
due to any just or authorized cause; and (3) petitioner did not observe due process in effecting
their dismissal, failing to give them written notice thereof. Thus, respondents prayed for
money claims, i.e., salary differentials, service incentive leave pay, cost of living allowance
(COLA) and 13th month pay.
Petitioner, however, paints a different picture. Petitioner asserts that the finished cattle are
sold to traders and middlemen who undertake transportation thereof to Manila for
distribution to the wet markets. In fact, according to petitioner, the buyers and end-users of
their finished cattle actually purchase the cattle as soon as they are considered ready for the
market. Petitioner claims that once the finished cattle are bought by the buyers, these buyers
act separately from, and independently of, petitioners business. In this regard, the buyers
themselves arrange, through local representatives, for the (a) hauling from petitioners farm to
the port area; (b) shipment of the finished cattle to Manila; and (c) escort or comboy services
to feed and water the cattle during transit.
In its position paper, petitioner relates only one instance when it engaged the services of
respondents as comboys. Petitioner maintains that their arrangement with respondents was
only on a per-trip or per-contract basis to escort cattle to Manila which contemplated the
cessation of the engagement upon return of the ship to the port of origin
the General Santos City port.
Petitioner further narrates that sometime in 1998, and well into 1999, its import of cattle
from Australia substantially decreased due to the devalued dollar. Consequently, petitioner
was forced to downsize, and the sale and shipments to Manila were drastically reduced. Thus,
petitioner and/or its buyers no longer retained escort or comboy services.
Ultimately, petitioner denies the existence of an employer-employee relationship
with respondents. Petitioner posits that: (a) respondents are independent contractors who
offer comboy services to various shippers and traders of cattle, not only to petitioner; (b) in
the performance of work on board the ship, respondents are free from the control and
supervision of the cattle owner since the latter is interested only in the result thereof; (c) in
the alternative, respondents can only be considered as casual employees performing work not
necessary and desirable to the usual business or trade of petitioner, i.e., cattle fattening to
market weight and production; and (d) respondents likewise failed to complete the one-year
service period, whether continuous or broken, set forth in Article 280[4] of the Labor Code, as
petitioners shipments were substantially reduced in 1998-1999, thereby limiting the escort or
comboy activity for which respondents were employed.

On June 30, 2000, the Labor Arbiter found that respondents were employees of
petitioner, thus:
[Petitioner] admits having engaged the services of [respondents] as
caretakers or comboys (convoys) though it qualifies that it was on a per trip
or per contract basis. It also admits paying their remuneration of P1,500.00
per trip. It tacitly admits having terminated [respondents] services when it
said that [respondents] were among the group of escorts who were no longer
accommodated due to the decrease in volume of imports and shipments.
[Petitioner] also undoubtedly exercised control and supervision over
[respondents] work as caretakers considering that the value of the cattle
shipped runs into hundreds of thousands of pesos. The preparation of the
cattle for shipment, manning and feeding them prior to and during transit,
and making a report upon return to General Santos City to tally the records
of the cattle shipped out versus cattle that actually reached Manila are
certainly all in accordance with [petitioners] instructions.
Thus, all the four elements in the determination of an employer-employee
relationship being present, [x x x] [respondents] were, therefore, employees
of [petitioner].
x x x [Respondents] also performed activities which are usually necessary
or desirable in the usual business or trade of [petitioner] (Art. 280, Labor
Code). [Petitioners] contention, to the contrary, is erroneous. Transporting
the cattle to its main market in Manila is an essential and component aspect
of [petitioners] operation. As held by [the NLRCs] Fifth Division in one
case:
Complainants task of escorting the livestock shipped
to Manila, taking care of the livestock in transit, is an
activity which is necessary and desirable in the usual
business or trade of respondent. It is of judicial notice
that the bulk of the market for livestock of big livestock
raisers such as respondent is in Manila. Hogs do not
swim, they are shipped. When in transit (usually two-
and-one-half days) they do not queue to the mess hall,
they are fed. x x x The caretaker is a component of the
business, a part of the scheme of the operation. (NFL and
Ricardo Garcia v. Bibiana Farms, Inc., NLRC CA No. XI-
065089-99 (rab-xi-01-50026-98); prom. April 28,
2000).
More, it also appears that [respondents] had rendered service for more than
one year doing the same task repeatedly, thus, even assuming they were
casual employees they may be considered regular employees with respect to
the activity in which they were employed and their employment shall
continue while such activity exists (last par. of Art. 280). [Respondents], in
fact, were hired on October 29, 1994 (Bastida) and June 25, 1993 (Caban),
a fact which [petitioner] dismally failed to refute.
Given the foregoing, [petitioners] contention that [respondents] were
independent contractors and free lancers deserves little consideration. Its
argument that its usual trade or business (importation/production and
fattening) ends in General Santos City, and does not include transporting
the cattle, does not persuade us.
[Petitioners] witnesses tried to corroborate [its] contention that
[respondents] also offered their services to various shippers and traders of
cattle, not only to [petitioner]. Former complainants Maquinsay and
Parrocha mentioned the names of these traders/buyers or shippers as
Lozano Farms, Bibiana Farms and other big cattle feedlot farms in
SOCSARGEN (Annexes A and E, [petitioners] position paper.) But not a
modicum of evidence was adduced to prove payment of [respondents]
services by any of these supposed traders or that [respondents] received
instructions from them. There is also no record that shows that the trader/s
actually shipped livestock and engaged the services of caretakers.[5]
Accordingly, the Labor Arbiter granted respondents claim for separation pay, COLA and union
service fees. The Labor Arbiter awarded respondents: (a) separation pay of one month for
every year of service; (b) COLA, as petitioner failed to prove payment thereof or its exemption
therefrom; and (c) union service fees fixed at 10% of the total monetary award. The Labor
Arbiter computed respondents total monetary awards as follows:
NAME SEPARATION PAY COLA SUB-TOTAL
Chiquito Bastida P15,000.00 P2,400.00 P17,400.00
Albert Caban 18,000.00 2,400.00 20,400.00
P37,800.00
Plus 10% Union Service Fees 3,780.00
TOTAL ------ P41,580.00[6]
However, the Labor Arbiter denied respondents claim for backwages, 13th month pay, salary
differential, service incentive leave pay and damages, to wit:
But we deny the claim for backwages which was merely inserted in the
prayer portion of [respondents] position paper. Reasons are abundant why
we decline to grant the same. In their complaint, [respondents] prayed for
separation pay (not reinstatement with consequent backwages) thereby
indicating right from the start that they do not want to work with
[petitioner] again. More importantly[,] during the conference held on
January 6, 2000, [petitioner] manifested its willingness to reinstate
[respondents] to their former work as [comboys] under the same terms and
conditions but [respondents] answered that they do not want to return to
work and instead are asking for payment of their separation pay. Finally[,]
[respondents] do not dispute that [petitioners] downsizing of its escorts in
1999 was due to a legitimate cause, i.e., dollar devaluation.
Also to go are [respondents] labor standard claims for 13th month pay and
service incentive leave pay as well as the claim for damages. We also deny
the claim for salary differentials.
 [Respondents] are not entitled to their claims for 13th month pay and service
incentive leave pay because they were paid on task basis. The claim for
damages is denied for lack of factual and legal basis as there is no showing
that respondent acted in bad faith in downsizing the number of its
caretakers. It even appears that the same is due to a legitimate cause. The
claim for salary differentials is denied on two grounds: (1) [these are] not
prayed for in their complaint; and (2) for lack of merit. It takes not more
than 3 days for the Gen. Santos-Manila trip. Even if we include counting the
return trip that would be total of six (6) days to the maximum.
[Respondents] were paid P1,500.00 per trip. Or, since they made an
average of 2 trips/month they were paid P3,000.00 for a twelve (12) days
work (or the equivalent of P250.00/day).[7]
On appeal to the NLRC, the Fifth Division affirmed the Labor Arbiters ruling on the existence
of an employer-employee relationship between the parties and the total monetary award
of P41,580.00 representing respondents separation pay, COLA and union service fees. The
NLRC declared:
After a judicious review of the records of this case, we found no cogent
reason to disturb the findings of the branch.
The presence of the four (4) elements in the determination of an employer-
employee relationship has been clearly established by the facts and evidence
on record, starting with the admissions of [petitioner] who acknowledged
the engagement of [respondents] as escorts of their cattles shipped from
General Santos to Manila, and the compensation of the latter at a fee
of P1,500.00 per trip. The dates claimed by [respondents] that they were
engaged remain not disputed by [petitioner] as observed by the branch.
The element of control, jurisprudentially considered the most essential
element of the four, has not been demolished by any evidence to the
contrary. The branch has noticed that the preparation of the shipment of
cattle, manning and feeding them while in transit, and making a report
upon their return to General Santos that the cattle shipped and which
reached Manila actually tallied were all indicators of instructions,
supervision and control by [petitioner] on [respondents] performance of
work as escorts for which they were hired. This we agree on all four[s]. The
livestock shipment would cost thousands of pesos and the certainty of it
reaching its destination would be the only thing any operator would
consider at all [time] and under all circumstances. Nothing more, nothing
less. It is illogical for [petitioner] to argue that the shipment was not
necessary [or] desirable to their business, as their business was mainly
livestock production, because they were undeniably the owners of the cattle
escorted by [respondents]. Should losses of a shipment occur due to
[respondents] neglect these would still be [petitioners] loss, and nobody
elses.
At this point, we emphasize the fact that even on appeal [petitioner] declines
to refute, by way of evidence, the finding of the branch that they failed to
prove the payment of [respondents] services by any of the supposed traders,
or that said traders actually shipped livestock. This is the point where the
case of NFL v. Bibiana Farms cited by [petitioner] differs from the instant
case in that bills of lading issued to, thus, in the name of the hog shippers
were submitted as proof that said shippers engaged, compensated and
supervised the escorts or convoys in their work, and not the hog raisers.[8]
Undaunted, petitioner filed a petition for certiorari before the CA. As previously
adverted to, the CA denied due course and dismissed the petition for the following procedural
flaws:
1) other material portions of the record referred to in the petition are not
attached thereto such as the Complaint for illegal dismissal and position
papers of the parties, in violation of Sec. 3, Rule 46 of the 1997 Rules of Civil
Procedure; and
2) there is no written explanation why personal service was not resorted to,
as required under Sec. 11, Rule 13, Ibid.[9]
Petitioners motion for reconsideration was, likewise, denied by the appellate court.
Hence, this appeal positing the following issues:
1. Whether the CA gravely abused its discretion when it dismissed the petition
for certiorari based on technical rules of procedure.
2. Whether the NLRC gravely abused its discretion when it affirmed the Labor Arbiters ruling
on the existence of an employer-employee relationship between the parties.
3. Corollary thereto, whether the NLRC gravely erred when it affirmed the Labor Arbiters
finding that respondents were illegally dismissed by petitioner and the consequent award of
money claims to respondents.
At the outset, we observe that petitioner raises extraneous issues which were obviously not
passed upon by appellate court when the latter denied due course and dismissed outright the
petition for certiorari. As such, the instant petition for review on certiorari directly assails the
NLRCs decision which mainly involves factual issues, such as whether respondents were
employees of petitioner and if they are entitled to their money claims.
Petitioner is unconcerned with the CAs reasons for dismissing the petition and, in fact,
declares that the dismissal was done with grave abuse of discretion for sticking to the
provisions of the Rules of Court a mere technicality as petitioner cavalierly puts it. Petitioner
asseverates that the CA dismissal defeat[s] substantial justice considering that [it] has a strong
cause of action against [respondents]. In all, petitioner submits that it had faithfully complied
with Section 11, Rule 13 of the Rules of Court by submitting an explanation and a duly
notarized affidavit of service of Maria Fe Sobrevega. Petitioner likewise points out that the
Explanation for the resort to service of the petition for certiorari via registered mail is found
on page 30 thereof. Curiously, however, only the copy of the same document submitted to the
CA lacked an Explanation.
We completely agree with the appellate courts forthright dismissal of the petition
for certiorari.

