CHEVRON (PHILS.), INC., petitioner, vs.

VITALIANO C GALIT, SJS AND ISSUE:

SONS CONSTRUCTION CORPORATION AND MR. REYNALDO
SALOMON, respondents. WON there exists an employer – employee relationship between Galit and
SJS
G.R. No. 186114, October 07, 2015
RULING:
FACTS: The complainant Galit filed an illegal dismissal suit against Chevron
and SJS Construction Corp. for illegal dismissal and for payment of other (1.) Galit is a regular employee of SJS. Upon cursory reading of the
labor standard benefits. He alleged that he is a regular and permanent employment contract between SJS and Galit, it is readily seen that SJS has
employee of Chevron, having been assigned at the company's Pandacan the power of dismissal and control. Galit admitted in his complaint that it was
depot; he is an "all-around employee" whose job consists of cleaning the SJS which detailed him in the Pandacan oil depot. Galit also did not present
premises of the depot, changing malfunctioning oil gaskets, transferring oil any evidence to prove that it was Chevron which pays his wages and that
from containers and other tasks that management would assign to him; in SJS is a mere conduit of the latter. He was dismissed therefrom because
the performance of his duties, he was directly under the control and Chevron no longer renewed its contract with SJS and that the latter
supervision of Chevron supervisors. Subsequently, he was verbally informed subsequently ceased to operate.
that his employment is terminated but was promised that he will be
(2.) The work performed by Galit, which is the "scooping of slop of oil water
reinstated soon; for several months, he followed up his reinstatement, bit to
separator," has no direct relation to Chevron’s business, which is the
no avail. SJS claimed that Galit was hired by SJS as a project employee and
importation, refining and manufacture of petroleum products. The job
was assigned to Chevron, as a janitor, based on a contract between the two
performed by Galit, which essentially consists of janitorial services, may be
companies; that the manpower contract between SJS and Chevron
incidental or desirable to petitioner's main activity but it is not necessary and
eventually ended which resulted in the severance of Galit's employment;
directly related to it.
SJS finally closed its business operations; that Galit was paid separation
pay. Chevron argued that it availed of the manpower services of SJS for the
maintenance of its oil depot in its Pandacan site; Galit, who was employed
by SJS, was assigned to the depot as a janitor; his wages and all
employment benefits were paid by SJS; he was subject to the supervision,
discipline and control of SJS; that Galit is not its employee but that of SJS.
The LA ruled to dismiss the complaint of Galit, holding that SJS is a
legitimate contractor and that it was Galit's employer and that the termination
of his services was lawful on account that the project for which he was
employed has already been accomplished; that the LA doesn’t have
jurisdiction over the complaint against Chevron as there existed no employer
– employee relationship between the company and the complainant. Upon
appeal with the NLRC, the commission affirmed the LA decision with
modification. It held that Galit is a regular employee of SJS, and not just a MANILA MEMORIAL PARK CEMETERY, INC., petitioner, vs. EZARD D.
mere project employee of the company whose action dismissing Galit was LLUZ, et al., respondents.
with lawful due to its closure. The CA, upon appeal of Chevron, ruled to
affirm the NLRC decision, hence the recourse of the latter with the SC. G.R. No. 208451, February 3, 2016
FACTS:
Petitioner Manila Memorial Park Cemetery, Inc. entered into a Contract of
Services with respondent Ward Trading and Services. The Contract of
Services provided that Ward Trading, as an independent contractor, will
render interment and exhumation services and other related work to Manila
Memorial in order to supplement operations at Manila Memorial Park,
Parañaque City. Among those assigned by Ward Trading to perform
services at the Manila Memorial Park were the respondents. Respondent’s
filed a complaint for regularization and Collective Bargaining Agreement
benefits against Manila Memorial. They alleged that they asked Manila
Memorial to consider them as regular workers within the appropriate
bargaining unit established in the collective bargaining agreement by Manila
Memorial and its union, the Manila Memorial Park Free Workers Union
(MMP Union). But Manila Memorial refused the request since respondents
were employed by Ward Trading, an independent labor contractor.
Thereafter, respondents joined the MMP Union. Subsequently, respondents
were dismissed by Manila Memorial. Thus, respondents amended the
complaint to include the prayer for their reinstatement and payment of back
wages. Meanwhile, Manila Memorial sought the dismissal of the complaint
for lack of jurisdiction since there was no employer-employee relationship.
Manila Memorial argued that respondents were employees of Ward Trading.
The Labor Arbiter dismissed the complaint for failing to prove the existence
of an employer-employee relationship. Respondent’s appealed to the NLRC
but it reversed the Labor Arbiter’s findings. It ruled that Ward Trading was a
labor-only contractor and an agent of Manila Memorial. Thereafter, Manila
Memorial filed an appeal with the CA. The CA affirmed the ruling of the
NLRC. It found the existence of an employer-employee relationship between
Manila Memorial and respondents.
