Labrev Cases

SAMEER OVERSEAS PLACEMENT
AGENCY, INC., Petitioner,

vs.
JOY C. CABILES, Respondent.
G.R. No. 170139 August 5, 2014
PONENTE: Leonen
TOPIC: Section 10 of RA 8042 vis-a-vis Section
7 of RA 10022
FACTS:
Petitioner, Sameer Overseas Placement
Agency, Inc., is a recruitment and placement
agency.
Respondent Joy Cabiles was hired thus
signed a one-year employment contract for
a monthly salary of NT$15,360.00. Joy
was deployed to work for Taiwan Wacoal, Co. Ltd.
(Wacoal) on June 26, 1997. She alleged that in
her employment contract, she agreed to work as
quality control for one year. In Taiwan, she was
asked to work as a cutter.
Sameer claims that on July 14, 1997, a
certain Mr. Huwang from Wacoal informed Joy,
without prior notice, that she was terminated and
that she should immediately report to their
office to get her salary and passport. She was
asked to prepare for immediate repatriation.
Joy claims that she was told that from June 26 to
July 14, 1997, she only earned a total of
NT$9,000.15 According to her, Wacoal deducted
NT$3,000 to cover her plane ticket to Manila.
On October 15, 1997, Joy filed a
complaint for illegal dismissal with the NLRC
against petitioner and Wacoal. LA dismissed the
complaint. NLRC reversed LAs decision. CA
affirmed the ruling of the National Labor
Relations Commission finding respondent
illegally dismissed and awarding her three
months worth of salary, the reimbursement of
the cost of her repatriation, and attorneys fees
ISSUE:
Whether or not Cabiles was entitled to
the unexpired portion of her salary due to illegal
dismissal.
HELD:
YES. The Court held that the award of
the three-month equivalent of respondents salary
should be increased to the amount equivalent to
the unexpired term of the employment contract.
In Serrano v. Gallant Maritime Services,
Inc. and Marlow Navigation Co., Inc., this court
ruled that the clause or for three (3) months for
every year of the unexpired term, whichever is
less is unconstitutional for violating the equal
protection clause and substantive due process.
A statute or provision which was
declared unconstitutional is not a law. It confers
no rights; it imposes no duties; it affords no
protection; it creates no office; it is inoperative as
if it has not been passed at all.
The Court said that they are aware that
the clause or for three (3) months for every year
of the unexpired term, whichever is less was
reinstated in Republic Act No. 8042 upon
promulgation of Republic Act No. 10022 in 2010.
Ruling on the constitutional issue
In the hierarchy of laws, the Constitution
is supreme. No branch or office of the
government may exercise its powers in any
manner inconsistent with the Constitution,
regardless of the existence of any law that
supports such exercise. The Constitution cannot
be trumped by any other law. All laws must be
read in light of the Constitution. Any law that is
inconsistent with it is a nullity.
Thus, when a law or a provision of
law is null because it is inconsistent with
the Constitution, the nullity cannot
be cured by reincorporation or
reenactment of the same or a similar law
or provision. A law or provision of law that was
already declared unconstitutional remains as
such unless circumstances have so changed as to
warrant a reverse conclusion.
The Court observed that the reinstated
clause, this time as provided in Republic Act. No.
10022, violates the constitutional rights to equal
protection and due process.96 Petitioner as well
as the Solicitor General have failed to show any
compelling change in the circumstances that
would warrant us to revisit the precedent.
The Court declared, once again, the
clause, or for three (3) months for every year of
the unexpired term, whichever is less in Section
7 of Republic Act No. 10022 amending Section 10
of Republic Act No. 8042 is declared
unconstitutional and, therefore, null and void.
Case Digest: Gagui v. Dejero &
Permejo
G.R. No. 196036 : OCTOBER 23, 2013
ELIZABETH M. GAGUI, Petitioner, v. SIMEON DEJERO

and TEODORO R. PERMEJO, Respondents.
SERENO, C.J.:
FACTS:
On 14 December 1993, respondents Simeon Dejero and

Teodoro Permejo filed separate Complaints for illegal
dismissal, nonpayment of salaries and overtime pay, refund
of transportation expenses, damages, and attorney fees
against PRO Agency Manila, Inc., and Abdul Rahman Al
Mahwes.
The Labor Arbiter Pedro Ramos rendered a decision

ordering respondents Pro Agecy Manila Inc., and Abdul
Rahman Al Mahwes to pay complainants. The LA also
issued a Writ of Execution. When the writ was returned
unsatisfied, an Alias Writ of Execution was issued, but was
also returned unsatisfied.
Respondents filed a Motion to Implead Respondent Pro

Agency Manila, Inc. Corporate Officers and Directors as
Judgment Debtor. It included petitioner as the Vice-
president/Stockholder/Director of PRO Agenct, Manila, Inc.
The LA granted the motion.
A 2nd Alias Writ of Execution was issued, which resulted in

the garnishment of petitioner bank deposit in the amount of
P85,430.48. Since, judgment remained unsatisfied,
respondents sought a 3rd alias writ of execution. The motion
was granted resulting in the levying of two parcels of lot
owned by petitioner located in San Fernando Pampanga.
Petitioner filed a Motion to Quash 3rd Alias Writ of

Execution. Petitioner alleged that apart from not being made
aware that she was impleaded as one of the parties to the
case, the LA decision did not hold her liable in any form
whatsoever. Executive Labor Arbiter denied the motion.
Upon appeal, NLRC denied the appeal for lack of merit.

NLRC ruled that in so far as overseas migrant workers are
concerned, it is R.A. 8042 itself that describes the nature of
the liability of the corporation and its officers and directors. It
is not essential that the individual officers and directors be
impleaded as party respondents to the case instituted by the
worker. A finding of liability on the part of the corporation will
necessarily mean the liability of the corporate officers or
directors.
The CA affirmed the NLRC decision. The two Motions for

Reconsideration were denied.
ISSUE: Whether or not petitioner may be held jointly and

severally liable with PRO Agency Manila, Inc. in accordance
with Section 10 of R.A. 8042?
HELD: The Petitioner may not be held jointly and
severally liable.
LABOR LAW: liability of corporate officers
The pertinent portion of Section 10, R.A. 8042 reads as

follows: The liability of the principal/employer and the
recruitment/placement agency for any and all claims under
this section shall be joint and several. This provision shall be
incorporated in the contract for overseas employment and
shall be a condition precedent for its approval.
In Sto. Tomas v. Salac, we had the opportunity to pass upon

the constitutionality of this provision. We have thus
maintained: the Court has already held, pending adjudication
of this case, that the liability of corporate directors and
officers is not automatic. To make them jointly and solidarily
liable with their company, there must be a finding that they
were remiss in directing the affairs of that company, such as
sponsoring or tolerating the conduct of illegal activities.
Hence, for petitioner to be found jointly and solidarily liable,

there must be a separate finding that she was remiss in
directing the affairs of the agency, resulting in the illegal
dismissal of respondents. Examination of the records would
reveal that there was no finding of neglect on the part of the
petitioner in directing the affairs of the agency. In fact,
respondents made no mention of any instance when
petitioner allegedly failed to manage the agency in
accordance with law, thereby contributing to their illegal
dismissal.
Petition for review on certiorari is GRANTED.
Almirante: Applicability of foreign law Friday,

September 16, 2016 By DOMINADOR ALMIRANTE
LABOR CASE DIGEST PETITIONER Industrial
Personnel & Management Services, Inc. (IPAMS) is
a local placement agency duly organized and
existing under Philippine laws. Petitioner SNC
Lavalin Engineers & Contractors, Inc. (SNC-Lavalin),
a Canadian company with business interests in
several countries, is the principal of IPAMS.
Respondent Alberto Arriola, a licensed general
surgeon in the Philippines, was hired by SNC-
Lavalin, through its local manning agency, IPAMS,
as a safety officer in its Ambatovy Project site in
Madagascar. Arriola filed a complaint against the
petitioners for illegal dismissal and non-payment of
overtime pay, vacation and sick leave pay before the
Labor Arbiter (LA). The petitioners asserted that
Arriolas employment documents were processed in
Canada, not to mention that SNC-Lavalins office
was in Ontario, so that the principle of lex loci
celebrationis was applicable. They relied on a copy
of the Employment Standards Act (ESA) of Ontario,
which was duly authenticated by the Canadian
authorities and certified by the Philippine Embassy.
Hence, they insisted that Canadian laws governed
the contract. Does this defense find merit? Ruling:
No. Granting arguendo that the labor contract
expressly stipulated the applicability of Canadian
law, still, Arriolas employment cannot be governed
by such foreign law because the third requisite is not
satisfied. A perusal of the ESA will show that some
of its provisions are contrary to the Constitution and
the labor laws of the Philippines. First, the ESA does
not require any ground for the early termination of
employment. Article 54 thereof only provides that no
employer should terminate the employment of an
employee unless a written notice had been given in
advance. Necessarily, the employer can dismiss any
employee for any ground it so desired. At its own
pleasure, the foreign employer is endowed with the
absolute power to end the employment of an
employee even on the most whimsical grounds.
Second, the ESA allows the employer to dispense
with the prior notice of termination to an employee.
Article 65 (4) thereof indicated that the employer
could terminate the employment without notice by
simply paying the employee a severance pay
computed on the basis of the period within which the
notice should have been given. The employee under
the ESA could be immediately dismissed without
giving him the opportunity to explain and defend
himself. The provisions of the ESA are patently
inconsistent with the right to security of tenure. Both
the Constitution and the Labor Code provide that this
right is available to any employee. In a host of cases,
the Court has upheld the employees right to security
of tenure in the face of oppressive management
behavior and management prerogative. Security of
tenure is a right which cannot be denied on mere
speculation of any unclear and nebulous basis. Not
only do these provisions collide with the right to
security of tenure, but they also deprive the
employee of his constitutional right to due process
by denying him of any notice of termination and the
opportunity to be heard. Glaringly, these
disadvantageous provisions under the ESA produce
the same evils which the Court vigorously sought to
prevent in the cases of Pakistan International and
Sameer Overseas. Thus, the Court concurs with the
CA that the ESA is not applicable in this case as it is
against our fundamental and statutory laws. In fine,
as the petitioners failed to meet all the four requisites
on the applicability of a foreign law, then the
Philippine labor laws must govern the overseas
employment contract of Arriola (Mendoza, J.; SC
Second Division, Industrial Personnel &
Management Services, Inc. (IPAMS), SNC Lavalin
Engineers & Contractors, Inc. And Angelito C.
Hernandez vs. Jose G. De Vera And Alberto B.
Arriola, G.R. No. 205703, March 07, 2016).
Read
more: http://www.sunstar.com.ph/cebu/business/201
6/09/16/almirante-applicability-foreign-law-498121
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G.R. No. 196784, January 13, 2016
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. MA. FE

TORRES SOLINA A.K.A. MA. FE BAYLON GALLO, Accused-
Appellant.
DECISION
PERALTA, J.:
Accused-appellant Ma. Fe Torres Solina a.k.a. Ma. Fe Bay Ion

Gallo appeals her case to this Court after the Court of
Appeals (CA) in its Decision1 dated March 11, 2010 affirmed
with modification her conviction beyond reasonable doubt of
the crime of illegal recruitment in large scale under Republic
Act No. 8042, otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995 (R.A. 8042) imposing the
penalty of life imprisonment and ordered to pay a. fine in the
amount of =P200,000.00 with subsidiary liability in case of
insolvency and six (6) counts of Estafa under Article 315 (2)
(a) of the Revised Penal Code (RPC), imposing the
indeterminate penalty of one (1) year, eight (8) months and
twenty (20) days prision correccional, as minimum, to five (5)
years, five (5) months and eleven (11) days of prision mayor,
as maximum, for each count and ordered to return to each
complainant the amount of P20,000.00 as actual damages,
handed clown by the Regional Trial Court (RTC), Branch 147,
in Makati City.
Accused-appellant was arraigned and tried under an

Information dated June 16, 2006 charging her of the crime of
illegal recruitment in large scale under R.A. 8042, thus:
chanRob lesvi rtual Lawl ibra ry
That in or about and sometime during the period from

September, 2005 up to February 2006, in the City of Makati,
Philippines, a place within the jurisdiction of this Honorable
Court, the above-named accused, representing herself to have
capacity to contract, enlist, transport and refer workers for
employment abroad, did then and there, without any license
or authority, recruit for overseas employment and for a fee,
the following complainants, to wit:
MONICA B. HIMAN
ERWIN B. DELA VEGA
GLADYS Z. REMORENTO
JOEY P. BACOLOD
MARLON B. DELA CRUZ
AUGUSTO A. CEZAR GARCES
LEYNARD B. TUTANES
thus in a large scale amounting to economic sabotage but said
accused failed to deploy said complainants and likewise failed
to return the money incurred by them and the documents
submitted despite demands, to the latter's damage and
prejudice.
CONTRARY TO LAW.2
cralawlawl ibra ry
ChanRoblesVirtualawl ibra ry
Accused-appellant was also charged and tried under seven (7)

separate informations for estafa under Article 315 par. 2 (a) of
the RPC, to wit: chanRoble svirtual Lawli bra ry
1) That in or about and sometime during the month of

September 2005, in the City of Makati, Philippines, a place
within the jurisdiction of this Honorable Court, the
abovenamed accused, did then and there willfully, unlawfully
and feloniously, defraud complainant MONICA I-IIMAN y
BASAMOT in the following manners, to wit: the said accused
by means of false manifestations and fraudulent
representations made prior and simultaneously with the
commission of fraud, to the effect that she have the capacity
to deploy complainant for overseas employment and could
facilitate the necessary papers, in connection therewith if
given the necessary amount and by means of other deceit of
similar import, induced and succeeded in inducing complainant
to give and deliver and, in fact, the complainant gave and
delivered to said accused the total amount of Php20,000.00
on the strength of said manifestation and representation
which turned out to be false, to the damage and prejudice of
said complainant in the aforementioned amount of
P20,000.00.
CONTRARY TO LAW.3

October, 2005, in the City ofMakati, Philippines, a place within
the jurisdiction of this Honorable Court, the abovenamed
accused, did then and there willfully, unlawfully and
feloniously, defraud complainant JOEY BACOLOD y PORTILLES
in the following manners, to wit: the said accused by means of
false manifestations and fraudulent representations made
prior and simultaneously with the commission of fraud, to the
ellect that she have the capacity to deploy complainant for
overseas employment and could facilitate the necessary
papers, in connection therewith if given the necessary amount
and by means of other deceit of similar import, induced and
succeeded in inducing complainant to give and deliver and, in
fact, the complainant gave and delivered to said accused the
total amount of Php20,000.00 on the strength of said
manilestation and representation which turned out to be false,
to the damage and prejudice of said complainant in the
aforementioned amount of P20,000.00.
CONTRARY TO LAW.4

October, 2005, in the City ofMakati, Philippines, a place within
the jurisdiction of this Honorable Court, the abovenamed
accused, did then and there willfully, unlawfully and
feloniously, defraud complainant MARLON DEL A CRUZ y
BOLESA in the following manners, to wit: the said accused by
means of false manifestations and fraudulent representations
made prior and simultaneously with the commission of fraud,
to the effect that she have the capacity to deploy complainant
for overseas employment and could facilitate the necessary
manifestation and representation which turned out to be false,
CONTRARY TO LAW.5

November, 2005, in the City ofMakati, Philippines, a place
and feloniously, defraud complainant ERWIN DELA VEGA y
BRIONES in the following manners, to wit: the said accused by
CONTRARY TO LAW.6

November, 2005, in the City of Fvfakati, Philippines, a place
and feloniously, defraud complainant GLADYS REMORENTO y
ZAMORA in the following manners, to wit: the said accused by
CONTRARY TO LAW.7

February, 2006, in the City of Makati, Philippines, a place
and feloniously, defraud complainant AUGUSTO CEZAR
GARCES y ALIMAGNO in the following manners, to wit: the
said accused by means of false manifestations and fraudulent
representations made prior and simultaneously with the
commission of fraud, to the effect that she have the capacity
to deploy complainant for overseas employment and could
facilitate the necessary papers, in connection therewith if
given the necessary amount and by means of other deceit of
similar import, induced and succeeded in inducing complainant
to give and deliver and, in fact, the complainant gave and
delivered to said accused the total amount of Php20,000.00
on the strength of said manifestation and representation
which turned out to be false, to the damage and prejudice of
said complainant in the aforementioned amount of
P20,000.00.
CONTRARY TO LAW.8

February, 2006, in the City of Makati, Philippines, a place
and feloniously, defraud complainant LEYNARD TUTANES y
BADIOLA in the following manners, to wit: the said accused by
CONTRARY TO LAW.9 cralawlawlibra ry
Accused-appellant pleaded "not guilty" and after trial on the

merits, the RTC found accused-appellant guilty beyond
reasonable doubt of the crimes charged except for one charge
of estafa which was provisionally dismissed by the RTC, upon
motion of accused-appellant, without prejudice to
reinstatement considering that the subpoena sent to
complainant Monica B. Himan had not been duly served upon
her person. The dispositive portion of the decision reads: chanRoble svirtual Lawli bra ry
WHEREFORE, premises considered, judgment is rendered in

these cases as follows: chanRoblesvi rtual Lawli bra ry
1. In Crim. Case No. 06-1275, finding herein accused Ma. Fe

Torres Solina a.k.a. Ma. Fe Baylon Gallo, Guilty Beyond
Reasonable Doubt of Illegal Recruitment in Large Scale and
sentencing her to suffer the indeterminate penalty of six (6)
years and one (1) day as minimum to eight (8) years as
maximum, and to pay a fine in the amount of P200,O00.O0
with subsidiary liability in case of insolvency;
2. In Crim. Cases Nos. 06-1277 to 06-1282, finding the said

accused Ma. Fe Torres Solina a.k.a. Ma. Fe Baylon Gallo,
Guilty Beyond Reasonable Doubt of six (6) counts of Estafa
under Art. 315, par. 2 (a), Revised Penal Code, and
sentencing her to suffer for each count, the indeterminate
penalty of one (1) year, eight (8) months, and twenty (20)
days prision correccional as minimum to five (5) years, five
(5) months, and eleven (11) days of prision mayor as
maximum; to return to each private complainant, namely,
Joey P. Bacolod, Marlon B. dela Cruz, Erwin B. Dela Vega,
Gladys Z. Remorento, Augusto Cezar A. Garces, and Leynard
B. Tutanes, the amount of P20,000.00 as actual damages.
SO ORDERED.
Makati City, October 30, 2007.10

cralawlawl ibra ry
ChanRobles Vi rtua lawlib rary
Thereafter, accused-appellant filed a Notice of Appeal,11 thus

elevating the cases to the CA. On March 11, 2010, the CA
affirmed the decision of the RTC with modification, the
dispositive portion of which reads as follows: chanRoble svirtual Lawlib ra ry
WHEREFORE, the foregoing considered, the instant appeal is

hereby DENTED. However, the assailed Decision dated 30
October 2007 is MODIFIED in that the appellant is hereby
sentenced to suffer the penalty of LIFE IMPRISONMENT as
penalty for the crime of illegal recruitment in large scale and is
ordered to pay a line in the amount of P200,000.00 with
subsidiary liability in case of insolvency. No costs.
SO ORDERED.
cralawlawl ibra ry
Thus, the case is now before this Court after accused-

appellant filed her Notice of Appeal on March 24, 2010.12
Accused-appellant and the Office of the Solicitor General

(OSG) both adopted their respective briefs filed before the
CA.13
In her Brief, accused-appellant assigned the following errors:

I.
THE COURT A QUO GRAVELY ERRED IN REJECTING THE

ACCUSED-APPELLANT'S DEFENSE.
II.
THE COURT A QUO GRAVELY ERRED IN FINDING THE
ACCUSED-APPELLANT GUILTY DESPITE THE PROSECUTION'S
FAILURE TO PROVE HER GUILT BEYOND REASONABLE
DOUBT. cralawlawlib rary
Accused-appellant maintains her denial that she was engaged

in the business of recruiting possible workers for jobs abroad.
She insists that like all the private complainants, she was also
an applicant for a job as an overseas worker and that she
merely accompanied them to a recruitment agency. She
alleges that private complainant Dela Vega and Dela Cruz
conspired together, used her name, and represented
themselves to the other applicants as being authorized to
collect documents and fees and that she only met the other
private complainants in the trainings/seminars she attended.
Anent the acknowledgment receipt signed by her and
presented by the prosecution as evidence, accused-appellant
argues that it does not prove that the money received by her
was the consideration for private complainant Garces'
placement abroad.
As to the charges of estafa, accused-appellant claims that the

prosecution failed to prove that she employed deceit to entice
private complainants to part with their money because she did
not represent or pass herself off as a licensed recruiter.
After a careful review of the records, this Court finds no

reason to reverse the decision of the CA.
All the elements of the crime of illegal recruitment in large

scale are present, namely: (1) the offender has no valid
license or authority required by law to enable him to lawfully
engage in recruitment and placement of workers; (2) the
offender undertakes any of the activities within the meaning of
"recruitment and placement" under Article 13 (b)14 of the
Labor Code, or any of the prohibited practices enumerated
under Article 34 of the said Code (now Section 6 of R.A.
8042); and (3) the offender committed the same against
three (3) or more persons, individually or as a group. More
importantly, all the said elements have been established
beyond reasonable doubt. Thus, as ruled by the CA: chanRoblesvi rtua lLawl ibra ry
First off, the first element is admittedly present. Appellant had

no license to recruit or engage in placement activities and she
herself had admitted to her lack of authority to do so. The
Certification dated 7 April 2006 issued by 1he POHA also
undeniably establishes this fact.
In like manner, the second and third elements also obtain in

this case. On separate occasions and under different premises,
appellant met with and herself recruited the private
complainants, six (6) in number, giving them the impression
that she had the capability to facilitate applications for
employment as factory workers in Japan. All these
complainants testified that appellant had promised them
employment for a fee amounting to P2(),000.00. Their
testimonies corroborate each other on material points, such as
the amount exacted by appellant as placement fee, the
country of destination, the training that they had to undergo
to qualify for employment and the submission of documentary
requirements needed for the same. The private complainants
were positive and categorical in testifying that they personally
met the appellant and that she asked for, among others, the
payment of placement fees in consideration for the promised
employment in Japan.15
cralawlawl ibra ry
ChanRoblesVi rtualaw lib rary
Accused-appellant's defense of denial cannot overcome the

positive testimonies of the witnesses presented by the
prosecution. As is well-settled in this jurisdiction, greater
weight is given to the positive identification of the accused by
the prosecution witnesses than the accused's denial and
explanation concerning the commission of the crime.16 Based
on the factual findings of the RTC, the combined and
corroborative testimonies of the witnesses for the prosecution
show that: it was appellant herself who informed them of the
existence of the job vacancies in Japan and of the
requirements needed for the processing of their applications.
It was properly established that it was accused-appellant who
accompanied the private complainants to undergo training and
seminar conducted by a person who represented himself as
connected with the Technical Education and Skills
Development Authority (TESDA). Evidence was also presented
that the private complainants, relying completely on accused-
appellant's representations, entrusted their money to her.
Finally, since there were six (6) victims, the RTC therefore did
not commit any error in convicting accused-appellant of the
charge of illegal recruitment in large scale.
This Court is also in agreement with the ruling of the CA that

accused-appellant is guilty of six (6) counts of estafa under
Article 315, par. 2 (a) of the Revised Penal Code, as amended.
It is settled that a person may be charged and convicted
separately of illegal recruitment under R.A. 8042, in relation
to the Labor Code, and estafa under Article 315 (2) (a) of the
Revised Penal Code.17 The elements of estafa are: (a) that the
accused defrauded another by abuse of confidence or by
means of deceit, and (b) that damage or prejudice capable of
pecuniary estimation is caused to the offended party or third
person.18 As aptly found by the RTC and affirmed by the CA,
accused-appellant defrauded the private complainants into
believing that she had the authority and capability to send
them for overseas employment in Japan and because of such
assurances, private complainants each parted with P20,000.00
in exchange for said promise of future work abroad. Still,
accused-appellant's promise never materialized, thus, private
complainants suffered damages to the extent of the sum of
money that they had delivered to accused-appellant.
To reiterate, settled is the rule that the findings and

conclusion of the trial court on the credibility of witnesses are
entitled to great respect because the trial courts have the
advantage of observing the demeanor of witnesses as they
testify.19 The determination by the trial court of the credibility
of witnesses, when affirmed by the appellate court, as in this
case, is accorded full weight and credit as well as great
respect, if not conclusive effect.20
Ancnt the CA's modification as to the penalty imposed, this

