EMPLOYMENT RELATIONSHIP
and SJS expired; subsequently, a new contract for janitorial
CHEVRON VS. GALIT
PERALTA J.:*
Before the Court is a petition for review on certiorari under
Rule 45 of the Rules of Court seeking the reversal and setting
aside of the Decision[1] and Resolution[2] of the Court of
Appeals (CA), dated December 8, 2008 and January 20,
2009, respectively, in CA-G.R. SP No. 104713. The assailed
CA Decision reversed and set aside the Decision dated
January 31, 2008 and the Resolution dated May 27, 2008 of
the National Labor Relations Commission (NLRC), Second
Division in NLRC NCR (Case No.) 00-03-02399-06 (CA No.
051468-07), while the questioned CA Resolution denied
petitioner's Motion for Reconsideration.
The factual and procedural antecedents of the case are as
follows:
On March 20, 2006, herein respondent (Galit) filed against
Caltex Philippines, Inc., now Chevron (Phils.), Inc., SJS and
Sons Construction Corporation (SJS), and its president,
Reynaldo Salomon (Salomon),[3] a Complaint[4] for illegal
dismissal, underpayment/non-payment of 13th month pay,
separation pay and emergency cost of living allowance. The
Complaint was filed with the NLRC National Capital Region,
North Sector Branch in Quezon City.
In his Position Paper,[5] Galit alleged that: he is a regular and
permanent employee of Chevron since 1982, having been
assigned at the company's Pandacan depot; he is an "all-
around employee" whose job consists of cleaning the
premises of the depot, changing malfunctioning oil gaskets,
transferring oil from containers and other tasks that
management would assign to him; in the performance of his
duties, he was directly under the control and supervision of
Chevron supervisors; on January 15, 2005, he was verbally
informed that his employment is terminated but was promised
that he will be reinstated soon; for several months, he followed
up his reinstatement but was not given back his job.
In its Position Paper,[6] SJS claimed that: it is a company
which was established in 1993 and was engaged in the
business of providing manpower to its clients on a "per
project/contract" basis; Galit was hired by SJS in 1993 as a
project employee and was assigned to Chevron, as a janitor,
based on a contract between the two companies; contrary to
Galit's allegation, he started working for SJS only in 1993; the
manpower contract between SJS and Chevron eventually
ended on November 30, 2004 which resulted in the severance
of Galit's employment; SJS finally closed its business
operations in December 2004; it retired from doing business
in Manila on January 21, 2005; Galit was paid separation pay
of P11,000.00.
On the other hand, petitioner contended in its Position Paper
with Motion to Dismiss[7] that: it entered into two (2) contracts
for-janitorial services with SJS from May 1, 2001 to April 30,
2003 and from June 1, 2003 to June 1, 2004; under these
contracts, SJS undertook to "assign such number of its
employees, upon prior .agreement with [petitioner], as would
be sufficient to fully and effectively render the work and
services undertaken" and to "supply the equipment, tools and
materials, which shall, by all means, be effective and efficient,
at its own expense, necessary for the performance" of
janitorial services; Galit, who was employed by SJS, was
assigned to petitioner's Pandacan 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; on
November 30, 2004, the extended contract between petitioner
services was awarded by petitioner to another independent
contractor; petitioner was surprised that Galit filed an action
impleading it; despite several conferences, the parties were
not able to arrive at an amicable settlement.
On October 31, 2006, the Labor Arbiter (LA) assigned to the
case rendered a Decision,[8] the dispositive portion of which
reads as follows:
WHEREFORE, judgment is hereby rendered DISMISSING
the Complaint against respondent Chevron for lack of
jurisdiction, and against respondents SJS and Reynaldo
Salomon for lack of merit. For equity and compassionate
consideration, however, respondent SJS is hereby ordered to
pay the complainant a separation pay at the rate of a half-
month salary for every year of service that the complainant
had with respondent SJS.
SO ORDERED.[9]
The LA found that SJS is a legitimate contractor and that it
was Galit's employer, not petitioner. The LA dismissed Galit's
complaint for illegal dismissal against petitioner for lack of
jurisdiction on the ground that there was no employer-
employee relationship between petitioner and Galit. The LA