ISSUE:
WON an employer-employee relationship exists between Manila Memorial
and respondents for the latter to be entitled to their claim for wages and
other benefits.
RULING: YES. Labor-only contracting exists when 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 the
performance of the work of the contractual employee. A closer look at the
Contract of Service reveals that Ward Trading does not have substantial
capital or investment in the form of tools, equipment, machinery, work
premises and other materials since it is Manila Memorial which owns the
equipment used in the performance of work needed for interment and
exhumation services. Further, the records show that Manila Memorial and
Enrique B. Lagdameo admitted that respondents performed various
interment services at its Sucat, Parañaque branch which were directly
related to Manila Memorial’s business of developing, selling and maintaining
memorial parks and interment functions. Manila Memorial even retained the
right to control the performance of the work of the employees concerned.
The NLRC also found that Ward Trading’s business documents fell short of
sound business practices. For failing to register as a contractor, a
presumption arises that one is engaged in labor-only contracting unless the
contractor overcomes the burden of proving that it has substantial capital,
investment, tools and the like.
DIAMOND FARMS, INC. V. SPFL ET AL.
G.R. Nos. 173254-55 & 173263
FACTS:
DFI owns an 800-hectare banana plantation ("original plantation") in Alejal,
Carmen, Davao. Pursuant to Republic Act No. 6657 or the Comprehensive
Agrarian Reform Law of 1988 ("CARL"), commercial farms shall be subject
to compulsory acquisition and distribution, thus the original plantation was
covered by the law. DFI offered to give up its rights and interest over the
original plantation in favor of the government by way of a Voluntary Offer to
Sell. The DAR accepted DFI's offer to sell the original plantation. Out of the
total 800 hectares, the DAR only approved the disposition of 689.88
hectares.
The awarded plantation was turned over to qualified agrarian reform
beneficiaries ("ARBs") under the CARL. These ARBs are 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.
DARBMUPCO entered into a Banana Production and Purchase Agreement
("BPPA") with DFI. Under the BPPA, DARBMUPCO and its members as
owners of the awarded plantation, agreed to grow and cultivate only high
grade quality exportable bananas to be sold exclusively to DPI. The BPPA is
effective for 10 years.18
Hampered by lack of manpower to undertake the agricultural operation
under the BPPA, DFI engaged the services of the respondent-contractors,
who in turn recruited the respondent-workers to assist DARBMUPCO in
meeting its production obligations under the BPPA,
Southern Philippines Federation of Labor ("SPFL")—a legitimate labor
organization with a local chapter in the awarded plantation filed a petition for
certification election in the Office of the Med-Arbiter on behalf of some 400
workers (the respondent-workers in this petition) "jointly employed by DFI
and DARBMUPCO" working in the awarded plantation.
In another case, 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 attorney's fees against DFI, DARBMUPCO and the
respondent-contractors before the National Labor Relations Commission
("NLRC").
DARBMUPCO and DFI denied that they are the employers of the
respondent-workers. They claimed, instead, that the respondent-workers are
the employees of the respondent-contractors.
ISSUE:
Who among DFI,DARBMUPCO and the respondent-contractors is the
employer of the respondent-workers?
RULING:
Petition is denied. Furthermore, the decision of the Court of Appeals
declaring DFI to be the employer of respondent-workers is affirmed.
This case involves job contracting, a labor arrangement expressly allowed by
law. 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.
The Omnibus Rules Implementing the Labor Code distinguishes between
permissible job contracting (or independent contractorship) and labor-only
contracting. Job contracting is permissible under the Code 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; and
(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.
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.
Based on the conditions for permissible job contracting, we rule that
respondent-contractors are labor only contractors.
There is no evidence showing that respondent-contractors are independent
contractors. The respondent-contractors, DFI, and DARBMUPCO did not
offer any proof that respondent-contractors were not engaged in labor-only
contracting.
Herein respondents, Voltaire Lopez, Jr., et al., were commissioned and
contracted by petitioner, Diamond Farms, Inc. (DFI) to recruit farm workers,
who are the complaining [respondent-workers] (as represented by Southern
Philippines Federation of Labor (SPFL) in this appeal by certiorari).
Farm tools, implements and equipment necessary to performance of such
farm activities were supplied by petitioner DFI. Herein respondents Voltaire
Lopez, Jr. et. al. had no adequate capital to acquire or purchase such tools,
implements, equipment, etc.
Herein respondents Voltaire Lopez, Jr., et. al. as well as rcspondents-SPFL,
et. al. were being directly supervised, controlled and managed by petitioner
DFI farm managers and supervisors, specifically on work assignments and
performance targets.
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. Thus, in this case,
respondent-contractors are the labor-only contractors and either DFI or
DARBMUPCO is their principal.
We hold that DFI is the principal. The records show that it is DFI which hired
the individual [respondent-contractors] who in turn hired their own men to
work in the 689.88 hectares land of DARBMUPCO as well as in the
managed area of the plantation.