Even if we are to overlook petitioners account on the curious case of the missing Explanation
only in the CAs copy of the petition, petitioners non-compliance with the requisites for the
filing a petition for certiorari remains. We detect petitioners ploy to sidestep a more fatal
procedural error, i.e., the failure to attach copies of all pleadings and documents relevant and
pertinent to the petition for certiorari set forth in paragraph 2, Section 1, Rule 65 of the Rules
of Court which reads:
The petition shall be accompanied by a certified true copy of the judgment,
order or resolution subject thereof, copies of all pleadings and
documents relevant and pertinent thereto, and a sworn certification
of non-forum shopping as provided in the third paragraph of Section 3, Rule
46.[10]
Corollary thereto, the second paragraph of Section 6, Rule 65, the first paragraph of
Section 2, Rule 56, and the last paragraph of Section 3, Rule 46 respectively read:
SEC. 6. Order to comment. x x x
In petitions for certiorari before the Supreme Court and the Court of
Appeals, the provisions of Section 2, Rule 56, shall be observed. x x x
SEC. 2. Rules applicable. The procedure in original cases for certiorari,
prohibition, mandamus, quo warranto and habeas corpus shall be in
accordance with the applicable provisions of the Constitution, laws, and
Rules 46, 48, 49, 51, 52 and this Rules[.] x x x
SEC. 3. Contents and filing of petition; effect of non-compliance
with requirements. x x x
The failure of the petitioner to comply with any of the foregoing
requirements shall be sufficient ground for the dismissal of the petition.
Quite apparent from the foregoing is that the CA did not err, much less commit grave abuse of
discretion, in denying due course to and dismissing the petition for certiorari for its
procedural defects. Petitioners failure to attach copies of all pleadings and documents relevant
and pertinent to its petition for certiorari warranted the outright dismissal thereof.
Petitioner, however, invokes the righteous ends of substantial justice as would exempt it from
adherence to procedural rules. Petitioner claims that the merits of its case necessitate a liberal
interpretation of the Rules of Court leading to a reversal of the appellate courts outright
dismissal of its petition.
Regrettably, upon an evaluation of the merits of the petition, we do not find cause to disturb
the findings of the Labor Arbiter, affirmed by the NLRC, which are supported by substantial
evidence.
The well-entrenched rule is that factual findings of administrative or quasi-judicial bodies,
which are deemed to have acquired expertise in matters within their respective jurisdictions,
are generally accorded not only respect but even finality, and bind the Court when supported
by substantial evidence.[11] Section 5, Rule 133 defines substantial evidence as that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.
Consistent therewith is the doctrine that this Court is not a trier of facts, and this is
strictly adhered to in labor cases.[12] We may take cognizance of and resolve factual issues only
when the findings of fact and conclusions of law of the Labor Arbiter are inconsistent with
those of the NLRC and the CA.[13]
In the case at bench, both the Labor Arbiter and the NLRC were one in their conclusion that
respondents were not independent contractors, but employees of petitioner. In determining
the existence of an employer-employee relationship between the parties, both the Labor
Arbiter and the NLRC examined and weighed the circumstances against the four-fold test
which has the following elements: (1) the power to hire, (2) the payment of wages, (3) the
power to dismiss, and (4) the power to control the employees conduct, or the so-called control
test.[14] Of the four, the power of control is the most important element. More importantly, the
control test merely calls for the existence of the right to control, and not necessarily the
exercise thereof.[15]
Naturally, both petitioners and respondents claims are on opposite poles. Respondents aver
that they were regular employees of petitioner, designated as escorts or comboys for the latters
cattle. Petitioner, on the other hand, denies that claim, and simultaneously asserts that
respondents are free lance escorts who offer their services to the buyers, middlemen and
traders of petitioner. Petitioner further asserts that its business is only confined to the
fattening of cattle and their sale once they reach the required market weight. According to
petitioner, its business does not include the shipment of cattle, which is undertaken by the
middlemen, traders and buyers, who, as owners thereof, engage respondents services to care
for the cattle while in transit. Thus, petitioner ultimately asserts that respondents, at that
juncture, were under the control and supervision of these middlemen, traders and buyers.
To support the foregoing contentions, petitioner simply presents the affidavits of Maquinsay
and Parrocha, original complainants before the Labor Arbiter, praying for the withdrawal of
the complaint for illegal dismissal insofar as they are concerned. Maquinsay and Parrocha
both allege that their engagement with petitioner is on a per-trip or per-contract basis, and
that they and their fellow comboys or escorts, herein respondents, did not offer their services
to petitioner alone.
Paying no heed to petitioners narration of the contemplated arrangement with respondents,
the Labor Arbiter pointed out the following:
[Maquinsay and Parrocha, petitioners] witnesses, tried to corroborate
[petitioners] contention that complainants also offered their services to
various shippers and traders of cattle, not only to [petitioner]. Former
complainants Maquinsay and Parrocha mentioned the names of these
traders/buyers or shippers as Lozano Farms, Bibiana Farms and other big
cattle feedlot farms in SOCSARGEN (Annexes A and B, [petitioners]
position paper). But not a modicum of evidence was adduced to
prove payment of [respondents] services by any of these
supposed traders or that [respondents] received instructions
from them. There is also no record that the trader/s actually
shipped livestock and engaged the services of caretakers.[16]
Echoing the same observation, the NLRC declared, thus:
At this point, we emphasize the fact that even on appeal [petitioner] decline
to refute, by way of evidence, the finding of the branch that they failed to
prove the payment of [respondents] services by any of the supposed traders,
or that said traders actually shipped livestock. This is the point where the
case of NFL v. Bibiana Farms cited by [petitioner] differ from the instant
case in that bills of lading issued to, thus, in the name of the hog shippers
were submitted as proof that said shippers engaged, compensated and
supervised the escorts or convoys in their work, and not the hog raisers.[17]
Yet, petitioner is adamant that its lack of documentary evidence should not be taken against it
since Maquinsay and Parrocha, two of the original complainants, attest to the nature of a
comboys or escorts work.
Significantly, Maquinsays and Parrochas affidavits proffer no reason why, in the first place,
they filed, along with herein respondents, the complaint for illegal dismissal against petitioner.
Maquinsay and Parrocha made an absolute turnaround and retracted their previous claim of
regular employee status without proof to support their allegations as against the claim of the
remaining complainants, herein respondents.
Conveniently, for its purposes, petitioner claims that Maquinsays and Parrochas affidavits
substantiate the claim of petitioner that indeed shipping arrangements and accommodation
of escorts, which are informal in nature and, thus, unrecorded, are under the responsibility,
control and supervision of the buyers and traders. Essentially, petitioner insists that the
affidavits of Maquinsay and Parrocha should bear more weight than the claims of respondents
in their complaint and position paper.
We reject petitioners self-serving contention. Having failed to substantiate its allegation on
the relationship between the parties, we stick to the settled rule in controversies between a
laborer and his master that doubts reasonably arising from the evidence should be resolved in
the formers favor.[18] The policy is reflected in no less than the Constitution,[19] Labor
Code[20] and Civil Code.[21]
Moreover, petitioners other contention that the shipment and the escort of live cattle
is not part of its business, thus, at most, respondents may only be considered as casual
employees, likewise fails to persuade.
First. Petitioner failed to disprove respondents claim that they were hired by
petitioner as comboys from 1993 and 1994, respectively. In fact, petitioner admits that
respondents were engaged, at one point, as comboys, on a per trip or per contract basis. This
assertion petitioner failed anew to substantiate. Noteworthy is the fact that Maquinsays and
Parrochas affidavit merely contain a statement that the offer of their services as comboys or
escorts was not limited to petitioner alone. The affidavits simply aver that they, including
herein respondents, were engaged by Dealco on a per trip basis, which commenced upon
embarkation on a ship for Manila and terminated upon their return to the port of origin.
Maquinsay and Parrocha did not state that respondents engagement by petitioner was on a
one-time basis. As a result, petitioners claim remains an unsubstantiated and bare-faced
allegation.
Second. Even assuming that respondents task is not part of petitioners regular course
of business, this does not preclude their attainment of regular employee status.
Article 280 of the Labor Code explicitly provides:
Art. 280. Regular and Casual Employment. The provisions of
written agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or services
to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has
rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his
employment shall continue while such activity exists.[22]
Undoubtedly, respondents were regular employees of petitioner with respect to the escort or
comboy activity for which they had been engaged since 1993 and 1994, respectively, without
regard to continuity or brokenness of the service.
Lastly, considering that we have sustained the Labor Arbiters and the NLRCs finding of an
employer-employee relationship between the parties, we likewise sustain the administrative
bodies finding of respondents illegal dismissal. Accordingly, we are not wont to disturb the
award of separation pay, claims for COLA and union service fees fixed at 10% of the total
monetary award, as these were based on the finding that respondents were dismissed without
just or authorized cause.
WHEREFORE, the petition is DENIED. The Resolution dated July 29, 2001 of the NLRC
in NLRC CA No. M-005974-2000 (RAB-11-10-50453-99) is hereby AFFIRMED. Costs
against the petitioner.
SO ORDERED.
WPP MARKETING COMMUNICATIONS, G.R. No. 169207 John Steedman, Chairman-WPP Worldwide and Chief Executive Officer of
INC., Mindshare, Co., a corporation based in Hong Kong, China, to work in the
JOHN STEEDMAN, Philippines for private respondent WPP Marketing Communications, Inc.
MARK WEBSTER, and (WPP), a corporation registered and operating under the laws of
NOMINADA LANSANG, Philippines. GALERA accepted the offer and she signed an Employment
Petitioners, Contract entitled Confirmation of Appointment and Statement of Terms
and Conditions (Annex B to Petition for Certiorari). The relevant portions
- versus - of the contract entered into between the parties are as follows:

Particulars:
JOCELYN M. GALERA, Name: Jocelyn M. Galera
Respondent. Address: 163 Mediterranean Avenue
x-------------------x Hayward, CA 94544
JOCELYN M. GALERA,
Petitioner, G.R. No. 169239 Position: Managing Director
Mindshare Philippines
- versus - Present: Annual Salary: Peso 3,924,000
Start Date: 1 September 1999
CARPIO, Acting C.J., Commencement Date: 1 September 1999
Chairperson, (for continuous service)
WPP MARKETING BRION, Office: Mindshare Manila
COMMUNICATIONS, INC., JOHN DEL CASTILLO,
STEEDMAN, ABAD, and 6. Housing Allowance
MARK WEBSTER, and PEREZ, JJ. The Company will provide suitable housing in Manila at
NOMINADA LANSANG, a maximum cost (including management fee and other
Respondents. Promulgated: associated costs) of Peso 576,000 per annum.

March 25, 2010 7. Other benefits.

x--------------------------------------------------x
DECISION
CARPIO, Acting C.J.:
The Case
G.R. Nos. 169207 and 169239 are petitions for review[1] assailing the Decision[2] promulgated
on 14 April 2005 as well as the Resolution[3] promulgated on 1 August 2005 of the Court of
Appeals (appellate court) in CA-G.R. SP No. 78721. The appellate court granted and gave due
course to the petition filed by Jocelyn M. Galera (Galera). The appellate courts decision
reversed and set aside that of the National Labor Relations Commission (NLRC), and directed
WPP Marketing Communications, Inc. (WPP) to pay Galera backwages, separation pay,
unpaid housing benefit, unpaid personal and accident insurance benefits, cash value under
the companys pension plan, 30 days paid holiday benefit, moral damages, exemplary
damages, 10% of the total judgment award as attorneys fees, and costs of the suit.
The Company will provide you with a fully maintained
company car and a driver.
The Company will continue to provide medical, health,
life and personal accident insurance plans, to an amount
not exceeding Peso 300,000 per annum, in accordance
with the terms of the respective plans, as provided by
JWT Manila.
The Company will reimburse you and your spouse one
way business class air tickets from USA to Manila and the
related shipping and relocation cost not exceeding
US$5,000 supported by proper documentation. If you
leave the Company within one year, you will reimburse
the Company in full for all costs of the initial relocation
as described therein.