Court finds no reason for its correction. The trial court
imposed the indeterminate penalty of six (6) years and one
(1) day, as minimum, to eight (8) years, as maximum, for the
crime of illegal recruitment in large scale, whereas the proper
penalty should have been life imprisonment, as provided
under Section 7 (b) of R.A. 8042. As ruled by the CA: chanRoblesv irt ual Lawlib rary
Be that as it may, this Court finds reversible error on the part

of the trial court respecting the penalty imposed on the
appellant for the crime of large scale illegal recruitment. Under
the last paragraph of Section 6 of R.A. 8042, illegal
recruitment shall be considered an offense involving economic
sabotage if committed in large scale, viz., committed against
three or more persons individually or as a group. In the
present case, six (6) private complainants testified against
appellant's acts of illegal recruitment, thereby rendering her
acts tantamount to economic sabotage. Under Section 7 (b) of
R.A. 8042, the penalty of life imprisonment and a fine of not
less than P500.000.00 nor more than P1,000,000.00 shall be
imposed if illegal recruitment constitutes economic sabotage.cralawlawlib rary
Nevertheless, the CA erred in not increasing the amount of

fine imposed by the RFC. In modifying the penalty to life
imprisonment, the CA cited Section 7 (b) of R.A. 8042
because the present case involves economic sabotage,
however, the same provision reads, [t]he penalty of life
imprisonment and a fine of not less than five hundred
thousand pesos (P500,000.00) nor more than one
million pesos (P1,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage. Hence, the fine
imposed should have been not less than five hundred
thousand pesos (P500,000.00) nor more than one million
pesos (P1,000,000.00) and not two hundred thousand pesos
(P200,000.00) as ruled by the RTC and the CA.
WHEREFORE, the appeal is DISMISSED and the Court of

Appeals Decision dated March 11, 2010 is AFFIRMED with
the MODIFICATION that accused-appellant Ma. Fe Torres
Solina a.k.a. Ma Fe Baylon Gallo is ORDERED to PAY a fine in
the amount of Five Hundred Thousand (P500,000.00) Pesos
with subsidiary liability in case of insolvency, instead of the
P200,000.00 adjudged earlier by the RTC and the CA for the
crime of illegal recruitment in large scale. Anent the six (6)
counts of Estafa under Article 315, paragraph 2 (a), Revised
Penal Code, accused-appellant is ORDERED to RETURN to
each private complainant the amount of Twenty Thousand
Pesos (P20,000.00), plus the legal interest of six percent (6%)
per annum from the finality of judgment until fully paid, as
actual damages.
SO ORDERED. chanrob lesvi rtua llawli bra ry

JAKERSON G. GARGALLO, Petitioner, v. DOHLE SEAFRONT
CREWING (MANILA), INC., DOHLE MANNING AGENCIES,
INC., AND MR. MAYRONILO B. PADIZ, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
For the Court's resolution are the Motion for

Reconsideration1 and Motion for Partial Reconsideration2filed
by petitioner Jakerson G. Gargallo (petitioner), and
respondents Dohle Seafront Crewing (Manila), Inc. (Dohle
Seafront), Dohle Manning Agencies, Inc. (Dohle Manning), and
Mr. Mayronilo B. Padiz (Padiz; collectively, respondents),
respectively, of the Court's Decision3 dated September 16,
2015, which affirmed the Decision4 dated June 10, 2014 and
the Resolution5 dated November 21, 2014 of the Court of
Appeals (CA) in CA-G.R. SP No. 130266, dismissing
petitioner's claim for permanent total disability benefits, but
ordered respondents Dohle Seafront and Dohle Manning,
jointly and severally, to pay petitioner his income benefit for
one hundred ninety-four (194) days, plus 10% of the total
amount of the income benefit as attorney's fees.
The Facts
On July 20, 2012, petitioner filed a complaint for permanent

total disability benefits against respondents before the
National Labor Relations Commission (NLRC).6 The complaint
stemmed from his claim that: (a) he accidentally fell on deck
while lifting heavy loads of lube oil drum, with his left arm
hitting the floor first, bearing his full body weight;7 (b) he has
remained permanently unfit for further sea service despite
major surgery and further treatment by the company-
designated physicians;8 and (c) his permanent total unfitness
to work was duly certified by his chosen physician whose
certification must prevail over the palpably self-serving and
biased assessment of the company-designated physicians.9 chanroble slaw
For their part, respondents countered that the fit-to-work

findings of the company-designated physicians must prevail
over that of petitioner's independent doctor, considering that:
(a) they were the ones who continuously treated and
monitored petitioner's medical condition; and (b) petitioner
failed to comply with the conflict-resolution procedure under
the Philippine Overseas Employment Administration-Standard
Employment Contract (POEA-SEC). Respondents further
averred that the filing of the disability claim was premature
since petitioner was still undergoing medical treatment within
the allowable 240-day period at the time the complaint was
filed.10
chanroble slaw
The Labor Arbiter (LA)11 and the NLRC12 gave more credence
to the medical report of petitioner's independent doctor and,
thus, granted petitioner's disability claim, and ordered
respondents to jointly and severally pay petitioner his
permanent total disability benefits, albeit at different
amounts.13 chanro bles law
However, the CA disagreed with the conclusions of the LA and

the NLRC, and dismissed petitioner's complaint.14 It ruled that
the claim was premature because at the time the complaint
was filed: (a) petitioner was still under medical treatment by
the company-designated physicians; (b) no medical
assessment has yet been issued by the company-designated
physicians as to his fitness or disability since the allowable
240-day treatment period during which he is considered under
temporary total disability has not yet lapsed; and (c)
petitioner has not yet consulted his own doctor, hence, had no
sufficient basis to prove his incapacity.15 The CA likewise gave
more credence to the fit to work assessment of the company-
designated physician who treated and closely monitored
petitioner's condition, over the contrary declaration of
petitioner's doctor who attended to him only once, two (2)
months after the filing of the complaint.16 chanrobleslaw
In its September 16, 2015 Decision, the Court upheld the CA's
dismissal of petitioner's claim for permanent total disability
benefits, but ordered Dohle Seafront and Dohle Manning,
jointly and severally, to pay petitioner the income benefit
arising from his temporary total disability which lasted for 194
days from his repatriation on March 11, 2012 until his last visit
to the company-designated physician on September 21,
201217 (the date when he was declared fit to work)18 plus
10% of the total amount of the income benefit as attorney's
fees.19 Meanwhile, the Court found no basis hold Padiz
solidarity liable with Dohle Seafront and Dohle Manning for
payment of the monetary awards to petitioner, absent any
showing that acted beyond the scope of his authority or with
malice.20chanro bles law
Dissatisfied, both parties filed their respective motions for

reconsideration of the Court's September 16, 2015
Decision.21 chanrob leslaw
I. Petitioner's Motion for Reconsideration
At the outset, the Court notes that, except as to the issue of

respondents' liability for the payment of income benefit, the
arguments propounded in petitioner's Motion for
Reconsideration had been adequately passed upon in its
September 16, 2015 Decision. In essence, petitioner argues
that: (a) the lapse of the 120-day period from the onset of
disability rendered him permanently and totally disabled
because the extension of the medical treatment was
unjustified;22 and (b) resort to a third doctor is am directory,
not a mandatory requirement.23 chanrob leslaw
Such arguments remain untenable.
The Court had already disposed of the foregoing matters in its

September 16, 2015 Decision, dismissing the complaint on the
grounds of: (a) premature filing; and (b) failure to comply
with the mandated conflict-resolution procedure under the
POEA-SEC, viz.: ChanRoblesVi rtua lawlib rary
It is undisputed that petitioner was repatriated on March 11,

2012 and immediately subjected to medical treatment.
Despite the lapse of the initial 120-day period on July 9, 2012,
such treatment continued due to persistent pain complained of
by petitioner, which was observed until his 180th day of
treatment on September 7, 2012. In this relation, the CA
correctly ruled that the tiling of the complaint for permanent
total disability benefits on July 20, 2012 was premature, and
should have been dismissed for lack of cause of action,
considering that at that time: (a) petitioner was still under the
medical treatment of the company-designated physicians
within the allowable 240-day period; (b) the latter had not yet
issued any assessment as to his fitness or disability; and (c)
petitioner had not yet secured any assessment from his
chosen physician, whom he consulted only more than two (2)
months thereafter, or on October 2, 2012.
Moreover, petitioner failed to comply with the prescribed

procedure under the afore-quoted Section 20 (A) (3) of the
2010 POEA-SEC on the joint appointment by the parties of a
third doctor, in case the seafarer's personal doctor disagrees
with the company-designated physician's fit-to-work
assessment. The [2008-2011 ver.di. IMEC IBF CBA (IBF CBA)]
similarly outlined the procedure, viz.: ChanRoblesVi rtualaw lib rary
25.2 The disability suffered by the seafarer shall be determined by a doctor appointed
by the Company. If a doctor appointed by or on behalf of the seafarer disagrees
with the assessment, a third doctor may be nominated jointly between the
Company and the Union and the decision of this doctor shall be final and binding
on both parties.
xxxx
25.4. A seafarer whose disability, in accordance with 25.2 above is assessed at 50% or
more shall, for the purpose of this paragraph, be regarded as permanently unfit
for further sea service in any capacity and be entitled to 100% compensation.
Furthermore, any seafarer assessed at less than 50% disability but certified as
permanently unfit for further sea service in any capacity by the Company-
nominated doctor, shall also be entitled to 100% compensation. Any
disagreement as to the assessment or entitlement shall be resolved in
accordance with clause 25.2 above.
In the recent case of Veritas Maritime Corporation v.

Gepanaga, Jr. [(see G.R. No. 206285, February 4, 2015, 750
SCRA 104, 117-118)], involving an almost identical provision
of the CBA, the Court reiterated the well-settled rule that the
seafarer's non-compliance with the mandated conflict-
resolution procedure under the POEA-SEC and the CBA
militates against his claims, and results in the affirmance of
the fit-to-work certification of the company-designated
physician, thus: ChanRobles Vi rtua lawlib rary
The [POEA-SEC] and the CBA clearly provide that when a

seafarer sustains a work-related illness or injury while on
board the vessel, his fitness or unfitness for work shall be
determined by the company-designated physician.
If the physician appointed by the seafarer disagrees with the

company-designated physician's assessment, the opinion of a
third doctor may be agreed jointly between the employer and
the seafarer to be the decision final and binding on them.
Thus, while petitioner had the right to seek a second and even
a third opinion, the final determination of whose decision must
prevail must be done in accordance with an agreed procedure.
Unfortunately, the petitioner did not avail of this procedure;
hence, we have no option but to declare that the company-
designated doctor's certification is the final determination that
must prevail. xxx24 chan roblesv irt uallawl ibra ry
There being no cogent reason to depart from the

aforementioned ruling, the Court denies petitioner's Motion for
Reconsideration insofar as it seeks to reinstate the NLRC's
ruling finding petitioner entitled to permanent total disability
benefits.
Nonetheless, the Court concurs with petitioner's asseveration

that it was erroneous to absolve Padiz from joint and several
liability with Dchle Seafront and Dohle Manning for the
payment of the income benefit arising from his temporary
total disability,25 in view of Section 10 of Republic Act No.
cralaw red
(RA) 8042,26 otherwise known as the "Migrant Workers and

Overseas Filipinos Act of 1995," as amended by RA
1002227 (RA 8042, as amended), which pertinently reads: ChanRobles Vi rt ualawlib ra ry
SECTION. 10. Money Claims. - xxx
The liability of the principal/employer and the

recruitment/placement agency for any and all claims under
this section shall be joint and several. This provision shall be
incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The
performance bond to be filed by the recruitment/placement
agency, as provided by law, shall be answerable for all money
claims or damages that may be awarded to the workers. If
the recruitment/placement agency is a juridical being,
the corporate officers and directors and partners as the
case may be, shall themselves be jointly and solidarity
liable with the corporation or partnership for the
aforesaid claims and damages.28 (Emphasis and
underscoring supplied)
Section 10 of RA 8042, as amended, expressly provides for
joint and solidary liability of corporate directors and officers
with the recruitment/placement agency for all money claims
or damages that may be awarded to Overseas Filipino Workers
(OFWs). While a corporate director, trustee, or officer who
entered into contracts in behalf of the corporation generally.
cannot be held personally liable for the liabilities of the latter,
in deference to the separate and distinct legal personality of a
corporation from the persons composing it, personal liability of
such corporate director, trustee, or officer, along (although
not necessarily) with the corporation, may validly attach
when he is made by a specific provision of law
personally answerable for his corporate action,29 as in
this case. Thus, in the recent case of Sealanes Marine
Services, Inc. v. Dela Torre,30 the Court had sustained the
joint and solidary liability of the manning agency, its foreign
principal and the manning agency's President in accordance
with Section 10 of RA 8042, as amended.
In addition, Dohle Seafront is presumed to have submitted a

verified undertaking by its officers and directors that they will
be jointly and severally liable with the company over claims
arising from an employer-employee relationship when it
applied for a license to operate a seafarer's manning agency,
as required under the 2003 POEA Rules and Regulations
Governing the Recruitment and Employment of Seafarers
(POEA Rules).31 chan rob leslaw
"Applicable laws form part of, and are read into, contracts
without need for any express reference thereto; more so,
when it pertains to a labor contract which is imbued with
public interest. Each contract thus contains not only what was
explicitly stipulated therein, but also the statutory provisions
that have any bearing on the matter."32 As applied herein,
Section 10 of RA 8042, as amended, and the pertinent POEA
Rules are deemed incorporated in petitioner's employment
contract with respondents. These provisions are in line with
the State's policy of affording protection to labor and
alleviating the workers' plight,33 and are meant to assure
OFWs immediate and sufficient payment of what is due
them.34 Thus, as the law provides, corporate directors and
officers are themselves solidarily liable with the
recruitment/placement agency for all money claims or
damages that may be awarded to OFWs.
Based on the foregoing premises, the Court, therefore, finds

Padiz jointly and solidarily liable with Dohle Seafront and
Dohle Manning for the payment of the income benefit arising
from petitioner's temporary total disability, and, to such
extent, grants petitioner's motion for reconsideration, and, in
consequence, modifies the September 16, 2015 Decision
accordingly.
II. Respondents' Motion for Partial Reconsideration
Petitioner's entitlement to income benefit was clearly shown in

this case, in light of the undisputed fact that he needed
continuous medical treatment for 194 days from his
repatriation on March 11, 2012, until his last visit with the
company-designated physician on September 21,
2012,35 when he was declared fit to work.36 chan rob leslaw
In this relation, the Court cannot subscribe to respondents'

contention that entitlement to income benefit is applicable
only to land-based employees compulsorily registered with the
Social Security System (SSS),37 considering that the 2010
POEA-SEC accords upon the manning agency/foreign principal
the duty to cover Filipino seafarers under the SSS and other
social protection government agencies.38 Neither is the Court
persuaded by respondents' argument that the obligation to
pay the same falls on the SSS in view of their compliance with
the above duty,39 because the income benefit arising from a
covered employee's temporary total disability is to be
advanced by the employer, subject to reimbursement by the
SSS40 upon compliance with the conditions set forth under
Section 1,41 Rule X of the Rules Implementing Title II, Book IV
of the Labor Code. Consequently, the Court finds no reason to
reverse or modify the directive for respondents to jointly and
severally pay petitioner his income benefit for 194 days, save
for the inclusion of Padiz as a solidary debtor.
However, after surveying existing jurisprudence on the

matter, the Court finds merit in respondents'
supplication42 that the award of attorney's fees must be
deleted. As a rule, the mere fact of having been forced to
litigate to protect one's interest does not amount to a
compelling legal reason to justify an award of attorney's fees
in the claimant's favor.43 Verily, jurisprudence is replete with
cases holding that attorney's fees may be awarded to a
claimant who is compelled to litigate with third persons or
incur expenses to protect his interest by reason of an
unjustified act or omission on the part of the party from whom
it is sought only when there is sufficient showing of bad faith
on the part of the latter in refusing to pay.44
chan robles law
However, in the case of Montierro v. Rickmers Marine Agency

Phils., Inc. (Montierro),45 similarly involving a claim for
permanent total disability benefits filed by a seafarer, the
Court had pronounced that in labor cases, the withholding of
wages and benefits need not be coupled with malice or bad
faith to warrant the grant of attorney's fees since all that is
required is that the refusal to pay was without justification,
thus, compelling the employee to litigate.46 Nonetheless, since
the complaint in Montierrowas filed: (a) when the petitioner
therein was still under treatment; (b) prior to the assessment
of the company-designated physician within the allowable
240-day period; and (c) without complying with the prescribed
conflict-resolution procedure, the Court declared that there
was no unlawful withholding of benefits, rendering the award
of attorney's fees to be improper. Thus, considering that
similar circumstances obtain in the present case, the Court
finds it proper to rule in the same way.
WHEREFORE, the Court hereby RESOLVES to:
1. PARTLY GRANT petitioner Jakerson G. Gargallo's

chanRoble svirtual Lawlib ra ry
(petitioner) Motion for Reconsideration and,

hereby, DECLARE respondent Mr. Mayronilo B. Padiz (Padiz)
jointly and severally liable with respondents Dohle Seafront
Crewing (Manila), Inc. (Dohle Seafront) and Dohle Manning
Agencies, Inc. (Dohle Manning), to pay petitioner his income
benefit for one hundred ninety-four (194) days; and cralawlawl ibra ry
2. PARTLY GRANT the Motion for Partial Reconsideration fi

ed by respondents Dohle Seafront, Dohle Manning, and Padiz,
thereby, deleting the award of attorney's fees equivalent to
10% of the adjudged income benefit in favor of petitioner.
The rest of the Court's September 16, 2015 Decision stands.
SO ORDERED. chanRoblesv irt ual Lawlib rary

Case Digest
Case Digest: Manila

Memorial v. Lluz
(February 3, 2016)
February 24, 2017
|
Lord Zedrique T. Macatiag
Undisputed Facts and Material Dates
On 23 February 2006, Manila Memorial Park

Cemetery, Inc. (Manila Memorial) entered into a
Contract of Services with Ward Trading and
Services (Ward Trading). The Contract provided
that Ward Trading, as a job contractor, will render
interment and exhumation services and other
related work to Manila Memorial in order to
supplement operations at Manila Memorial Park,
Paraaque City.
Ward Trading assigned respondents Ezard Lluz

and eight others[1] (respondents) to perform
services at the Manila Memorial Park.
On 26 June 2007, the respondents filed a

Complaint for regularization and Collective
Bargaining Agreement (CBA) benefits against
Manila Memorial, Enrique B. Lagdameo, Manila
Memorials Executive Vice-President and Director
in Charge for Overall Operations, and Ward
Trading. On 6 August 2007, respondents filed an
amended complaint to include illegal dismissal,
underpayment of 13th month pay, and payment
of attorneys fees.
Employees Allegations and Position
Respondents alleged that they asked Manila

Memorial to consider them as regular workers
within the appropriate bargaining unit established
in the CBA by Manila Memorial and its union, the
Manila Memorial Park Free Workers Union (MMP
Union). Manila Memorial refused the request
since respondents were employed by Ward
Trading, its contractor. Thereafter, respondents
joined the MMP Union. The MMP Union, on
behalf of respondents, sought their regularization,
which Manila Memorial again declined.
Respondents then filed the complaint.
Subsequently, respondents were dismissed.
Thus, respondents amended the complaint to
include the prayer for their reinstatement and
payment of back wages.
Employers Allegations and Position
Manila Memorial argued that it has no employer-

employee relationship with the respondents since
they were the employees of Ward Trading.
The Labor Arbiters Ruling
The LA dismissed the complaint for failure to

prove the existence of employer-employee
relationship between Manila Memorial and the
respondents.
The NLRCs Ruling on the Appeal
and on the MR
The NLRC reversed the decision of the LA, ruling
that Ward Trading is a labor-only contractor. This
implies that Ward Trading is merely an agent of
Manila Memorial, and therefore, the respondents
are the employees of the latter. The Motion for
Reconsideration filed by Manila Memorial was
denied.
Court of Appeal's Ruling on the

Appeal and on the MR
The CA affirmed the ruling of the NLRC. It

subsequently denied Manila Memorials Motion
for Reconsideration.
Factual and Evidentiary Issue

1. Whether or not Ward Trading is a labor-only
contractor YES, and Manila Memorial is the
employer of the respondents.
Supreme Court's Ratio Decidendi
As provided under Department Order No. 18-02,
Sec. 7 (2), where there is labor-only contracting,
the principal shall be deemed the employer of the
contractual employee.
The elements of labor-only contracting
are found in Ward Trading
The Court cited Department Order No. 18-
02, Sec. 5, which prohibits labor-only
contracting and provides for its definition:
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:
1. 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
2. The contractor does not exercise the right to control over
the performance of the work of the contractual employee.
xxxx
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.
Hence, there is labor only contracting when the

contractor has no substantial capital or
investment, OR does not exercise the right to
control over the contractual employees
performance. These two elements are found in
the case of Ward Trading.
Ward Trading has no substantial capital or
investment
In the case of investment, Ward Trading
had practically none. While the Contract of
Services provides that Manila Memorial shall sell
equipment worth P1.4 million to Ward Trading[2],
the Court found no evidence to prove that the
sale actually pushed through or that payments
were made by Ward Trading.
The Contract also provides that Manila Memorial

shall have the right to rent back from Ward
Trading all or any of its equipment.[3] This
provision, as the Court agreed with the NLRC, is
clear proof that Ward Trading does not have an
absolute right to use or enjoy the
equipment; hence proving that it has no
ownership thereof.
Furthermore, since Manila Memorial agreed to

provide office space for Ward Tradings staff and
personnel, the Court treated it as a clear proof
that even its work premises are not owned by
Ward Trading.
Lastly, the Court had the following to say on the

increase of Ward Tradings capital:
Ward Tradings Balance Sheet as of 31 December 2005

showed that it had assets in the amount of P441,178.50 and
property and equipment with a net book value of P86,026.50
totaling P534,705. A year later, Ward Tradings Balance
Sheet ending in 31 December 2006 showed that it had
assets in the amount of P57,084.70 and property and
equipment with a net book value of P1,426,468 totaling
P1,491,052.70. Ward Trading, in its Income Statements for
the years 2005 and 2006, only earned a net income of
P53,800.00 in the year ending 2005 and P68,141.50 in
2006. Obviously, Ward Trading could not have raised a
substantial capital of P1,400,000.00 from its income
alone without the inclusion of the equipment owned and
allegedly sold by Manila Memorial to Ward Trading after
they signed the Contract of Services on 23 February
2006. (Citations omitted, emphasis supplied.)
Ward Trading has no control over the work
performance of the respondents
The Court agreed with the CA that the Contract of
Services shows proof that Manila Memorial even
retained control over the performance of the work
of the respondents. The Court cited the findings
of the CA:
A perusal of the Service Contract would reveal that

respondent Ward is still subject to petitioners control as it
specifically provides that although Ward shall be in charge of
the supervision over individual respondents, the exercise of
its supervisory function is heavily dependent upon the needs
of petitioner Memorial Park.
XXX
The contract further provides that petitioner has the option to
take over the functions of Wards personnel if it finds any
part or aspect of the work or service provided to be
unsatisfactory.
Evidence did not overcome the
presumption of labor-only contracting
The Court found that Ward Trading is not a
registered contractor under the Department of
Labor and Employment. The Court cited D.O. No.
18-02 once more regarding the presumption of
labor-only contracting, which arises from failure to
register:
Section 11. Registration of Contractors or Subcontractors.