DFI cannot argue that DARBMUPCO is the principal of the respondent-
contractors because it (DARBMUPCO) owns the awarded plantation where
respondent-contractors and respondent-workers were working. That
DARBMUPCO owns the awarded plantation where the respondent-
contractors and respondent-workers were working is immaterial.DFI, as the
principal, hired the respondent-contractors and the latter, in turn, engaged
the services of the respondent-workers.
Clearly, DFI is the true employer of the respondent-workers; respondent-
contractors are only agents of DFI. Under Article 106 of the Labor Code, DFI
shall be 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.
WESLEYAN UNIVERSITY-PHILIPPINES vs. GUILLERMO T. MAGLAYA,
SR. G.R. No. 212774 January 23, 2017
“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.”
FACTS:
WUP is a non-stock, non-profit, non-sectarian educational corporation duly
organized and existing under the Philippine laws. Respondent Atty.
Guillermo T. Maglaya, Sr. was appointed as a corporate member and was
elected as a member of the Board of Trustees, both for a period of five (5)
years. He was elected as President of the University for a five-year term. He
was re-elected as a trustee. In a Memorandum, the incumbent Bishops of
the United Methodist Church apprised all the corporate members of the
expiration of their tenns on December 31, 2008, unless renewed by the
former. The said members, including Maglaya, sought the renewal of their
membership in the WUP's Board, and signified their willingness to serve the
corporation. 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. 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", and that the Bishops have appointed the incoming corporate
members and trustees. He clarified that there was no agreement and any
discussion of the turnover because the corporate members still have valid
and existing corporate terms. In this case, 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. Manuel Palomo, the new Chairman of the Board, informed Maglaya
of the termination of his services and authority as the President of the
University. Thereafter, Maglaya and other fonner members of the Board
filed a Complaint for Injunction and Damages before the Regional Trial Court
of Cabanatuan City.The RTC dismissed the case declaring the same as a
nuisance or harassment suit prohibited under Section l(b), Rule 1 of the
Interim Rules for Intra-Corporate Controversies. 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.
Consequently, the expiration of the terms of the plaintiffs, including Maglaya,
as corporate members carried with it their termination as members of the
Board. Moreover, 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. The CA affirmed the decision of
the RTC, and dismissed the petition for certiorari filed by the plaintiffs for
being the improper remedy. Thereafter, Maglaya filed the present illegal
dismissal case against WUP, Palomo, Bishop Lito C. Tangonan and Bishop
Leo A. Soriano. He claimed that he was unceremoniously dismissed in a
wanton, reckless, oppressive and malevolent manner. The Labor Arbiter
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. The
National Labor Relations Commission 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
Labor Code, Maglaya was illegally dismissed. Thereafter, the NLRC denied
the motion for reconsideration filed by WUP and the CA dismissed the
petition for certiorari filed by WUP. The CA noted that the decision and
resolution of the NLRC became final and executor.
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.
RULING:
The Court find the instant petition impressed with merit. WUP alleges that
while the NLRC decision became final and executory, 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. "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. 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 ₱2,505,208.75 awarded from the time the NLRC decision
became final and executory up to the time the CA 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.
NESTLE PHILIPPINES, INC., petitioner, vs. COURT OF APPEALS and
SECURITIES AND EXCHANGE COMMISSION, respondents. G.R. No.
86738 November 13, 1991
FACTS:
On February 21, 1983, the Authorized Capital Stock (ACS) of petitioner
Nestle was increased from P300 million divided into 3 million shares with a
par value of P100 per share, to P600 million divided into 6 million shares
with a par value of P100 per share. Nestle underwent the necessary
procedures involving Board and stockholders approvals and the necessary
filings to secure the approval of the increase of ACS. It was approved by
respondent SEC.
Nestle issued 344,500 shares out of its previously authorized but unissued
capital stock exclusively to its principal stockholders San Miguel Corporation
and to Nestle S.A. San Miguel Corporation subscribed to and completely
paid up 168,800 shares, while Nestle S.A. subscribed to and paid up the
balance of 175,700 shares of stock.
In 1985, petitioner Nestle filed a letter to SEC seeking exemption of its
proposed issuance of additional shares to its existing principal shareholders,
from the registration requirement of Section 4 of the Revised Securities Act
and from payment of the fee referred to in Section 6(c) of the same Act to
wit:
“Sec. 6. Exempt transactions. — a) The requirement of registration under
subsection (a) of Section four of this Act shall not apply to the sale of any
security in any of the following transactions: xxx xxx xxx
(4) The distribution by a corporation, actively engaged in the business
authorized by its articles of incorporation, of securities to its stockholders or
other security holders as a stock dividend or other distribution out of surplus;
or the issuance of securities to the security holder or other creditors of a
corporation in the process of a bona fide reorganization of such corporation
made in good faith and not for the purpose of avoiding the provisions of this
Act, either in exchange for the securities of such security holders or claims of
such creditors or partly for cash and partly in exchange for the securities or
claims of such security holders or creditors; or the issuance of additional
capital stock of a corporation sold or distributed by it among its own
stockholders exclusively, where no commission or other remuneration is paid
or given directly or indirectly in connection with the sale or distribution
of such increased capital stock.”