likewise dismissed the complaint against SJS and Salomon
for lack of merit on the basis of his finding that Galit's
employment with SJS simply expired as a result of the
completion of the project for which he was engaged.
Aggrieved, herein respondent filed an appeal[10] with the
NLRC.
On January 31, 2008, the NLRC rendered its Decision[11] and
disposed as follows:
WHEREFORE, premises considered, the decision under
review is hereby, MODIFIED.
Respondent SJS and Sons Construction Corporation is
ordered to pay the complainant, severance compensation, at
the rate of one (1) month salary for every year of service. In
all other respects, the appealed decision so stands as
AFFIRMED.
SO ORDERED.[12]
The NLRC affirmed the findings of the LA that SJS was a
legitimate job contractor and that it was Galit's employer.
However,"the NLRC found that Gal it was a regular, and not a
project employee, of SJS, whose employment was effectively
terminated when SJS ceased to operate.
Herein respondent tiled a Motion for Reconsideration,[13] but
the NLRC denied it in its Resolution[14] dated May 27, 2008.
Respondent then filed a petition for certiorari with the CA
assailing the above NLRC Decision and Resolution.
On December 8, 2008, the CA promulgated its assailed
Decision, the dispositive portion of which reads, thus:
WHEREFORE, premises considered, the petition
is GRANTED. The Decision dated January 31, 2008 and the
Resolution dated May 27, 2008 of the NLRC, Second Division
1
in NLRC NCR [Cast No.] 00-03-02399-06 (CA No. 051468-
07) are REVERSED and SET ASIDE. Judgment is rendered
declaring private respondent Chevron Phils, guilty of illegal
dismissal and ordering petitioner Galit's reinstatement without
loss of seniority rights and other privileges and payment of his
full backwages, inclusive of allowances and to other benefits
or their monetary equivalents computed from the time
compensation was withheld up to the time of actual
reinstatement. Private respondent Chevron Phils, is also
hereby ordered to pay 10% of the amount due petitioner Galit
as attorney's fees.
SO ORDERED.[15]
Contrary to the- findings of the LA and the NLRC, the CA held
that SJS was a labor-only contractor, that petitioner is Galit's
actual employer and that the latter was unjustly dismissed
from his employment.
Herein petitioner filed a motion for reconsideration, but the CA
denied it in its Resolution dated January 20, 2009.
Hence, the present petition for review on certiorari based on
the following grounds:
I.
WITH ALL DUE RESPECT, THE HONORABLE COURT OF
APPEALS SERIOUSLY ERRED IN DECLARING THAT THE
DISMISSAL OF RESPONDENT WAS ILLEGAL
CONSIDERING THAT:
A. THE FINDINGS OF FACT OF TFIE LABOR ARBITER A
QUO AND THE NATIONAL LABOR
RELATIONS COMMISSION ARE ALREADY BINDING
UPON THE HONORABLE COURT OF APPEALS.
B. THERE IS NO EMPLOYER-EMPLOYEE RELATIONSHIP
BETWEEN THE COMPANY AND RESPONDENT HEREIN.
C. PETITIONER SJS IS A. LEGITIMATE INDEPENDENT
CONTRACTOR.
II.
CONSIDERING THAT THERE IS NO EMPLOYER-
EMPLOYEE RELATIONSHIP BETWEEN THE COMPANY
AND RESPONDENT HEREIN, THE HONORABLE COURT
OF APPEALS' AWARD OF REINSTATEMENT,
BACKWAGES, AND ATTORNEY'S FEES AGAINST THE
COMPANY HAS NO LEGAL BASIS.[16]
On September 19, 2012, this Court issued a
Resolution[17] directing petitioner to implead SJS as party-
respondent on the ground that it is an indispensable party
without whom no final determination can be had of this case.
In a Motion[18] dated November 21, 2012, petitioner
manifested its compliance with this Court's September 19,
2012 Resolution. In addition, it prayed that Salomon be also
impleaded as party-respondent
Acting on petitioner's above Motion, this Court issued another
Resolution[19] on June 19, 2013, stating that SJS and
Salomon are impleaded as parties-respondents and are
required to comment on the petition for review on certiorari.
However, despite due notice sent to SJS and Salomon at their
last known addresses, copies of the above Resolution were
returned unserved. Hence, on October 20, 2014, the Court,
acting on Galit's plea for early resolution of the case,
promulgated a Resolution[20]resolving to dispense with the
filing by SJS and Salomon of their respective comments.
The Court will, thus, proceed to resolve the instant petition.
At the outset, the Court notes that the first ground raised by
petitioner consists of factual issues. It is settled that this Court
is not a trier of facts, and this applies with greater force in labor
cases.[21] Corollary thereto, this Court has held in a number