Consistent with authority of the Secretary of Labor and
Employment to restrict or prohibit the contracting out of labor
through appropriate regulations, a registration system to
govern contracting arrangements and to be implemented by
the Regional Office is hereby established.
The Registration of contractors and subcontractors shall be

necessary for purposes of establishing an effective labor
market information and monitoring.
Failure to register shall give rise to the presumption that

the contractor is engaged in labor-only
contracting. (Emphasis supplied.)
For failing to register as a contractor, Ward
Trading is presumed engaged in labor-only
contracting unless it proves that it has substantial
capital, investment, tools and the like. In this
case, however, the opposite was proven.
[1] Norman Corral, Erwin Fugaban, Valdimar Balisi, Emilio Fabon,

John Mark Aplicador, Michael Curioso, Junlin Espares, and
Gavino Farinas.
[2] The COMPANY shall [sell] to the contractor the COMPANY

owned equipment in the amount of ONE MILLION FOUR
HUNDRED THOUSAND PESOS ONLY (Php 1,400,000.00)
payable in two (2) years or a monthly payment of FIFTY EIGHT
THOUSAND THREE HUNDRED THIRTY FIVE PESOS ONLY
(Php 58,335.00) to be deducted from the CONTRACTORs
billing.
[3] 5. The COMPANY reserves the right to rent all or any of the
CONTRACTORs equipment in the event the COMPANY requires
the use of said equipment. x x x.
Case Digest: Diamond
Farms, Inc. v. SPFL et
al. (January 13, 2016)
February 21, 2017
|
Lord Zedrique T. Macatiag
Undisputed Facts and Material Dates
Diamond Farms, Inc. (DFI) owned an 800-

hectare banana plantation in Alejal, Carmen,
Davao.
DFI sold 689.88 hectares of the original

plantation to the government, and on January 1,
1996, the Department of Agrarian Reform (DAR)
turned over the purchased land to qualified
agrarian reform beneficiaries (ARBs)[1].
These ARBs were the same farmers who were
working in the original plantation. They
subsequently organized themselves into a multi-
purpose cooperative named DARBMUPCO,
which is one of the respondents in this case.
On March 27, 1996, DARBMUPCO and DFI

entered into a Banana Production and Purchase
Agreement (BPPA). In this contract,
DARBMUPCO agreed to cultivate bananas to be
sold exclusively to DFI. To assist DARBMUPCO
in meeting its production obligations in the BPPA,
DFI engaged the services of 12 individual
contractors (respondent-contractors)[2], who in
turn recruited 400 workers (respondent-workers).
On June 20, 1997 and September 15, 1997, the

Southern Philippines Federation of Labor (SPFL),
together with more than 300 workers, filed a case
for underpayment of wages, nonpayment of 13th
month pay and service incentive leave pay and
attorneys fees against DFI, DARBMUPCO and
the respondent-contractors before the National
Labor Relations Commission (NLRC) in Davao
City.
Employers Allegations and Position
DARBMUPCO averred that it is not the employer
of respondent-workers; neither is DFI. It asserted
that the money claims should be directed against
the true employerthe respondent-contractors.
The Labor Arbiters Ruling

The LA held that the respondent-contractors are
labor-only contractors and that DFI is the
employer of all the respondent-workers. The LA
gave credence to the affidavits of the other
contractors of DFI (who are not party-
respondents in this petition) asserting that DFI
engaged their services, and supervised and paid
their laborers. The affidavits also stated that the
contractors had no dealings with DARBMUPCO,
except that their work is done in the awarded
plantation.
The LA also dismissed the case against

DARBMUPCO.
The NLRCs Ruling on the Appeal
and on the MR
The NLRC Fifth Division modified the LAs
decision, declaring that DFI and DARBMUPCO
are the employers of the workers. DARBMUPCO
filed two motions for reconsideration, both of
which the NLRC denied.
Court of Appeal's Ruling on the

Appeal and on the MR
The CA held that DFI is the employer of the
workers, noting the following reasons:
1. DFI hired the respondent-contractors, who in
turn procured their own men to work in the land
owned by DARBMUPCO;
2. DFI admitted that the respondent-contractors
worked under the direction and supervision of
DFIs managers and personnel;
3. DFI paid for the respondent-contractors
services; and
4. The fact that the respondent-workers worked
in the land owned by DARBMUPCO is
immaterial. Ownership of the land is not one of
the four (4) elements generally considered to
establish employer-employee relationship.
The CA also ruled that the respondent-
contractors are labor-only contractors. DFI filed a
motion for reconsideration, which was denied.
Factual and Evidentiary Issues

1. Whether or not the respondent-contractors are
independent contractors NO, they are labor-
only contractors;
2. Who among DFI, DARBMUPCO and the
respondent-contractors is the employer of the
respondent workers? DFI
Supreme Court's Ratio Decidendi
1. The respondent-contractors are labor-

only contractors
The Court first explained the concept of

contracting and subcontracting:
Contracting or subcontracting is an arrangement whereby a

principal (or employer) agrees to put out or farm out with a
contractor or subcontractor the performance or completion of
a specific job, work or service within a definite or
predetermined period, regardless of whether such job, work
or service is to be performed or completed within or outside
the premises of the principal. It involves a trilateral
relationship among the principal or employer, the contractor
or subcontractor, and the workers engaged by the contractor
or subcontractor. (Citations omitted.)
The Court then distinguished between

permissible job contracting (or independent
contractorship) and labor-only contracting:
Job contracting is permissible if the following conditions are

met:
1. The contractor carries on an independent business and
undertakes the contract work on his own account under his
own responsibility according to his own manner and
method, free from the control and direction of his employer
or principal in all matters connected with the performance of
the work except as to the results thereof;
2. The contractor has substantial capital or investment in the
form of tools, equipment, machineries, work premises, and
other materials which are necessary in the conduct of his
business.[3]
In contrast, job contracting shall be deemed as labor-only
contracting, an arrangement prohibited by law, if a person
who undertakes to supply workers to an employer:
1. Does not have substantial capital or investment in the form
of tools, equipment, machineries, work premises and other
materials; and
2. The workers recruited and placed by such person are
performing activities which are directly related to the
principal business or operations of the employer in which
workers are habitually employed.[4]
As a general rule, a contractor is presumed to be
a labor-only contractor, unless such contractor
overcomes the burden of proving that it has the
substantial capital, investment, tools and the like.
When the contractor is found to be a labor-only

contractor, the principal will be automatically
regarded as the employer of the workers. The
Court stated:
A finding that a contractor is a labor-only contractor is

equivalent to a declaration that there is an employer-
employee relationship between the principal, and the
workers of the labor-only contractor; the labor-only
contractor is deemed only as the agent of the principal.
Based on the following rules, the Court held that

the respondent-contractors are only labor
contractors. Neither DFI, DARBMUPCO nor the
purported independent-contractors offered any
evidence showing that the respondent-
contractors are independent contractors. The
Court said:
To support its argument that respondent-contractors are the

employers of respondent-workers, and not merely labor-only
contractors, DFI should have presented proof showing that
respondent-contractors carry on an independent business
and have sufficient capitalization. The record, however, is
bereft of showing of even an attempt on the part of DFI to
substantiate its argument.
2. DFI is the principal and employer of

the workers
The Court said that under the Labor Code[5], [a]

principal or employer refers to the person who
enters into an agreement with a job contractor,
either for the performance of a specified work or
for the supply of manpower.
The Court agreed with the CA that DFI is the

principal, since it was DFI which hired the
respondent-contractors, which in turn hired the
workersa claim not denied by DFI. The fact the
DARBMUPCO owned the plantation where the
employees worked is immaterial, because it was
DFI, not DARBMUPCO, which hired the
respondent-contractors.
The findings of the CA that DFI exercised control

over the respondent-workers bolstered the
argument that DFI is the principal. The Court
noted:
DFI, through its managers and supervisors, provides for the

work assignments and performance targets of the
respondent-workers. The managers and supervisors also
have the power to directly hire and terminate the
respondent-workers. Evidently, DFI wields control over the
respondent-workers. (Citation omitted.)
Further, DFI cannot argue that the BPPA

expressly states that the workers are not
employees of DFI[6]. The Court ruled that [i]n
labor-only contracting, it is the law which creates
an employer-employee relationship between the
principal and the workers of the labor-only
contractor. The Court also cited another case
that likewise ruled that, [t]he existence of an
employer-employee relation is a question of law
and being such, it cannot be made the subject of
agreement.[7]
Therefore, it is clear that DFI is the true employer

of the respondent-workers and is solidarily liable
with the respondent-contractors for the rightful
claims of the respondent-workers, to the same
manner and extent as if the latter are directly
employed by DFI.
[1] The transfer was pursuant to the

Comprehensive Agrarian Reform Law.
[2] Volter Lopez, Ruel Romero, Patricio

Caprecho, Rey Dimacali, Elesio Emanel, Victor
Singson, Nilda Dimacali, Premitivo Diaz, Rudy
Vistal, Roger Montero, Josisimo Gomez and
Manuel Mosquera.
[3] Omnibus Rules Implementing the Labor Code,

Book III, Rule VIII, Section 8.
[4] Id., Section. 9.
[5] Art. 106.

[6] It is clearly recognized by the FIRST PARTY
that its members and other personnel utilized in
the performance of its function under this
agreement are not employees of the SECOND
PARTY.
[7] Tabas v. California Manufacturing Co., Inc.,

G.R. No. 80680, January 26, 1989, 169 SCRA
497.
Case Digest
Case Study: Joaquin Lu

vs. Tirso Enopia et al.
August 1, 2017
|
Gerald Dick B. Baro
G.R. No. 197899

06 Mar 2017
Peralta, J.
Facts:
Tirso Enopia and 34 others were hired from
January 20, 1994 to March 20, 1996 as crew
members of the fishing mother boat F/B MG-28
owned by Joaquin "Jake" Lu who is the sole
proprietor of Mommy Gina Tuna Resources
based in General Santos City. Lu and Enopia et
al had an income-sharing arrangement wherein
55% goes to Lu, 45% to the crew members, with
an additional 4% as "backing incentive. They
also equally share the expenses for the
maintenance and repair of the mother boat, and
for the purchase of nets, ropes and payaos.
Sometime in August 1997, Lu proposed the
signing of a Joint Venture Fishing Agreement
between them, but Enopia et al refused to sign
the same as they opposed the one-year term
provided in the agreement. According to Enopia
et al, during their dialogue on August 18, 1997,
Lu terminated their services right there and then
because of their refusal to sign the agreement.
On the other hand, Lu alleged that the master
fisherman (piado) Ruben Salili informed him that
Enopia et al still refused to sign the agreement
and have decided to return the vessel F/B MG-
28.
On August 25, 1997, Enopia et al filed their
complaint for illegal dismissal, monetary claims
and damages. The Labor Arbiter dismissed the
complaint and found that no employer-employee
relationship exists but a joint venture. The NLRC
affirmed the decision of the LA. On appeal, the
Court of Appeals reversed the ruling of the NLRC
and found that there was an employer-employee
relationship since there was the element of
control.
Issue: Whether or not there is an employer-

employee relationship between Enopia et al
and Lu.
Ruling:
Yes, there is an employer-employee relationship.
In determining the existence of an employer-

employee relationship, the following elements are
considered:
(l) the selection and engagement of the workers;
(2) the power to control the worker's conduct;
(3) the payment of wages by whatever means;
and
(4) the power of dismissal. All these elements
present in this case.
It was shown by the latter's evidence that the

employer stated in their Social Security System
(SSS) online inquiry system printouts was MGTR,
which is the company of Lu. The coverage of the
Social Security Law is predicated on the
existence of an employer-employee relationship.
The 4% backing incentive fee which was divided

among the fishermen engaged in the fishing
operations approved by Lu was paid to them after
deducting the latter's respective vale or cash
advance. Why would these fishermen obtain vale
or cash advance from Lu and not from the piado
who allegedly hired and had control over the
fishermen.
Communications were made through radio

operators and checkers. Such communication
would establish that he was constantly monitoring
or checking the progress of respondents' fishing
operations throughout the duration thereof, which
showed their control and supervision over
respondents' activities. Lu also assigned Master
Fisherman (Piado) and Assistant master
fisherman as well as Checker and assistant
Checker.
Finally, the power of dismissal over the fishermen

were shown when Lu dismissed them after they
refused to sign the joint fishing venture
agreement.
As to the issue of regular employment, the

primary standard for determining regular
employment is the reasonable connection
between the particular activity performed by
the employee in relation to the usual trade or
business of the employer.
Respondents' jobs as fishermen-crew members

of F/B MG 28 were directly related and necessary
to petitioner's deep-sea fishing business and they
had been performing their job for more than one
year.
WESLEYAN UNIVERSITY-PHILIPPINES, PETITIONER, VS. GUILLERMO T.
MAGLAYA, SR., RESPONDENT.
DECISION
PERALTA, J.:
For this Court's resolution is a petition for

review on certiorari filed by petitioner
Wesleyan University-
Philippines (WUP) assailing the
Resolution dated January 20, 2014 of the
[1]
Court of Appeals (CA) which denied its

petition for certiorari.
The facts are as follows:
WUP is a non-stock, non-profit, non-
sectarian educational corporation duly
organized and existing under the
Philippine laws on April 28, 1948. [2]
Respondent Atty. Guillenno T. Maglaya,
Sr. (Maglaya) was appointed as a corporate
member on January 1, 2004, and was
elected as a member of the Board of
Trustees (Board) on January 9, 2004 both for
a period of five (5) years. On May 25,
2005, he was elected as President of the
University for a five-year term. He was re-
elected as a trustee on May 25, 2007. [3]
In a Memorandum dated November 28,

2008, the incumbent Bishops of the
United Methodist Church (Bishops) apprised all
the corporate members of the expiration of
their terms on December 31, 2008, unless
renewed by the former. The said
[4]
members, including Maglaya, sought the

renewal of their membership in the WUP's
Board, and signified their willingness to
serve the corporation. [5]
On January 10, 2009, Dr. Dominador

Cabasal, Chairman of the Board, informed
the Bishops of the cessation of corporate
terms of some of the members and/or
trustees since the by-laws provided that
the vacancy shall only be filled by the
Bishops upon the recommendation of the
Board.[6]
On March 25, 2009, Maglaya learned that

the Bishops created an Ad Hoc Committee to
plan the efficient and orderly turnover of
the administration of the WUP in view of
the alleged "gentleman's agreement"
reached in December 2008, and that the
Bishops have appointed the incoming
corporate members and trustees. He
[7]
clarified that there was no agreement and

any discussion of the turnover because the
corporate members still have valid and
existing corporate terms.
[8]
On April 24, 2009, the Bishops, through a

formal notice to all the officers, deans,
staff, and employees of WUP, introduced
the new corporate members, trustees, and
officers. In the said notice, it was indicated
that the new Board met, organized, and
elected the new set of officers on April 20,
2009. Manuel Palomo (Palomo), the new
[9]
Chairman of the Board, informed Maglaya

of the termination of his services and
authority as the President of the
University on April 27, 2009. [10]
Thereafter, Maglaya and other fonner

members of the Board (Plaintiffs) filed a
Complaint for Injunction and Damages
before the Regional Trial Court (RTC) of
Cabanatuan City, Branch 28. In a
[11]
Resolution dated August 19, 2009, the

[12]
RTC dismissed the case declaring the same

as a nuisance or harassment suit
prohibited under Section 1(b), Rule 1 of
[13]
the Interim Rules for Intra-Corporate

Controversies. The RTC observed that it
[14]
is clear from the by-laws of WUP that

insofar as membership in the corporation
is concerned, which can only be given by
the College of Bishops of the United
Methodist Church, it is a precondition to a
seat in the WUP Board. Consequently,
[15]
the expiration of the terms of the

plaintiffs, including Maglaya, as corporate
members carried with it their termination
as members of the Board. Moreover, [16]
their continued stay in their office beyond

their terms was only in hold-over
capacities, which ceased when the Bishops
appointed new members of the
corporation and the Board. [17]
The CA, in a Decision dated March 15,

[18]
2011, affirmed the decision of the RTC,

and dismissed the petition for certiorari filed
by the plaintiffs for being the improper
remedy. The CA held that their status as
corporate members of WUP which expired
on December 31, 2008 was undisputed.
The CA agreed with the RTC that the
plaintiffs had no legal standing to question
the Bishops' alleged irregular appointment
of the new members in their Complaint on
May 18, 2009 as the termination of their
membership in the corporation necessarily
resulted in the conclusion of their
positions as members of the Board
pursuant to the WUP by-laws. [19]
Thereafter, Maglaya filed on March 22,

2011 the present illegal dismissal case
against WUP, Palomo, Bishop Lito C.
Tangonan (Tangonan), and Bishop Leo A.
Soriano (Soriano). Maglaya claimed that he
[20]
was unceremoniously dismissed in a

wanton, reckless, oppressive and
malevolent manner on the eve of April 27,
2009. Tangonan and Soriano acted in
[21]
evident bad faith when they disregarded

his five-year term of office and delegated
their protege Palomo as the new university
president. Maglaya alleged that he
[22]
faithfully discharged his necessary and

desirable functions as President, and
received P175,000.00 as basic salary,
P10,000.00 as cost of living allowance,
and P10,000.00 as representation
allowance. He was also entitled to other
benefits such as: the use of university
vehicles; the use of a post paid mobile
cellular phone in his official transactions;
the residence in the University Executive
House located at Inday Street, Magsaysay
Sur, Cabanatuan City, with free water,
electricity, and services of a household
helper; and receipt of 13 month pay,
th
vacation leave pay, retirement pay, and

shares in related learning experience. On
[23]
May 31, 2006, his basic salary was

increased to P95,000.00 due to his
additional duty in overseeing the
operations of the WUP Cardiovascular and
Medical Center.
Maglaya presented the following pieces of
evidence: copies of his appointment as
President, his Identification Card, the
WUP Administration and Personnel Policy
Manual which specified the retirement of
the university president, and the check
disbursement in his favor evidencing his
salary, to substantiate his claim that he
was a mere employee. [24]
WUP, on the other hand, asseverated that

the dismissal or removal of Maglaya, being
a corporate officer and not a regular
employee, is a corporate act or intra-
corporate controversy under the
jurisdiction of the RTC. WUP also
[25]
maintained that since Maglaya's

appointment was not renewed, he ceased
to be a member of the corporation and of
the Board; thus, his term for presidency
has also been terminated. [26]
Meanwhile, this Court, in a Resolution
dated June 13, 2011, denied the petition
for review on certiorari filed by Maglaya and
the other former members of the Board for
failure to show any reversible error in the
decision of the CA. The same became final
and executory on August 24, 2011. [27]
In a Decision dated September 20, 2011,

[28]
the Labor Arbiter (LA) ruled in favor of

WUP. The LA held that the action between
employers and employees where the
employer-employee relationship is merely
incidental is within the exclusive and
original jurisdiction of the regular
courts. Since he was appointed as
[29]
President of the University by the Board,

Maglaya was a corporate officer and not a
mere employee. The instant case involves
intra-corporate dispute which was
definitely beyond the jurisdiction of the
labor tribunal. The dispositive portion of
[30]
the decision reads:
WHEREFORE, premises considered, the instant complaint is hereby dismissed for lack
of jurisdiction.
SO ORDERED.[31]
In a Decision dated April 25, 2012, the

[32]
National Labor Relations

Commission (NLRC) in NLRC-LAC No. 01-
000470-12, reversed and set aside the
Decision of the LA ruling that the illegal
dismissal case falls within the jurisdiction
of the labor tribunals. Since the reasons
for his termination cited by WUP were not
among the just causes provided under
Article 282 (now Article 297) of the
[33]
Labor Code, Maglaya was illegally

dismissed. The NLRC observed that the
Board did not elect Maglaya, but merely
appointed him. Maglaya was appointed for
a fixed period of five (5) years from May 7,
2005 to May 6, 2010, while the period of
his appointment as member of the
corporation was five (5) years from
January 2004. The decretal portion of
[34]
the decision reads:
WHEREFORE, premises considered, the appealed decision is hereby REVERSED and

SET ASIDE, declaring:
jurisdiction over this case by virtue of the employer-employee

(a)
relation of the parties
(b) the illegality of the dismissal of [respondent] by [petitioner]
[Petitioner] therefore [is] hereby ordered to pay [respondent]:
1. separation pay - [P] 375,000.00
2. full backwages - 1,252,462.50
3. retirement pay - 500,000.00
4. moral damages - 100,000.00
5. exemplary damages - 50,000.00
6. 10% of the above as
- 227,746.25
attorney's fees
TOTAL AWARDS - [P]2,505,208.75
based on the attached computation of this Commission's Computation Unit.
SO ORDERED.[35]
Ruling in favor of Maglaya, the NLRC

explicated that although the position of the
President of the University is a corporate
office, the manner of Maglaya's
appointment, and his duties, salaries, and
allowances point to his being an employee
and subordinate. The control test is the
[36]
most important indicator of the presence

of employer-employee relationship. Such
was present in the instant case as Maglaya
had the duty to report to the Board, and it
was the Board which terminated or
dismissed him even before his term ends. [37]
Thereafter, the NLRC denied the motion

for reconsideration filed by WUP in a
Resolution dated February 11, 2013.
[38]
In a Resolution, the CA dismissed the

petition for certiorari filed by WUP. The CA
noted that the decision and resolution of
the NLRC became final and executory on
March 16, 2013. WUP's attempt to
[39]
resurrect its lost remedy through filing the

petition would not prosper since final and
executory judgment becomes unalterable
and may no longer be modified in any
respect. Thus:
[40]
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.[41]
Upon denial of his Motion for

Reconsideration, WUP elevated the case
before this Court raising the issue:
The Court of Appeals committed an error of law when it summarily dismissed the
special civil action for certiorari raising lack of jurisdiction of the NLRC filed by [WUP]
where it was very clear that the NLRC had no jurisdiction over the case involving a
corporate officer and where the nature of the controversy is an intra-corporate dispute.
We find the instant petition impressed

with merit.
WUP alleges that while the NLRC decision
became final and executory on March 16,
2013, it did not mean that the said
decision had become immutable and
unalterable as the CA ruled. WUP
maintains that the remedy of the aggrieved
party against a final and executory
decision of the NLRC is the filing of the
petition for certiorari under Rule 65 of the
Rules of Court. As such, it was able to meet
the conditions set forth in filing the said
remedy before the CA.
Settled is the rule that while the decision
of the NLRC becomes final and executory
after the lapse of ten calendar days from
receipt thereof by the parties under Article
223 (now Article 229) of the Labor Code,
[42]
the adverse party is not precluded from

assailing it via Petition for Certiorari under Rule
65 before the CA and then to this Court via a
Petition for Review under Rule 45. [43]
This Court has explained and clarified the

power of the CA to review NLRC
decisions, viz.:
The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition
for Certiorari has been settled as early as in our decision in St. Martin Funeral Home
v. National Labor Relations Commission.This Court held that the proper vehicle for
such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of
Court, and that this action should be filed in the Court of Appeals in strict observance
of the doctrine of the hierarchy of courts. Moreover, it is already settled that under
Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An
Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of
Section Nine of Batas Pambansa Blg. 129 as amended, known as the Judiciary
Reorganization Act of 1980), the Court of Appeals pursuant to the exercise of its
original jurisdiction over Petitions for Certiorari - is specifically given the power to
pass upon the evidence, if and when necessary, to resolve factual issues.[44]
Consequently, the remedy of the aggrieved

party is to timely file a motion for reconsideration as a
precondition for any further or subsequent remedy, and then
seasonably avail of the special civil action

of certiorari under Rule 65, for a period of sixty
(60) days from notice of the decision. [45]
Records reveal that WOP received the

decision of the NLRC on May 12, 2012,
and filed its motion for reconsideration on
May 24, 2012. WUP received the[46]
Resolution dated February 11, 2013

denying its motion on March 12,
2013. Thereafter, it filed its petition
[47]
for certiorari before the CA on March 26,

2013. [48]
We find that the application of the

doctrine of immutability of judgment in
the case at bar is misplaced. To reiterate,
although the 10-day period for finality of
the decision of the NLRC may already have
lapsed as contemplated in the Labor Code,
this Court may still take cognizance of the
petition for certiorari on jurisdictional and due
process considerations if filed within the
reglementary period under Rule
65. From the abovementioned, WUP was
[49]
able to discharge the necessary conditions

in availing its remedy against the final and
executory decision of the NLRC.
There is an underlying power of the courts
to scrutinize the acts of such agencies on
questions of law and jurisdiction even
though no right of review is given by
statute. Furthermore, the purpose of
[50]
judicial review is to keep the

administrative agency within its
jurisdiction and protect the substantial
rights of the parties.[51]
Now on the issue of whether or not the
NLRC has jurisdiction over the illegal
dismissal case filed by Maglaya.
The said issue revolves around the
question on whether Maglaya is a
corporate officer or a mere employee. For
purposes of identifying an intra-corporate
controversy, We have defined corporate
officers, thus:
"Corporate officers" in the context of Presidential Decree No. 902-A are those officers
of the corporation who are given that character by the Corporation Code or by
the corporation's by-laws. There are three specific officers whom a corporation
must have under Section 25 of the Corporation Code. These are the president, secretary
and the treasurer. The number of officers is not limited to these three. A corporation
may have such other officers as may be provided for by its by-laws like, but not limited
to, the vice-president, cashier, auditor or general manager. The number of corporate
officers is thus limited by law and by the corporation's by-laws.[52]
The president, vice-president, secretary

and treasurer are commonly regarded as
the principal or executive officers of a
corporation, and they are usually
designated as the officers of the
corporation. However, other officers are sometimes
or the board
created by the charter or by-laws of a corporation,
of directors may be empowered under the

by-laws of a corporation to create
additional offices as may be necessary.
This Court expounded that an "office" is
created by the charter of the corporation
and the officer is elected by the directors
or stockholders, while 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. [53]
From the foregoing, that the creation of the

position is under the corporation's charter
or by-laws, and that theelection of the officer is
by the directors or stockholders must
concur in order for an individual to be
considered a corporate officer, as against
an ordinary employee or officer. It is only
when the officer claiming to have been
illegally dismissed is classified as such
corporate officer that the issue is deemed
an intra-corporate dispute which falls
within the jurisdiction of the trial courts.
[54]
In its position paper before the LA, WUP

presented its amended By-Laws dated
[55]
November 28, 1988 submitted to the SEC

to prove that Maglaya, as the University
President, was a corporate officer whose
rights do not fall within the jurisdiction of
the labor tribunal. It also presented the
Resolution dated August 19, 2009 of the
RTC, and the Decision dated March 15, 20
11 of the CA to show that the earlier case
was filed by Maglaya and others, as
members of the Board, questioning the
Bishops' appointment of the new members
without their recommendation.
The relevant portions of the amended By-
Laws provide:
ARTICLE VI. BOARD OF TRUSTEES
xxxx
Section 2. Membership (a) The Board of Trustees shall be composed of Ten (10)
members of the corporation from among themselves provided, that six (6) shall come
from the Ministry and Laity of the United Methodist [C]hurch in the Philippines, three
(3) shall be non-Methodist, friends and sympathizers of the Wesleyan University-
Philippines and of the United Methodist Church, and one (1) representative of the
Wesleyan Alumni Association, as provided in section 1 (c), Article IV hereof, and (b)
provided further that the incumbent area bishop and the President of the Wesleyan
University-Philippines shall be honorary members of the Board.
x x x x[56]
ARTICLE VIII. OFFICERS
Section 1. Officers The officers of the Board of Trustees shall be:
(a) Chairman
(b) Vice-Chairman
(c) Secretary
(d) Treasurer
xxxx
Section 6. The President of Wesleyan University-Philippines The President of the