Nestle argued that Section 6(a) (4) of the Revised Securities Act embraces
“not only an increase in the authorized capital stock but also the issuance
of additionalshares to existing stockholders of the unissued portion of
the unissued capital stock“.
SEC denied petitioner’s requests and ruled that the proposed issuance of
shares did not fall under Section 6 (a) (4) of the Revised Securities Act,
since Section 6 (a) (4) is applicable only where there is an increase in the
authorized capital stock of a corporation.
MR was denied and appeal to CA was also denied. Thus this Petition for
Review.
ISSUE:
WON petitioner Nestle’s application for exemptions should be granted.
RULING:
No. Under Sec 38 of the Corporation Code, a corporation engaged in
increasing its authorized capital stock, with the required vote of its Board of
Directors and of its stockholders, must file a sworn statement of the treasurer
of the corporation showing that at least 25% of “such increased capital stock”
has been subscribed and that at least 25% of the amount subscribed has
been paid either in actual cash or in property transferred to the corporation.
The corporation must issue at least 25% of the newly or contemporaneously
authorized capital stock in the course of complying with the requirements of
the Corporation Code for increasing its authorized capital stock.
After approval by the SEC of the increase of its authorized capital stock, and
from time to time thereafter, the corporation, by a vote of its Board of
Directors, and without need of either stockholder or SEC approval, may
issue and sell shares of its already authorized but still unissued capital stock
to existing shareholders or to members of the general public.
In the case at bar, since the 344,500 shares of Nestle capital stock are
proposed to be issued from already authorized but still unissued capital
stock and since the present authorized capital stock of 6,000,000 shares
with a par value of P100.00 per share is not proposed to be further
increased, the SEC and the CA correctly rejected Nestle’s petition.
When capital stock is issued in the course of and in compliance with the
requirements of increasing its authorized capital stock under Section 38 of
the Corporation Code, the SEC examines the financial condition of the
corporation, and hence there is no real need for exercise of SEC authority
under the Revised Securities Act. Thus, one of the requirements under the
current regulations of the SEC in respect of filing a certificate of increase of
authorized capital stock, is submission of “a financial statement duly certified
by an independent CPA as of the latest date possible or as of the date of the
meeting when stockholders approved the increase/decrease in capital
stock or thereabouts. When all or part of the newly authorized capital stock is
proposed to be issued as stock dividends, the SEC requirements are even
more exacting; they require, in addition to the regular audited financial
statements, the submission by the corporation of a “detailed or Long Form
Report of the certifying Auditor.” Moreover, since approval of an increase in
authorized capital stock by the stockholders holding 2/3 of the outstanding
capital stock is required by Section 38 of the Corporation Code, at a
stockholders meeting held for that purpose, the directors and officers of the
corporation may be expected to inform the shareholders of the financial
condition and prospects of the corporation and of the proposed utilization of
the fresh capital sought to be raised.
On the other hand, issuance of previously authorized but theretofore
unissued capital stock by the corporation requires only Board of Directors
approval. Neither notice to nor approval by the shareholders or the SEC is
required for such issuance. There would be no opportunity for the SEC to
see to it that shareholders (especially the small stockholders) have a
reasonable opportunity to inform themselves about the very fact of such
issuance and about the condition of the corporation and the potential value
of the shares of stock being offered.
An issuance of previously authorized but still unissued capital stock may be
held to be an exempt transaction by the SEC under Section 6(b) so long as
the SEC finds that the requirements of registration under the Revised
Securities Act are “not necessary in the public interest and for the protection
of the investors” by reason, inter alia, of the small amount of stock that is
proposed to be issued or because the potential buyers are very limited in
number and are in a position to protect themselves.
Petitioner Nestle’s second claim for exemption is from payment of the fee
provided for in Section 6 (c) of the Revised Securities Act. Petitioner claims
that to require it now to pay one-tenth of one percent (1%) of the issued
value of the 344,500 shares of stock proposed to be issued, is to require it to
pay a second time for the same service on the part of the SEC.
We think it clear that the fee collected in 21 February 1983 by the SEC was
assessed in connection with the examination and approval of the certificate
of increase of authorized capital stock then submitted by petitioner. The fee,
on the other hand, provided for in Section 6 (c) which petitioner will be
required to pay if it does file an application for exemption under Section 6
(b), is quite different; this is a fee specifically authorized by the Revised
Securities Act, (not the Corporation Code) in connection with the grant of an
exemption from normal registration requirements imposed by that Act. We
do not find such fee either unreasonable or exorbitant.