You will participate in the JWT Pension Plan under the
terms of this plan, the Company reserves the right to
transfer this benefit to a Mindshare Pension Plan in the
future, if so required.

The Facts 8. Holidays

You are entitled to 20 days paid holiday in addition to
The appellate court narrated the facts as follows: public holidays per calendar year to be taken at times
Petitioner is Jocelyn Galera (GALERA), a [sic] American citizen who was agreed with the Company. Carry-over of unused accrued
recruited from the United States of America by private respondent holiday entitlement into a new holiday year will not
 normally be allowed. No payment will be made for
holidays not taken. On termination of your employment,
unless you have been summarily dismissed, you will be
entitled to receive payment for unused accrued holiday
pay. Any holiday taken in excess of your entitlement shall
be deducted from your final salary payment.
9. Leave Due to Sickness or Injury
The maximum provision for sick leave is 15 working days
per calendar year.
12. Invention/Know-How
Any discovery, invention, improvement in procedure,
trademark, trade name, designs, copyrights or get-ups
made, discovered or created by you during the
continuance of your employment hereunder relating to
the business of the Company shall belong to and shall be
the absolute property of the Company. If required to do
so by the Company (whether during or after the
termination of your employment) you shall at the
expense of the company execute all instruments and do
all things necessary to vest in ownership for all other
rights, title and interests (including any registered rights
therein) in such discovery, invention, improvement in
procedure, trademark, trade name, design, copyright or
get-up in the Company (or its
Nominee) absolutely and as sole beneficial owner.
14. Notice.
The first three months of your employment will be a trial
period during which either you or the Company may
terminate your employment on one weeks notice. If at the
end of that period, the Company is satisfied with your
performance, you will become a permanent employee.
Thereafter you will give Company and the Company will
give you three months notice of termination of
employment. The above is always subject to the
following: (1) the Companys right to terminate the
contract of employment on no or short notice where you
are in breach of contract; (2) your employment will at any
event cease without notice on your retirement date when
you are 60 years of age.
SIGNED JOCELYN M. GALERA 8-16-99
Date of Borth [sic] 12-25-55
Employment of GALERA with private respondent WPP became effective
on September 1, 1999 solely on the instruction of the CEO and upon
signing of the contract, without any further action from the Board of
Directors of private respondent WPP.
Four months had passed when private respondent WPP filed before the
Bureau of Immigration an application for petitioner GALERA to receive a
working visa, wherein she was designated as Vice President of
WPP. Petitioner alleged that she was constrained to sign the application in
order that she could remain in the Philippines and retain her employment.
Then, on December 14, 2000, petitioner GALERA alleged she was
verbally notified by private respondent STEEDMAN that her services had
been terminated from private respondent WPP. A termination letter
followed the next day.[4]
On 3 January 2001, Galera filed a complaint for illegal dismissal, holiday pay, service
incentive leave pay, 13th month pay, incentive plan, actual and moral damages, and attorneys
fees against WPP and/or John Steedman (Steedman), Mark Webster (Webster)
and Nominada Lansang (Lansang). The case was docketed as NLRC NCR Case No. 30-01-
00044-01.
The Labor Arbiters Ruling
In his Decision dated 31 January 2002, Labor
Arbiter Edgardo M. Madriaga (Arbiter Madriaga) held WPP, Steedman, Webster,
and Lansang liable for illegal dismissal and damages. Arbiter Madriaga stated that Galera was
not only illegally dismissed but was also not accorded due
process. Arbiter Madriaga explained, thus:
[WPP] failed to observe the two-notice rule. [WPP] through
respondent Steedman for a five (5) minute meeting on December 14, 2000
where she was verbally told that as of that day, her employment was being
terminated. [WPP] did not give [Galera] an opportunity to defend herself
and explain her side. [Galera] was even prohibited from reporting for work
that day and was told not to report for work the next day as it would be
awkward for her and respondent Steedman to be in the same premises after
her termination. [WPP] only served [Galera] her written notice of
termination only on 15 December 2001, one day after she was verbally
apprised thereof.
The law mandates that the dismissal must be properly done otherwise, the
termination is gravely defective and may be declared unlawful as we hereby
hold [Galeras] dismissal to be illegal and unlawful. Where there is no
showing of a clear, valid and legal cause for the termination of employment,
the law considers the matter a case of illegal dismissal and the burden is on
the employer to prove that the termination was for a valid or authorized
cause. The law mandates that both the substantive and procedural aspects
of due process should be observed. The facts clearly show that respondents
were remiss on both aspects. Perforce, the dismissal is void and unlawful.
xxxx
Considering the work performance and achievements of [Galera] for the
year 2000, we do not find any basis for the alleged claim of incompetence
by herein respondents. Had [Galera] been really incompetent, she would
not have been able to generate enormous amounts [sic] of revenues and
business for [WPP]. She also appears to be well liked as a leader by her
subordinates, who have come forth in support of [Galera]. These facts
remain undisputed by respondents.
A mans job being a property right duly protected by our laws, an employer
who deprives an employee [of] the right to defend himself is liable for
damages consistent with Article 32 of the Civil Code. To allow an employer
to terminate the employment of his worker based merely on allegations
without proof places the [employee] in an uncertain situation. The
unflinching rule in illegal dismissal cases is that the employer bears the
burden of proof.
In the instant case, respondents have not been able to muster evidence to
counter [Galeras] allegations. [Galeras] allegations remain and stand
absent proof from respondents rebutting them. Hence, our finding of illegal
dismissal against respondents who clearly have conspired in bad faith to
deprive [Galera] of her right to substantive and procedural due process.[5]
The dispositive portion of Arbiter Madriagas decision reads as follows:
WHEREFORE, premises considered, we hereby hold herein respondents
liable for illegal dismissal and damages, and award to [Galera], by virtue of
her expatriate status, the following:
a. Reinstatement without loss of seniority rights.
b. Backwages amounting to $120,000 per year
at P50.00 to US $1 exchange rate, 13th month pay, transportation
and housing benefits.
c. Remuneration for business acquisitions amounting
to Two Million Eight Hundred Fifty Thousand Pesos
(P2,850,000.00) and Media Plowback Incentive equivalent to
Three Million Pesos (P3,000,000.00) or a total of not less than
One Hundred Thousand US Dollars ($100,000.00).
d. US Tax Protection of up to 35% coverage equivalent
to Thirty Eight Thousand US Dollars ($38,000).
e. Moral damages including implied defamation and
punitive damages equivalent to Two Million Dollars
(US$2,000,000.00).
f. Exemplary damages equivalent to One Million
Dollars ($1,000,000.00).
g. Attorneys fees of 10% of the total award herein.
SO ORDERED.[6]
The Ruling of the NLRC
The First Division of the NLRC reversed the ruling of Arbiter Madriaga. In its
Decision[7] promulgated on 19 February 2003, the NLRC stressed that Galera was WPPs Vice-
President, and therefore, a corporate officer at the time she was removed by the Board of
Directors on 14 December 2000. The NLRC stated thus:
It matters not that her having been elected by the Board to an added
position of being a member of the Board of Directors did not take effect as
her May 31, 2000 election to such added position was conditioned to be
effective upon approval by SEC of the Amended By-Laws, an approval which
took place only in February 21, 2001, i.e., after her removal on December
14, 2000. What counts is, at the time of her removal, she continued to
be WPPs Vice-President, a corporate officer, on hold over capacity.
Ms. Galeras claim that she was not a corporate officer at the time of her
removal because her May 31, 2000 election as Vice President for Media,
under WPPs Amended By-Laws, was subject to the approval by the
Securities and Exchange Commission and that the SEC approved the
Amended By-Laws only in February 2001. Such claim is unavailing. Even if
Ms. Galeras subsequent election as Vice President for Media on May 31,
2000 was subject to approval by the SEC, she continued to hold her
previous position as Vice President under the December 31, 1999 election
until such time that her successor is duly elected and qualified. It is a basic
principle in corporation law, which principle is also embodied in WPPs by-
laws, that a corporate officer continues to hold his position as such until his
successor has been duly elected and qualified. When Ms. Galera was elected
as Vice President on December 31, 1999, she was supposed to have held that
position until her successor has been duly elected and qualified. The record
shows that Ms. Galera was not replaced by anyone. She continued to be Vice
President of WPP with the same operational title of Managing Director for
Mindshare and continued to perform the same functions she was
performing prior to her May 31, 2000 election.
In the recent case of Dily Dany Nacpil v. International Broadcasting Corp.,
the definition of corporate officer for purposes of intra-corporate
controversy was even broadened to include a Comptroller/Assistant
Manager who was appointed by the General Manager, and whose
appointment was later approved by the Board of Directors. In this case, the
position of comptroller was not even expressly mentioned in the By-Laws of
the corporation, and yet, the Supreme Court found him to be a corporate
officer. The Court ruled that
(since) petitioners appointment as comptroller required
the approval and formal action of IBCs Board of Directors
to become valid, it is clear therefore that petitioner is a
corporate officer whose dismissal may be the subject of a
controversy cognizable by the SEC... Had the petitioner
 been an ordinary employee, such board action would not
have been required.
Such being the case, the imperatives of law require that we hold that the
Arbiter below had no jurisdiction over Galeras case as, again, she was a
corporate officer at the time of her removal.
WHEREFORE, the appeals of petitioner from the Decision of Labor
Arbiter Edgardo Madriaga dated January 31, 2002 and his Order dated
March 21, 2002, respectively, are granted. The January 31, 2002 decision of
the Labor Arbiter is set aside for being null and void and the temporary
restraining order we issued on April 24, 2002 is hereby made
permanent. The complaint of Jocelyn Galera is dismissed for lack of
jurisdiction.
SO ORDERED.[8]
In its Resolution[9] promulgated on 4 June 2003, the NLRC further stated:
We are fully convinced that this is indeed an intra-corporate dispute which
is beyond the labor arbiters jurisdiction. These consolidated cases clearly
[involve] the relationship between a corporation and its officer and is
properly within the definition of an intra-corporate relationship which,
under P.D. No. 902-A, is within the jurisdiction of the SEC (now the
commercial courts). Such being the case, We are constrained to rule that the
Labor Arbiter below had no jurisdiction over Ms. Galeras complaint for
illegal dismissal.
WHEREFORE, the motion for reconsideration filed by Ms. Galera is hereby
denied for lack of merit. We reiterate our February 19, 2003 Decision
setting aside the Labor Arbiters Decision dated January 31, 2002 for being
null and void.
SO ORDERED.[10]
Galera assailed the NLRCs decision and resolution before the appellate court and raised a lone
assignment of error.
The National Labor Relations Commission acted with grave abuse of
discretion amounting to lack or excess of jurisdiction when it reversed
the decision of the Labor Arbiter not on the merits but for alleged lack
of jurisdiction.[11]
The Decision of the Appellate Court
The appellate court reversed and set aside the decision of the NLRC. The appellate court ruled
that the NLRCs dismissal of Galeras appeal is not in accord with jurisprudence. A person
could be considered a corporate officer only if appointed as such by a corporations Board
of Directors, or if pursuant to the power given them by either the Articles of Incorporation or
the By-Laws.[12]
The appellate court explained:
A corporation, through its board of directors, could only act in the manner
and within the formalities, if any, prescribed by its charter or by the general
law. If the action of the Board is ultra vires such
is motu proprio void ab initio and without legal effect whatsoever. The by-
laws of a corporation are its own private laws which substantially have the
same effect as the laws of the corporation. They are, in effect, written into
the charter. In this sense, they beome part of the fundamental law of the
corporation with which the corporation and its directors and officers must
comply.
Even if petitioner GALERA had been appointed by the Board of Directors
on December 31, 1999, private respondent WPPs By-Laws provided for only
one Vice-President, a position already occupied by private respondent
Webster. The same defect also stains the Board of Directors appointment of
petitioner GALERA as a Director of the corporation, because at that time
the By-Laws provided for only five directors. In addition, the By-laws only
empowered the Board of Directors to appoint a general manager and/or
assistant general manager as corporate officers in addition to a chairman,
president, vice-president and treasurer. There is no mention of a corporate
officer entitled Managing Director.