of cases that factual findings of administrative or quasi-judicial
bodies, which are deemed to have acquired expertise in
matters within their respective jurisdictions, are generally
accorded not only respect but even finality, and bind the Court
when supported by substantial evidence.[22] However, it is
equally settled that the.foregoing principles admit of certain
exceptions, to wit: (1) the findings are grounded entirely on
speculation, surmises or conjectures; (2) the inference made
is manifestly mistaken, absurd or impossible; (3) there is
grave abuse of discretion; (4) the judgment is based on a
misapprehension of facts; (5) the findings of fact are
conflicting; (6) in making its findings, the Court of Appeals
went beyond the issues of the case, or its findings are contrary
to the admissions of both appellant and appellee; (7) the
findings are contrary to those of the trial court; (8) the findings
are conclusions without citation of specific evidence on which
they are based; (9) the facts set forth in the petition, as well
as in petitioners main and reply briefs, are not disputed by
respondent; (10) the findings of fact are premised on the
supposed absence of evidence and contradicted by the
evidence on record; and (11) the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties,
which, if properly considered, would justify a different
conclusion.[23] In the instant case, the Court gives due course
to the instant petition considering that the findings of fact and
conclusions of law of the LA and the NLRC differ from those
of the CA.
Thus, the primordial question that confronts the Court is
whether there existed an employer-employee relationship
between petitioner and Galit, and whether the former is liable
to the latter for the termination of his employment. Corollary to
this, is the issue of whether or not SJS is an independent
contractor or a labor only contractor.
To ascertain the existence of an employer-employee
relationship, jurisprudence has invariably adhered to 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 power to control the employee's
conduct, or the so-called "control test."[24] Of these four, the
last one is the most important.[25] The so-called "control test"
is commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employer-
employee relationship.[26]Under the control test, an
employer-employee relationship exists where the person for
whom the services are performed reserves the right to control
not only the end achieved, but also the manner and means to
be used in reaching that end.[27]
In the instant case, the true nature of Galit's employment is
evident from the Job Contract between petitioner and SJS,
pertinent portions of which are reproduced hereunder:
x x x x
1.1 The CONTRACTOR [SJS] shall provide the following
2
specific services to the COMPANY [petitioner]:
x x x x
1. Scooping of slop of oil water separator
2. Cleaning of truck parking area/drum storage area and pier
xxxx
4.1 In the fulfillment of its obligations to the COMPANY, the
CONTRACTOR shall select and hire its workers. The
CONTRACTOR alone shall be responsible for the payment of
their wages and other employment benefits and likewise for
the safeguarding of their health and safety in accordance with
existing laws- and regulations. Likewise, the CONTRACTOR
shall be responsible for the discipline and/or dismissal of
these workers.
4.2 The CONTRACTOR shall retain the right to control the
manner and the means of performing the work, with the
COMPANY having the control or direction only as to the
results to be accomplished.
x x x x
4.4 It is understood that, for the above reasons, these workers
shall be considered as the employees of the CONTRACTOR.
Under no circumstances, shall these workers be deemed
directly or indirectly as the employees of the COMPANY.
x x x x
5.1 The CONTRACTOR shall maintain efficient and effective
discipline over any and all employees it may utilize in
performing its obligations under this CONTRACT, x x x
5.2 The COMPANY shall in no manner be answerable or
accountable for any incident or injury which may occur to any
worker or personnel of .the CONTRACTOR during the time
and consequent upon the performance of the work and
services under this Agreement, nor for any injury, loss or
damage arising from fault, negligence or carelessness of the
CONTRACTOR or anyone of its workers to any person or
persons or to his or their property; and the CONTRACTOR
covenants and agrees to assume, as it does hereby assume,