WHEREFORE, Petition for Review on Certiorari is hereby DENIED for lack
of merit.

RAMIL R. VALENZUELA v. ALEXANDRA MINING & OIL VENTURES
This is a Petition for Review on Certiorari[1] filed under Rule 45 of the Rules
of Court, assailing the Decision[2] dated June 5, 2015 and Resolution dated
January 13, 2016 of the Court of Appeals (CA) in CA-GR. SP No. 136037.
FACTS:
The instant case stemmed from a complaint for illegal dismissal, non-
payment of backwages, overtime pay, separation pay, moral and exemplary
damages and attorney's fees filed by Ramil R. Valenzuela (Valenzuela)
against Alexandra Mining and Oil Ventures, Inc. (AMOVI) and its owner and
president, Cesar E. Detera (Cesar) (collectively, the respondents).
In his Position Paper,[4] Valenzuela alleged that he was hired as a company
driver of AMOVI on January 12, 2008, with an eight-hour work shift from 8:00
a.m. to 5:00 p.m. and with a monthly salary of F12,000.00. On June 15,
2013, after five years and five months of service, he was told that he can no
longer continue to work as there were no forthcoming funds to pay for his
salary.[5]
For their part, the respondents alleged that Valenzuela was actually hired as
a family driver of the Deteras. They alleged, however, that the !P12,000.00
monthly salary of Valenzuela was charged to AMOVFs account for
convenience. They averred that on June 15, 2013, Valenzuela informed
Cesar's wife, Annlynn, that he was going home to his province to visit his
parents. Annlynn granted him leave but when she asked him whether he can
return for work the following Monday, Valenzuela told her that he would give
her a call. Come Monday, Valenzuela did not show up for work and did not
also call to inform the Deteras of the reason behind his absence. This
caused them inconvenience as their daughter's schooling has started and it
was Valenzuela's responsibility to bring her to and from school.[6]
A week later, Valenzuela showed up at the Deteras' residence and informed
them that he was resigning and asked for his separation pay. To obviate
further verbal altercation, Annlynn agreed but asked him to submit a
resignation letter. Ultimately, Annlynn told him to make up his mind but
Valenzuela just walked out and never returned.[7]
In his Reply,[8] Valenzuela emphasized that he did not just suffer to work for
the company but also drove for the members of the Detera family. He denied
that he ever asked permission to visit his parents in Bicol, as the Deteras
knew that his parents had long been dead. Moreover, the remains of his
deceased parents were buried in Pateros. He alleged that he actually
reported for work on June 17, 2013, but was prevented by Cesar who told
him that his service is no longer needed as there were no funds forthcoming
to pay for his salary.
LA: On November 16, 2013, the Labor Arbiter (LA) rendered a
Decision[9] holding that Valenzuela had been illegally dismissed, the
dispositive portion of which reads, as follows:
WHEREFORE, premises considered, judgment is hereby rendered finding
[Valenzuela] to have been illegally dismissed. [The respondents] are hereby
found jointly and severally liable and ordered to pay [Valenzuela] the amount
of One Hundred Thirty[-] Two Thousand Pesos (P132,000.00) representing
his full backwages and separation pay plus ten percent (10%) thereof as
attorney's fees.
SO ORDERED.
The LA dismissed Cesar's claim that Valenzuela was a family driver and not
an employee of AMOVI, as the evidence on record proved otherwise. [11] She
likewise pointed out that the respondents failed to present any evidence to
support their claim that Valenzuela abandoned his employment. [12]
Unyielding, the respondents interposed an appeal to the National Labor
Relations Commission (NLRC),[13] and reiterated their claim that Valenzuela
was the family driver of the Deteras and not an employee of AMOVI. They
added that Valenzuela, being a member of the household service, may be
terminated at will by his employer pursuant to Article 150 of the Labor
Code.[14]
NLRC: On March 27, 2014, the NLRC Fourth Division (Formerly 7 th Division)
rendered a Decision[15] affirming the ruling of the LA, the pertinent portion of
which reads, thus:
Finally, resolving respondents' insistence that [Valenzuela] was hired as a
Family Driver and not as Company Driver, we find the same untenable. The
records of this case show that respondents failed to present evidence to
dispute [Valenzuela's] allegations. Such allegation is unsupported. On the
other hand, the appellant [sic] was able to present in [sic] identification card
and payslips.
There being no showing of any error committed by the [LA] in the assailed
Decision, we opt not to disturb the same.
WHEREFORE, the Appeal filed by respondents is hereby DISMISSED.
Assailed decision is AFFIRMED.
SO ORDERED.[16]
The respondents filed a Motion for Reconsideration [17] of the foregoing
decision, but the NLRC denied the same in its Resolution [18] dated April 25,
2014.