Hence, when the Board of Directors enacted the Resolutions of December
31, 1999 and May 31, 2000, it exceeded its authority under the By-Laws and
are, therefore, ultra vires. Although private respondent WPP sought to
amend these defects by filing Amended By-Laws with the Securities and
Exchange Commission, they did not validate the ultra vires resolutions
because the Amended By-Laws did not take effect until February 16, 2001,
when it was approved by the SEC. Since by-laws operate only prospectively,
they could not validate the ultra vires resolutions.[13]
The dispositive portion of the appellate courts decision reads:
WHEREFORE, the petition is hereby GRANTED and GIVEN DUE
COURSE. The assailed Decision of the National Labor Relations
Commission is hereby REVERSED and SET ASIDE and a new one is entered
DIRECTING private respondent WPP MARKETING COMMUNICATIONS,
INC. to:
1. Pay [Galera] backwages at the peso equivalent of
US$120,000.00 per annum plus three months from her
summary December 14, 2000 dismissal up to March 14, 2001
because three months notice is required under the contract,
plus 13th month pay, bonuses and general increases to which
she would have been normally entitled, had she not been
dismissed and had she not been forced to stop working,
including US tax protection of up to 35% coverage which she
had been enjoying as an expatriate;
 2. Pay x x x GALERA the peso equivalent of US$185,000.00
separation pay (1 years);
3. Pay x x x GALERA any unpaid housing benefit for the 18
months of her employment in the service to the Company as
an expatriate in Manila, Philippines at the rate of P576,000
per year; unpaid personal and accident insurance benefits for
premiums at the rate of P300,000.00 per year; whatever cash
value in the JWT Pension Plan; and thirty days paid holiday
benefit under the contract for the 1 calendar years with the
Company;
4. Pay x x x GALERA the reduced amount of PhP2,000,000.00
as moral damages;
5. Pay [Galera] the reduced amount of PhP1,000,000.00 as
exemplary damages;
6. Pay [Galera] an amount equivalent to 10% of the judgment
award as attorneys fees;
7. Pay the cost of the suit.
SO ORDERED.[14]
Respondents filed a motion for reconsideration on 5 May 2005. Galera filed a motion for
partial reconsideration and/or clarification on the same date. The appellate court found no
reason to revise or reverse its previous decision and subsequently denied the motions in a
Resolution promulgated on 1 August 2005.[15]
The Issues
WPP, Steedman, Webster, and Lansang raised the following grounds in G.R. No.
169207:
I. The Court of Appeals seriously erred in ruling that the NLRC has
jurisdiction over [Galeras] complaint because she was not an
employee. [Galera] was a corporate officer of WPP from the beginning
of her term until her removal from office.
II. Assuming arguendo that the Court of Appeals correctly ruled that the
NLRC has jurisdiction over [Galeras] complaint, it should have
remanded the case to the Labor Arbiter for reception of evidence on the
merits of the case.
III. [Galera] is an alien, hence, can never attain a regular or permanent
working status in the Philippines.
IV. [Galera] is not entitled to recover backwages, other benefits and
damages from WPP.[16]
On the other hand, in G.R. No. 169239, Galera raised the following grounds in
support of her petition:
The CA decision should be consistent with Article 279 of the Labor Code and
applicable jurisprudence, that full backwages and separation pay (when in
lieu of reinstatement), should be reckoned from time of dismissal up to time
of reinstatement (or payment of separation pay, in case separation instead
of reinstatement is awarded).
Accordingly, petitioner Galera should be awarded full backwages and
separation pay for the period from 14 December 2000 until the finality of
judgment by the respondents, or, at the very least, up to the promulgation
date of the CA decision.
The individual respondents Steedman, Webster and Lansang must be
held solidarily liable with respondent WPP for the wanton and summary
dismissal of petitioner Galera, to be consistent with law and jurisprudence
as well as the specific finding of the CA of bad faith on the part of
respondents.[17]
This Court ordered the consolidation of G.R. Nos. 169207 and 169239 in a resolution dated 16
January 2006.[18]
The Ruling of the Court
In its consolidated comment, the Office of the Solicitor General (OSG) recommended that (A)
the Decision dated 14 April 2005 of the appellate court finding (1) Galera to be a regular
employee of WPP; (2) the NLRC to have jurisdiction over the present case; and (3) WPP to
have illegally dismissed Galera, be affirmed; and (B) the case remanded to the Labor Arbiter
for the computation of the correct monetary award. Despite the OSGs recommendations, we
see that Galeras failure to seek an employment permit prior to her employment poses a serious
problem in seeking relief before this Court. Hence, we settle the various issues raised by the
parties for the guidance of the bench and bar.
Whether Galera is an Employee or a Corporate Officer
Galera, on the belief that she is an employee, filed her complaint before the Labor Arbiter. On
the other hand, WPP, Steedman, Webster and Lansang contend that Galera is a corporate
officer; hence, any controversy regarding her dismissal is under the jurisdiction of the
Regional Trial Court. We agree with Galera.
Corporate officers are given such character either by the Corporation Code or by the
corporations by-laws. Under Section 25 of the Corporation Code, the corporate officers are the
president, secretary, treasurer and such other officers as may be provided in the by-
laws.[19] Other officers are sometimes created by the charter or by-laws of a corporation, or
the board of directors may be empowered under the by-laws of a corporation to create
additional offices as may be necessary.
An examination of WPPs by-laws resulted in a finding that Galeras appointment as a
corporate officer (Vice-President with the operational title of Managing Director of
Mindshare) during a special meeting of WPPs Board of Directors is an appointment to a non-
existent corporate office. WPPs by-laws provided for only one Vice-President. At the time
of Galeras appointment on 31 December 1999, WPP already had one Vice-President in the
person of Webster. Galera cannot be said to be a director of WPP also because all five
directorship positions provided in the by-laws are already occupied. Finally, WPP cannot rely
on its Amended By-Laws to support its argument that Galera is a corporate officer. The
Amended By-Laws provided for more than one Vice-President and for two additional
directors. Even though WPPs stockholders voted for the amendment on 31 May 2000, the SEC
approved the amendments only on 16 February 2001. Galera was dismissed on 14 December
2000.WPP, Steedman, Webster, and Lansang did not present any evidence
that Galeras dismissal took effect with the action of WPPs Board of Directors.
The appellate court further justified that Galera was an employee and not a corporate officer
by subjecting WPP and Galeras relationship to the four-fold test: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employers power to control the employee with respect to the means and methods by which the
work is to be accomplished. The appellate court found:
x x x Sections 1 and 4 of the employment contract mandate where and how
often she is to perform her work; sections 3, 5, 6 and 7 show that wages she
receives are completely controlled by x x x WPP; and sections 10 and 11
clearly state that she is subject to the regular disciplinary procedures of
x x x WPP.
Another indicator that she was a regular employee and not a corporate
officer is Section 14 of the contract, which clearly states that she is a
permanent employee not a Vice-President or a member of the Board of
Directors.
xxxx
Another indication that the Employment Contract was one of regular
employment is Section 12, which states that the rights to any invention,
discovery, improvement in procedure, trademark, or copyright created or
discovered by petitioner GALERA during her employment shall
automatically belong to private respondent WPP. Under Republic Act 8293,
also known as the Intellectual Property Code, this condition prevails if the
creator of the work subject to the laws of patent or copyright is an employee
of the one entitled to the patent or copyright.
Another convincing indication that she was only a regular employee and not
a corporate officer is the disciplinary procedure under Sections 10 and 11 of
the Employment Contract, which states that her right of redress is
through Mindshares Chief Executive Officer for the Asia-Pacific. This
implies that she was not under the disciplinary control of private
respondent WPPs Board of Directors (BOD), which should have been the
case if in fact she was a corporate officer because only the Board of Directors
could appoint and terminate such a corporate officer.
Although petitioner GALERA did sign the Alien Employment Permit from
the Department of Labor and Employment and the application for a 9(g)
visa with the Bureau of Immigration both of which stated that she was
private respondents WPP Vice President these should not be considered
against her. Assurming arguendo that her appointment as Vice-President
was a valid act, it must be noted that these appointments
occurred afater she was hired as a regular employee. After her
appointments, there was no appreciable change in her duties.[20]
Whether the Labor Arbiter and the NLRC
have jurisdiction over the present case
Galera being an employee, then the Labor Arbiter and the NLRC have jurisdiction over the
present case. Article 217 of the Labor Code provides:
Jurisdiction of Labor Arbiters and the Commission. (a) Except as
otherwise provided under this Code, the Labor Arbiters shall have original
and exclusive jurisdiction to hear and decide x x x the following cases
involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those
cases that workers may file involving wages, rates of pay, hours of
work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms
of damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this
Code, including questions involving the legality of strikes and
lockouts;
6. Except claims for Employees Compensation, Social
Security, Medicare and other maternity benefits, all other claims,
arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction
over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation of collective bargaining
agreements and those arising from the interpretation or
enforcement of company personnel policies shall be disposed of by
the Labor Arbiter by referring the same to the grievance machinery
and voluntary arbitration as may be provided in said agreements.

In contrast, Section 5.2 of Republic Act No. 8799, or the Securities Regulation Code, states:
The Commissions jurisdiction over all cases enumerated under Section 5 of
Presidential Decree No. 902-A is hereby transferred to the courts of general
jurisdiction or the appropriate Regional Trial Court: Provided, That the
Supreme Court in the exercise of its authority may designate the Regional
Trial Court branches that shall exercise jurisdiction over these cases. The
Commission shall retain jurisdiction over pending cases involving intra-
corporate disputes submitted for final resolution which should be resolved
within one year from the enactment of this Code. The Commission shall
retain jurisdiction over pending suspension of payments/rehabilitation
cases filed as of 30 June 2000 until finally disposed.
The pertinent portions of Section 5 of Presidential Decree No. 902-A, mentioned above, states:
b) Controversies arising out of intra-corporate or partnership relations,
between and among stockholders, members or associates; between any or
all of them and the corporation, partnership or association of which they are
stockholders, members or associates, respectively; and between such
corporation, partnership or association and the state insofar as it concerns
their individual franchise or right to exist as such entity;
c) Controversies in the election or appointments of directors, trustees,
officers or managers of such corporations, partnerships or associations.
Whether WPP illegally dismissed Galera
WPPs dismissal of Galera lacked both substantive and procedural due process.
Apart from Steedmans letter dated 15 December 2000 to Galera, WPP failed to prove any just
or authorized cause for Galeras dismissal. Steedmans letter to Galera reads:
The operations are currently in a shamble. There is lack of leadership and
confidence in your abilities from within, our agency partners and some
clients.
Most of the staff I spoke with felt they got more guidance and direction
from Minda than yourself. In your role as Managing Director, that is just
not acceptable.
I believe your priorities are mismanaged. The recent situation where you
felt an internal strategy meeting was more important than a new business
pitch is a good example.
You failed to lead and advise on the two new business pitches. In both cases,
those involved sort (sic) Mindas input. As I discussed with you back in July,
my directive was for you to lead and review all business pitches. It is obvious
[that] confusion existed internally right up until the day of the pitch.
The quality output is still not to an acceptable standard, which was also part
of my directive that you needed to focus on back in July.
I do not believe you understand the basic skills and industry knowledge
required to run a media special operation.[21]
WPP, Steedman, Webster, and Lansang, however, failed to substantiate the allegations
in Steedmans letter. Galera, on the other hand, presented documentary evidence[22] in the
form of congratulatory letters, including one from Steedman, which contents are diametrically
opposed to the 15 December 2000 letter.
The law further requires that the employer must furnish the worker sought to be dismissed
with two written notices before termination of employment can be legally effected: (1) notice
which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of the employers decision
to dismiss him. Failure to comply with the requirements taints the dismissal with
illegality.[23] WPPs acts clearly show that Galerasdismissal did not comply with the two-notice
rule.