University, who must be an active member of the United Methodist Church in the
Philippines at the time of his election shall be in-charge of and be responsible for the
administration of the University and other institutions of learning that [m]ay hereafter
be established by the corporation, and
(a) May, with the Board of Trustees;
(1) Organize and/or reorganize the administrative set up of the Wesleyan University-
Philippines to effect efficiency and upgrade institutional administration and
supervision;
(2) Employ, suspend, dismiss, transfer or replace personnel and prescribe and enforce
rules and regulations for their proper conduct in the discharge of their duties;
(3) Shall make reports during the different rumual conference of the United Methodist
Church ru1d to such agencies as may be deemed necessary on the operations of the
university and related matters;
(4) Shall prescribe and enforce rules and regulations for the promotion and
maintenance of discipline in the proper conduct and discharge of the functions and
duties of subordinate administrative officers, professors, teachers, employees and
students and other personnel.
(b) Shall make reports and recommendations to the Board of Trustees or to the
Chairman of the Board of Trustees on matters pertaining to the institution as he may
find necessary;
(c) Shall countersign all checks drawn by the Treasurer from the depository of the
University, and
(d) Shall exercise, perform and discharge all such other powers, functions and duties as
are interest in the office of the President.
x x x[57]
It is apparent from the By-laws of WUP

that the president was one of the officers
of the corporation, and was an honorary
member of the Board. He was appointed
by the Board and not by a managing
officer of the corporation. We held that
one who is included in the by-laws of a
corporation in its roster of corporate
officers is an officer of said corporation
and not a mere employee. [58]
The alleged "appointment" of Maglaya

instead of "election" as provided by the by-
laws neither convert the president of
university as a mere employee, nor amend
its nature as a corporate officer. With the
office specifically mentioned in the by-
laws, the NLRC erred in taking cognizance
of the case, and in concluding that
Maglaya was a mere employee and
subordinate official because of the manner
of his appointment, his duties and
responsibilities, salaries and allowances,
and considering the Identification Card,
the Administration and Personnel Policy
Manual which specified the retirement of
the university president, and the check
disbursement as pieces of evidence
supporting such finding.
A corporate officer's dismissal is always a
corporate act, or an intra-corporate
controversy which arises between a
stockholder and a corporation, and the
nature is not altered by the reason or
wisdom with which the Board of Directors
may have in taking such action. The issue
[59]
of the alleged termination involving a

corporate 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. [60]
The long-established rule is that the

jurisdiction over a subject matter is
conferred by law. Perforce, Section 5 (c)
[61]
of PD 902-A, as amended by Subsection

5.2, Section 5 of Republic Act No. 8799,
which provides that the regional trial
courts exercise exclusive jurisdiction over
all controversies in the election or
appointment of directors, trustees, officers
or managers of corporations, partnerships
or associations, applies in the case at bar. [62]
To emphasize, the determination of the

rights of a 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. [63]
As held in Leonor v. Court of Appeals, a void judgment

[64]
for want of jurisdiction is no judgment at

all. It cannot be the source of any right nor
the creator of any obligation. All acts
performed pursuant to it and all claims
emanating from it have no legal effect.
Hence, it can never become final and any
writ of execution based on it is void. [65]
Since this Court is now reversing the

challenged decision of the CA and
affirming the decision of the LA in
dismissing the case for want of
jurisdiction, Maglaya is not entitled to
collect the amount of P2,505,208.75
awarded from the time the NLRC decision
became final and executory up to the time
theCA dismissed WUP's petition for certiorari.
In sum, this Court finds that the NLRC
erred in assuming jurisdiction over, and
thereafter in failing to dismiss, Maglaya's
complaint for illegal dismissal against
WUP, since the subject matter of the
instant case is an intra-corporate
controversy which the NLRC has no
jurisdiction.
WHEREFORE, the petition for review
on certiorari filed by petitioner Wesleyan
University-Philippines is hereby GRANTED.
The assailed Resolution dated January 20,
2014 of the Court of Appeals in CA-G.R.
SP No. 129196 is hereby REVERSED and SET
ASIDE. Respondent Atty. Guillermo T.
Maglaya, Sr. is
hereby ORDERED to REIMBURSE the petitioner the
amount of P2,505,208.75 awarded by the
National Labor Relations Commission.
SO ORDERED.
WESLEYAN UNIVERSITY-
PHILIPPINES, Petitioner, v. GUILLERMO T. MAGLAYA,
SR., Respondent.
DECISION
PERALTA, J.:
For this Court's resolution is a petition for review

on certiorari filed by petitioner Wesleyan University-
Philippines (WUP) assailing the Resolution1 dated January 20,
2014 of the Court of Appeals (CA) which denied its petition
for certiorari.
The facts are as follows:

chanRoblesvi rtua lLawl ibra ry
WUP is a non-stock, non-profit, non-sectarian educational

corporation duly organized and existing under the Philippine
laws on April 28, 1948.2
Respondent Atty. Guillenno T. Maglaya, Sr. (Maglaya) was

appointed as a corporate member on January 1, 2004, and
was elected as a member of the Board of Trustees (Board) on
January 9, 2004 both for a period of five (5) years. On May
25, 2005, he was elected as President of the University for a
five-year term. He was re-elected as a trustee on May 25,
2007.3
In a Memorandum dated November 28, 2008, the incumbent

Bishops of the United Methodist Church (Bishops) apprised all
the corporate members of the expiration of their terms on
December 31, 2008, unless renewed by the former.4 The said
members, including Maglaya, sought the renewal of their
membership in the WUP's Board, and signified their
willingness to serve the corporation.5
On January 10, 2009, Dr. Dominador Cabasal, Chairman of

the Board, informed the Bishops of the cessation of corporate
terms of some of the members and/or trustees since the by-
laws provided that the vacancy shall only be filled by the
Bishops upon the recommendation of the Board.6
On March 25, 2009, Maglaya learned that the Bishops created

an Ad Hoc Committee to plan the efficient and orderly
turnover of the administration of the WUP in view of the
alleged "gentleman's agreement" reached in December 2008,
and that the Bishops have appointed the incoming corporate
members and trustees.7 He clarified that there was no
agreement and any discussion of the turnover because the
corporate members still have valid and existing corporate
terms.8
On April 24, 2009, the Bishops, through a formal notice to all

the officers, deans, staff, and employees of WUP, introduced
the new corporate members, trustees, and officers. In the said
notice, it was indicated that the new Board met, organized,
and elected the new set of officers on April 20, 2009.9 Manuel
Palomo (Palomo), the new Chairman of the Board, informed
Maglaya of the termination of his services and authority as the
President of the University on April 27, 2009.10
Thereafter, Maglaya and other fonner members of the

Board (Plaintiffs) filed a Complaint for Injunction and Damages
before the Regional Trial Court (RTC) of Cabanatuan City,
Branch 28.11 In a Resolution12dated August 19, 2009, the RTC
dismissed the case declaring the same as a nuisance or
harassment suit prohibited under Section 1(b),13 Rule 1 of the
Interim Rules for Intra-Corporate Controversies.14 The RTC
observed that it is clear from the by-laws of WUP that insofar
as membership in the corporation is concerned, which can
only be given by the College of Bishops of the United
Methodist Church, it is a precondition to a seat in the WUP
Board.15 Consequently, the expiration of the terms of the
plaintiffs, including Maglaya, as corporate members carried
with it their termination as members of the Board.16Moreover,
their continued stay in their office beyond their terms was only
in hold-over capacities, which ceased when the Bishops
appointed new members of the corporation and the Board.17
The CA, in a Decision18 dated March 15, 2011, affirmed the

decision of the RTC, and dismissed the petition
for certiorari filed by the plaintiffs for being the improper
remedy. The CA held that their status as corporate members
of WUP which expired on December 31, 2008 was undisputed.
The CA agreed with the RTC that the plaintiffs had no legal
standing to question the Bishops' alleged irregular
appointment of the new members in their Complaint on May
18, 2009 as the termination of their membership in the
corporation necessarily resulted in the conclusion of their
positions as members of the Board pursuant to the WUP by-
laws.19
Thereafter, Maglaya filed on March 22, 2011 the present

illegal dismissal case against WUP, Palomo, Bishop Lito C.
Tangonan (Tangonan), and Bishop Leo A.
Soriano (Soriano).20 Maglaya claimed that he was
unceremoniously dismissed in a wanton, reckless, oppressive
and malevolent manner on the eve of April 27,
2009.21 Tangonan and Soriano acted in evident bad faith when
they disregarded his five-year term of office and delegated
their protege Palomo as the new university
president.22 Maglaya alleged that he faithfully discharged his
necessary and desirable functions as President, and received
P175,000.00 as basic salary, P10,000.00 as cost of living
allowance, and P10,000.00 as representation allowance. He
was also entitled to other benefits such as: the use of
university vehicles; the use of a post paid mobile cellular
phone in his official transactions; the residence in the
University Executive House located at Inday Street,
Magsaysay Sur, Cabanatuan City, with free water, electricity,
and services of a household helper; and receipt of 13th month
pay, vacation leave pay, retirement pay, and shares in related
learning experience.23 On May 31, 2006, his basic salary was
increased to P95,000.00 due to his additional duty in
overseeing the operations of the WUP Cardiovascular and
Medical Center.
Maglaya presented the following pieces of evidence: copies of

his appointment as President, his Identification Card, the WUP
Administration and Personnel Policy Manual which specified
the retirement of the university president, and the check
disbursement in his favor evidencing his salary, to
substantiate his claim that he was a mere employee.24
WUP, on the other hand, asseverated that the dismissal or

removal of Maglaya, being a corporate officer and not a
regular employee, is a corporate act or intra-corporate
controversy under the jurisdiction of the RTC.25 WUP also
maintained that since Maglaya's appointment was not
renewed, he ceased to be a member of the corporation and of
the Board; thus, his term for presidency has also been
terminated.26
Meanwhile, this Court, in a Resolution dated June 13, 2011,

denied the petition for review on certiorarifiled by Maglaya and
the other former members of the Board for failure to show any
reversible error in the decision of the CA. The same became
final and executory on August 24, 2011.27
In a Decision28 dated September 20, 2011, the Labor

Arbiter (LA) ruled in favor of WUP. The LA held that the action
between employers and employees where the employer-
employee relationship is merely incidental is within the
exclusive and original jurisdiction of the regular courts.29 Since
he was appointed as President of the University by the Board,
Maglaya was a corporate officer and not a mere employee.
The instant case involves intra-corporate dispute which was
definitely beyond the jurisdiction of the labor tribunal.30 The
dispositive portion of the decision reads:chanRoblesvi rtual Lawli bra ry
WHEREFORE, premises considered, the instant complaint is

hereby dismissed for lack of jurisdiction.
SO ORDERED.31
In a Decision32 dated April 25, 2012, the National Labor

Relations Commission (NLRC) in NLRC-LAC No. 01-000470-12,
reversed and set aside the Decision of the LA ruling that the
illegal dismissal case falls within the jurisdiction of the labor
tribunals. Since the reasons for his termination cited by WUP
were not among the just causes provided under Article
28233 (now Article 297) of the Labor Code, Maglaya was
illegally dismissed. The NLRC observed that the Board did not
elect Maglaya, but merely appointed him. Maglaya was
appointed for a fixed period of five (5) years from May 7, 2005
to May 6, 2010, while the period of his appointment as
member of the corporation was five (5) years from January
2004.34 The decretal portion of the decision reads: chanRoblesv irt ual Lawlib rary
WHEREFORE, premises considered, the appealed decision is
hereby REVERSED and SET ASIDE, declaring: chanRoble svi rtual Lawli bra ry
(a) jurisdiction over this case by virtue of the employer-employee

relation of the parties
(b) the illegality of the dismissal of [respondent] by [petitioner]
[Petitioner] therefore [is] hereby ordered to pay

[respondent]:
1. separation pay - [P] 375,000.00
2. full backwages - 1,252,462.50
3. retirement pay - 500,000.00
4. moral damages - 100,000.00
5. exemplary damages - 50,000.00
6. 10% of the above as attorney's fees -

227,746.25
TOTAL AWARDS - [P]2,505,208.75
based on the attached computation of this Commission's

Computation Unit.
SO ORDERED.35
Ruling in favor of Maglaya, the NLRC explicated that although

the position of the President of the University is a corporate
office, the manner of Maglaya's appointment, and his duties,
salaries, and allowances point to his being an employee and
subordinate.36 The control test is the most important indicator
of the presence of employer-employee relationship. Such was
present in the instant case as Maglaya had the duty to report
to the Board, and it was the Board which terminated or
dismissed him even before his term ends.37
Thereafter, the NLRC denied the motion for reconsideration

filed by WUP in a Resolution38 dated February 11, 2013.
In a Resolution, the CA dismissed the petition

for certiorari filed by WUP. The CA noted that the decision and
resolution of the NLRC became final and executory on March
16, 2013.39 WUP's attempt to resurrect its lost remedy
through filing the petition would not prosper since final and
executory judgment becomes unalterable and may no longer
be modified in any respect.40 Thus: chanRoblesvirt ual Lawlib rary
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.41
Upon denial of his Motion for Reconsideration, WUP elevated

the case before this Court raising the issue: chanRoblesvi rt ual Lawlib rary
The Court of Appeals committed an error of law when it

summarily dismissed the special civil action
for certiorari raising lack of jurisdiction of the NLRC filed by
[WUP] where it was very clear that the NLRC had no
jurisdiction over the case involving a corporate officer and
where the nature of the controversy is an intra-corporate
dispute.
We find the instant petition impressed with merit.
WUP alleges that while the NLRC decision became final and
executory on March 16, 2013, it did not mean that the said
decision had become immutable and unalterable as the CA
ruled. WUP maintains that the remedy of the aggrieved party
against a final and executory decision of the NLRC is the filing
of the petition for certiorari under Rule 65 of the Rules of
Court. As such, it was able to meet the conditions set forth in
filing the said remedy before the CA.
Settled is the rule that while the decision of the NLRC

becomes final and executory after the lapse of ten calendar
days from receipt thereof by the parties under Article
22342 (now Article 229) of the Labor Code, the adverse party
is not precluded from assailing it via Petition
for Certiorari under Rule 65 before the CA and then to this
Court via a Petition for Review under Rule 45.43
This Court has explained and clarified the power of the CA to

review NLRC decisions, viz.:
The power of the Court of Appeals to review NLRC

decisions via Rule 65 or Petition for Certiorari has been settled
as early as in our decision in St. Martin Funeral Home v.
National Labor Relations Commission. This Court held that the
proper vehicle for such review was a Special Civil Action
for Certiorari under Rule 65 of the Rules of Court, and that
this action should be filed in the Court of Appeals in strict
observance of the doctrine of the hierarchy of courts.
Moreover, it is already settled that under Section 9 of Batas
Pambansa Blg. 129, as amended by Republic Act No.
7902[10] (An Act Expanding the Jurisdiction of the Court of
Appeals, amending for the purpose of Section Nine of Batas
Pambansa Blg. 129 as amended, known as the Judiciary
Reorganization Act of 1980), the Court of Appeals pursuant
to the exercise of its original jurisdiction over Petitions
forCertiorari - is specifically given the power to pass upon the
evidence, if and when necessary, to resolve factual issues.44
Consequently, the remedy of the aggrieved party is to timely
file a motion for reconsideration as a precondition for
any further or subsequent remedy, and then seasonably
avail of the special civil action of certiorari under Rule 65, for a
period of sixty (60) days from notice of the decision.45
Records reveal that WOP received the decision of the NLRC on

May 12, 2012, and filed its motion for reconsideration on May
24, 2012.46 WUP received the Resolution dated February 11,
2013 denying its motion on March 12, 2013.47 Thereafter, it
filed its petition for certiorari before the CA on March 26,
2013.48
We find that the application of the doctrine of immutability of

judgment in the case at bar is misplaced. To reiterate,
although the 10-day period for finality of the decision of the
NLRC may already have lapsed as contemplated in the Labor
Code, this Court may still take cognizance of the petition
for certiorari on jurisdictional and due process considerations
if filed within the reglementary period under Rule 65.49From
the abovementioned, WUP was able to discharge the
necessary conditions in availing its remedy against the final
and executory decision of the NLRC.
There is an underlying power of the courts to scrutinize the

acts of such agencies on questions of law and jurisdiction even
though no right of review is given by statute.50 Furthermore,
the purpose of judicial review is to keep the administrative
agency within its jurisdiction and protect the substantial rights
of the parties.51
Now on the issue of whether or not the NLRC has jurisdiction

over the illegal dismissal case filed by Maglaya.
The said issue revolves around the question on whether

Maglaya is a corporate officer or a mere employee. For
purposes of identifying an intra-corporate controversy, We
have defined corporate officers, thus:chanRoblesvirtual Lawli bra ry
"Corporate officers" in the context of Presidential Decree No.

902-A are those officers of the corporation who are given
that character by the Corporation Code or by the
corporation's by-laws. There are three specific officers
whom a corporation must have under Section 25 of the
Corporation Code. These are the president, secretary and the
treasurer. The number of officers is not limited to these three.
A corporation may have such other officers as may be
provided for by its by-laws like, but not limited to, the vice-
president, cashier, auditor or general manager. The number of
corporate officers is thus limited by law and by the
corporation's by-laws.52
The president, vice-president, secretary and treasurer are

commonly regarded as the principal or executive officers of a
corporation, and they are usually designated as the officers of
the corporation. However, 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. This Court expounded that an "office" is created by
the charter of the corporation and the officer is elected by the
directors or stockholders, while 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.53
From the foregoing, that the creation of the position is under
the corporation's charter or by-laws, and that the election of
the officer is by the directors or stockholders must concur in
order for an individual to be considered a corporate officer, as
against an ordinary employee or officer. It is only when the
officer claiming to have been illegally dismissed is classified as
such corporate officer that the issue is deemed an intra-
corporate dispute which falls within the jurisdiction of the trial
courts.54
In its position paper before the LA, WUP presented its

amended By-Laws55 dated November 28, 1988 submitted to
the SEC to prove that Maglaya, as the University President,
was a corporate officer whose rights do not fall within the
jurisdiction of the labor tribunal. It also presented the
Resolution dated August 19, 2009 of the RTC, and the
Decision dated March 15, 20 11 of the CA to show that the
earlier case was filed by Maglaya and others, as members of
the Board, questioning the Bishops' appointment of the new
members without their recommendation.
The relevant portions of the amended By-Laws provide: chanRob lesvi rtual Lawl ibra ry
ARTICLE VI. BOARD OF TRUSTEES
xxxx
Section 2. Membership (a) The Board of Trustees shall be

composed of Ten (10) members of the corporation from
among themselves provided, that six (6) shall come from the
Ministry and Laity of the United Methodist [C]hurch in the
Philippines, three (3) shall be non-Methodist, friends and
sympathizers of the Wesleyan University-Philippines and of
the United Methodist Church, and one (1) representative of
the Wesleyan Alumni Association, as provided in section 1 (c),
Article IV hereof, and (b) provided further that the incumbent
area bishop and the President of the Wesleyan University-
Philippines shall be honorary members of the Board.
x x x x56
ARTICLE VIII. OFFICERS
Section 1. Officers The officers of the Board of Trustees shall

be:chanRoble svirtual Lawlib ra ry
(a) Chairman
(b) Vice-Chairman
(c) Secretary
(d) Treasurer
xxxx
Section 6. The President of Wesleyan University-Philippines

The President of the University, who must be an active
member of the United Methodist Church in the Philippines at
the time of his election shall be in-charge of and be
responsible for the administration of the University and other
institutions of learning that [m]ay hereafter be established by
the corporation, and
(a) May, with the Board of Trustees; chanrob leslaw
(1) Organize and/or reorganize the administrative set up of

the Wesleyan University-Philippines to effect efficiency and
upgrade institutional administration and supervision; chanrobles law
(2) Employ, suspend, dismiss, transfer or replace personnel

and prescribe and enforce rules and regulations for their
proper conduct in the discharge of their duties;chanrobleslaw
(3) Shall make reports during the different rumual conference

of the United Methodist Church ru1d to such agencies as may
be deemed necessary on the operations of the university and
related matters; chanrob leslaw
(4) Shall prescribe and enforce rules and regulations for the
promotion and maintenance of discipline in the proper conduct
and discharge of the functions and duties of subordinate
administrative officers, professors, teachers, employees and
students and other personnel.
(b) Shall make reports and recommendations to the Board of

Trustees or to the Chairman of the Board of Trustees on
matters pertaining to the institution as he may find
necessary; chanrob leslaw
(c) Shall countersign all checks drawn by the Treasurer from

the depository of the University, and
(d) Shall exercise, perform and discharge all such other

powers, functions and duties as are interest in the office of the
President.
x x x57
It is apparent from the By-laws of WUP that the president was

one of the officers of the corporation, and was an honorary
member of the Board. He was appointed by the Board and not
by a managing officer of the corporation. We held that one
who is included in the by-laws of a corporation in its roster of
corporate officers is an officer of said corporation and not a
mere employee.58
The alleged "appointment" of Maglaya instead of "election" as

provided by the by-laws neither convert the president of
university as a mere employee, nor amend its nature as a
corporate officer. With the office specifically mentioned in the
by-laws, the NLRC erred in taking cognizance of the case, and
in concluding that Maglaya was a mere employee and
subordinate official because of the manner of his appointment,
his duties and responsibilities, salaries and allowances, and
considering the Identification Card, the Administration and
Personnel Policy Manual which specified the retirement of the
university president, and the check disbursement as pieces of
evidence supporting such finding.
A corporate officer's dismissal is always a corporate act, or an

intra-corporate controversy which arises between a
stockholder and a corporation, and the nature is not altered
by the reason or wisdom with which the Board of Directors
may have in taking such action.59 The issue of the alleged
termination involving a corporate 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.60
The long-established rule is that the jurisdiction over a subject

matter is conferred by law.61 Perforce, Section 5 (c) of PD
902-A, as amended by Subsection 5.2, Section 5 of Republic
Act No. 8799, which provides that the regional trial courts
exercise exclusive jurisdiction over all controversies in the
election or appointment of directors, trustees, officers or
managers of corporations, partnerships or associations,
applies in the case at bar.62
To emphasize, the determination of the rights of a 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.63
As held in Leonor v. Court of Appeals,64 a void judgment for

want of jurisdiction is no judgment at all. It cannot be the
source of any right nor the creator of any obligation. All acts
performed pursuant to it and all claims emanating from it
have no legal effect. Hence, it can never become final and any
writ of execution based on it is void.65
Since this Court is now reversing the challenged decision of

the CA and affirming the decision of the LA in dismissing the
case for want of jurisdiction, Maglaya is not entitled to collect
the amount of P2,505,208.75 awarded from the time the
NLRC decision became final and executory up to the time
theCA dismissed WUP's petition for certiorari.
In sum, this Court finds that the NLRC erred in assuming

jurisdiction over, and thereafter in failing to dismiss, Maglaya's
complaint for illegal dismissal against WUP, since the subject
matter of the instant case is an intra-corporate controversy
which the NLRC has no jurisdiction.
WHEREFORE, the petition for review on certiorari filed by

petitioner Wesleyan University-Philippines is
hereby GRANTED. The assailed Resolution dated January 20,
2014 of the Court of Appeals in CA-G.R. SP No. 129196 is
hereby REVERSED and SET ASIDE. Respondent Atty.
Guillermo T. Maglaya, Sr. is
hereby ORDERED to REIMBURSE the petitioner the amount
of P2,505,208.75 awarded by the National Labor Relations
Commission.
SO ORDERED. chanr
NESTLE PHILIPPINES, INC., Petitioner, v. BENNY A.
PUEDAN, JR., JAYFER D. LIMBO, BRODNEY N. AVILA,
ARTHUR C. AQUINO, RYAN A. MIRANDA, RONALD R.
ALAVE, JOHNNY A. DIMAYA, MARLON B. DELOS REYES,
ANGELITO R. CORDOVA, EDGAR S. BARRUGA, CAMILO B.
CORDOVA, JR., JEFFRY B. LANGUISAN, EDISON U.
VILLAPANDO, JHEIRNEY S. REMOLIN, MARY LUZ A.
MACATALAD,* JENALYN M. GAMUROT, DENNIS G.
BAWAG, RAQUEL A. ABELLERA, AND RICANDRO G.
GUATNO, JR., Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the