Undeterred, the respondents filed a petition for certiorari with the CA
imputing grave abuse of discretion on the part of the NLRC for holding that
there was an employer-employee relationship between AMOVI and
Valenzuela.
CA: On June 5, 2015, the CA rendered a Decision,[19] the dispositive portion
of which reads, as follows:
WHEREFORE, the Petition is PARTLY GRANTED. The Decision dated
March 27, 2014 and Resolution dated April 25, 2014 of the National Labor
Relations Commission are AFFIRMED with MODIFICATION in that the
award of backwages is DELETED.
SO ORDERED.[20]
The CA held that since there was no clear evidence that Valenzuela was
dismissed by the respondents and, on the other hand, there was an equal
lack of proof of abandonment of work on the part of Valenzuela. Following
the ruling of the Court in Exodus International Construction Corporation, et
al. v. Biscocho, et at.,[21] the remedy was to reinstate Valenzuela without
backwages.
On July 21, 2015, Valenzuela filed a Motion for Partial
Reconsideration,[23] but the same was denied by the CA in its
Resolution[24] dated January 13, 2016.
On March 10, 2016, Valenzuela filed the instant petition questioning the
Decision dated June 5, 2015 and Resolution dated January 13, 2016 of the
CA. He contends that the fact of his dismissal was clearly established and
this entitles him to the payment of both separation pay and full backwages.
SC: The Court holds that the instant case presents a clear case of illegal
dismissal contrary to the ruling of the CA that there was none.
The ruling in Exodus is not
applicable in the instant case
In its decision, the CA ruled that while it was established that Valenzuela
was an employee of AMOVI, there was no proof that the company or its
president dismissed him from service. It likewise affirmed that Valenzuela did
not abandon his employment as the respondents failed to establish acts
showing his intention to leave employment. Thus, it applied the ruling
in Exodus, where it was held that when there is no evidence of the fact of
dismissal on the part of the employer and, at the same time, no proof of
abandonment on the part of the employee, the proper relief is reinstatement
without backwages.[25]
A cursory reading of Exodus, however, will show that it is inapplicable in the
instant case. It is well to remember that in Exodus, the resolution to reinstate
the workers without any backwages was brought about by the finding that
there was neither illegal dismissal nor abandonment of work. Thus, to be fair
with both parties, the Court ordered the reinstatement of the workers without
unduly burdening the employer with the payment of backwages since the
fact of dismissal, much less illegal, was not established.
The instant case does not share the same factual milieu with Exodus. It is
noteworthy to emphasize that in all the pleadings submitted by Cesar before
the LA, NLRC and CA, he vigorously refuted the existence of an employer-
employee relationship between AMOVI and Valenzuela, and at the same
time, presented himself as the real employer of the latter. His argument was
that Valenzuela was not a company driver but a family driver of the Deteras.
The question regarding who may be deemed the real employer of
Valenzuela had been unanimously resolved and agreed by the LA, NLRC
and the CA to be AMOVI. The labor tribunals and the CA were all in accord
that Valenzuela was an employee of AMOVI as evidenced by the
identification card and payslips stating the company as his employer.
Moreover, the CA held that, utilizing the four-fold test of employer-employee
relationship, the result would show that Valenzuela was under the control of
AMOVI. It ruled thus:
In determining the existence of an employer-employee relationship,
jurisprudence spelled out the four-fold test, to wit: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the employer's power to control the employee with respect
to the means and methods by which the work is to be accomplished, x x x.
It was [AMOVI] which hired [Valenzuela] in January 2008, and which issued
an identification card showing that [Valenzuela] was an employee.
[Valenzuela] was likewise included in the payroll of [AMOVI], although it was
claimed that it was merely "for convenience." We do not see what kind of
convenience is afforded to [AMOVI].
The power to discipline and to dismiss is also present, and it was exercised
by [Cesar] as President of [AMOVI] which incidentally is a family corporation.
Finally, the control test is likewise satisfied. [Valenzuela] had no choice as to
who his passengers would be. He was a company driver who was required
to render service to the President of the Corporation, including his nuclear
family. It was them who controlled and dictated the manner by which he
performed his job.[26](Citation omitted)
The CA, however, erred in holding that there was no evidence of dismissal
as it is clear from Cesar's own admission that Valenzuela was
unceremoniously dismissed from service. In all his pleadings, while claiming
to be the reaj employer of Valenzuela, Cesar impliedly admitted dismissing
him from employment by repeatedly invoking Article 150 of the Labor Code
to justify his action. The provision reads as follows:
Art. 150. Service of termination notice. If the duration of the household
service is not determined either in stipulation or by nature of the service, the
employer or the househelper may give notice to put an end to the
relationship five (5) days before the intended termination of the service
On the basis of the foregoing provision, Cesar asseverated that as a family
driver, Valenzuela's service may be terminated at will by his
employer.[27] Thus, there is implied admission that he indeed terminated
Valenzuela out of his own volition, without sufficient ground and notice.