Whether Galera is entitled to the monetary award
WPP, Steedman, Webster, and Lansang argue that Galera is not entitled
to backwages because she is an alien. They further state that there is no guarantee that the
Bureau of Immigration and the Department of Labor and Employment will continue to grant
favorable rulings on the applications for a 9(g) visa and an Alien Employment Permit after the
expiry of the validity of Galeras documents on 31 December 2000. WPPs argument is a
circular argument, and assumes what it attempts to prove. Had WPP not dismissed Galera,
there is no doubt in our minds that WPP would have taken action for the approval of
documents required for Galeras continued employment.
This is Galeras dilemma: Galera worked in the Philippines without a proper work permit but
now wants to claim employees benefits under Philippine labor laws.
Employment of GALERA with private respondent WPP became
effective on September 1, 1999 solely on the instruction of the CEO and
upon signing of the contract, without any further action from the Board of
Directors of private respondent WPP.
Four months had passed when private respondent WPP filed
before the Bureau of Immigration an application for petitioner
GALERA to receive a working visa, wherein she was designated as Vice
President of WPP. Petitioner alleged that she was constrained to sign the
application in order that she could remain in the Philippines and retain her
employment.[24]
The law and the rules are consistent in stating that the employment permit must be
acquired prior to employment. The Labor Code states: Any alien seeking admission to the
Philippines for employment purposes and any domestic or foreign employer who desires to
engage an alien for employment in the Philippines shall obtain an employment permit from Petitioner Gloria V. Gomez used to work as Manager of the Legal Department of Petron
the Department of Labor.[25] Section 4, Rule XIV, Book 1 of the Implementing Rules and Corporation, then a government-owned corporation. With Petrons privatization, she availed
Regulations provides: of the companys early retirement program and left that organization on April 30, 1994. On the
following day, May 1, 1994, however, Filoil Refinery Corporation (Filoil), also a government-
Employment permit required for entry. No alien seeking employment, owned corporation, appointed her its corporate secretary and legal counsel,[1] with the same
whether as a resident or non-resident, may enter the Philippines without managerial rank, compensation, and benefits that she used to enjoy at Petron.
first securing an employment permit from the Ministry. If an alien enters
the country under a non-working visa and wishes to be employed thereafter, But Filoil was later on also identified for privatization. To facilitate its conversion,
he may only be allowed to be employed upon presentation of a duly the Filoil board of directors created a five-member task force headed by petitioner Gomez who
approved employment permit. had been designated administrator.[2] While documenting Filoils assets, she found several
properties which were not in the books of the corporation. Consequently, she advised the
Galera cannot come to this Court with unclean hands. To grant Galeras prayer is to sanction board to suspend the privatization until all assets have been accounted for.
the violation of the Philippine labor laws requiring aliens to secure work permits before their
employment. We hold that the status quo must prevail in the present case and we leave the With the privatization temporarily shelved, Filoil underwent reorganization and was
parties where they are. This ruling, however, does not bar Galera from seeking relief from renamed Filoil Development Management Corporation (FDMC), which later became the
other jurisdictions. respondent PNOC Development Management Corporation (PDMC).When this happened,
Gomezs task force was abolished and its members, including Gomez, were given termination
WHEREFORE, we PARTIALLY GRANT the petitions in G.R. Nos. 169207 and notices on March 5, 1996.[3] The matter was then reported to the Department of Labor and
169239. We SET ASIDE the Decision of the Court of Appeals promulgated on 14 April 2005 Employment on March 7, 1996.[4]
as well as the Resolution promulgated on 1 August 2005 in CA-G.R. SP No. 78721.
Meantime, petitioner Gomez continued to serve as corporate secretary of respondent
SO ORDERED. PDMC. On September 23, 1996 its president re-hired her as administrator and legal counsel
of the company.[5] In accordance with company guidelines, it credited her the years she served
GLORIA V. GOMEZ, G.R. No. 174044 with the Filoil task force. On May 24, 1998, the next president of PDMC extended her term as
Petitioner, administrator beyond her retirement age,[6] pursuant to his authority under the PDMC
Present: Approvals Manual.[7] She was supposed to serve beyond retirement from August 11, 1998 to
Carpio, J., Chairperson, August 11, 2004. Meantime, a new board of directors for PDMC took over the company.
- versus - Leonardo-De Castro,
Brion, On March 29, 1999 the new board of directors of respondent PDMC removed
Del Castillo, and petitioner Gomez as corporate secretary. Further, at the boards meeting on October 21, 1999
Abad, JJ. the board questioned her continued employment as administrator. In answer, she presented
PNOC DEVELOPMENT AND the former presidents May 24, 1998 letter that extended her term. Dissatisfied with this, the
MANAGEMENT CORPORATION board sought the advice of its legal department, which expressed the view that Gomezs term
(PDMC) (formerly known as extension was an ultra vires act of the former president. It reasoned that, since her position
FILOIL DEVELOPMENT AND was functionally that of a vice-president or general manager, her term could be extended
MANAGEMENT CORPORATION Promulgated: under the companys by-laws only with the approval of the board. The legal department held
[FDMC]), that her de facto tenure could be legally put to an end.[8]
Respondent. November 27, 2009
Sought for comment, the Office of the Government Corporate Counsel (OGCC) held
x ---------------------------------------------------------------------------------------- x the view that while respondent PDMCs board did not approve the creation of the position of
administrator that Gomez held, such action should be deemed ratified since the board had
DECISION been aware of it since 1994. But the OGCC ventured that the extension of her term beyond
retirement age should have been made with the boards approval.[9]
ABAD, J.:
Petitioner Gomez for her part conceded that as corporate secretary, she served only
as a corporate officer. But, when they named her administrator, she became a regular
This case is about what distinguishes a regular company manager performing important managerial employee. Consequently, the respondent PDMCs board did not have to approve
executive tasks from a corporate officer whose election and functions are governed by the either her appointment as such or the extension of her term in 1998.
companys by-laws.
Pending resolution of the issue, the respondent PDMCs board withheld petitioner
The Facts and the Case Gomezs wages from November 16 to 30, 1999, prompting her to file a complaint for non-
payment of wages, damages, and attorneys fees with the Labor Arbiter on December 8,
1999.[10] She later amended her complaint to include other money claims.[11]
In a special meeting held on December 29, 1999 the respondent PDMCs board
resolved to terminate petitioner Gomezs services retroactive on August 11, 1998, her
retirement date.[12] On January 5, 2000 the board informed petitioner of its decision.[13] Thus,
she further amended her complaint to include illegal dismissal.[14]
Respondent PDMC moved to have petitioner Gomezs complaint dismissed on
ground of lack of jurisdiction. The Labor Arbiter granted the motion[15] upon a finding that
Gomez was a corporate officer and that her case involved an intra-corporate dispute that fell
under the jurisdiction of the Securities and Exchange Commission (SEC) pursuant to
Presidential Decree (P.D.) 902-A.[16] On motion for reconsideration, the National Labor
Relations Commission (NLRC) Third Division set aside the Labor Arbiters order and
remanded the case to the arbitration branch for further proceedings.[17] The Third Division
held that Gomez was a regular employee, not a corporate officer; hence, her complaint came
under the jurisdiction of the Labor Arbiter.
Upon elevation of the matter to the Court of Appeals (CA) in CA-G.R. SP 88819,
however, the latter rendered a decision on May 19, 2006,[18] reversing the NLRC decision. The
CA held that since Gomezs appointment as administrator required the approval of the board
of directors, she was clearly a corporate officer. Thus, her complaint is within the jurisdiction
of the Regional Trial Court (RTC) under P.D. 902-A, as amended by Republic Act (R.A.)
8799.[19] With the denial of her motion for reconsideration,[20] Gomez filed this petition for
review on certiorari under Rule 45.
The Issue Presented
The key issue in this case is whether or not petitioner Gomez was, in her capacity as
administrator of respondent PDMC, an ordinary employee whose complaint for illegal
dismissal and non-payment of wages and benefits is within the jurisdiction of the NLRC.
The Courts Ruling
Ordinary company employees are generally employed not by action of the directors and
stockholders but by that of the managing officer of the corporation who also determines the
compensation to be paid such employees.[21] Corporate officers, on the other hand, are elected
or appointed[22] by the directors or stockholders, and are those who are given that character
either by the Corporation Code or by the corporations by-laws.[23]
Here, it was the PDMC president who appointed petitioner Gomez administrator, not
its board of directors or the stockholders. The president alone also determined her
compensation package. Moreover, the administrator was not among the corporate officers
mentioned in the PDMC by-laws. The corporate officers proper were the chairman, president,
executive vice-president, vice-president, general manager, treasurer, and secretary.[24]
Respondent PDMC claims, however, that since its board had under its by-laws the
power to create additional corporate offices, it may be deemed to have simply ratified its
presidents creation of the corporate position of administrator.[25] But creating an additional
corporate office was definitely not respondent PDMCs intent based on its several actions
concerning the position of administrator.
Respondent PDMC never told Gomez that she was a corporate officer until the tail-
end of her service after the board found legal justification for getting rid of her by consulting
its legal department and the OGCC which supplied an answer that the board obviously
wanted. Indeed, the PDMC president first hired her as administrator in May 1994 and then as
administrator/legal counsel in September 1996 without a board approval. The president even
extended her term in May 1998 also without such approval. The companys mindset from the
beginning, therefore, was that she was not a corporate officer.
Respondent PDMC of course claims that as administrator petitioner Gomez
performed functions that were similar to those of its vice-president or its general manager,
corporate positions that were mentioned in the companys by-laws. It points out that Gomez
was third in the line of command, next only to the chairman and president,[26] and had been
empowered to make major decisions and manage the affairs of the company.
But the relationship of a person to a corporation, whether as officer or agent or
employee, is not determined by the nature of the services he performs but by the incidents of
his relationship with the corporation as they actually exist.[27] Here, respondent PDMC hired
petitioner Gomez as an ordinary employee without board approval as was proper for a
corporate officer. When the company got her the first time, it agreed to have her retain the
managerial rank that she held with Petron. Her appointment paper said that she would be
entitled to all the rights, privileges, and benefits that regular PDMC employees
enjoyed.[28] This is in sharp contrast to what the former PDMC presidents appointment paper
stated: he was elected to the position and his compensation depended on the will of the board
of directors.[29]
What is more, respondent PDMC enrolled petitioner Gomez with the Social Security
System, the Medicare, and the Pag-Ibig Fund. It even issued certifications dated October 10,
2008,[30] stating that Gomez was a permanent employee and that the company had remitted
combined contributions during her tenure. The company also made her a member of the
PDMCs savings and provident plan[31] and its retirement plan.[32] It grouped her with the
managers covered by the companys group hospitalization insurance.[33] Likewise, she
underwent regular employee performance appraisals,[34] purchased stocks through the
employee stock option plan,[35] and was entitled to vacation and emergency leaves.[36] PDMC
even withheld taxes on her salary and declared her as an employee in the official Bureau of
Internal Revenue forms.[37] These are all indicia of an employer-employee relationship which
respondent PDMC failed to refute.
Estoppel, an equitable principle rooted on natural justice, prevents a person from
rejecting his previous acts and representations to the prejudice of others who have relied on
them.[38] This principle of law applies to corporations as well. The PDMC in this case is
estopped from claiming that despite all the appearances of regular employment that it weaved
around petitioner Gomezs position it must have technically hired her only as a corporate
officer. The board and its officers made her stay on and work with the company for years under
the belief that she held a regular managerial position.
That petitioner Gomez served concurrently as corporate secretary for a time is
immaterial. A corporation is not prohibited from hiring a corporate officer to perform services
under circumstances which will make him an employee.[39] Indeed, it is possible for one to
have a dual role of officer and employee. In Elleccion Vda. De Lecciones v. National Labor
Relations Commission,[40] the Court upheld NLRC jurisdiction over a complaint filed by one
who served both as corporate secretary and administrator, finding that the money claims were
made as an employee and not as a corporate officer.