Decision2 dated March 26, 2015 and the Resolution3 dated
September 17, 2015 of the Court of Appeals (CA) in CA-G.R.
SP No. 132686, which affirmed the Decision4 dated May 30,
2013 and the Resolution5 dated August 30, 2013 of the
National Labor Relations Commission (NLRC) in LAC No. 02-
000699-13/ NCR-03-04761-12, declaring petitioner Nestle
Philippines, Inc. (NPI), jointly and severally liable with Ocho
de Septiembre, Inc. (ODSI) to respondents Benny A. Puedan,
Jr., Jayfer D. Limbo, Bradney N. Avila, Arthur C. Aquino, Ryan
A. Miranda, Ronald R. Alave, Johnny A. Dimaya, Marlon B.
Delos Reyes, Angelita R. Cordova, Edgar S. Barruga, Camilo B.
Cordova, Jr., Jeffry B. Languisan, Edison U. Villapando,
Jheirney S. Remolin, Mary Luz A. Macatalad, Jenalyn M.
Gamurot, Dennis G. Bawag, Raquel A. Abellera, and Ricandro
G. Guatno, Jr. (respondents) for separation pay, nominal
damages, and attorney's fees.
The Facts
The instant case arose from an amended6 complaint7 dated
July 6, 2012 for illegal dismissal, damages, and attorney's fees
filed by respondents against, inter alia, ODSI and NPI.
Respondents alleged that on various dates, ODSI and NPI
hired them to sell various NPI products in the assigned
covered area. After some time, respondents demanded that
they be considered regular employees of NPI, but they were
directed to sign contracts of employment with ODSI instead.
When respondents refused to comply with such directives, NPI
and ODSI terminated them from their position.8 Thus, they
were constrained to file the complaint, claiming that: (a) ODSI
is a labor-only contractor and, thus, they should be deemed
regular employees of NPI; and (b) there was no just or
authorized cause for their dismissal.9
For its part, ODSI averred that it is a company engaged in the

business of buying, selling, distributing, and marketing of
goods and commodities of every kind and it enters into all
kinds of contracts for the acquisition thereof. ODSI admitted
that on various dates, it hired respondents as its employees
and assigned them to execute the Distributorship
Agreement10 it entered with NPI,11 the relevant portions of
which state: ChanRoblesVi rtualaw lib rary
3.1 DISTRIBUTOR (ODSI) shall assign a sales force in his/her regular employ,
dedicated solely to the handling of NPI Grocery Retail Products under this
Agreement, and who shall exclusively cover assigned areas/channels of
distribution.
3.2 DISTRIBUTOR shall service the outlets within the Territory by re-selling Products
obtained exclusively from Nestle Philippines, Inc. and not from any other source.
3.3 DISTRIBUTOR shall utilize booking and distribution salesmen to undertake

territory development. Booking done by DISTRIBUTOR shall be delivered by its
personnel. Collection of accounts shall be taken cared (sic) of by DISTRIBUTOR,
without prejudice to the provisions of Clause 13 hereof.
3.4 DISTRIBUTOR's route salesmen shall exclusively cover assigned ex-truck
areas/channels of distribution.
3.5 DISTRIBUTOR shall also provide training to its staff or personnel where necessary,
to improve operations in servicing the requirements of DISTRIBUTOR's customers.
From time to time, NESTLE shall offer to DISTRIBUTOR suggestions and
recommendations to improve sales and to further develop the market.
3.6 DISTRIBUTOR shall meet the sales, reach and distribution targets agreed upon by
NESTLE and DISTRIBUTOR. For purposes of this clause, reach targets refer to the
number of stores, dealers and/or outlets which DISTRIBUTOR should cover or
service within a particular period. Distribution targets refer to the number of stock
keeping units and/or product lines covered by this Agreement.
In the event of DISTRIBUTOR's failure to meet NESTLE's sales targets, NESTLE

has the sole discretion of assigning another distributor of the Products and/or
reducing the Territory covered by DISTRIBUTOR.
3.7 DISTRIBUTOR agrees to provide at its own cost and expense facilities and other
resources necessary for the distribution and sale of the Products.
3.8 NESTLE's sales personnel may get orders for the Products distributed by
DISTRIBUTOR and pass on the said orders to DISTRIBUTOR.
3.9 NESTLE shall provide the necessary promotional and marketing support for the
Products through promotional materials, product information literature,
participation in trade fairs, and other market development activities.
3.10 Should NESTLE manufacture and/or distribute other products not subject of this
Agreement, which, in NESTLE's opinion, should likewise be extended to
DISTRIBUTOR's outlets, such additional products shall be included among those
listed in Annex "A" hereof.
NESTLE shall deliver the Products to DISTRIBUTOR's warehouse(s) at its own

expenses. Immediately upon receipt of the Products, DISTRIBUTOR shall carry out
a visual inspection thereof. In the event any quantity of the Products is found to
be defective upon such visual inspection, NESTLE shall replace such quantity of
the Products at no cost to DISTRIBUTOR.
3.11 All costs for transportation and/or shipment of the Products from DISTRIBUTOR's
warehouse(s) to its outlets/customers shall be the account of the DISTRIBUTOR.12
However, the business relationship between NPI and ODSI
turned sour when the former's sales department badgered the
latter regarding the sales targets. Eventually, NPI downsized
its marketing and promotional support from ODSI which
resulted to business reverses and in the latter's filing of a
petition for corporate rehabilitation and, subsequently, the
closure of its Nestle unit due to the termination of the
Distributorship Agreement and the failure of rehabilitation.
Under the foregoing circumstances, ODSI argued that
respondents were not dismissed but merely put in floating
status.13
On the other hand, NPI did not file any position paper or
appear in the scheduled conferences.14
The Labor Arbiter Ruling
In a Decision15 dated December 28, 2012, the Labor Arbiter

(LA) dismissed the complaint for lack of merit, but
nevertheless, ordered, inter alia, ODSI and NPI to pay
respondents nominal damages in the aggregate amount of
P235,728.00 plus attorney's fees amounting to ten percent
(10%) of the total monetary awards.16 The LA found that: (a)
respondents were unable to prove that they were NPI
employees; and (b) respondents were not illegally dismissed
as ODSI had indeed closed down its operations due to
business losses.17 As to the issue on the failure to give
respondents a thirty (30)-day notice prior to such closure, the
LA concluded that all the impleaded respondents therein (i.e.,
including NPI) should be held liable for the payment of
nominal damages plus attorney's fees.18
Aggrieved, respondents appealed to the NLRC.19
The NLRC Ruling

In a Decision20 dated May 30, 2013, the NLRC reversed and
set aside the LA ruling and, accordingly, ordered ODSI and
NPI to pay each of the respondents: (a) separation pay
amounting to 1/2 month pay for every year of service
reckoned from the time they were employed until the finality
of the Decision; and (b) nominal damages in the amount of
P30,000.00. The NLRC likewise ordered NPI and ODSI to pay
respondents attorney's fees amounting to ten percent (10%)
of the monetary awards.21
Contrary to the LA's findings, the NLRC found that while ODSI
indeed shut down its operations, it failed to prove that such
closure was due to serious business losses as it did not
present evidence, e.g., financial statements, to corroborate its
claims. As such, it ruled that respondents are entitled to
separation pay. In this relation, the NLRC also found that since
ODSI failed to notify respondents of such closure, the latter
are likewise entitled to nominal damages.22
Further, the NLRC found ODSI to be a labor-only contractor of

NPI, considering that: (a) ODSI had no substantial
capitalization or investment; (b) respondents performed
activities directly related to NPI's principal business; and (c)
the fact that respondents' employment depended on the
continuous supply of NPI products shows that ODSI had not
been carrying an independent business according to its own
manner and method.23 Consequently, the NLRC deemed NPI
to be respondents' true employer, and thus, ordered it jointly
and severally liable with ODSI to pay the monetary claims of
respondents.24
Respondents moved for a partial reconsideration,25 arguing

that since it was only ODSI that closed down operations and
not NPI and, considering the finding that the latter was
deemed to be their true employer, NPI should reinstate them,
or if not practicable, to pay them separation pay equivalent to
one (1) month pay for every year of service. NPI also moved
for reconsideration,26 contending that: (a) it was deprived of
its right to participate in the proceedings before the LA and
the NLRC; and (b) it had no employer-employee relationship
with respondents as ODSI was never its contractor, whether
independent or labor-only.27 However, the NLRC denied both
motions in a Resolution28 dated August 30, 2013, holding that:
(a) respondents' termination was due to the closure of ODSI's
Nestle unit, an authorized cause and, thus, the monetary
awards in their favor were proper; (b) NPI was not deprived of
its right to participate in the proceedings as it was duly served
with copies of the parties' respective pleadings, as well as the
rulings of both the LA and the NLRC; (c)
assuming arguendo that NPI was indeed deprived of due
process, its subsequent filing of a motion for reconsideration
before the NLRC cured the defect as it was able to argue its
position in the said motion; and (d) the circumstances
surrounding the Distributorship Agreement between ODSI and
NPI showed that the former is indeed a labor-only contractor
of the latter.29
Dissatisfied, NPI filed a petition for certiorari30 before the CA,

essentially insisting that: (a) it was deprived of due process
before the tribunals a quo; and (b) there was no employer-
employee relationship between NPI and
respondents.31 Records reveal that no other party elevated the
matter before the CA.
The CA Ruling
In a Decision32 dated March 26, 2015, the CA affirmed the

NLRC ruling. Anent the issue on due process, the CA held that
NPI was not deprived of its opportunity to be heard as it was
able to receive a copy of the complaint and other pleadings,
albeit it failed to respond thereto.33 As regards the substantive
issue, the CA ruled that despite ODSI and NPI's contract being
denominated as a "Distributorship Agreement," it contained
provisions demonstrating a labor-only contracting
arrangement between them, as well as NPI's exercise of
control over the business of ODSI. Moreover, the CA pointed
out that: (a) there was nothing in the records which showed
that ODSI had substantial capital to undertake an independent
business; and (b) respondents performed tasks essential to
NPI's business.34
Undaunted, NPI moved for reconsideration,35 which was,

however, denied in a Resolution36 dated September 17, 2015;
hence, this petition.
The Issues Before the Court
The essential issues for the Court's resolution are whether or

not the CA correctly ruled that: (a) NPI was accorded due
process by the tribunals a quo; and (b) ODSI is a labor-only
contractor of NPI, and consequently, NPI is respondents' true
employer and, thus, deemed jointly and severally liable with
ODSI for respondents' monetary claims.
The Court's Ruling
To justify the grant of the extraordinary remedy of certiorari,

the petitioner must satisfactorily show that the court or quasi-
judicial authority gravely abused the discretion conferred upon
it. Grave abuse of discretion connotes a capricious and
whimsical exercise of judgment, done in a despotic manner by
reason of passion or personal hostility, the character of which
being so patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty
enjoined by or to act at all in contemplation of law.37
In labor disputes, grave abuse of discretion may be ascribed

to the NLRC when, inter alia, its findings and conclusions are
not supported by substantial evidence, or that amount of
relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion.38
Guided by the foregoing considerations, the Court finds that

the CA was correct in ruling that the labor tribunals a
quo gave NPI an opportunity to be heard. However, it erred in
not ascribing grave abuse of discretion on the NLRC's finding
that ODSI is a labor-only contractor of NPI and, thus, the
latter is the respondents' true employer, and jointly and
severally liable with ODSI for respondents' monetary claims.
As will be explained hereunder, such finding by the NLRC is
not supported by substantial evidence.
I.
The observance of fairness in the conduct of any investigation

is at the very heart of procedural due process. The essence of
due process is to be heard, and, as applied to administrative
proceedings, this means a fair and reasonable opportunity to
explain one's side, or an opportunity to seek a reconsideration
of the action or ruling complained of. Administrative due
process cannot be fully equated with due process in its strict
judicial sense, for in the former a formal or trial-type hearing
is not always necessary, and technical rules of procedure are
not strictly applied.39 The Court's disquisition in Ledesma v.
CA40 is instructive on this matter, to wit:
ChanRoblesVirt ualawli bra ry
Due process, as a constitutional precept, does not always and

in all situations require a trial-type proceeding. Due process is
satisfied when a person is notified of the charge against him
and given an opportunity to explain or defend himself. In
administrative proceedings, the filing of charges and giving
reasonable opportunity for the person so charged to answer
the accusations against him constitute the minimum
requirements of due process. The essence of due process
is simply to be heard, or as applied to administrative
proceedings, an opportunity to explain ones side, or an
opportunity to seek a reconsideration of the action or
ruling complained of.41(Emphasis and underscoring
supplied)
In this case, NPI essentially claims that it was deprived of its
right to due process when it was not notified of the
proceedings before the LA and did not receive copies and
issuances from the other parties and the LA,
respectively.42 However, as correctly pointed out by the CA,
NPI was furnished via courier of a copy of the amended
complaint filed by the respondents against it as shown by LBC
Receipt No. 125158910840.43 It is also apparent that NPI was
also furnished with the respondents' Position Paper, Reply,
and Rejoinder.44 Verily, NPI was indeed accorded due process,
but as the LA mentioned, the former chose not to file any
position paper or appear in the scheduled conferences.45
Assuming arguendo that NPI was somehow deprived of due

process by either of the labor tribunals, such defect was cured
by: (a) NPI's filing of its motion for reconsideration before the
NLRC; (b) the NLRC's subsequent issuance of its Resolution
dated August 30, 2013 wherein the tribunal considered all
ofNPI's arguments as contained in its motion; and (c) NPI's
subsequent elevation of the case to the CA. In Gonzales v.
Civil Service Commission,46 the Court reiterated the rule that
"[a]ny seeming defect in [the] observance [of due process] is
cured by the filing of a motion for reconsideration," and that
"denial of due process cannot be successfully invoked by a
party who [was] afforded the opportunity to be heard x x
x."47 Similarly, in Autencio v. Manara,48 it was held that
defects in procedural due process may be cured when the
party has been afforded the opportunity to appeal or to seek
reconsideration of the action or ruling complained of.49
Evidently, the foregoing shows that NPI was not denied due
process of law as it was afforded the fair and reasonable
opportunity to explain its side.
II.
In holding NPI jointly and severally liable with ODSI for the
monetary awards in favor of respondents, both the NLRC and
the CA held that based on the provisions of the Distributorship
Agreement between them, ODSI is merely a labor-only
contractor of NPI.50 In this regard, the CA opined that the
following stipulations of the said Agreement evinces that NPI
had control over the business of ODSI, namely, that: (a) NPI
shall offer to ODSI suggestions and recommendations to
improve sales and to further develop the market; (b) NPI
prohibits ODSI from exporting its products (the No-Export
provision); (c) NPI provided standard requirements to ODSI
for the warehousing and inventory management of the sold
goods; and (d) prohibition imposed on ODSI to sell any other
products that directly compete with those of NPI.51
However, a closer examination of the Distributorship

Agreement reveals that the relationship of NPI and ODSI is
not that of a principal and a contractor (regardless of whether
labor-only or independent), but that of a seller and a
buyer/re-seller. As stipulated in the Distributorship
Agreement, NPI agreed to sell its products to ODSI at
discounted prices,52 which in turn will be re-sold to identified
customers, ensuring in the process the integrity and quality of
the said products based on the standards agreed upon by the
parties.53 As aptly explained by NPI, the goods it
manufactures are distributed to the market through various
distributors, e.g., ODSI, that in turn, re-sell the same to
designated outlets through its own employees such as the
respondents. Therefore, the reselling activities allegedly
performed by the respondents properly pertain to ODSI,
whose principal business consists of the "buying, selling,
distributing, and marketing goods and commodities of every
kind" and "[entering] into all kinds of contracts for the
acquisition of such goods [and commodities]."54
Thus, contrary to the CA's findings, the aforementioned

stipulations in the Distributorship Agreement hardly
demonstrate control on the part of NPI over the means and
methods by which ODSI performs its business, nor were they
intended to dictate how ODSI shall conduct its business as a
distributor. Otherwise stated, the stipulations in the
Distributorship Agreement do not operate to control or fix the
methodology on how ODSI should do its business as a
distributor of NPI products, but merely provide rules of
conduct or guidelines towards the achievement of a mutually
desired result55 - which in this case is the sale of NPI products
to the end consumer. In Steelcase, Inc. v. Design
International Selections, Inc.,56 the Court held that the
imposition of minimum standards concerning sales, marketing,
finance and operations are nothing more than an exercise of
sound business practice to increase sales and maximize
profits, to wit:
ChanRobles Vi rtualaw lib rary
Finally, both the CA and DISI rely heavily on the Dealer

Performance Expectation required by Steelcase of its
distributors to prove that DISI was not functioning
independently from Steelcase because the same imposed
certain conditions pertaining to business planning,
organizational structure, operational effectiveness and
efficiency, and financial stability. It is actually logical to expect
that Steelcase, being one of the major manufacturers of office
systems furniture, would require its dealers to meet several
conditions for the grant and continuation of a distributorship
agreement. The imposition of minimum standards
concerning sales, marketing, finance and operations is
nothing more than an exercise of sound business
practice to increase sales and maximize profits for the
benefit of both Steelcase and its distributors. For as
long as these requirements do not impinge on a
distributor's independence, then there is nothing wrong
with placing reasonable expectations on
them.57 (Emphasis and underscoring supplied)
Verily, it was only reasonable for NPI - it being a local arm of
one of the largest manufacturers of foods and grocery
products worldwide - to require its distributors, such as ODSI,
to meet various conditions for the grant and continuation of a
distributorship agreement for as long as these conditions do
not control the means and methods on how ODSI does its
distributorship business, as shown in this case. This is to
ensure the integrity and quality of the products which will
ultimately fall into the hands of the end consumer.
Thus, the foregoing circumstances show that ODSI was not a

labor only contractor of NPI; hence, the latter cannot be
deemed the true employer of respondents. As a consequence,
NPI cannot be held jointly and severally liable to ODSI's
monetary obligations towards respondents.
WHEREFORE, the petition is GRANTED. The Decision dated

March 26, 2015 and the Resolution dated September 17, 2015
of the Court of Appeals in CA-G.R. SP No. 132686 are
hereby REVERSED and SET ASIDE. Accordingly, the Decision
dated May 30, 2013 and the Resolution dated August 30,
2013 of the National Labor Relations Commission in LAC No.
02-000699-13/NCR-03-04761-12
are MODIFIED, DELETING petitioner Nestle Philippines,
Inc.'s solidary liability with Ocho de Septiembre, Inc. (ODSI)
for the latter's monetary obligations to respondents Benny A.
Puedan, Jr., Jayfer D. Limbo, Brodney N. Avila, Arthur C.
Aquino, Ryan A. Miranda, Ronald R. Alave, Johnny A. Dimaya,
Marlon B. Delos Reyes, Angelito R. Cordova, Edgar S. Barruga,
Camilo B. Cordova, Jr., Jeffry B. Languisan, Edison U.
Villapando, Jheimey S. Remolin, Mary Luz A. Macatalad,
Jenalyn M. Gamurot, Dennis G. Bawag, Raquel A. Abellera,
and Ricandro G. Guatno, Jr.

W.M. MANUFACTURING, INC., Petitioner, v. RICHARD R.
DALAG AND GOLDEN ROCK MANPOWER
SERVICES, Respondent.
DECISION
VELASCO JR., J.:
Nature of the Case
For consideration is the amended petition for review under

Rule 45 of the Rules of Court, assailing the February 21, 2013
Decision1 and September 17, 2013 Amended Decision2 of the
Court of Appeals (CA) in CA-G.R. SP No. 122425,3 which
declared petitioner W.M. Manufacturing, Inc. (WM MFG) and
respondent Golden Rock Manpower Services (Golden Rock)
solidarily liable to respondent Richard R. Dalag (Dalag) for the
latter's alleged illegal dismissal from employment.
The Facts
On January 3, 2010, petitioner, as client, and respondent

Golden Rock, as contractor, executed a contract denominated
as "Service Agreement,"4 which pertinently reads:
SERVICE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS
xxxx
The CONTRACTOR shall render, undertake, perform and

employ the necessary number of workers as the CLIENT may
need, at such dates and times as the CLIENT may deem
necessary.
The CLIENT shall have the right to request for replacement to

relieve such workers as the need arises for any reason
whatsoever and the CONTRACTOR undertakes to furnish a
replacement immediately as possible.
xxxx
There shall be no employer-employee relationship between

the CLIENT, on the one hand, and the persons assigned by the
CONTRACTOR to perform the services called for hereunder, on
the other hand.
In view of this, CONTRACTOR agrees to hold the CLIENT free

from any liability, cause(s) o(f) action and/or claims which
may failed (sic) by said workers including but not limited to
those arising from injury or death of any kind of nature that
may be sustained by them while in the performance of their
assigned tasks.
The CONTRACTOR hereby warrants compliance with the

provisions of the Labor Code of the Philippines as well as with
all other presidential decrees, general orders, letters of
instruction, laws rules and regulations pertaining to the
employment of a labor now existing or which may hereafter be
enacted, including the payment of wages, allowances,
bonuses, and other fringe benefits, and the CLIENT shall not
in any way be responsible for any claim for personal injury or
death, for wages, allowances, bonuses and other fringe
benefits, made either by the said personnel or by third parties,
whether or not such injury, death or claim by third parties,
whether or not such injury, death or claim arises out of, or in
any way connected with, the performance of personnel's
duties.
The CLIENT shall have the right to report to the CONTRACTOR

and protest any untoward act, negligence, misconduct,
malfeasance or nonfeasance of the said personnel and the
contractor alone shall have the right to discipline the said
personnel.
The CONTRACTOR shall fully and faithfully comply with the

provisions of the New Labor Code, as well as with other laws,
rules and regulations, pertaining to the employment of labor
which is now existing or which hereafter be promulgated or
enacted.
In relation to the Service Agreement, Golden Rock, on April
26, 2010, engaged the services of respondent Dalag as a
factory worker to be assigned at petitioner's factory. For this
purpose, respondents inked a five-month Employment
Contract For Contractual Employees (Employment
Contract)5 that reads:
EMPLOYMENT CONTRACT FOR CONTRACTUAL EMPLOYEES
Dear Mr./Ms. Richard Dalag,
[Golden Rock] hire(s) you as a contractual worker/employee

to work at WM MFG under these conditions: chanRoblesv irt ual Lawlib rary
1) You will hold the position as (sic) Factory Worker.
2) Your employment as a CONTRACTUAL EMPLOYEE takes

effect on April 26, 2010 to Sept. 26, 2010. You will receive a
salary of P328.00 per day payable weekly/15'h (sic) day
monthly of the calendar month.
xxxx
7) Your employment as a CONTRACTUAL EMPLOYEE may be
terminated at any time for any cause, which may arise due to
inability to learn and undertake duties and responsibilities of
the position you are being employed for, inefficiency, violation
of company rules, policies and regulations, personnel
reduction and recession business. In either event, you will be
given a notice of termination during your working hours/day.
The company undertakes to pay your compensation for the

days actually worked and the company shall not be liable for
the period of the contract not run for any separation pay.
Notwithstanding the five-month duration stipulated in the
contract, respondent Dalag would allege in his complaint for
illegal dismissal6 that on August 7, 2010, one of WM MFCs
security guards prevented him from going to his work station
and, instead, escorted him to the locker room and limited his
activity to withdrawing his belongings therefrom. Having been
denied entry to his work station without so much as an
explanation from management, Dalag claimed that he was
illegally dismissed, his employment having been terminated
without either notice or cause, in violation of his right to due
process, both substantive and procedural.
Dalag further claimed that his assignment at WM MFG as side

seal machine operator was necessary and desirable for the
company's plastic manufacturing business, making him a
regular employee entitled to benefits under such
classification.7 He likewise alleged that WM MFG and Golden
Rock engaged in the illegal act of labor-only contracting based
on the following circumstances: that all the equipment,
machine and tools that he needed to perform his job were
furnished by WM MFG; that the jobs are to be performed at
WM MFCs workplace; and that he was under the supervision of
WM MFCs team leaders and supervisors.
The complaint, docketed as LAC No. 03-000673-11, was

lodged against WM MFG, Golden Rock, Jocelyn Hernando
(Hernando), Watson Nakague (Nakague) and Pablo Ong
(Ong), the latter three individuals as officers of the impleaded
companies. In their joint position paper, therein respondents
argued that Dalag was not dismissed and that, on the
contrary, it was he who abandoned his work. They offered as
proof WM MFG's memos8 addressed to Dalag, which ordered
him to answer within 24-hours the accusations relating to the
following alleged infractions: gross negligence, qualified theft,
malicious mischief, incompetence, grave misbehaviour,
insubordination, dishonesty, and machine sabotage.9 Based on
the memos and the affidavits submitted by his former co-
workers,10 Dalag repeatedly failed to immediately report to
management the breakdowns of the side-seal machine he was
assigned to operate; that he did not report that the machine's
thermocouple wire and conveyor belt needed repair, causing
the damage on the belt to worsen and for the wire to
eventually break; and that he pocketed spare parts of
petitioner's machines without company management's
consent.
Memo 2010-19 dated August 7, 2010, the final memo WM