Unfortunately for Cesar, the labor tribunals and the CA all agreed that
Valenzuela was a company employee and his admission on the fact of the
latter's dismissal only established that it was done without regard to
substantive and procedural due process.
The Court elucidated on the requisites of a valid dismissal in Skippers United
Pacific, Inc., et al. v. Doza, et al,[28] thus:
For a worker's dismissal to be considered valid, it must comply with both
procedural and substantive due process. The legality of the manner of
dismissal constitutes procedural due process, while the legality of the act of
dismissal constitutes substantive due process.
Procedural due process in dismissal cases consists of the twin requirements
of notice and hearing. The employer must furnish the employee with two
written notices before the termination of employment can be effected: (1) the
first notice apprises the employee of the particular acts or omissions for
which his dismissal is sought; and (2) the second notice informs the
employee of the employer's decision to dismiss him. Before the issuance of
the second notice, the requirement of a hearing must be complied with by
giving the worker an opportunity to be heard. It is not necessary that an
actual hearing be conducted.
Substantive due process, on the other hand, requires that dismissal by the
employer be made under a just or authorized cause under Articles 282 to
284 of the Labor Code.[29] (Citations omitted)

Evidently, the respondents raised no valid ground to justify Valenzuela's
dismissal. As admitted by Cesar, Valenzuela was terminated at will. This
was corroborated by Valenzuela's claim that when he returned for work on
June 17, 2013, he was simply told that he can no longer continue to work as
there were no funds forthcoming to pay off his salary.
Further, the twin requirement of notice and hearing for a valid termination
was not observed by the respondents. Valenzuela was not at all informed of
the ground of his dismissal and was deprived the opportunity to explain his
side. He was rashly dismissed from service without a valid ground and the
required notices.
Valenzuela is entitled to separation
pay with full backwages.
Article 279[30] of the Labor Code, as amended, provides that an illegally
dismissed employee shall be entitled to reinstatement, full backwages,
inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him
up to the time of his actual reinstatement.
Lindsay,[31] the Court deliberated on the reliefs available to an illegally
In Macasero v. Southern Industrial Gases Philippines and/or Lindsay, [31] the
Court delibe dismissed employee. It held:
[A]n illegally dismissed employee is entitled to two reliefs: backwages and
reinstatement. The two reliefs provided are separate and distinct. In
instances where reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation pay is
granted. In effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no longer viable,
and backwages.
xxxx And in Velasco v. National Labor Relations Commission:
The accepted doctrine is that separation pay may avail in lieu of
reinstatement if reinstatement is no longer practical or in the best interest of
the parties. Separation pay in lieu of reinstatement may likewise be awarded
if the employee decides not to be reinstated.[32] (Citations omitted, italics
ours, and emphasis and underscoring deleted)
[30]Art. 279. Security of Tenure. - In cases of regular employment, the
employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed
from the tune his compensation was withheld from him up to the time of his
actual
reinstatement.
Consistent with the finding that Valenzuela had been illegally dismissed, he
is, therefore, entitled to reinstatement and full backwages. In view, however,
of the strained relations between the parties, the award of separation pay in
lieu of reinstatement is a more feasible alternative.
In CRC Agricultural Trading, et al. v. NLRC, et al.,[33] the Court explained the
rationale behind the allowance for the award of separation pay in lieu of
reinstatement. It emphasized that under the doctrine of strained relations,
the payment of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. On one
hand, such payment liberates the employee from what could be a highly
oppressive work environment. On the other hand, it releases the employer
from the grossly unpalatable obligation of maintaining in its employ a worker
it could no longer trust.[34]
Considering the antagonistic stance of the parties with each other,
compelling Valenzuela's reinstatement might do more harm on their already
strained relationship. It is worth mentioning that Valenzuela acted not only as
a company driver, he was also being tasked to render personal errands for
the Deteras, like bringing the daughter of the Deteras to and from school,
which meant that the element of trust is essential. The antagonism created
by the institution of the instant case is enough to conclude that the parties
are no longer willing to work with each other.
The Court takes note that there was an allegation that AMOVT had ceased
operation or that it was on the verge of collapse while the proceedings in this
dase are being conducted.[35] However, the fact of actual closure of business
was not clearly established in the records nor was the Court informed by any
of the parties that AMOVI had in fact ceased operations. Therefore, this
allegation will not be considered in the period for the computation of the
monetary awards due the dismissed employee, as the company is still
reasonably presumed to be in full operation. The computation of the
separation pay will still be one (1) month salary for every year of service plus
backwages from the time of their illegal termination up to the finality of this
Decision.[36]
Finally, the CA correctly ruled on the solidary liability of the respondents to
pay the monetary awards due the dismissed employee. As a rule, "[a]
corporate officer is not personally liable for the money claims of discharged
corporate employees unless he acted with evident malice and bad faith in
terminating their employment."[37] Here, Cesar's bad faith was manifested by
his persistent assertion that Valenzuela was merely a family driver in order to
justify his unceremonious dismissal. He repeatedly insisted that as a family
driver or member of the household service, Valenzuela may be terminated at
will, which was exactly what he did. He unreasonably sent Valenzuela home
when the latter reported for work, the latter unaware of what he had done to
merit such an abrupt termination. Cesar's admission on the reckless manner
of Valenzuela's dismissal justifies holding him solidarity liable with AMOVI.