WHEREFORE, the Court GRANTS the petition, REVERSES and SETS ASIDE the
decision dated May 19, 2006 and the resolution dated August 15, 2006 of the Court of Appeals
in CA-G.R. SP 88819, and REINSTATES the resolution dated November 22, 2002 of the
National Labor Relations Commissions Third Division in NLRC NCR 30-12-00856-
99. Let the records of this case be REMANDED to the arbitration branch of origin for the
conduct of further proceedings.
SO ORDERED.
Pursuant to such agreement, petitioners Raul Locsin and Eddie Tomaquin, among other
security guards, were posted at a PLDT office.
On August 30, 2001, respondent issued a Letter dated August 30, 2001 terminating the
Agreement effective October 1, 2001.[4]
Despite the termination of the Agreement, however, petitioners continued to secure the
premises of their assigned office. They were allegedly directed to remain at their post by
representatives of respondent. In support of their contention, petitioners provided the Labor
Arbiter with copies of petitioner Locsins pay slips for the period of January to September
2002.[5]

RAUL G. LOCSIN and G.R. No. 185251 Then, on September 30, 2002, petitioners services were terminated.
EDDIE B. TOMAQUIN,
Petitioners, Thus, petitioners filed a complaint before the Labor Arbiter for illegal dismissal and recovery
Present: of money claims such as overtime pay, holiday pay, premium pay for holiday and rest day,
service incentive leave pay, Emergency Cost of Living Allowance, and moral and exemplary
YNARES-SANTIAGO, J., damages against PLDT.
Chairperson,
- versus - CHICO-NAZARIO, The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal. It was
VELASCO, JR., explained in the Decision that petitioners were found to be employees of PLDT and not of
NACHURA, and SSCP. Such conclusion was arrived at with the factual finding that petitioners continued to
PERALTA, JJ. serve as guards of PLDTs offices. As such employees, petitioners were entitled to substantive
PHILIPPINE LONG DISTANCE Promulgated: and procedural due process before termination of employment. The Labor Arbiter held that
TELEPHONE COMPANY, respondent failed to observe such due process requirements. The dispositive portion of the
Respondent. October 2, 2009 Labor Arbiters Decision reads:
x-----------------------------------------------------------------------------------------x
WHEREFORE, premises considered, judgment is hereby rendered ordering
respondent Philippine Long Distance and Telephone Company (PLDT) to
DECISION pay complainants Raul E. Locsin and Eddie Tomaquin their separation pay
and back wages computed as follows:
VELASCO, JR., J.:
NAME SEPARATION PAY BACKWAGES
The Case 1. Raul E. Locsin P127,500.00 P240,954.67
2. Eddie B. Tomaquin P127,500.00 P240,954.67
P736,909.34
This Petition for Review on Certiorari under Rule 45 seeks the reversal of the May 6,
2008 Decision[1] and November 4, 2008 Resolution[2] of the Court of Appeals (CA) in CA-G.R. All other claims are DISMISSED for want of factual basis.
SP No. 97398, entitled Philippine Long Distance Telephone Company v. National Labor
Relations Commission, Raul G. Locsin and Eddie B. Tomaquin. The assailed decision set Let the computation made by the Computation and Examination
aside the Resolutions of the National Labor Relations Commission (NLRC) dated October 28, Unit form part of this decision.
2005 and August 28, 2006 which in turn affirmed the Decision dated February 13, 2004 of
the Labor Arbiter. The assailed resolution, on the other hand, denied petitioners motion for SO ORDERED.
reconsideration of the assailed decision.
PLDT appealed the above Decision to the NLRC which rendered a Resolution affirming in
The Facts toto the Arbiters Decision.

On November 1, 1990, respondent Philippine Long Distance Telephone Company (PLDT) and
the Security and Safety Corporation of the Philippines (SSCP) entered into a Security Services
Agreement[3] (Agreement) whereby SSCP would provide armed security guards to PLDT to be
assigned to its various offices.
Thus, PDLT filed a Motion for Reconsideration of the NLRCs Resolution which was also
denied.
Consequently, PLDT filed a Petition for Certiorari with the CA asking for the nullification of
the Resolution issued by the NLRC as well as the Labor Arbiters Decision. The CA rendered
the assailed decision granting PLDTs petition and dismissing petitioners complaint. The
dispositive portion of the CA Decision provides:
WHEREFORE, the instant Petition for Certiorari is GRANTED. The
Resolutions dated October 28, 2005 and August 28, 2006 of the National
Labor Relations Commission are ANNULLED and SET ASIDE. Private
respondents complaint against Philippine Long Distance Telephone
Company is DISMISSED.
SO ORDERED.
The CA applied the four-fold test in order to determine the existence of an employer-
employee relationship between the parties but did not find such relationship. It determined
that SSCP was not a labor-only contractor and was an independent contractor having
substantial capital to operate and conduct its own business. The CA further bolstered its
decision by citing the Agreement whereby it was stipulated that there shall be no employer-
employee relationship between the security guards and PLDT.
Anent the pay slips that were presented by petitioners, the CA noted that those were
issued by SSCP and not PLDT; hence, SSCP continued to pay the salaries of petitioners after
the Agreement. This fact allegedly proved that petitioners continued to be employees of
SSCP albeit performing their work at PLDTs premises.
From such assailed decision, petitioners filed a motion for reconsideration which was
denied in the assailed resolution.
Hence, we have this petition.
The Issues
1. Whether or not; complainants extended services to the respondent for
one (1) year from October 1, 2001, the effectivity of the termination of
the contract of complainants agency SSCP, up to September 30, 2002,
without a renewed contract, constitutes an employer-employee
relationship between respondent and the complainants.
2. Whether or not; in accordance to the provision of the Article 280 of the
Labor Code, complainants extended services to the respondent for
another one (1) year without a contract be considered as contractual
employment.
3. Whether or not; in accordance to the provision of the Article 280 of the
Labor Code, does complainants thirteen (13) years of service to the
respondent with manifestation to the respondent thirteen (13) years
renewal of its security contract with the complainant agency SSCP, can
be considered only as seasonal in nature or fixed as [specific projects]
or undertakings and its completion or termination can be dictated as
[controlled] by the respondent anytime they wanted to.
4. Whether or not; complainants from being an alleged contractual
employees of the respondent for thirteen (13) years as they were then
covered by a contract, becomes regular employees of the respondent as
the one (1) year extended services of the complainants were not covered
by a contract, and can be considered as direct employment pursuant to
the provision of the Article 280 of the Labor Code.
5. Whether or not; the Court of Appeals committed grave abuse of
discretion when it set aside and [annulled] the labor [arbiters] decision
and of the NLRCs resolution declaring the dismissal of the complainant
as illegal.[6]
The Courts Ruling
This petition is hereby granted.
An Employer-Employee
Relationship Existed Between the Parties
It is beyond cavil that there was no employer-employee relationship between the
parties from the time of petitioners first assignment to respondent by SSCP in 1988 until the
alleged termination of the Agreement between respondent and SSCP. In fact, this was the
conclusion that was reached by this Court in Abella v. Philippine Long Distance Telephone
Company,[7] where we ruled that petitioners therein, including herein petitioners, cannot be
considered as employees of PLDT. It bears pointing out that petitioners were among those
declared to be employees of their respective security agencies and not of PLDT.
The only issue in this case is whether petitioners became employees of respondent
after the Agreement between SSCP and respondent was terminated.
This must be answered in the affirmative.
Notably, respondent does not deny the fact that petitioners remained in the premises
of their offices even after the Agreement was terminated. And it is this fact that must be
explained.
To recapitulate, the CA, in rendering a decision in favor of respondent, found that:
(1) petitioners failed to prove that SSCP was a labor-only contractor; and (2) petitioners are
employees of SSCP and not of PLDT.
In arriving at such conclusions, the CA relied on the provisions of the Agreement,
wherein SSCP undertook to supply PLDT with the required security guards, while furnishing
PLDT with a performance bond in the amount of PhP 707,000. Moreover, the CA gave weight
to the provision in the Agreement that SSCP warranted that it carry on an independent
business and has substantial capital or investment in the form of equipment, work premises,
and other materials which are necessary in the conduct of its business.
Further, in determining that no employer-employee relationship existed between the
parties, the CA quoted the express provision of the Agreement, stating that no employer-
employee relationship existed between the parties herein. The CA disregarded the pay slips of
Locsin considering that they were in fact issued by SSCP and not by PLDT.
From the foregoing explanation of the CA, the fact remains that petitioners remained
at their post after the termination of the Agreement. Notably, in its Comment dated March 10,
2009,[8] respondent never denied that petitioners remained at their post until September 30,
2002. While respondent denies the alleged circumstances stated by petitioners, that they were
told to remain at their post by respondents Security Department and that they were informed
by SSCP Operations Officer Eduardo Juliano that their salaries would be coursed through
SSCP as per arrangement with PLDT, it does not state why they were not made to vacate their
posts. Respondent said that it did not know why petitioners remained at their posts.
Rule 131, Section 3(y) of the Rules of Court provides:
SEC. 3. Disputable presumptions.The following presumptions are
satisfactory if uncontradicted, but may be contradicted and overcome by
other evidence:
xxxx
(y) That things have happened according to the ordinary course of
nature and the ordinary habits of life.
In the ordinary course of things, responsible business owners or managers would not
allow security guards of an agency with whom the owners or managers have severed ties with
to continue to stay within the business premises. This is because upon the termination of the
owners or managers agreement with the security agency, the agencys undertaking of liability
for any damage that the security guard would cause has already been terminated. Thus, in the
event of an accident or otherwise damage caused by such security guards, it would be the
business owners and/or managers who would be liable and not the agency. The business
owners or managers would, therefore, be opening themselves up to liability for acts of security
guards over whom the owners or managers allegedly have no control.
At the very least, responsible business owners or managers would inquire or learn
why such security guards were remaining at their posts, and would have a clear understanding
of the circumstances of the guards stay. It is but logical that responsible business owners or
managers would be aware of the situation in their premises.
We point out that with respondents hypothesis, it would seem that SSCP was paying
petitioners salaries while securing respondents premises despite the termination of their
Agreement. Obviously, it would only be respondent that would benefit from such a situation.
And it is seriously doubtful that a security agency that was established for profit would allow
its security guards to secure respondents premises when the Agreement was already
terminated.
From the foregoing circumstances, reason dictates that we conclude that petitioners
remained at their post under the instructions of respondent. We can further conclude that
respondent dictated upon petitioners that the latter perform their regular duties to secure the
premises during operating hours. This, to our mind and under the circumstances, is sufficient
to establish the existence of an employer-employee relationship. Certainly, the facts as
narrated by petitioners are more believable than the irrational denials made by respondent.
Thus, we ruled in Lee Eng Hong v. Court of Appeals:[9]
Evidence, to be believed, must not only proceed from the mouth of a
credible witness, but it must be credible in itself such as the common
experience and observation of mankind can approve as probable under the
circumstances. We have no test of the truth of human testimony, except its
conformity to our knowledge, observation and experience. Whatever is
repugnant to these belongs to the miraculous and is outside judicial
cognizance (Castaares v. Court of Appeals, 92 SCRA 568 [1979]).
To reiterate, while respondent and SSCP no longer had any legal relationship with
the termination of the Agreement, petitioners remained at their post securing the premises of
respondent while receiving their salaries, allegedly from SSCP. Clearly, such a situation makes
no sense, and the denials proffered by respondent do not shed any light to the situation. It is
but reasonable to conclude that, with the behest and, presumably, directive of respondent,
petitioners continued with their services. Evidently, such are indicia of control that
respondent exercised over petitioners.
Such power of control has been explained as the right to control not only the end to
be achieved but also the means to be used in reaching such end.[10] With the conclusion that
respondent directed petitioners to remain at their posts and continue with their duties, it is
clear that respondent exercised the power of control over them; thus, the existence of an
employer-employee relationship.