MFG attempted to serve Dalag, pertinently reads:11
Samakaluwid, matapos ang isinagawang imbestigasyon
tungkol sa mga insidenteng kinasangkutan mo.
Napagdesisyunan na ng Management na magbaba ng Final
Decision na ikaw ay patawan ng suspension at pinagrereport
sa Golden Rock Agency, ito ay clahil sa mga alegasyon na
nagpapatunay na ikaw ay nagkasala at lumabag sa Patakaran
ng kumpanyang ito.
Dalag, however, allegedly refused to receive the memos, and
instead turned his back on his superiors, informing them that
he will no longer return, and then walked away. And on that
very same day, WM MFG, through a letter addressed to
Golden Rock, informed the manpower company of its intention
to exercise its right to ask for replacement employees under
the Service Agreement. As per the letter, WM MFG no longer
needed Dalag's services.12
The parties would later file their respective replies in support

of the allegations and arguments raised in their position
papers.13
Ruling of the Labor Arbiter
On January 24, 2011, Labor Arbiter Eduardo G. Magno

rendered a Decision14 in LAC No. 03-000673-11 dismissing
Dalag's complaint. The dispositive portion of the Decision
reads:
WHEREFORE, the Complaint is hereby DISMISSED for lack of
merit.
However, respondents are hereby ordered to pay his unpaid

wages for three days in the amount of P1,212.00
SO ORDERED.
Citing Machica v. Roosevelt Center Services, Inc.,15 the Labor
Arbiter ratiocinated that the burden of proving actual dismissal
is upon the shoulders of the party alleging it; and that WM
MFG and Golden Rock can only be burdened to justify a
dismissal if it, indeed, took place. Unfortunately for Dalag, the
Labor Arbiter did not find substantial evidence to sustain a
finding that he was, in the first place, actually dismissed from
employment. As observed by the Labor Arbiter:16
Records show that complainant [Dalag] last reported for work
on August 6, 2010 and filed his complaint for illegal dismissal
on August 9, 2010. However, [Dalag] failed to establish the
fact of his alleged dismissal on August 07, 2010.
As established by respondents [WM MFG, Golden Rock,

Hernando, Nakague, and Ong], [Dalag] was hired by [Golden
Rock] as contractual employee on April 26, 2010 until
September 26, 2010 and was assigned at its client [WM MFG].
[Dalag] failed to present any letter of termination of his

employment by his employer [Golden Rock].
A party alleging a critical fact must support his allegation with

substantial evidence for any decision based on
unsubstantiated allegation cannot stand as it will offend due
process.
There is no illegal dismissal to speak of where the employee

was not notified that he had been dismissed from his
employment nor he was prevented from returning to his work.
(words in brackets added, citations omitted)
Plainly, between WM MFG and Golden Rock, the Labor Arbiter
considered the latter as Dalag's true employer. Thus, Dalag's
termination from employment, if any, ought to come not from
WM MFG but from Golden Rock. Without such termination,
actual or constructive, Dalag's complaint cannot prosper for
there was no dismissal to begin with, legal or otherwise.
Obviously aggrieved by the Labor Arbiter's ruling, Dalag

interposed an appeal with the National Labor Relations
Commission (NLRC).
Rulings of the NLRC

On May 31,2011, Dalag obtained a favorable ruling from the
NLRC through its Decision17 in NLRC NCR CASE NO. 08-11002-
10, which granted his appeal in the following wise:
WHEREFORE, in view of the foregoing premises, the appeal of
the complainant is GRANTED. The assailed Decision dated
January 24, 2011 is hereby REVERSED and SET ASIDE.
Judgment is now rendered declaring complainant to have been
illegally terminated from employment. Respondents W.M
Manufacturing, Inc., et. al., are hereby ordered to reinstate
immediately complainant to his former position without loss of
seniority rights and privileges computed from the time he was
actually dismissed or his compensation withheld up to the
time of actual reinstatement, which as of the decision,
amounted to a total of One Hundred Seven Thousand Seven
Hundred Thirty-Nine and 73/100 Pesos (P107,739.73), as
computed by the NLRC Computation Unit, exclusive of the
complainant's unpaid wages from August 4-6, 2010, in the
amount of P1,212.00 as previously awarded.
All other claims are hereby dismissed for lack of merit.
SO ORDERED.
In siding with respondent Dalag, the NLRC determined that
Dalag's true employer was WM MFG, who merely engaged
respondent Golden Rock as a labor-only contractor. To arrive
at this conclusion, the NLRC utilized the control test, thusly:18
x x x [T]he employment contract of the complainant only
showed that [Golden Rocld] hired [Dalag] as a factory worker
to be assigned to [WM MFG] and by all indications, Golden
Rock did not provide technical or special services [WM MFG].
Moreover, [WM MFG and Golden Rock] did not deny that the
machines or tools used by the complainant, including the work
premises, belonged to respondent [WM MFG], and not to the
agency.
[WM MFG]'s control and supervision over the work of [Dalag]

is indeed explicit, and as stated by [Dalag] he was supervised
not by Golden Rock but by the team leaders and supervisors
of [WM MFG]. And not only that, based on the evidence
submitted by respondent [WM MFG], it was the latter who
even took the pains of investigating the alleged infractions of
[Dalag]. By [WM MFG and Golden Rock]'s own allegation, it
was [WM MFG] who issued memos to [Dalag] directing him to
explain several infractions allegedly committed. All those
notices and memoranda, which according to [WM MFG]
[Dalag] refused to receive, emanated from [WM MFG], and
not from Golden Rock. This only demonstrates that the
complainant is not an employee of [Golden Rock] but of [WM
MFG].
The so-called "control test" in determining employer-employee

relationship is applicable in the instant case. In this case, [WM
MFG] reserved the right to control the complainant not only as
to the result of the work to be done but also to the means and
methods by which the same is to be accomplished. Hence,
clearly, there is an employer-employee between [WM MFG]
and [Dalag].
Aside from applying the control test, the Commission likewise
gave credence to Dalag's postulation that several other factors
point to Golden Rock's nature as a labor-only contractor, a
mere agent. The NLRC outlined these considerations as
follows: that Golden Rock supplied WM MFG with employees
that perform functions that are necessary, desirable, and
directly related to the latter's main business;19 that there is an
absence of proof that Golden Rock is involved in permissible
contracting services20 and that it carries on an independent
business for undertaking job contracts other than to WM
MFG;21 and that both WM MFG and Golden Rock even jointly
submitted pleadings to the NLRC, with the same submission
and defenses, and even under the same representation.22 On
account of these circumstances, the NLRC deemed the
contractual relation between WM MFG and Golden Rock as one
of labor-only contracting, akin to that of a principal and his
agent. In light of this determination, the NLRC held that they
are, therefore, jointly and severally liable23 to WM MFG's
illegally dismissed employees that were supplied by Golden
Rock.
Dalag, having been prevented from reporting to work without

just cause and without being afforded the opportunity to be
heard, is one of such illegally dismissed employees to whom
Golden Rock and petitioner are solidarily liable, so the NLRC
ruled. In its initial findings, the NLRC held that the attempt to
serve Dalag copies of the memoranda did not constitute
sufficient notice for there was no proof of service or even of an
attempt thereof. The Commission explained that assuming for
the sake of argument that Dalag, indeed, refused to receive
copies of the memos personally served, WM MFG's remedy
was then to serve them through registered mail in order to be
considered as compliance with the procedural requirement of
notice.24 WM MFG's failure to comply with the same then
resulted in Dalag being deprived of his procedural due process
right.
Moreover, assuming even further that there was no deviation

from procedure, the NLRC held that the contents of the
memos offered by petitioner in evidence do not amount to
valid cause for they merely constituted allegations, not proof,
of Dalag's infractions. As noted by the NLRC, no formal
investigation followed the attempt to serve Dalag copies of the
memoranda. Thus, to the mind of the Commission, the
veracity of the allegations in the memoranda were not verified
and cannot, therefore, be taken at face value.25
cralawred
Dalag's legal victory, however, would be short-lived, for

eventually, WM MFG and Nakague would jointly move for
reconsideration, which would be granted by the NLRC.
In its second Decision26 promulgated on September 20, 2011,

the NLRC absolved Dalag's alleged employers from liability, as
follows:
WHEREFORE, in view of the foregoing premises, the Motion
for Reconsideration is hereby, GRANTED. The assailed
Decision dated May 31, 2011 is hereby REVERSED and SET
ASIDE. The Decision of Labor Arbiter Eduardo G. Magno dated
January 24, 2011 is hereby REINSTATED.
SO ORDERED.
To justify the turnabout, the NLRC took into consideration
Certificate of Registration No. NCR-CFO-091110-0809-
00327 dated August 27, 2009 and issued by the Department of
Labor and Employment (DOLE) to Golden Rock pursuant to
Department Order No. 18-02, s. 2002,28 and Articles 106-109
of the Labor Code, on job-contracting.29 The said certificate,
along with the copy of the Service Agreement between WM
MFG and Golden Rock and Dalag's Employment Contract, was
submitted for the first time as attachments to WM MFG and
Nakague's motion for reconsideration, but were, nevertheless,
admitted by the NLRC in the interest of substantial justice.30
With the introduction of these new pieces of evidence, the

commission ruled anew that its previous observationthat
there was an absence of proof that Golden Rock is a legitimate
job contractorhas effectively been refuted. What is more,
the NLRC no longer relied solely on the control test and
instead applied the four-fold test in ascertaining Dalag's true
employer. And in reviewing its earlier Decision, the NLRC
noted that it is Golden Rock who paid Dalag's salaries and
wages; that under the Service Agreement, it reserved unto
itself the power to dismiss Dalag; and that it has sole control
over the exercise of Dalag's employment.31
The NLRC then proceeded to reiterate the Labor Arbiter's

position that for the employer's burden to prove that its
dismissal of an employee was for just cause to arise, the
employee must first demonstrate that he was, in the first
place, actually dismisseda fact which Dalag failed to
establish. Lastly, the NLRC noted that Dalag reported for work
for only three (3) months and cannot, therefore, be
considered a regular employee.32
Rulings of the Court of Appeals
Expectedly, the September 20, 2011 NLRC Decision prompted

Dalag to elevate the case to the CA via a Rule 65 petition for
certiorari, docketed as CA-G.R. SP No. 122425, alleging that
the commission committed grave abuse of discretion when it
reversed its own ruling. Specifically, Dalag argued that it was
highly irregular for the Commission to have admitted the
documents belatedly offered by WM MFG as evidence,33 and
insisted that the NLRC did not err in its first Decision finding
that he was illegally dismissed.34 Meanwhile, WM MFG and
Nakague would counter that the petition to the CA ought to be
dismissed outright since Dalag failed to file a motion for
reconsideration of the NLRC's second Decision, a condition
sine qua non for filing a petition for certiorari under Rule 65.
They likewise point to the Entry of Judgment35 issued by the
NLRC, signifying that the second Decision of the NLRC has
already attained finality. To modify the same would then
violate the doctrine on the immutability of judgments.
On February 21, 2013, the appellate court rendered a Decision
favoring Dalag in the following wise:
WHEREFORE, the petition is GRANTED. The Decision Dated
September 20, 2011 of the National Labor Arbiter's
Commission, Second Division in NLRC NCR 08-11002-10 (LAC
No. 03-000673-11) is hereby REVERSED and SET ASIDE.
The NLRC's Decision dated May 31, 2011 is REINSTATED.
SO ORDERED.36 ChanRobles Vi rtua lawlib rary
Dispensing with the procedural arguments, the CA struck

down the contentions of both parties relating to the rigid
application of procedural rules.37 It held that rules of evidence
prevailing in courts of law or equity are not binding in labor
cases,38 and allow the admission of additional evidence not
presented before the Labor Arbiter, and submitted before the
NLRC for the first time on appeal,39 as in WM MFCs case.
As regards the alleged availability of a plain, speedy, and

adequate remedy at Dalag's disposal that bars the filing of a
petition for certiorari, the CA held that technical rules may be
relaxed in this regard in the interest of substantial justice.40 To
quote the appellate court:
In this case, a liberal construction of the rules is called for as
records show that petitioner filed the petition as a pauper
litigant. Technical rules of procedure may be relaxed to serve
the demands of substantial justice particularly in labor cases,
where the prevailing principle is that technical rules shall be
liberally construed in favor of the working class in accordance
with the demands of substantial justice. Rules of procedure
should also not be applied in a very rigid technical sense in
labor cases in order that technicalities would not stand in the
way of equitably and completely resolving the rights and
obligations of the parties. (citations omitted)
On to the merits, the CA discussed that Golden Rock's
Certificate of Registration is not conclusive evidence that the
company is an independent contractor.41 More controlling for
the CA was the failure of Golden Rock to prove the
concurrence of the requisites of a legitimate independent job
contractor according to jurisprudence.42 Absent proof that
Golden Rock has substantial capital and that it exercised
control over Dalag, the CA held that petitioner and Golden
Rock miserably failed to establish the latter's status as a
legitimate independent contractor.43 Finally, the appellate
court did not give credence to petitioner's claim of
abandonment since it failed to discharge the burden of proving
Dalag's unjustified refusal to return to work.44
Unfazed, WM MFG and Nakague moved for reconsideration of

the CA's ruling. On September 17, 2013, the CA rendered an
Amended Decision partially granting the motion and modifying
the decretal portion of its earlier ruling in the following wise:
WHEREFORE, the Motion for Reconsideration is PARTIALLY
GRANTED. The Decision, dated February 21, 2013 of this
Court which reads:
No. 03-000673-11) is hereby REVERSED and SET ASIDE. The
NLRC's Decision dated May 31, 2011 is REINSTATED.
SO ORDERED.
is hereby AMENDED to read:
No. 03-000673-11) is hereby REVERSED and SET ASIDE. The
NLRC's Decision dated May 31, 2011 is REINSTATED insofar as
the liability of Golden Rock Manpower Services and W.M.
Manufacturing, Inc. are concerned. The company officers,
Watson Nakague and Pablo Ong are absolved of liability.
SO ORDERED.
SO ORDERED.45 ChanRobles Vi rtua lawlib rary
Citing Delima v. Gois,46 the CA determined that the absence of

malice or bad faith on the part of Nakague and Ong negated
any possibility of liability for Dalag's illegal dismissal.
Grounds for the Petition
Unsatisfied with the outcome, petitioner WM MFG interposed a

petition for review against respondent Dalag, anchored on the
following assignment of errors:
I
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS

SERIOUSLY ERRED IN DECIDING A QUESTION OF SUBSTANCE
NOT IN ACCORD WITH THE LAW AND APPLICABLE DECISIONS
OF THIS HONORABLE COURT WHEN IT GAVE DUE COURSE TO
DALAG'S PETITION NOTWITHSTANDING THE FACT THAT HE
FAILED TO FILE A MOTION FOR RECONSIDERATION OF THE
NLRC'S 20 SEPTEMBER 2011 DECISION, A CONDITION SINE
QUA NON FOR ONE TO AVAIL THE EXTRAORDINARY REMEDY
OF CERTIORARI UNDER RULE 65 OF THE RULES OF COURT
II

OF THIS HONORABLE COURT WHEN IT GAVE DUE COURSE TO
DALAG'S PETITION FOR CERTIORARI NOTWITHSTANDING
THE FACT THAT THE NLRC'S 20 SEPTEMBER 2011 DECISION
HAD LONG BECOME FINAL AND EXECUTORY
III

OF THIS HONORABLE COURT IN FINDING THAT RESPONDENT
WAS AN EMPLOYEE OF THE COMPANY AND THAT HE WAS
ILLEGALLY DISMISSED47 ChanRobles Virtualawl ibra ry
Petitioner maintains that the filing of a motion for

reconsideration prior to resorting to certiorari cannot be
dispensed with merely on account of the filer's status as a
pauper litigant; that the CA violated the doctrine on the
immutability of judgments when it reversed the NLRC's second
final and executory Decision; that Golden Rock is Dalag's true
employer, not WM MFG; that Golden Rock is a legitimate
independent contractor with whom WM MFG cannot be held
solidarity liable; and that Dalag abandoned his work, and was
not in any way dismissed.
In his Comment, Dalag, substantially reiterating the May 31,

2011 Decision of the NLRC in NLRC NCR CASE NO. 08-11002-
10 as affirmed by the appellate court, maintained that the
non-filing of a motion for reconsideration in this case falls
under one of the recognized exceptions in jurisprudence, and
is, therefore, excused; that the CA did not err in finding that
WM MFG and Golden Rock engaged in labor-only contracting
and should be considered solidarity liable; and that he was
illegally dismissed.
By claiming that Golden Rock is an independent contractor,

the Court noted that petitioner's claim could potentially shift
liability to Golden Rock alone, should the Court maintain the
finding that Dalag was illegally dismissed. Given this
circumstance, and the fact that Golden Rock has actively
participated in the proceedings a quo, the Court, by its
November 24, 2014 Resolution,48 directed petitioner to
implead Golden Rock in the instant case. Petitioner, on
January 28, 2015, complied with the directive and impleaded
Golden Rock in its Amended Petition for Review on Certiorari.
On June 23, 2015, Golden Rock submitted its Comment

alleging that all the elements of legitimate contracting are
present in this case. Moreover, it joined petitioner in its claim
that Dalag was not terminated, illegally or otherwise, but
abandoned his post.
The Issues
The issues in this case can be summarized, thusly:
1. Whether or not Dalag is excused from not moving for

reconsideration before filing a petition for certiorari;
2. Whether or not WM MFG and Golden Rock engaged in

labor-only contracting;
3. Whether or not Dalag was illegally dismissed; and
4. What monetary award/s is Dalag entitled to, if any, and at

what amount.
The Court's Ruling
The petition is meritorious.
Respondent Dalag was excused from filing a Motion for

Reconsideration before filing a Petition for Certiorari
under Rule 65 with the CA
As a general rule, a motion for reconsideration is a
prerequisite for the availment of a petition for certiorari under
Rule 65. The intention behind the requirement is to afford the
public respondent an opportunity, the NLRC in this case, to
correct any error attributed to it by way of re-examination of
the legal and factual aspects of the case.49 The Court,
however, has declined from applying the rule rigidly in certain
scenarios. The well-recognized exceptions are enumerated
in Romy 's Freight Service v. Castro,50 viz:
(a) Where the order is a patent nullity, as where the court a
quo has no jurisdiction;
(b) Where the questions raised in the certiorari

proceeding have been duly raised and passed upon by
the lower court, or are the same as those raised and
passed upon in the lower court;
(c) Where there is an urgent necessity for the resolution of the

question and any further delay would prejudice the interests
of the Government or of the petitioner or the subject matter of
the action is perishable;
(d) Where, under the circumstances, a motion for

reconsideration would be useless;
(e) Where petitioner was deprived of due process and there is

extreme urgency for relief;
(f) Where, in a criminal case, relief from an order of arrest is

urgent and the granting of such relief by the trial court is
improbable;
(g) Where the proceedings in the lower court are a nullity for
lack of due process;
(h) Where the proceedings were ex parte or in which the

petitioner had no opportunity to object; and
(i) Where the issue raised is one purely of law or where public
interest is involved, (emphasis added)
Verily, the CA is mistaken in looking to respondent Dalag's
indigency to exempt the latter from complying with procedural
rules. Under the Rules of Court, a pauper or indigent litigant is
exempted from the payment of legal fees,51 but not from filing
a motion for reconsideration before resorting to the
extraordinary remedy of certiorari.
Be that as it may, the second exception (i.e. that the

questions raised in the certiorari proceeding have been duly
raised and passed upon by the lower court, or are the same as
those raised and passed upon in the lower court) may still be
invoked to achieve the same result of exempting Dalag from
moving for reconsideration of the September 20, 2011 NLRC
Decision. As extensively discussed, the contractual relation
between WM MFG and Golden Rock, as well as the validity of
Dalag's dismissal, have consistently been the main issues in
the flip-flopping rulings in the proceedings below. Moreover,
noteworthy is that the ruling that respondent Dalag assailed
by certiorari was the NLRC's secondDecision, petitioner
having already moved for reconsideration of the labor
commission's May 31, 2011 findings. Thus, to settle the issues
once and for all, the CA aptly deemed it prudent, and
rightfully so, to dispense with the procedural requirement of
reconsideration and to address the substantive issues head
on.
WM MFG and Golden Rock engaged in labor-only

contracting
Delving into the core of the controversy, the Court first

determines whether or not petitioner WM MFG and Golden
Rock engaged in labor-only contracting. Both companies claim
that Golden Rock is a legitimate contractor for manpower
services, relying on its Certificate of Registration and their
contractual stipulation leaving Golden Rock with the power to
discipline its employees.
We are not convinced.
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.52
Under Art. 106 of Presidential Decree No. 442, otherwise

known as the Labor Code of the Philippines, the Secretary of
Labor and Employment (SOLE) may issue pertinent
regulations to protect the rights of workers against the
prohibited practice of labor-only contracting. Pursuant to this
delegated authority, the SOLE, throughout the years,
endeavored to provide clearer guidelines in distinguishing a
legitimate manpower provider from a labor-only contractor,
beginning with Department Order No. 10,53 series of 1997,
issued on May 30, 1997; followed by Department Order No.
03,54 series of 2001, issued on May 8, 2001; Department
Order 18-02,55 series of 2002, issued on February 21, 2002;
and by Department Order No. 18-A,56 series of 2011,
promulgated on November 14, 2011. Of these executive
edicts, Department Order 18-02 (DO 18-02) is the applicable
issuance at the time respondent Dalag complained of his
alleged illegal dismissal.57
Section 5 of DO 18-02 laid down the criteria in determining

whether or not labor-only contracting exists between two
parties, 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,
for a principal, and any of the following elements are
present: chanRoblesvirtual Lawli bra ry
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.
xxxx
It is clear from the above section that the essential element in
labor-only contracting is that the contractor merely recruits,
for a principal. However, the presence of this essential
element is not enough and must, in fact, be accompanied by
any one of the confirmatory elements to be considered a
labor-only contractor within the contemplation of the rule.58
The presence of the essential element in the extant case
cannot be gainsaid. This much is clearly provided in the
service agreement between WM MFG and Golden Rock:
The CONTRACTOR shall render, undertake, perform
and employ the necessary number of workers as the
CLIENT may need, at such dates and times as the CLIENT
may deem necessary.
As to the presence of the confirmatory elements, Dalag draws
our attention to (1) Golden Rock's lack of substantial capital,
coupled with the necessity and desirability of the job he
performed in WM MFG; and (2) Golden Rock's lack of control
over the employees it supplied WM MFG.
i. Golden Rock lacked substantial capital
Anent the first confirmatory element, petitioner and Golden

Rock refuted the latter's alleged lack of substantial capital by
presenting its Certificate of Registration from the DOLE
Regional Office in Valenzuela City. Although not conclusive
proof of legitimacy as a manpower provider, the certification
nevertheless prevented the presumption of labor-only
contracting from arising.59 In its stead, the certification gave
rise to a disputable presumption that the contractor's
operations are legitimate. As provided in Gallego v. Bayer
Philippines, Inc.:60
The DOLE certificate having been issued by a public officer, it
carries with it the presumption that it was issued in the
regular performance of official duty. Petitioners bare
assertions fail to rebut this presumption. Further, since the
DOLE is the agency primarily responsible for regulating the
business of independent job contractors, the Court can
presume, in the absence of evidence to the contrary, that it
had thoroughly evaluated the requirements submitted by
PRODUCT IMAGE before issuing the Certificate of Registration.
xxx
Among the requirements for registration is a copy of the
contractor's audited financial statements, if the applicant is a
corporation, partnership, cooperative or a union, or a copy of
the latest income tax return if the applicant is a sole
proprietorship.61 Upon submission of the requirements, the
DOLE Regional Director concerned will then have seven (7)
days to evaluate the information supplied and determine
whether the application ought to be approved or denied. Since
Golden Rock's application was approved, both petitioner and
respondent company claimed that the DOLE Regional Office
found Golden Rock's capitalization to be satisfactory and
substantial, contrary to Dalag's claim.
Petitioner and Golden Rock's claim fails to convince.
It may be that the DOLE Regional Director for the National

Capital Region was satisfied by Golden Rock's capitalization as
reflected on its financial documents, but the basis for
determining the substantiality of a company's "capital" rests
not only thereon but also on the tools and equipment it owns
in relation to the job, work, or service it provides. DO 18-02
defines "substantial capital or investment" in the context of
labor-only contracting as referring not only to a contractor's
financial capability, but also encompasses the 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.62
Here, the Certificate of Registration may have prevented the

presumption of labor-only contracting from arising, but the
evidence Dalag adduced was sufficient to overcome the
disputable presumption that Golden Rock is an independent
contractor. To be sure, in performing his tasks, Dalag made
use of the raw materials and equipment that WM MFG
supplied. He also operated the side-seal machine in the
workplace of WM MFG, not of Golden Rock. With these
attendant circumstances, the Court rules that the first
confirmatory element indubitably exists.
ii. WM MFG exercised control over the employees supplied by