WHEREFORE, the Decision dated June 5, 2015 and Resolution dated
January 13, 2016 of the Court of Appeals in CA-G.R. SP No. 136037
are AFFIRMED with the following MODIFICATIONS: (1) Alexandra Mining
and Oil Ventures, Inc. and Cesar Detera are hereby held liable for illegal
dismissal; and (2) the award of full backwages by the National Labor
Relations Commission (Fourth Division) in its Decision promulgated on
March 27, 2014 is hereby RESTORED. The respondents are solidarity held
liable for the payment of the monetary awards, subject to a recomputation of
separation pay which shall be one (1) month for every year of service and
full backwages from the time of illegal dismissal up to the finality of this
Decision.
SO ORDERED.
HSY MARKENTING LTD V. VILLASTIQUE
FACTS:
VIRGILIO O. Villastique was hired by HSY Marketing Ltd. Co. as field driver
tasked to deliver ready-to-wear items and/or general merchandise.
He filed a complaint for illegal dismissal with money claims against HSY
Marketing, for allegedly withholding his salary for his refusal to resign.
Petitioner invoked the defense that since respondent was the one who
refused to report for work, he should be considered as having voluntarily
severed his own employment. Thus, his money claims cannot prosper, as he
was not dismissed from the service.
The Labor Arbiter (LA) dismissed the charge of illegal dismissal, finding no
evidence to substantiate respondent’s claim that he was dismissed from his
job. There was likewise no evidence submitted by petitioner that respondent
had indeed voluntarily resigned. He ruled that the employer-employee
relationship between the parties should be maintained. Finding however,
strained relations between the parties, he did not order the reinstatement of
respondent, and instead directed petitioner to pay him the amount of
P86,580.00 as separation pay.
The National Labor Relations Commission (NLRC) affirmed the finding of the
LA. The Court of Appeals (CA) in turn affirmed in toto the resolution of the
NLRC. Petitioner imputes error, in among others, the award of separation
pay. Does the contention find merit?
Ruling: Yes.
The Court likewise upholds the unanimous conclusion of the lower tribunals
that respondent had not been dismissed at all. Other than the latter’s
unsubstantiated allegation of having been verbally terminated from his work,
no substantial evidence was presented to show that he was indeed
dismissed or was prevented from returning to his work. In the absence of
any showing of an overt or positive act proving that petitioner had dismissed
respondent, the latter’s claim of illegal dismissal cannot be sustained, as
such supposition would be self-serving, conjectural, and of no probative
value.

Similarly, petitioner’s claims of respondent’s voluntary resignation and/or

abandonment deserve scant consideration, considering petitioner’s failure to
discharge the burden of proving the deliberate and unjustified refusal of
respondent to resume his employment without any intention of returning. It
was incumbent upon petitioner to ascertain respondent’s interest or non-
interest in the continuance of his employment, but to no avail.

Since there is no dismissal or abandonment to speak of, the appropriate

course of action is to reinstate the employee (in this case, herein
respondent) without, however, the payment of backwages.

Notably, the reinstatement ordered here should not be construed as a relief

proceeding from illegal dismissal; instead, it should be considered as a
declaration or affirmation that the employee may return to work because he
was not dismissed in the first place. For this reason, the Court agrees with
petitioner that the LA, the NLRC, and the CA erred in awarding separation
pay in spite of the finding that respondent had not been dismissed.

Properly speaking, liability for the payment of separation pay is but a legal
consequence of illegal dismissal where reinstatement is no longer viable or
feasible. As a relief granted in lieu of reinstatement, it goes without saying
that an award of separation pay is inconsistent with a finding that there was
no illegal dismissal. This is because an employee who had not been
dismissed, much less illegally dismissed, cannot be reinstated. Moreover, as
there is no reinstatement to speak of, respondent cannot invoke the doctrine
of strained relations to support his prayer for the award of separation pay. x x
x.

In fine, petitioner is ordered to reinstate respondent to his former position

without the payment of backwages. If respondent voluntarily chooses not to
return to work, he must then be considered as having resigned from
employment. This is without prejudice, however, to the willingness of both
parties to continue with their former contract of employment or enter into a
new one whenever they so desire. (Perlas-Bernabe, J.; SC 1st Division, HSY
Marketing Ltd., Co. vs. Virgilio O. Villastique, G.R. No. 219569, Aug 17,
2016).