In Tongko v. The Manufacturers Life Insurance Co. (Phils.) Inc.,[11] we reiterated the
oft repeated rule that control is the most important element in the determination of the
existence of an employer-employee relationship:
In the determination of whether an employer-employee
relationship exists between two parties, this Court applies the four-fold test
to determine the existence of the elements of such relationship. In Pacific
Consultants International Asia, Inc. v. Schonfeld, the Court set out the
elements of an employer-employee relationship, thus:
Jurisprudence is firmly settled that whenever the
existence of an employment relationship is in dispute, four
elements constitute the reliable yardstick: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employers power to control the
employees conduct. It is the so-called control test which
constitutes the most important index of the existence of the
employer-employee relationship that is, whether the employer
controls or has reserved the right to control the employee not only
as to the result of the work to be done but also as to the means and
methods by which the same is to be accomplished. Stated
otherwise, an employer-employee relationship exists where the
person for whom the services are performed reserves the right to
control not only the end to be achieved but also the means to be
used in reaching such end.
Furthermore, Article 106 of the Labor Code contains a provision on contractors, to
wit:
Art. 106. Contractor or subcontractor. Whenever an employer
enters into a contract with another person for the performance of the
formers work, the employees of the contractor and of the latters
subcontractor, if any, shall be paid in accordance with the provisions of this
Code.
In the event that the contractor or subcontractor fails to pay the
wages of his employees in accordance with this Code, the employer shall be
 jointly and severally liable with his contractor or subcontractor to such
employees to the extent of the work performed under the contract, in the
same manner and extent that he is liable to employees directly employed by
him.
The Secretary of Labor and Employment may, by
appropriate regulations, restrict or prohibit the contracting-out
of labor to protect the rights of workers established under this
Code. In so prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job contracting
as well as differentiations within these types of contracting and
determine who among the parties involved shall be considered
the employer for purposes of this Code, to prevent any violation
or circumvention of any provision of this Code.
There is labor-only contracting where the person supplying
workers to an employer does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among others,
and the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be considered
merely as an agent of the employer who shall be responsible to the workers
in the same manner and extent as if the latter were directly employed by
him. (Emphasis supplied.)
Thus, the Secretary of Labor issued Department Order No. 18-2002, Series of 2002,
implementing Art. 106 as follows:
Section 5. Prohibition against labor-only contracting.Labor-only
contracting is hereby declared prohibited. For this purpose, labor-only
contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job,
work or service for a principal, and any of the following elements are
present:
(i) The contractor or subcontractor does not have
substantial capital or investment which relates to the job, work or
service to be performed and the employees recruited, supplied or
placed by such contractor or subcontractor are performing
activities which are directly related to the main business of the
principal; or
(ii) the contractor does not exercise the right to
control over the performance of the work of the
contractual employee.
The foregoing provisions shall be without prejudice to the
application of Article 248 (C) of the Labor Code, as amended.
Substantial capital or investment refers to capital stocks and
subscribed capitalization in the case of corporations, tools, equipment,
implements, machineries and work premises, actually and directly used by
the contractor or subcontractor in the performance or completion of the job,
work or service contracted out.
The right to control shall refer to the right reserved to the person
for whom the services of the contractual workers are performed, to
determine not only the end to be achieved, but also the manner and means
to be used in reaching that end.
On the other hand, Sec. 7 of the department order contains the consequence of such
labor-only contracting:
Section 7. Existence of an employer-employee relationship.The
contractor or subcontractor shall be considered the employer of the
contractual employee for purposes of enforcing the provisions of the Labor
Code and other social legislation. The principal, however, shall be solidarily
liable with the contractor in the event of any violation of any provision of
the Labor Code, including the failure to pay wages.
The principal shall be deemed the employer of the contractual
employee in any of the following cases as declared by a competent authority:
(a) where there is labor-only contracting; or
(b) where the contracting arrangement falls within the
prohibitions provided in Section 6 (Prohibitions) hereof. (Emphasis
supplied.)
Evidently, respondent having the power of control over petitioners must be
considered as petitioners employerfrom the termination of the Agreement onwardsas this was
the only time that any evidence of control was exhibited by respondent over petitioners and in
light of our ruling in Abella.[12] Thus, as aptly declared by the NLRC, petitioners were entitled
to the rights and benefits of employees of respondent, including due process requirements in
the termination of their services.
Both the Labor Arbiter and NLRC found that respondent did not observe such due
process requirements. Having failed to do so, respondent is guilty of illegal dismissal.
WHEREFORE, we SET ASIDE the CAs May 6, 2008 Decision and November 4,
2008 Resolution in CA-G.R. SP No. 97398. We hereby REINSTATE the Labor Arbiters
Decision dated February 13, 2004 and the NLRCs Resolutions dated October 28,
2005 and August 28, 2006.
No costs.
SO ORDERED.
MASONIC CONTRACTOR, INC. and MELVIN G.R. No. 185094
BALAIS/AVELINO REYES,
Petitioners, Present:
CORONA, J.,
 Chairperson,
- versus - CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
BERSAMIN,* JJ.
MAGDALENA MADJOS, ZENAIDA TIAMZON, and
CARMELITA RAPADAS, Promulgated:
Respondents.
November 25, 2009
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
This is a petition for review on certiorari assailing the July 18, 2008 Decision[1] of the Court
of Appeals (CA), as well as its October 23, 2008 Resolution,[2] in CA-G.R. SP No. 101023. The
CA, in its assailed decision and resolution, reversed and set aside the Decision[3] promulgated
by the National Labor Relations Commission (NLRC) on February 6, 2007, as well as the
December 16, 2004 Decision[4] of the Labor Arbiter (LA), rendered in favor of herein
petitioners.
First, the facts:
Respondents Magdalena Madjos, Zenaida Tiamzon and Carmelita Rapadas were employed
sometime in 1991 as all-around laborers (driver/sweeper/ taga-libing/grass-cutter) by
Masonic Contractor, Inc. (MCI). Each of them received an initial daily wage of P165.00 and
were required to report for work from 7:00 a.m. to 4:00 p.m. Three years thereafter, MCI
increased their wages by P15.00 per day[5] but not without earning the ire of Melvin Balais,
president of MCI.[6]
Sometime in 2004, Balais told Madjos, Tiamzon and Rapadas, along with nine (9) other
employees, to take a two-day leave. When they reported for work two days thereafter, they
were barred from entering the work premises and were informed that they had already been
replaced by other workers.[7] This prompted Madjos and her co-workers to file a complaint
against herein petitioners for illegal dismissal and for non-payment of overtime pay, holiday
pay, 13th month pay, and damages.
In their Position Paper dated April 12, 2004,[8] respondents averred that they were regular
employees of MCI who were summarily dismissed from their jobs contrary to the substantive
and procedural requirements of law.
Petitioners, for their part, denied being the direct employer of respondents.[9] Essentially, they
argued that MCI had maintenance contracts with different memorial park companies and that,
over the years, they had engaged the services of a certain Luz Malibiran to provide them with
the necessary manpower depending on MCIs volume of work.[10]
On December 16, 2004, LA Aliman Mangandog rendered a Decision,[11] dismissing the
complaint for lack of merit. The LA ratiocinated that Madjos, Tiamzon and Rapadas failed to
present any evidence to prove that MCI had control over the means and methods in the
performance of their work. The LA gave more credence to Malibirans affidavit,[12] pertinent
portions of which read:
1. Ako at ang mga nagsumbong sa SSS laban sa Masonic Contractors, Inc.,
komokontrata lamang ng mga gawaing (sic) ng nasabing kompanya sa loob
ng Loyola Memorial Park at ang aming mga ginawa ay binabayaran ng buo
na siya naman naming pinagpaparti- partihan.
2. Ako at ang mga nagsumbong sa SSS, sa kadahilanang alam naming na
(sic) hindi kami empleyado ng kahit sinumang kompanya o pagawaan ay
nag-usap-usap at nagkasundo na kami na mismo sa aming sarili ang
magpalista sa SSS at magbayad ng kontribusyon kung gusto naming na (sic)
magkaroon ng benepisyo pagdating ng panahon.
3. Alam naming lahat na kami ay hindi empleyado ng
Masonic Contractors[,] Inc., kung kaya alam naming (sic) na ang
nasabing kompanya ay walang pananagutan na kami ay ipalista sa SSS
bilang empleyado.
4. Ang mga nagsumbong sa SSS ay umalis at umayaw na lang ng
walang paalam kung kaya kaming mga natira ay napilitang maghanap
ng ibang makakasama sa pangongontrata. Ang aming pangongontrata sa
Masonic Contractors[,] Inc. ay isang pakiusap lamang sa nasabing
kompanya upang kami ay magkaroon ng sariling pinagkakakitaan upang
matugunan ang aming pang-araw-araw na pangangailangan.
5. Ang salaysay na ito ay aking ginawa para patunayan ang mga nakasaaad
dito ay pawang totoo at upang malaman ng tang[g]apan ng SSS na walang
pagkukulang ang Masonic Contractors[,] Inc.[13]
On appeal, the NLRC affirmed the LAs ruling. Respondents motion for reconsideration was,
likewise, denied.
On review, the CA reversed the findings of the NLRC and the LA. The CA reasoned that the
NLRC erroneously imposed upon the three complainants the burden of proving that they were
employees, when it was the employer and/or the contractor which should have been tasked
with the onus to prove that it had substantial capital, investment, tools, etc. to disprove the
allegation that it was engaged in labor-only contracting.[14] In contrast to the NLRCs ruling,
the CA found that an employer-employee relationship existed between herein petitioners and
respondents, and that the latter were illegally terminated from their work.
The dispositive portion of the July 18, 2008 Decision of the CA states:
WHEREFORE, the petition is GRANTED. The assailed dispositions are
ANNULLED and SET ASIDE. Masonic Contractor, Inc. is ORDERED to
reinstate Petitioners Magdalena Madjos, Carmelita Rapadas, and Zenaida
Tiamzon or, in the event that reinstatement is no longer feasible, to pay each
of them separation pay. Masonic Contractor, Inc. is also DIRECTED to pay
the Petitioners full backwages and other monetary benefits computed from
the time of their dismissal up to the time of actual reinstatement or up to
the finality of this decision, if reinstatement is not possible. No costs.
 SO ORDERED.[15]
Petitioners now come to this Court via a Rule 45 petition, contending that the CA committed
a reversible error in finding that they were engaged in labor-only contracting and for holding
them liable for respondents dismissal.
Central to the disposition of the case is a determination of whether respondents are employees
of MCI.
We answer in the affirmative.
In Brotherhood Labor Unity Movement of the Philippines v. Hon. Zamora, the Court
explained:
In determining the existence of an employer-employee relationship, the
elements that are generally considered are the following: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employers power to control the employee with
respect to the means and methods by which the work is to be accomplished.
It is the so-called control test that is the most important element.[16]
The existence of an employer-employee relationship is a question of fact which should be
supported by substantial evidence.[17]
reason for doing so and without observing procedural due process. We thus affirm the CAs
finding that petitioners are liable for their unwarranted action against respondents.
Lastly, petitioners did not even make an effort to deny or refute respondents claim that they
were not paid their overtime pay, holiday pay and 13th month pay. By their silence, petitioners
are deemed to have admitted the same.[22] Section 11 of Rule 8 of the Rules of Court, which
supplements the NLRC Rules, provides that an allegation not specifically denied is deemed
admitted.[23] Accordingly, petitioners should comply with their statutory obligations to
respondents.
WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The
assailed July 18, 2008 Decision of the Court of Appeals in CA-G.R. SP No. 101023 and its
October 23, 2008 Resolution are hereby AFFIRMED. Petitioners are further ordered to pay
respondents their unpaid overtime pay, holiday pay and 13th month pay to be computed by the
Labor Arbiter, and to bear the costs of this suit.
SO ORDERED.