Golden Rock
As to the second confirmatory element (i.e. control), petitioner

argues that the Service Agreement it forged with Golden Rock
specifically provides that the latter exclusively exercises
control over the employees it assigns to WM MFG. What is
more, it is Golden Rock who paid for Dalag's salaries and
wages, a badge of their employer-employee relation.
Petitioner's claim does not persuade.
The second confirmatory element under DO 18-02 does not

require the application of the economic test and, even more
so, the four-fold test to determine whether or not the relation
between the parties is one of labor-only contracting. All it
requires is that the contractor does not exercise control over
the employees it supplies, making the control test of
paramount consideration. The fact that Golden Rock pays for
Dalag's wages and salaries then has no bearing in resolving
the issue.
Under the same DO 18-02, the "right to control" refers to the

right to determine not only the end to be achieved, but also
the manner and means to be used in reaching that
end.63 Here, notwithstanding the contract stipulation leaving
Golden Rock the exclusive right to control the working warm
bodies it provides WM MFG, evidence irresistibly suggests that
it was WM MFG who actually exercised supervision over
Dalag's work performance. As culled from the records, Dalag
was supervised by WM MFG's employees. Petitioner WM MFG
even went as far as furnishing Dalag with not less than seven
(7) memos directing him to explain within twenty-four (24)
hours his alleged work infractions.64 The company likewise
took pains in issuing investigation reports detailing its findings
on Dalag's culpability.65 Clearly, WM MFG took it upon itself to
discipline Dalag for violation of company rules, regulations,
and policies, validating the presence of the second
confirmatory element.
Having ascertained that the essential element and at least one

confirmatory element obtain in the extant case, there is then
no other result than for the Court to rule that WM MFG and
Golden Rock engaged in labor-only contracting. As such, they
are, by legal fiction, considered principal and agent,
respectively, jointly and severally liable to their illegally
dismissed employees, in accordance with Art. 109 of the Labor
Code66 and Sec. 19 of DO 18-02.67
We stress, however, that this finding of labor-only contracting

does not preclude the Court from re-examining, in future
cases, the nature of the contractual relationship between WM
MFG and Golden Rock under Department Order No. 18-A,
series of 2011, which redefined the parameters of legitimate
service contracting, private recruitment and placement
services, and labor-only contracting.
WM MFG dismissed Dalag for just cause, but did not

comply with the procedural requirements
This brings us to the question of whether or not Dalag was
illegally dismissed.
i. Dalag did not abandon his employment, but was in fact

dismissed
The Court is not unmindful of the rule in labor cases that the
employer has the burden of proving that the termination was
for a valid or authorized cause; but fair evidentiary rule
dictates that before an employer is burdened to prove that
they did not commit illegal dismissal, it is incumbent upon the
employee to first establish by substantial evidence that he or
she was, in fact, dismissed.68
A cursory reading of the records of this case would reveal that

the fact of Dalag's dismissal was sufficiently established by
petitioner's own evidence.
Recall that Memo 2010-19 dated August 7, 2010 indefinitely

suspended Dalag from work. This is in hew with Dalag's
allegation in his complaint that on even date, he was
prevented by WM MFG's security guard from proceeding to his
work station, and was told to withdraw his belongings from his
locker. Noteworthy, however, is that while Memo 2010-19
merely imposed an indefinite period of suspension, WM MFG's
true intentionto sever its ties with Dalagis brought to the
fore by its letter dated August 9, 2010, informing Golden Rock
that it no longer requires respondent Dalag's services.69
We cannot subscribe to petitioner's contrary view that Dalag

was never terminated, legally or otherwise, and that it was he
who abandoned his employment. On this point, the teaching
in MZR Industries v. Colambot70 is apropos:
In a number of cases, this Court consistently held that to
constitute abandonment of work, two elements must be
present: first, the employee must have failed to report for
work or must have been absent without valid or justifiable
reason; and second, there must have been a clear
intention on the part of the employee to sever the
employer-employee relationship manifested by some
overt act.
In the instant case, other than Colambot's failure to report

back to work after suspension, petitioners failed to present
any evidence which tend to show his intent to abandon his
work. It is a settled rule that mere absence or failure to report
for work is not enough to amount to abandonment of work.
There must be a concurrence of the intention to abandon and
some overt acts from which an employee may be deduced as
having no more intention to work. On this point, the CA was
correct when it held that:
Mere absence or failure to report for work, even after notice to
return, is not tantamount to abandonment. The burden of
proof to show that there was unjustified refusal to go back to
work rests on the employer. 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 employee's ultimate act of putting an end to his
employment. Furthermore, it is a settled doctrine that the
filing of a complaint for illegal dismissal is inconsistent
with abandonment of employment. An employee who
takes steps to protest his dismissal cannot logically be
said to have abandoned his work. The filing of such
complaint is proof enough of his desire to return to work, thus
negating any suggestion of abandonment. (emphasis added)
A prayer for reinstatement in a complaint for illegal dismissal
signifies the employee's desire to continue his working relation
with his employer, and militates against the latter's claim of
abandonment. Pursuant to the age-old adage that he who
alleges must prove,71 it becomes incumbent upon the
employer to rebut this seeming intention of the employee to
resume his work. Hence, to prove abandonment, the onus
rests on the employer to establish by substantial evidence the
employee's non-interest in the continuance of his
employment, which petitioner herein failed to do. On the
contrary, Dalag's immediate filing of a complaint after his
dismissal, done in a span of only two (2) days, convinces us of
his intent to continue his work with WM MFG.
With the foregoing discussion, the burden now shifts to

petitioner and Golden Rock to justify the legality of Dalag's
dismissal, by proving that the termination was for just cause,
and that the employee was afforded ample opportunity to be
heard prior to dismissal.72
ii. Dalag's dismissal was for just cause
The Labor Code mandates that an employee cannot be

terminated except for just or authorized cause, lest the
employer violate the former's constitutionally guaranteed right
to security of tenure.73 Relevant hereto, the just causes for
termination of employment are enumerated under Art. 282 of
P.D. 442, as follows:
1. Serious misconduct or willful disobedience by the

employee of the lawful orders of his employer or
representative in connection with his work;
2. Gross and habitual neglect by the employee of his

duties;
3. Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
4. Commission of a crime or offense by the employee against

the person of his employer or any immediate member of
his family or his duly authorized representatives; and
5. Other causes analogous to the foregoing. (emphasis

added)
To constitute just cause for an employee's dismissal, the

neglect of duties must not only be gross but also habitual.
Gross neglect means an absence of that diligence that an
ordinarily prudent man would use in his own
affairs.74 Meanwhile, to be considered habitual, the negligence
must not be a single or isolated act.75
Here, WM MFG duly established that Dalag was terminated for

just cause on the second ground. The litany of Dalag's
infractions, as detailed in memos 2010-13 up to 2010-18
demonstrated how Dalag repeatedly failed to report to his
supervisor the problems he encountered with the side-seal
machine assigned to nim for operation. This failure resulted in
repeated machine breakdowns that caused production and
delivery delays, and lost business opportunities for the
company. As stated in the memos:
MEMO 2010-1376
Base sa inireport na insidente reference number CTRL #2010-

27. Ikaw ay nakasira |ng] Conveyor Belt ng Sideseal Machine
No.02 noong ika-20 ng Hulyo 2010 dahil sa iyong
kapabayaan.
Lumalabas na ikaw ay nagkasala ng Gross Negligence na

nagresulta sa pagkakasira ng mamahaling gamit ng
kompanya.
Ang ganitong pangyayari ay nagdulot ng malaking abala sa

produksyon at pagkaantala sa delivery. Sa panahong kung
saan mahigpit ang kompetisyon at pabago-bagong
ekonomiya, ang mga ganitong pangyayari at may lubhang
epekto sa kumpanya.
Ikaw ay binibigyan ng 24-oras para magsubmite sa Admin

office ng written explanation o depensa sa nangyari.
Inaasahan na itong pangyayari ay hindi na mauulit. Ito rin ay
babala para sa iyo at pag alala na kailangan mag ingal at
umiwas sa paglabag sa Company Rules and Regulation.
MEMO2010-1477

28 Ang pagkasira mo ng Conveyor belt ay hindi mo ginawan
ng oral o written report ang pagkasira mo ng makina sa team
leader o sa maintenance o SINO MAN kahit na alam mo na ito
ay dapat mong gawin.
Lumalabas na ikaw ay nagkasala ng sadyang pagtatago o

paglilihim ng tunay na kalagayan ng makina na nagdulot ng
malaking negatibong epekto sa produksyon.
Ang ganitong pangyayari ay nagdulot ng malaking abala sa

produksyon at pagkaantala sa delivery. Sa panahong kung
saan mahigpit ang kompetisyon at pabago-bagong
ekonomiya, ang mga ganitong pangyayari at may lubhang
epekto sa kumpanya.

babala para sa iyo at pag alala na kailangan mag ingat at
MEMO2010-1678

30 Ang pagkasira ng manual heater ng sideseal machine
no.02 ay hindi mo nanaman pinaalam o ginawan ng report.

paglilihim ng tunay na kalagayan ng makina na nagdudulot ng
Ang di pagrereport mapa-verbal o written, pagtatago o

pagkukubli sa kundisyon ng makina ay nagdulot ng malaking
abala sa produksyon. Amg paglilihis ng tunay na pangyayari
ay nagdulot din ng pagkakaroon ng di pagkakaunawaan ng
Maintenance at ni Melvin Luna. Dahil dito nagkagulo at
nadelay ang produksyon.
Sa panahong kung saan mahigpit ang kumpetisyon at pabago-

bagong ekonomiya, ang mga ganitong pangyayari ay lubhang
nakakaapekto sa kumpanya.

Inaasahan na itong pangyayari ay Hindi na mauulit. Ito rin ay
MEMO2010-1779

31 Ang naputol na Thermocouple wire ng sideseal machine no.
02 at ang hindi mo paggawa ng report tungkol dito ay patunay
na walang dahilan para ito ay masira.

paglilihim ng tunay na kalagayan ng makina na nagdulot ng
Ang mga ganitong pangyayari na kahina-hinala at kaduda-

duda ay hindi maganda at dapat gayahin ng sinuman. Sa
panahong kung saan mahigpit ang kumpetisyon at pabago-
bago ang ekonomiya, ang mga ganitong pangyayari ay
lubhang nakakaapekto sa kumpanya.

MEMO 2010-1880
Base sa pangyayaring naganap, ang hindi pagsasabi o pag

amin na nasira ang makina ay napakalaking responsibilidad ng
isang operator. Sa kabila ng pagbigay ng memo sa iyo at
babala, nauulit pa rin ang insidente ng hindi mo pagreport sa
kahit anong paraan, mapawritten o verbal na pararan.
Ang paulit-ulit na pangyayari ay lubos na nakaapekto sa

produksyon. Dahil dito, nagkaroon ng pagkaantala at di
pagkadeliver ng mga produkto sa ating kliyente sa tamang
oras.
Ang ganitung gawain ay isang maliwanag na isang uri ng

kapabayaan, pananadya at hindi magandang halimbawa para
gayahin ng sinuman.
Contrary to the NLRC's May 31, 2011 Decision, as effectively
affirmed by the CA, Dalag's dismissal rested not on mere
suspicion alone as the allegations in the memos were
supported by written statements executed by Dalag's co-
workers and immediate superiors.81 As recounted by Melvin
Luna, who operates the same side-seal machine assigned to
Dalag, he frequently encounters problems when starting up
the equipment after Dalag was through with it, and that Dalag
usually leaves the machine unserviceable after use. This
practice was observed by Danilo Acosta, one of the team
leaders of WM MFG, as per his written statement. Dalag's own
team leader, Bonifacio Dimaano, likewise executed a written
statement to the effect that Dalag never reported any problem
with his side-seal machine.
Moreover, the NLRC's finding that WM MFG took no further

step in the form of administrative investigation to confirm its
suspicion is refuted by the Investigation Report82 that served
as basis for Dalag's "suspension." The Court notes that from
the dates the memos were issued, the earliest being July 20,
2010, until the date of Dalag's dismissal, August 7, 2010,
there was reasonable time for WM MFG to look into the
matter, and that it, in fact, did so. As per the Investigation
Report: chanRoblesv irt ual Lawlib rary
Kinalabasan ng Imbestigasyon ng Insidente:

1. Noong ika-20 ng Hulyo 2010 nalaman ni Melvin Luna na nasira ang conveyor belt
at di mapaandar ang Sideseal Machine No. 2. Ito ay nangyari dahil sa kapabayaan
ng kanyang kapalitan na si Richard Dalag. Bilang isang operator isa sa mga
binabantayan niya ay ang pag-ikot ng conveyor belt ngunit hindi niya napansin ang
paghinto nito habang umaandar ang makina na naging sanhi ng pagkakaroon ng
malaking butas ng conveyor belt.
2. Nabutas ang conveyor belt sa pamamagitan ng mainit na sealing bar na siyang

dumidiin dito. Ang hindi pag-ikot ng belt at madiin na puwersa ng mainit na sealing
bar sa isang parte ng belt ay mag-iiwan ng malalim na hiwa sa hindi umiikot na
belt.
3. Dahil sa hindi pagreport ng nakasriang si RICHARD DALAG, itong insidenteng ito ay

nagdulot ng di pagkakaunawaan sa pagitan ng Maintenance Staff at ng iyong
kapalitang si Melvin Luna.
4. Dahil rin dito, ito ay nagdulot ng malaking delays sa ating produksyon at di

pagkakadeliver ng produkto sa tamang oras sa kliyente.
xxxx
8. Napagalaman din ng Maintenance staff, Team Leader at Production Supervisor ang

mga hindi maipaliwanag na sira ng makina sa kabila ng maayos na kondisyon nito
bago ito hawakan ni RICHARD DALAG.
9. Ito ay hindi nangyari ng isang beses lamang kundi paulit ulit. Ang magkasunod na
insidente ng pagkasira ng manual heater at ng thermocouple wire at hindi paggawa
ni RICHARD DALAG ng report ay patunay na walang malinaw na dahilan upang
masira ang mga piyesa.
10. Ang paulit-ulit na hindi pagrereport ni RICHARD DALAG sa mga nagiging sira ng
makina ay hindi maganda at kahina-hinala na Gawain ng pananabotahe.
Hence, Dalag's gross and habitual neglect of his duty to report

to his superiors the problems he encountered with the side-
seal machine he was assigned to operate was well-
documented and duly investigated by WM MFG. The Court,
therefore, holds that there was, indeed, just cause to
terminate Dalag's employment under Art. 282(2) of the Labor
Code.
iii. Procedural requirements were not observed when Dalag's

employment was terminated
Anent the conformity of Dalag's dismissal to procedural
requirements, the cardinal rule in our jurisdiction is that the
employer must furnish the employee with two written notices
before the termination of his employment can be effected: (1)
the first apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the
second informs the employee of the employer's decision to
dismiss him. The twin notice rule is coupled with the
requirement of a hearing, which is complied with as long as
there was an opportunity to be heard, and not necessarily that
an actual hearing was conducted.83
In the case at bar, while petitioner submitted as evidence

memos that it supposedly attempted to serve Dalag, there
was no proof that these were, indeed, received by the
latter.84 By petitioner's own allegation, Dalag refused to
receive the same. Under such circumstance, the more prudent
recourse would have been to serve the memos through
registered mail instead of directly proceeding with the
investigation. As held in NEECO II v. NLRC:85
x x x That private respondent refused to receive the
memorandum is to us, too self-serving a claim on the part of
petitioner in the absence of any showing of the signature or
initial of the proper serving officer. Moreover, petitioner could
have easily remedied the situation by the expediency of
sending the memorandum to private respondent by registered
mail at his last known address as usually contained in the
Personal Data Sheet or any personal file containing his last
known address.
The non-service of notice effectively deprived Dalag of any, if
not ample, opportunity to be informed of and defend himself
against the administrative charges leveled against him, which
element goes into the very essence of procedural due
process.86
Dalag is only entitled to nominal damages, not full
backwages
In spite of the failure of WM MFG and Golden Rock to show

that they complied with the procedural requirements of a valid
termination under the Labor Code and its implementing rules,
Dalag's dismissal cannot be deemed tainted with illegality,
contrary to the CA's ruling,87 for the circumstance merely
renders the two companies solidarity liable to Dalag for
nominal damages. Instructional on this point is the doctrine
in JAKA Food Processing Corp. v. Pacot (JAKA).88 There, the
Court expounded that a dismissal for just cause under Art.
282 of the Labor Code implies that the employee concerned
has committed, or is guilty of, some violation against the
employer, i.e. the employee has committed some serious
misconduct, is guilty of some fraud against the employer, or
he has neglected his duties. Thus, it can be said that the
employee himself initiated the dismissal process. However, the
employer will still be held liable if procedural due process was
not observed in the employee's dismissal. In such an event,
the employer is directed to pay, in lieu of backwages,
indemnity in the form of nominal damages.89
Nominal damages are adjudicated in order that a right of the

plaintiff that has been violated or invaded by the defendant
may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.90 In
cases such as JAKA, the nominal damages awarded serves as
vindication or recognition of the employee's fundamental due
process right,91 and as a deterrent against future violations of
such right by the employer.92
The amount of nominal damages to be awarded is addressed

to the sound discretion of the court, taking into account the
relevant circumstances.93 Nonetheless, JAKA laid down the
following guidelines in determining what amount could be
considered proper:94
(1) if the dismissal is based on a just cause under Article

282 but the employer failed to comply with the notice
requirement, the sanction to be imposed upon him should be
tempered because the dismissal process was, in effect,
initiated by an act imputable to the employee; and
(2) if the dismissal is based on an authorized cause under

Article 283 but the employer failed to comply with the notice
requirement, the sanction should be stiffer because the
dismissal process was initiated by the employer's exercise of
his management prerogative.
In the case at bar, given that there was substantial attempt

on the part of WM MFG to comply with the procedural
requirements, the Court, nevertheless, deems the amount of
P30,000 as sufficient nominal damages95 to be awarded to
respondent Dalag.
WHEREFORE, premises considered, the petition

is GRANTED. The February 21, 2013 Decision and September
17, 2013 Amended Decision of the Court of Appeals in CA-
G.R. SP No. 122425 are hereby REVERSED and SET ASIDE.
Let a new one be entered declaring W.M. Manufacturing and
Golden Rock Manpower Services jointly and severally liable to
Richard R. Dalag in the amount of One Thousand Two Hundred
Twelve Pesos (P1,212) representing Richard R. Dalag's unpaid
wages from August 4-6, 2010 as determined by the Labor
Arbiter; and Thirty Thousand Pesos (P30,000) as nominal
damages for Dalag's dismissal with just cause, but without
observing proper procedure.
VICMAR DEVELOPMENT CORPORATION AND/OR

ROBERT KUA, OWNER, AND ENGR. JUANITO C.
PAGCALIWAGAN,1 MANAGER, Petitioners, v. CAMILO
ELARCOSA, MARLON BANDA, DANTE L. BALAMAD,
RODRIGO COLANSE,2 CHIQUITO PACALDO, ROBINSON
PANAGA, JUNIE ABUGHO, SBLVERIO NARISMA,
ARMANDO GONZALES, TEOFILO ELBINA, FRANCISCO
BAGUIO, GELVEN RHYAN RAMOS, JULITO SIMAN,
RECARIDO4 PANES, JESUS TINSAY, AGAPITO CANAS,
JR., OLIVER LOBAYNON, SIMEON BAGUIO, JOSEPH
SALCEDO, DONIL INDINO, WILFREDO GULBEN,
JESRILE5 TANIO, RENANTE PAMON, RICHIE6 GULBEN,
DANIEL ELLO, REXY DOFELIZ, RONALD NOVAL,
NORBERTO BELARGA, ALLAN BAGUIO, ROBERTO
PAGUICAN, ROMEO7PATOY, ROLANDO TACBOBO,
WILFREDO LADRA, RUBEN PANES, RUEL CABANDAY,
AND JUNARD8 ABUGHO, Respondent.
DECISION
DEL CASTILLO, J.:
Before us is a Petition for Review on Certiorari assailing the

November 24, 2009 Decision9 of the Court of Appeals (CA) in
CA-G.R SP No. 01853-MN. The CA granted the Petition
for Certiorari filed therewith, and reversed and set aside the
February 2, 200710 Resolution of the National Labor Relations
Commission (NLRC), Fifth Division, Cagayan de Oro, which in
turn, affirmed the May 25, 200611 and May 29,
200612 respective Decisions of Executive Labor Arbiters (LA)
Benjamin E. Pelaez (Pelaez) and Noel Augusto S. Magbanua
(Magbanua) dismissing the complaints for lack of merit. Also
assailed is the May 10, 2012 CA Resolution13 denying the
motion for reconsideration.
Factual Antecedents
This case stemmed from a Complaint for illegal dismissal and

money claims filed by Ruben Panes, Ruel Cabanday and
Jonard Abugho (respondents) against Vicmar Development
Corporation (Vicmar) and/or Robert Kua (Kua), its owner and
Juanito Pagcaliwagan (Pagcaliwagan), its manager, docketed
as NLRC Case No. RAB-10-08-00593-2005;14 and consolidated
Complaints for illegal dismissal and money claims filed by
Camilo Elarcosa, Marlon Banda, Dante Balamad, Rodrigo
Colanse, Chiquito Pacaldo, Robinson Panaga, Romel Patoy,
Wilfredo Ladra, Junie Abugho, Silverio Narisma, Armando
Gonzales, Teofilo Elbina, Francisco Baguio, Gelven Rhyan
Ramos, Julito Siman, Recarido Panes, Jesus Tinsay, Agapito
Cafias, Jr., Oliver Lobaynon, Rolando Tacbobo, Simeon
Baguio, Roberto Paguican, Joseph Salcedo, Donil Indino,
Wilfredo Gulben, Jesreil Taneo, Renante Pamon, Richie
Gulben, Daniel EUo, Rexy Dofeliz, Ronald Noval, Norberto
Belarca, and Allan Baguio (respondents), among others,
against Vicmar, Kua, and Pagcaliwagan (petitioners), docketed
as NLRC Case Nos. RAB-10-09-00603-2004; RAB-10-09-
00609-2004; RAB-10-09-00625-2004; and RAB-10-02-00190-
2005.15
Respondents alleged that Vicmar, a domestic corporation

engaged in manufacturing of plywood for export and for local
sale, employed them in various capacities - as boiler tenders,
block board receivers, waste feeders, plywood checkers,
plywood sander, conveyor operator, ripsaw operator, lumber
grader, pallet repair, glue mixer, boiler fireman, steel strap
repair, debarker operator, plywood repair and reprocessor,
civil workers and plant maintenance. They averred that Vicmar
has two branches, Top Forest Developers, Incorporated (TFDI)
and Greenwood International Industries, Incorporated (GUI)
located in the same compound where Vicmar operated.16
According to respondents, Vicmar employed some of them as

early as 1990 and since their engagement they had been
performing the heaviest and dirtiest tasks in the plant
operations. They claimed that they were supposedly employed
as "extra" workers; however, their assignments were
necessary and desirable in the business of Vicmar. They
asserted that many of them were assigned at the boilers for at
least 11 hours daily.17 They emphasized that the boiler section
was necessary to Vicmar's business because it was where
pieces of plywood were dried and cooked to perfection.18 They
further stated that a number of them were also assigned at
the plywood repair and processing section, which required
longer working hours.19
Respondents declared that Vicmar paid them minimum wage

and a small amount for overtime but it did not give them
benefits as required by law, such as Philhealth, Social Security
System, 13th month pay, holiday pay, rest day and night shift
differential.20 They added that Vicmar employed more than
200 regular employees and more than 400 "extra" workers.21
Sometime in 2004, Vicmar allegedly informed respondents

that they would be handled by contractors.22Respondents
stated that these contractors were former employees of
Vicmar and had no equipment and facilities of their
own.23 Respondents averred that as a result thereof, the
wages of a number of them who were receiving P276.00 as
daily wage, were reduced to P200.00 or P180.00, despite
overtime work; and the wages of those who were receiving
P200.00 and P180.00 were reduced to P145.00 or P131.00.
Respondents protested said wage decrease but to no avail.
Thus, they filed a Complaint with the DOLE24 for violations of
labor standards for which appropriate compliance orders were
issued against Vicmar.25 cralawre d
Respondents claimed that on September 13, 2004, 28 of them

were no longer scheduled for work and that the remaining
respondents, including their sons and brothers, were
subsequently not given any work schedule.26
Respondents maintained that they were regular employees of

Vicmar; that Vicmar employed a number of them as early as
1990 and as late as 200327 through Pagcaliwagan, its plant
manager; that Vicmar made them perform tasks necessary
and desirable to its usual business; and that Vicmar paid their
wages and controlled the means and methods of their work to
meet the standard of its products. Respondents averred that
Vicmar dismissed them from service without cause or due
process that prompted the filing of this illegal dismissal case.28
Respondents claimed that they were illegally dismissed after

"vicmar learned that they instituted the subject Complaint
through the simple expedience of not being scheduled for
work. Even those persons associated with them were
dismissed. They also asserted that Vicmar did not comply with
the twin notice requirement in dismissing employees.29
Furthermore, respondents contended that while Vicmar, TFDI

and Gin were separately registered with the SEC,30 they were
involved in the same business, located in the same compound,
owned by one person, had one resident manager, and one and
the same administrative department, personnel and finance
sections. They claimed that the employees of these companies
were identified as employees of Vicmar even if they were
assigned in TFDI or GIII.31
On the other hand, petitioners stated that Vicmar is a

domestic corporation engaged in wood processing, including
the manufacture of plywood since 1970;32 that Vicmar
employed adequate regular rank-and-file employees for its
normal operation; and that it engaged the services of
additional workers when there were unexpected high demands
of plywood products and when several regular employees
were unexpectedly absent or on leave.33
Petitioners pointed out that the engagement of Vicmar's