all liabilities for any such injury, loss or damage and to make
the COMPANY free and blameless therefrom, x x x
5.3. The CONTRACTOR shall be responsible for any loss or
damage that may be incurred upon the products, properties
and installations of the COMPANY during the effectivity of this
Contract which are due to the unreasonable or negligent act
of the CONTRACTOR, its agents or its workers.
x x x x
6.1 The CONTRACTOR shall at its own expense maintain
with a reputable insurance company, acceptable to the
CQMPANY, a comprehensive liability insurance in the amount
required by the COMPANY to cover claims for bodily injury,
death or property damage caused to any person or persons
by an act or omission of the CONTRACTOR or any of its
employees, agents or representatives.
x x x x
x x x [T]he CONTRACTOR agrees and undertakes:
x x x x
b. To submit satisfactory proof to the COMPANY that it has
registered its personnel/workers assigned to perform the work
and services herein required with the Social Security System,
Medicare and other appropriate agencies for purposes of the
Labor Code as well as other laws, decrees, rules and
regulations.
c. To pay the wages or salaries of its personnel/workers as
well as benefits, premia and protection in accordance with the
provisions of the Labor Code and other applicable laws,
decrees, rules and regulations promulgated by competent
authority, xxx
d. To assign such number of its employees, upon prior
agreement with the COMPANY, as would be sufficient to fully
and effectively render the work and services herein
undertaken, xxx
e. To supply the equipment, tools and materials, which shall,
by all means, be effective and efficient, at its own expense,
necessary for the performance of the services under this
Contract.[28]
The foregoing provisions of the Job Contract between
petitioner and SJS demonstrate that the latter possessed the
following earmarks of an employer, to wit: (1) the power of
selection and engagement of employees, under.Sections 4.1
and 6.1(d); (2) the payment of wages, under Sections 4.1 and
6.1(c); (3) the power to discipline and dismiss, under Section
4.1; and, (4) the power to control the employee's conduct,
under Sections 4.1, 4.2, and 5.1.
As to SJS' power of selection and engagement, Galit himself
admitted in his own affidavit that it was SJS which assigned
him to work at Chevron's Pandacan depot.[29] As such, there
is no question that it was SJS which selected and engaged
Galit as its employee.
With respect to the payment of wages, the Court finds no error
in the findings of the LA that Galit admitted that it was SJS
which paid his wages. While Galit claims that petitioner was
the one which actually paid his wages and that SJS was
merely used as a conduit, Galit failed to present evidence to
this effect. Galit, likewise, failed to present sufficient proof to
back up his claim that it was petitioner, and not SJS, which
actually paid his SSS, Philhealth and Pag-IBIG premiums. On
the contrary, it is .unlikely that SJS would report Galit as its
worker, pay his SSS, Philhealth and Pag-IBIG premiums, as
well as his wages, if it were not true that he was indeed its
employee.[30] In the same manner, the Quitclaim and
Release,[31] which was undisputedly signed by Galit,
acknowledging receipt of his separation pay from SJS, is an
indirect admission or recognition of the fact that the latter was
indeed his employer. Again, it would be unlikely for SJS to pay
Galit his separation pay if it is not the latter's employer.
Galit also did not dispute the fact that he was dismissed from
employment by reason of the termination of the service
contract between SJS and petitioner. In other words, it was
not petitioner which ended his employment. He was dismissed
therefrom because petitioner no longer renewed its contract
with SJS and that the latter subsequently ceased to operate.
Anent the power of control, the Court again finds no cogent
reason to depart from the findings of the NLRC that in case of
matters that needed to be addressed with respect to
employee performance, petitioner dealt directly with SJS and
not with the employee concerned. In any event, it is settled
that such power merely calls for the existence of the right to
control and not necessarily the exercise thereof. In the'
present case, the Job Contract between petitioner and SJS
3
clearly provided that SJS "shall retain the right to control the
manner and the means of performing the work, with
[petitioner] having the control or direction only as to the results
to be accomplished."[32]