LESLIE OKOL, G.R. No. 160146
Petitioner,

Petitioners defense that they merely contracted the services of respondents through Malibiran Present:
fails to persuade us. The facts of this case show that respondents have been under the employ
of MCI as early as 1991. They were hired not to perform a specific job or undertaking. Instead, - versus - CARPIO, J., Chairperson,
they were employed as all-around laborers doing varied and intermittent jobs, such as those CARPIO MORALES,*
of drivers, sweepers, gardeners, and even undertakers or tagalibing, until they were LEONARDO-DE CASTRO,**
arbitrarily terminated by MCI in 2004.Their wages were paid directly by MCI, as evidenced DEL CASTILLO, and
by the latters payroll summary,[18] belying its self-serving and unsupported contention that it ABAD, JJ.
paid directly to Malibiran for respondents services. Respondents had identification cards or SLIMMERS WORLD INTERNATIONAL,
gate passes issued not by Malibiran, but by MCI,[19] and were required to wear uniforms BEHAVIOR MODIFICATIONS, INC.,
bearing MCIs emblem or logo when they reported for work.[20] and RONALD JOSEPH MOY, Promulgated:
Respondents.
It is common practice for companies to provide identification cards to individuals not only as December 11, 2009
a security measure, but more importantly to identify the bearers thereof as bona x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
fide employees of the firm or institution that issued them.[21] The provision of company-issued
identification cards and uniforms to respondents, aside from their inclusion in MCIs summary
payroll, indubitably constitutes substantial evidence sufficient to support only one DECISION
conclusion: that respondents were indeed employees of MCI.

Moreover, as correctly observed by the CA, petitioners failed to show that it was Malibiran
who exercised control over the means and methods of the work assigned to respondents.
Interestingly, Malibirans affidavit is silent on the aspect of control over respondents means
and methods of work. Rather than categorically stating that she was the one who directly
employed respondents to render work for MCI, Malibiran merely implies that, like
respondents, she was just a co-worker. Malibirans statement that the work for MCI was merely
in the nature of accommodation to help respondents earn a living, in effect, impliedly admits
the fact that she did not have the capacity to engage in the independent job-contracting
business, and that, therefore, she was not respondents employer.
With the issue of respondents employment resolved, we then declare that respondents were
illegally terminated when petitioners summarily dismissed them from work without any valid
CARPIO, J.:
The Case
Before the Court is a petition for review on certiorari[1] assailing the Decision[2] dated 18
October 2002 and Resolution dated 22 September 2003 of the Court of Appeals in CA-G.R.
SP No. 69893, which set aside the Resolutions dated 29 May 2001 and 21 December 2001 of
the National Labor Relations Commission (NLRC).
The Facts
Respondent Slimmers World International operating under the name Behavior Modifications,
Inc. (Slimmers World) employed petitioner Leslie Okol (Okol) as a management trainee on 15
June 1992. She rose up the ranks to become Head Office Manager and then Director and Vice
President from 1996 until her dismissal on 22 September 1999.
On 28 July 1999, prior to Okols dismissal, Slimmers World preventively suspended
Okol. The suspension arose from the seizure by the Bureau of Customs of seven Precor
elliptical machines and seven Precor treadmills belonging to or consigned to Slimmers
World. The shipment of the equipment was placed under the names of Okol and two customs
brokers for a value less than US$500. For being undervalued, the equipment were seized.
On 2 September 1999, Okol received a memorandum that her suspension had been extended
from 2 September until 1 October 1999 pending the outcome of the investigation on the
Precor equipment importation.
On 17 September 1999, Okol received another memorandum from Slimmers World requiring
her to explain why no disciplinary action should be taken against her in connection with the
equipment seized by the Bureau of Customs.
On 19 September 1999, Okol filed her written explanation. However, Slimmers World found
Okols explanation to be unsatisfactory. Through a letter dated 22 September 1999 signed by
its president Ronald Joseph Moy (Moy), Slimmers World terminated Okols employment.
Okol filed a complaint[3] with the Arbitration branch of the NLRC against Slimmers World,
Behavior Modifications, Inc. and Moy (collectively called respondents) for illegal suspension,
illegal dismissal, unpaid commissions, damages and attorneys fees, with prayer for
reinstatement and payment of backwages.
On 22 February 2000, respondents filed a Motion to Dismiss[4] the case with a reservation of
their right to file a Position Paper at the proper time. Respondents asserted that the NLRC
had no jurisdiction over the subject matter of the complaint.
In an Order,[5] dated 20 March 2000, the labor arbiter granted the motion to dismiss. The
labor arbiter ruled that Okol was the vice-president of Slimmers World at the time of her
dismissal. Since it involved a corporate officer, the dispute was an intra-corporate
controversy falling outside the jurisdiction of the Arbitration branch.
Okol filed an appeal with the NLRC. In a Resolution[6] dated 29 May 2001, the NLRC
reversed and set aside the labor arbiters order. The dispositive portion of the resolution
states:
WHEREFORE, the Order appealed from is SET ASIDE and REVERSED. A
new one is hereby ENTERED ordering respondent Behavior Modification,
Inc./Slimmers World International to reinstate complainant Leslie F. Okol
to her former position with full back wages which to date stood in the
amount of P10,000,000.00 computed from July 28, 1999 to November 28,
2000 until fully reinstated; and the further sum of P1,250,000.00 as
indemnity pay plus attorneys fee equivalent to ten (10%) of the total
monetary award. However, should reinstatement be not feasible separation
pay equivalent to one month pay per year of service is awarded, a fraction
of at least six months considered one whole year.
All other claims are dismissed for lack of factual or legal basis.
SO ORDERED.[7]
Respondents filed a Motion for Reconsideration with the NLRC. Respondents contended that
the relief prayed for was confined only to the question of jurisdiction. However, the NLRC not
only decided the case on the merits but did so in the absence of position papers from both
parties. In a Resolution[8] dated 21 December 2001, the NLRC denied the motion for lack of
merit.
Respondents then filed an appeal with the Court of Appeals, docketed as CA-G.R. SP No.
69893.
The Ruling of the Court of Appeals
In a Decision[9] dated 18 October 2002, the appellate court set aside the NLRCs Resolution
dated 29 May 2001 and affirmed the labor arbiters Order dated 20 March 2000. The Court of
Appeals ruled that the case, being an intra-corporate dispute, falls within the jurisdiction of
the regular courts pursuant to Republic Act No. 8799.[10] The appellate court added that the
NLRC had acted without jurisdiction in giving due course to the complaint and deprived
respondents of their right to due process in deciding the case on the merits.
Okol filed a Motion for Reconsideration which was denied in a Resolution[11] dated 22
September 2003.
Hence, the instant petition.
The Issue
The issue is whether or not the NLRC has jurisdiction over the illegal dismissal case filed by
petitioner.
The Courts Ruling
The petition lacks merit.
Petitioner insists that the Court of Appeals erred in ruling that she was a corporate officer and
that the case is an intra-corporate dispute falling within the jurisdiction of the regular
courts. Petitioner asserts that even as vice-president, the work that she performed conforms
to that of an employee rather than a corporate officer. Mere title or designation in a
corporation will not, by itself, determine the existence of an employer-employee
relationship. It is the four-fold test, namely (1) the power to hire, (2) the payment of wages,
(3) the power to dismiss, and (4) the power to control, which must be applied.
Petitioner enumerated the instances that she was under the power and control of Moy,
Slimmers Worlds president: (1) petitioner received salary evidenced by pay slips, (2) Moy
deducted Medicare and SSS benefits from petitioners salary, and (3) petitioner was
dismissed from employment not through a board resolution but by virtue of a letter from
Moy. Thus, having shown that an employer-employee relationship exists, the jurisdiction to
hear and decide the case is vested with the labor arbiter and the NLRC.
Respondents, on the other hand, maintain that petitioner was a corporate officer at the time
of her dismissal from Slimmers World as supported by the General Information Sheet and
Directors Affidavit attesting that petitioner was an officer. Also, the factors cited by
petitioner that she was a mere employee do not prove that she was not an officer of Slimmers
World. Even the alleged absence of any resolution of the Board of Directors approving
petitioners termination does not constitute proof that petitioner was not an officer.
Respondents assert that petitioner was not only an officer but also a stockholder and
director; which facts provide further basis that petitioners separation from Slimmers World
does not come under the NLRCs jurisdiction.

The issue revolves mainly on whether petitioner was an employee or a corporate officer of
Slimmers World. Section 25 of the Corporation Code enumerates corporate officers as the
president, secretary, treasurer and such other officers as may be provided for in the by-
laws. In Tabang v. NLRC,[12] we held that an office is created by the charter of the corporation
and the officer is elected by the directors or stockholders. On the other hand, an employee
usually occupies no office and generally is employed not by action of the directors or
stockholders but by the managing officer of the corporation who also determines the
compensation to be paid to such employee.
In the present case, the respondents, in their motion to dismiss filed before the labor arbiter,
questioned the jurisdiction of the NLRC in taking cognizance of petitioners complaint. In the
motion, respondents attached the General Information Sheet [13](GIS) dated 14 April 1998,
Minutes[14] of the meeting of the Board of Directors dated 14 April 1997 and Secretarys
Certificate,[15] and the Amended By-Laws[16] dated 1 August 1994 of Slimmers World as
submitted to the SEC to show that petitioner was a corporate officer whose rights do not fall
within the NLRCs jurisdiction. The GIS and minutes of the meeting of the board of directors
indicated that petitioner was a member of the board of directors, holding one subscribed
share of the capital stock, and an elected corporate officer.
The relevant portions of the Amended By-Laws of Slimmers World which enumerate the
power of the board of directors as well as the officers of the corporation state:
Article II
The Board of Directors
1. Qualifications and Election The general management of the corporation
shall be vested in a board of five directors who shall be stockholders and
who shall be elected annually by the stockholders and who shall serve until
the election and qualification of their successors.
xxx
Article III
Officers
xxx
4. Vice-President Like the Chairman of the Board and the President, the Vice-President shall
be elected by the Board of Directors from [its] own members.
The Vice-President shall be vested with all the powers and authority and is required to
perform all the duties of the President during the absence of the latter for any cause.
The Vice-President will perform such duties as the Board of Directors may impose upon him
from time to time.
xxx
Clearly, from the documents submitted by respondents, petitioner was a director and officer
of Slimmers World. The charges of illegal suspension, illegal dismissal, unpaid commissions,
reinstatement and back wages imputed by petitioner against respondents fall squarely within
the ambit of intra-corporate disputes. In a number of cases,[17] we have held that a corporate
officers dismissal is always a corporate act, or an intra-corporate controversy which arises
between a stockholder and a corporation. The question of remuneration involving a
stockholder and officer, not a mere employee, is not a simple labor problem but a matter that
comes within the area of corporate affairs and management and is a corporate controversy in
contemplation of the Corporation Code.[18]
Prior to its amendment, Section 5(c) of Presidential Decree No. 902-A[19] (PD 902-A)
provided that intra-corporate disputes fall within the jurisdiction of the Securities and
Exchange Commission (SEC):
Sec. 5. In addition to the regulatory and adjudicative functions of the
Securities and Exchange Commission over corporations, partnerships and
other forms of associations registered with it as expressly granted under
existing laws and decrees, it shall have original and exclusive jurisdiction to
hear and decide cases involving:
xxx
c) Controversies in the election or appointments of directors, trustees, officers or managers
of such corporations, partnerships or associations.
Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000,
transferred to regional trial courts the SECs jurisdiction over all cases listed in Section 5 of
PD 902-A:
5.2. The Commissions jurisdiction over all cases enumerated under Section
5 of Presidential Decree No. 902-A is hereby transferred to the Courts of
general jurisdiction or the appropriate Regional Trial Court.
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It is a settled rule that jurisdiction over the subject matter is conferred by law. [20] The
determination of the rights of a director and corporate officer dismissed from his employment
as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute
subject to the jurisdiction of the regular courts. Thus, the appellate court correctly ruled that
it is not the NLRC but the regular courts which have jurisdiction over the present case.
WHEREFORE, we DENY the petition. We AFFIRM the 18 October 2002 Decision and 22
September 2003 Resolution of the Court of Appeals in CA-G.R. SP No. 69893. This Decision
is without prejudice to petitioner Leslie Okols taking recourse to and seeking relief through
the appropriate remedy in the proper forum.
SO ORDERED.