"extra" workers was not continuous and not more than four of
them were engaged per section in every shift. They added
that from the time of engagement, respondents were not
assigned for more than one year in a section or a specific
activity.34They explained that some of Vicmar's "extra"
workers were engaged under "pakyaw" system and were paid
based on the items repaired or retrieved.35 Petitioners also
stated that respondents Allan Baguio, Romel Patoy, Rexy
Dofeliz, Marlon Banda, Gulben Rhyan Ramos, Julieto Simon
and Agapito Canas, Jr. were "extra" workers of TFDI, not
Vicmar.36 They likewise alleged that a number of respondents
were engaged to assist regular employees in the
company,37 and the others were hired to repair used steel
straps and retrieve useable veneer materials, or to perform
janitorial services.38
Moreover, petitioners argued that the engagement of

additional workforce was subject to the availability of forest
products, as well as veneer materials from Malaysia or
Indonesia and the availability of workers.39
Petitioners further asseverated that sometime in August 2004,

they decided to engage the services of legitimate independent
contractors, namely, E.A. Rosales Contracting Services and
Candole Contracting Services, to provide additional
workforce.40 Petitioners claimed that they were unaware that
respondents were dissatisfied with this decision leading to the
DOLE case.41 They insisted that hiring said contractors was a
cost-saving measure, which was part of Vicmar's management
prerogative.42
Ruling of the Executive Labor Arbiters
On May 25, 2006, ELA Pelaez dismissed the complaints in

NLRC Case Nos. RAB-10-09-00603-2004; RAB-10-09-00609-
2004; RAB-10-09-00625-2004; and RAB-10-02-00190-
2005.43 On May 29, 2006, ELA Magbanua dismissed the
complaint in NLRC Case No. RAB-10-08-00593-2005.44
Both ELAs Pelaez and Magbanua held that respondents were

seasonal employees of Vicmar, whose work was "co-terminus
or dependent upon the extraordinary demands for plywood
products and also on the availability of logs or timber to be
processed into plywood."45 They noted that Vicmar could
adopt cost-saving measures as part of its management
prerogative, including engagement of legitimate independent
contractors.46
Ruling of the National Labor Relations Commission
Consequently, respondents filed a Notice of Appeal with

Motion to Consolidate Cases47 alleging that the foregoing
cases involved same causes of actions, issues, counsels, and
respondents, and complainants therein were similarly situated.
Thereafter, in their Consolidated Memorandum on

Appeal,48 respondents argued that their work in Vicmar was
not seasonal. They averred that since their employment in
1990 until their termination in 2004, they continuously worked
for Vicmar and were not allowed to work for other companies.
They alleged that there was never a decline in the demand
and production of plywood. They also claimed that they
continuously worked in Vicmar the whole year, except in
December during which the machines were shut down for
servicing and clean-up. They, nonetheless, stated that some
of them were the ones who had been cleaning these
machines.
In addition, respondents averred that even assuming that they

were seasonal employees, they were still regular employees
whose employment was never severed during off-season.
Thus, they asserted that the decision to farm them out to
contractors was in violation of their right to security of tenure
and was an evidence of bad faith on the part of Vicmar.
On February 2, 2007, the NLRC affirmed the Decisions of ELAs

Pelaez and Magbanua.49 On April 30, 2007, it denied
respondents' motion for reconsideration.50
Ruling of the Court of Appeals
Undaunted, respondents filed with the CA a

Petition51 for Certiorari maintaining that they were regular
employees of Vicmar and that the latter illegally dismissed
them. They insisted that the labor contractors engaged by
Vicmar were "labor-only" contractors, as they have no
equipment and facilities of their own.
Petitioners, for their part, reiterated that Vicmar employed

respondents as additional workforce when there was high
demand for plywood thus, they were merely seasonal
employees of Vicmar. They argued that Vicmar engaged
independent contractors as a cost-saving measure; and these
contractors exercised direct control and supervision over
respondents. In conclusion, petitioners declared that
respondents were not illegally dismissed but lost their
employment because of refusal to coordinate with Vicmar's
independent contractors.
On November 24,2009, the CA rendered the assailed Decision

granting the Petition for Certiorari, the dispositive portion of
which reads:
WHEREFORE, premises considered, the Petition is GRANTED.

The Resolution dated February 2,2007 of the National Labor
Relations Commission (NLRC), Fifth Division, Cagayan de Oro
City is REVERSED and SET ASIDE. Private respondents are
ORDERED to reinstate petitioners to their former positions,
without loss of seniority rights, and to pay full backwages from
the time they were illegally dismissed until actual
reinstatement.
SO ORDERED.52 ChanRoble sVirt ualawli bra ry
The CA held that a number of respondents were assigned to

the boiler section where plywood was dried and cooked to
perfection; and while the other respondents were said to have
been assigned at the general service section, they were
"cleaners on an industrial level handling industrial
refuse."53 As such, according to the CA, respondents
performed activities necessary and desirable in the usual
business of Vicmar, as they were assigned to departments
vital to its operations. It also noted that the repeated hiring of
respondents proved the importance of their work to Vicmar's
business. It maintained that the contractors were engaged by
Vicmar only for the convenience of Vicmar. In sum, the CA
declared that respondents were illegally dismissed since there
was no showing of just cause for their termination and of
compliance by Vicmar to due process of law.
On May 10, 2012, the CA denied petitioners' motion for

reconsideration.54
Petitioners thus filed this Petition raising the sole ground as

follows:
THE HONORABLE COURT OF APPEALS, WITH ALL DUE
RESPECT AND DEFERENCE, ERRED IN REVERSING AND
SETTING ASIDE THE FINDINGS OF FACTS AND CONCLUSIONS
OF THE NATIONAL LABOR RELATIONS COMMISSION (NLRC).
THE DECISION AS WELL AS THE RESOLUTION ARE NOT IN
ACCORDANCE WITH LAW AND APPLICABLE JURISPRUDENCE
AND IF NOT CORRECTED, WILL CAUSE GRAVE INJUSTICE
AND IRREPERABLE [SIC] DAMAGE TO THE PETITIONERS WHO
WILL BE CONSTRAINED TO ABSORB UNCESSARY [SIC]
WORKFORCE, WHICH WILL LEAD TO THE FURTHER
DETERIORATION OF ITS FINANCIAL INSTABILITY [SIC] AND
POSSIBLY TO ITS CLOSURE.55 ChanRoble sVirt ualawli bra ry
Petitioners contend that it is irregular for the CA to reverse the

findings of facts of the NLRC and the ELAs based on two work
schedules of different companies and identification cards of
five respondents. They maintain that said evidence cannot
conclusively prove that respondents were regular employees
of Vicmar.56
Additionally, petitioners argue that the CA erred in finding that

they (petitioners) have the burden to prove that respondents
were hired for only one season to establish that they were
mere seasonal employees. Petitioners emphasize that since
the inception of this case, they have been denying
respondents' claim that they were working under regular
working hours and working days.57
Petitioners maintain that respondents were Vicmar's "extra"

workers;58 that the engagement of independent contractors
was a management prerogative exercised in good faith;59 that
some of the respondents were engaged by TFDI and thus,
they have no standing in this case.60
Respondents, on their part, assert that petitioners have the

burden to prove that they (respondents) were seasonal
employees because such allegation is a critical fact that must
be substantiated.61 They likewise restate that they were
regular employees of Vicmar because they had been
performing tasks necessary and desirable for the production of
plywood; they continuously worked in Vicmar for more than
11 hours daily until they were terminated in September 2004;
and they were not allowed to work for companies other than
Vicmar.62
Respondents claim that assuming that they were "extra"

workers, still, their continued and repeated hiring for more
than 10 years made their functions necessary or desirable in
the usual business of Vicmar.63
Issue
Did the CA err in finding that the NLRC gravely abused its
discretion in affirming the ELAs' Decisions dismissing the
complaint?
Our Ruling
In labor cases, grave abuse of discretion may be ascribed to

the NLRC when its findings and conclusions are not supported
by substantial evidence or such relevant evidence that a
reasonable mind might accept as adequate to support a
conclusion.64 The CA may grant a Petition for Certiorari if it
finds that the NLRC committed grave abuse of discretion by
capriciously, whimsically or arbitrarily disregarding the
material evidence decisive of a case. It cannot "make this
determination without looking into the evidence presented by
the parties. Necessarily, the appellate court can only evaluate
the materiality or significance of the evidence, which is alleged
to have been capriciously, whimsically, or arbitrarily
disregarded by the NLRC, in relation to all other evidence on
record."65
In this case, we find that the CA correctly granted

respondents' Petition for Certiorari because the NLRC gravely
abused its discretion when it affirmed the dismissal of
respondents' Complaints.
Section 280 of the Labor Code defines a regular employee as

one who is 1) engaged to perform tasks usually necessary or
desirable in the usual business or trade of the employer,
unless the employment is one for a specific project or
undertaking or where the work is seasonal and for the
duration of a season; or 2) has rendered at least 1 year of
service, whether such service is continuous or broken, with
respect to the activity for which he is employed and his
employment continues as long as such activity exists.66
Here, there is substantial evidence to prove that respondents

were regular employees such that their separation from work
without valid cause amounted to illegal dismissal.
To support their illegal dismissal case, respondents listed the

date of their hiring, the date they were terminated and the
sections where they were assigned prior to dismissal, to wit:67
NAMES DATE HIRED SECTION DATE FIRED
Panes, Ruben June 1990 Boiler Oct. 2004
Panes, Recarido August 1990 Boiler Sept. 2004
Tinsay, Jesus 1991 Boiler Sept. 2004
Gonzales, Armando June 1991 Assy./Fin. Feb. 2004
Patoy, Romel Nov. 1991 Boiler Sept. 2004
Ladra, Wilfredo 1992 Plant Maint. Sept. 2004
Balamad, Dante July 1994 Boiler Sept. 2004
Baguio, Simeon 1995 Boiler Sept. 2004
Baguio, Francisco 1995 Block Board June 2004
Tacbobo, Rolando Jan. 1995 Plant Maint. Sept. 2004
Belarga, Norberto 1995 Boiler July 2004
Elarcosa, Camilo 1995 Boiler Sept. 2004
Abugho, Junie June 1996 Boiler Sept. 2004
Pamon, Renante June 1996 Assy./Fin. Sept. 2004
Abugho, Jonard June 1996 Boiler Oct. 2004
Noval, Ronald 1997 Boiler Aug. 2004
Siman, Julito 1997 Boiler Sept. 2004
Baguio, Allan 1997 Boiler Sept. 2004
Cabanday, Ruel 1998 Assy./Fin. Oct. 2004
Salcedo, Joseph 1998 Assy./Fin. Sept. 2004
Lobaynon, Oliver 1998 Boiler Sept. 2004
Panaga, Robinson 1999 Assy./Fin. March 2004

Paguican, Roberto 1999 Boiler Sept. 2004
Ello, Daniel 1999 Boiler Sept. 2004
Taneo, Jesrile 1999 Plywood Rep. Sept. 2004
Indino, Donil 1999 Plywood Rep. Sept. 2004
Narisma, Silverio July 1999 Assy ./Fin. Sept. 2004
Canas, Agapito Jr. Jan. 2000 Plant Maint. Sept. 2004
Gulben, Wilfredo Dec. 2000 Plywood Rep. Sept. 2004
Gulben, Rechie Mar. 2000 Plywood Rep. Sept. 2004
Pacaldo, Chiquito Mar. 2000 Green End May 2002
Dofeliz, Rexy June 2001 Boiler Aug. 2004
xxxx
Ramos, Gelven
July 2002 Boiler Sept. 2004
Rhyan
Colansi, Rodrigo Oct. 2002 Assy./Fin. Sept. 2004
xxxx Jan. 2002 Boiler Sept. 2004
Banda, Marlon June 2003 Boiler Sept. 2004
Elbina, Teofilo Nov. 2003 Boiler July 2004
The foregoing allegations were uncontroverted as no relevant

employment files, payrolls and records were submitted by
petitioners to refute the information. Being the employer,
petitioners have custody and control of important employment
documents. As such, failure to submit them gives rise to the
presumption that their presentation would be prejudicial to
petitioners' cause and leads the Court to conclude that the
assertions of respondents are truthful declarations.68
Interestingly, in the DOLE case filed by respondents against

Vicmar and TFDI, the latter did not also submit documents to
disprove respondents' claim for wage differentials, 13th month
pay and holiday pay. Because of this, the DOLE Secretary
denied their appeal. In her February 17, 2006 Order,69 the
DOLE Secretary made the following pronouncements:
In this case, the appellants (Vicmar and TFDI) were given
seven x x x days to comply with the Notice of Inspection
Results or to contest the findings therein, but they chose to
ignore the directive. Summary hearings were conducted x x x
to give the appellants ample time to submit payrolls, but they
merely promised to do so x x x [A]t the extra hearing on 18
November, they still failed to do so. x x x There being none,
the Director could not but sustain the inspection report.
Neither can the Director be faulted for not referring the case
to the NLRC on the ground that material evidence, namely,
the payrolls and the daily time records, were not duly
considered during inspection. The appellants cannot raise this
argument because it was they who failed to produce the
records for the consideration of the inspector and the Regional
Director[.]70
ChanRoblesVirtualawl ibra ry
Similarly, we cannot fault the CA in the instant case for giving

credence to the assertions and documentary evidence
adduced by respondents. Petitioners had the opportunity to
discredit them had they presented material evidence,
including payrolls and daily time records, which are within
their custody, to prove that respondents were mere additional
workforce engaged when there are extraordinary situations,
such as high demands for plywood products or unexpected
absences of regular employees; and that respondents were
not assigned for more than one year to the same section or
activity.
Moreover, respondents were shown to have performed

activities necessary in the usual business of Vicmar. Most of
them were assigned to activities essential for plywood
production, the central business of Vicmar. In the list above,
more than half of the respondents were assigned to the boiler,
where pieces of plywood were cooked to perfection. While the
other respondents appeared to have been assigned to other
sections in the company, the presumption of regular
employment should be granted in their favor pursuant to
Article 280 of the Labor Code since they had been performing
the same activity for at least one year, as they were assigned
to the same sections, and there is no indication that their
respective activities ceased.71
The test to determine whether an employee is regular is the

reasonable connection between the activity he performs and
its relation to the employer's business or trade, as in the case
of respondents assigned to the boiler section. Nonetheless,
the continuous re-engagement of all respondents to perform
the same kind of tasks proved the necessity and desirability of
their services in the business of Vicmar.72Likewise, considering
that respondents appeared to have been performing their
duties for at least one year is sufficient proof of the necessity,
if not the indispensability of their activities in Vicmar's
business.73
The Court also holds that Vicmar failed to prove that the
contractors it engaged were legitimate labor contractors.
To determine the existence of independent contractorship, it is

necessary to establish that the contractor carries a distinct
and independent business, and undertakes to perform work on
its own account and under its responsibility and pursuant to
its own manner and method, without the control of the
principal, except as to the result; that the contractor has
substantial capital or investment; and, that the agreement
between the principal and the contractor assures the
contractual employees to all labor and occupational safety and
health standards, to right to self-organization, security of
tenure and other benefits.74
Other than their respective Certificates75 of Registration issued

by the DOLE on August 12, 2004, E.A Rosales Contracting
Services and Candole Labor Contracting Services were not
shown to have substantial capital or investment, tools and the
like. Neither was it established that they owned equipment
and machineries for the purported contracted job. Also, the
allegation that they had clients other than Vicmar remained to
be bare assertion without corresponding proof. More
importantly, there was no evidence presented that these
contractors undertook the performance of their service
contracts with Vicmar pursuant to their own manner and
method, without the control and supervision of Vicmar.76
Petitioners cannot rely on the registration of their contractors

to prove that the latter are legitimate independent
contractors. Such registration is not conclusive of the status of
a legitimate contractor; rather, it merely prevents the
presumption of being a labor-only contractor from arising.
Indeed, to determine whether labor-only contracting exists,
the totality of the facts and circumstances of the case must be
considered.77
The Court also gives merit to the finding of the CA that Vicmar
is the employer of respondents despite the allegations that a
number of them were assigned to the branches of Vicmar.
Petitioners failed to refute the contention that Vicmar and its
branches have the same owner and management - which
included one resident manager, one administrative
department, one and the same personnel and finance
sections. Notably, all respondents were employed by the same
plant manager, who signed their identification cards some of
whom were under Vicmar, and the others under TFDI.
Where it appears that business enterprises are owned,

conducted and controlled by the same parties, law and equity
will disregard the legal fiction that these corporations are
distinct entities and shall treat them as one. This is in order to
protect the rights of third persons, as in this case, to
safeguard the rights of respondents.78
Considering that respondents were regular employees and

their termination without valid cause amounts to illegal
dismissal, then for its contrary ruling unsupported by
substantial evidence, the NLRC gravely abused its discretion in
dismissing the complaints for illegal dismissal. Therefore, the
CA Decision setting aside that of the NLRC is in order and
must be sustained.79
WHEREFORE, the Petition is DENIED. The Decision dated

November 24,2009 and Resolution dated May 10, 2012 of the
Court of Appeals in CA-G.R. SP No. 01853-MIN
are AFFIRMED.

Philippine Aeolus Automotive
United Corporation v. NLRC [G.R.
No. 124617, April 28, 2000]
Tuesday, January 27, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Labor Law
FACTS: Private respondent was a

company nurse for the Philippine Aelous
United Corporation. A memorandum was
issued by the personnel manager of
petitioner corporation to
respondent Cortez asking her to explain
why no action should be taken against her
for (1) throwing a stapler at plant manager
William Chua; (2) fro losing the amount of
Php 1,488 entrusted to her; (3) for asking a
co-employee to punch in her time card one
morning when she was not there. She was
then placed on preventive suspension.
Another memorandum was sent to her
asking her to explain why she failed to
process the ATM applications of her co-
employees. She submitted a written
explanation as to the loss of Php 1,488 and
the punching in of her time card. A third
memorandum was sent to her informing her
of her termination from service for gross
and habitual neglect of duties, serious
misconduct, and fraud or willful breachof
trust.
ISSUES:
1. W/N petitioner was illegally dismissed.
2. If such dismissal was illegal, W/N
petitioner should be entitled to damages.
HELD:
1. Yes. The grounds by which
an employer may validly terminate the
services of an employee must be strictly
construed. As to the first charge,
respondent claims that plant manager
William Chua had been making
sexual advances on her since her first year
of employment and that when she would
not accede to his requests, he threatened
that he would cause her termination from
service. As to the second charge, the money
entrusted to her was not lost, but given to
the personnel-in-charge for proper
transmittal as evidence by a receipt signed
by the latter. As to the third charge,
she explains that she asked someone to
punch in her card as she was doing
an errand for one of the companys officers
and with the permission of William Chua. As
to the fourth charge, she asserts that she
had no knowledge thereof. To constitute
serious misconduct to justify dismissal, the
acts must be done in relation to the
performance of her duties as
would show her to be unfit to continue
working for her employer. The acts of did
not pertain to her duties as a nurse nor did
they constitute serious misconduct.
However due to the strained relations, in
lieu of reinstatement, she is to be awarded
separation pay of one month for every year
of service until finality of this judgment.
2. Yes. Private respondent admittedly

allowed four years to pass before coming
out with her employers sexual impositions;
but the time to do such varies depending
upon the needs, circumstances
and emotionalthreshold of the employee. It
is clear that respondent has suffered
anxiety, sleepless nights, besmirched
reputation and social humiliation by reason
of the act complained of. Thus, she should
be entitled to moral and exemplary
damages for the oppressive manner with
which petitioners effected her dismissal and
to serve as a warming to officers who take
advantage of their ascendancy over their
employees.
Domingo vs. Rayala (596 SCRA 90)
Domingo vs. Rayala
546 Scra 90
Facts:
Ma. Lourdes T. Domingo (Domingo), then Stenographic
Reporter III at the NLRC, filed a Complaint for sexual
harassment against Rayala, the chairman of NLRC.
She alleged that Rayala called her in his office and touched
her shoulder, part of her neck then tickled her ears.
Rayala argued that his acts does not constitute sexual
harassment because for it to exist, there must be a
demand, request or requirement of sexual favor.
Issue:
Whether or not Rayala commit sexual harassment.
Rulings:
Yes.
The law penalizing sexual harassment in our jurisdiction is

RA 7877. Section 3 thereof defines work-related sexual
harassment in this wise:
Sec. 3. Work, Education or Training-related Sexual
Harassment Defined. Work, education or training-related
sexual harassment is committed by an employer, manager,
supervisor, agent of the employer, teacher, instructor,
professor, coach, trainor, or any other person who, having
authority, influence or moral ascendancy over another in a
work or training or education environment, demands,
requests or otherwise requires any sexual favor from the
other, regardless of whether the demand, request or
requirement for submission is accepted by the object of
said Act.
(a) In a work-related or employment environment, sexual
harassment is committed when:
(1) The sexual favor is made as a condition in the hiring or
in the employment, re-employment or continued
employment of said individual, or in granting said individual
favorable compensation, terms, conditions, promotions, or
privileges; or the refusal to grant the sexual favor results in
limiting, segregating or classifying the employee which in a
way would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said employee;
. (2) The above acts would impair the employees rights or
privileges under existing labor laws; or
. (3) The above acts would result in an intimidating,
hostile, or offensive environment for the employee.
even if we were to test Rayalas acts strictly by the

standards set in Section 3, RA 7877, he would still be
administratively liable. It is true that this provision calls for
a demand, request or requirement of a sexual favor. But
it is not necessary that the demand, request or
requirement of a sexual favor be articulated in a
categorical oral or written statement. It may be discerned,
with equal certitude, from the acts of the offender.
Holding and squeezing Domingos shoulders, running his
fingers across her neck and tickling her ear, having
inappropriate conversations with her, giving her money
allegedly for school expenses with a promise of future
privileges, and making statements with unmistakable
sexual overtones all these acts of Rayala resound with
deafening clarity the unspoken request for a sexual favor.

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SAMEER OVERSEAS PLACEMENT

AGENCY, INC., Petitioner,

ELIZABETH M. GAGUI, Petitioner, v. SIMEON DEJERO

On 14 December 1993, respondents Simeon Dejero and

The Labor Arbiter Pedro Ramos rendered a decision

Respondents filed a Motion to Implead Respondent Pro

A 2nd Alias Writ of Execution was issued, which resulted in

Petitioner filed a Motion to Quash 3rd Alias Writ of

Upon appeal, NLRC denied the appeal for lack of merit.

The CA affirmed the NLRC decision. The two Motions for

ISSUE: Whether or not petitioner may be held jointly and

LABOR LAW: liability of corporate officers

The pertinent portion of Section 10, R.A. 8042 reads as

In Sto. Tomas v. Salac, we had the opportunity to pass upon

Hence, for petitioner to be found jointly and solidarily liable,

Petition for review on certiorari is GRANTED.

Almirante: Applicability of foreign law Friday,

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. MA. FE

Accused-appellant Ma. Fe Torres Solina a.k.a. Ma. Fe Bay Ion

Accused-appellant was arraigned and tried under an

That in or about and sometime during the period from

Accused-appellant was also charged and tried under seven (7)

1) That in or about and sometime during the month of

2) That in or about and sometime during the month of

3) That in or about and sometime during the month of

4) That in or about and sometime during the month of

5) That in or about and sometime during the month of

6) That in or about and sometime during the month of

7) That in or about and sometime during the month of

Accused-appellant pleaded "not guilty" and after trial on the

WHEREFORE, premises considered, judgment is rendered in

1. In Crim. Case No. 06-1275, finding herein accused Ma. Fe

2. In Crim. Cases Nos. 06-1277 to 06-1282, finding the said

Makati City, October 30, 2007.10

Thereafter, accused-appellant filed a Notice of Appeal,11 thus

WHEREFORE, the foregoing considered, the instant appeal is

Thus, the case is now before this Court after accused-

Accused-appellant and the Office of the Solicitor General

In her Brief, accused-appellant assigned the following errors:

THE COURT A QUO GRAVELY ERRED IN REJECTING THE

Accused-appellant maintains her denial that she was engaged

As to the charges of estafa, accused-appellant claims that the

After a careful review of the records, this Court finds no

All the elements of the crime of illegal recruitment in large

First off, the first element is admittedly present. Appellant had

In like manner, the second and third elements also obtain in

Accused-appellant's defense of denial cannot overcome the

This Court is also in agreement with the ruling of the CA that

To reiterate, settled is the rule that the findings and

Ancnt the CA's modification as to the penalty imposed, this

Be that as it may, this Court finds reversible error on the part

Nevertheless, the CA erred in not increasing the amount of

WHEREFORE, the appeal is DISMISSED and the Court of

SO ORDERED. chanrob lesvi rtua llawli bra ry

For the Court's resolution are the Motion for

On July 20, 2012, petitioner filed a complaint for permanent

For their part, respondents countered that the fit-to-work

However, the CA disagreed with the conclusions of the LA and

Dissatisfied, both parties filed their respective motions for