In addition, it would bear to point out that contrary to the ruling

of the CA, the work performed by Galit, which is the "scooping
of slop of oil water separator,"[33] has no direct relation to
petitioner's business, which is the importation, refining and
manufacture of petroleum products. The Court defers to the
findings of both the LA and the NLRC that the job performed
by Galit, which essentially consists of janitorial services, may
be incidental or desirable to petitioner's main activity but it is
not necessary and directly related to it.

As to whether or not SJS is an independent contractor,

jurisprudence has invariably ruled that an independent
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,
and 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.[34] This embodies what
has long been jurisprudentially recognized as the control test,
as discussed above. In the instant case, SJS presented
evidence to show that it had an independent business by
paying business taxes and fees and that it was registered as
an employer with the Social Security System. Moreover, there
was no evidence to show that SJS and its employees were
ever subject to the control of petitioner. On the contrary, as
shown above, SJS possessed the right to control its
employees' manner and means of performing their work ,
including herein respondent Galit.

As to its capital, there is no dispute that SJS generated an

income of P1,523,575.81 for the year 2004.[35] In Neri v.
National Labor Relations Commission,[36] this Court held that
a business venture which had a capitalization of
P1,000,000.00 was considered as highly capitalized and
cannot be deemed engaged in labor-only contracting. In the
present case, while SJS' income of more than P1,500,000.00
was not shown to be equivalent to its authorized capital stock,
such income is an indication of how much capital was put into
its business to generate such amount of revenue. Thus, the
Court finds no sufficient reason to disturb the findings of the
LA and the NLRC that SJS had substantial capital.

WHEREFORE, the instant petition is GRANTED. The

assailed Decision and Resolution of the Court of Appeals,
dated December 8, 2008 and January 20, 2009, respectively,
are REVERSED and SET ASIDE. The Decision of the
National Labor Relations Commission, dated January 31,
2008 in NLRC NCR' [Case No.] 00-03-02399-06 (CA No.
051468-07) is REINSTATED.

SO ORDERED.

Villarama, Jr., Perlas-Bernabe,** Leonen,*** and Jardeleza,

JJ., concur.

4
PETRON VS. CABERTE
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the November
14, 2007 Decision[2] of the Court of Appeals (CA) in CA-G.R.
SP No. 82356 which reversed the May 14, 2003
Decision[3] and November 27, 2003 Resolution[4] of the
National Labor Relations Commission (NLRC) in NLRC Case
No. V-000329-2002. The NLRC affirmed the March 7, 2002
Decision[5] of the Labor Arbiter dismissing the Complaints for
illegal dismissal and payment of monetary claims filed by
respondents Armz Caberte (Caberte), Antonio Caberte, Jr.
(Caberte Jr.), MichaeServicio (Servicio), Ariel Develos
(Develos), Adolfo Gestupa (Gestupa), Archie Ponteras
(Ponteras), Arnold Blanco (Blanco), Dante Mariano (Mariano),
Virgilio Galorosa (Galorosa) and Camilo Te (Te) against
petitioner Petron Corporation (Petron), ABC Contracting
Services (ABC), and its owner Antonio B. Caberte, Sr.
(Caberte Sr.). Likewise assailed is the CA Resolution[6] dated
March 4, 2008 which denied Perron's Motion for
Reconsideration.
Factual Antecedents
Petron is a domestic corporation engaged in the manufacture
and distribution to the general public of various petroleum
products. In pursuance of its business, Petron owns and
operates several bulk plants in the country for receiving,
storing and distributing its products.
On various dates from 1979 to 1998, respondents were hired
to work at Petron's Bacolod Bulk Plant in San Patrick, Bacolod
City, Negros Occidental as LPG/Gasul fillers, maintenance
crew, warehousemen, utility workers and tanker receiving
crew.
For the periods from March 1, 1996 to February 28, 1999 and
November 1, 1996 to June 30, 1999, Petron and ABC, a labor
contracting business owned and operated by Caberte Sr.,
entered into a Contract for Services[7] and a Contract for LPG
Assistance Services.[8] Under both service contracts, ABC
undertook to provide utility and maintenance services to
Petron in its Bacolod Bulk Plant.
Proceedings before the Labor Arbiter
On July 2, 1999, respondents Caberte, Caberte Jr., Servicio,
Develos, Gestupa, Ponteras, Blanco and Mariano filed before
the Labor Arbiter a Complaint[9] for illegal dismissal,
underpayment of wages and non-payment of allowances,
13th month pay, overtime pay, holiday pay, service incentive
leave pay, moral and exemplary damages and attorney's fees
against Petron, ABC and Caberte Sr., docketed as NLRC
RAB VI Case No. 06-07-10588-99. Subsequently,
respondents Galorosa and Te separately filed similar
Complaints[10] docketed as NLRC RAB VI Case No. 06-07-
10675-99 and RAB Case No. 06-09-10785-99, respectively.
The three Complaints were consolidated in an
Order[11] dated October 25, 1999 of the Labor Arbiter.
Respondents averred that even before Petron engaged ABC
as contractor in 1996, most of them had already been working
for Petron for years. However, every time Petron engages a
new contractor, it would designate such new contractor as
their employer. Despite such arrangement, Petron exercised
control and supervision over their work, the performance of
which is necessary and desirable in its usual trade and
business. Respondents added that ABC is a mere labor-only
contractor which had no substantial capital and investment,
and had no control over the manner and method on how they
accomplished their work. Thus, Petron is their true employer.
On July 1, 1999, however, Petron no longer allowed them to
enter and work in the premises of its Bacolod Bulk Plant.
Hence, the complaints for illegal dismissal.
On the other hand, Petron asserted that ABC is an
independent contractor which supplied the needed manpower
for the maintenance of its bulk handling premises and offices,
as well as for tanker assistance in the receiving and re-filling
of its LPG products; that among the workers supplied by ABC
were respondents, except Caberte Jr., who does not appear
to be one of those assigned by ABC to work for it; that it has
no direct control and supervision over respondents who were
tasked to perform work required by the service contracts it
entered into with ABC; and, that it cannot allow the continuous
employment of respondents beyond the expiration of the
contracts with ABC. To prove the legitimacy and capacity of
ABC as an independent contractor, Petron submitted the
following documents: (1) Contractor's Pre-Qualification
Statement;[12] (2) Petron's Conflict of Interest Policy signed
by Caberte Sr., as proprietor of ABC;[13] (3) ABC's Certificate
of Registration issued by the Bureau of Internal Revenue
(BIR);[14] (4) Value-Added Tax Return for the year
1995;[15] (5) BIR Confirmation Receipt;[16] (6) Caberte Sr.'s
Tax Identification Number (TIN) issued by the BIR;[17] (7)
Caberte Sr.'s Individual Income Tax Return for the years
1993[18] and 1994;[19] (8) ABC's Audited Financial
Statements for the years 1992,[20] 1993[21] and
1994;[22] (9) ABC's Mayor's Permit for the year
1995;[23] and, (10) ABC's Certificate of Registration of
Business Name issued by the Department of Trade and
Industry (DTI).[24] In addition, it averred that ABC, as a
contractor, had duly posted a performance bond[25] and took
out insurance policies[26] against liabilities. Petron likewise
presented affidavits[27] of two Petron employees stating that
respondents do not perform activities related to Petron's
business operation but only tasks which are intermittent and
which can be contracted out. Also submitted were
affidavits[28] of three former employees of ABC attesting to
the fact that during their stint in Petron, they used materials
such as floor polisher, floor wax, broom, dustpan, cleaning
rags and other equipment owned by ABC to accomplish their
tasks and that they worked under the supervision of Caberte
Sr., through the latter's designated overall supervisor,
respondent Caberte. Petron further revealed that
ABC/Caberte Sr. has the power to hire and fire respondents
and was the one paying their wages.
In a Decision[29] dated March 7, 2002, Executive Labor
Arbiter Danilo C. Acosta (LA Acosta) held that ABC is an
independent contractor that has substantial capital and that
respondents were its employees. He likewise ruled that ABC's
cessation of operation is a force majeure that justifies
respondents' dismissal. Nonetheless, LA Acosta awarded
respondents separation pay based on the applicable minimum
wage rate at the time of expiration of the contracts of service.
He, however, denied the claims for overtime pay and night
shift differential pay for lack of merit. The dispositive portion of
the Decision reads:
Conformably with the foregoing, respondent ABC is hereby
ORDERED TO PAY EACH COMPLAINANT, namely,
complainants Antonio Caberte, Jr., Armz M. Caberte, Michael
Servicio, Ariel Develos, Adolfo Gestupa, Archie Ponteras,
Arnold Blanco, Dante Mirano, Virgilio Galorosa and Camilo
Te, separation pay of one month for every year of service.
All other claims and the claims against respondent PETRON
are hereby ORDERED DISMISSED for lack of merit.
5
 NLRC Case No. V-000329-2002, affirming the March 7, 2002
SO ORDERED.[30] Decision of Executive Labor Arbiter Danilo C. Acosta of the
Proceedings before the National Labor Relations Commission Sub-Regional Arbitration Branch VI, Bacolod City, is hereby
REVERSED.
Respondents appealed to the NLRC where they insisted that
they are regular employees of Petron since ABC is a labor- Respondent Petron Corporation is ordered to reinstate Armz
only contractor. Caberte, Antonio Caberte, Jr., Michael Servicio, Ariel
Develos, Adolfo Gestupa, Archie Ponteras, Arnold Blanco,
In a Decision[31] dated May 14, 2003, the NLRC affirmed the Dante Mirano, Virgilio Galorosa and Camilo Te to their former
ruling of the Labor Arbiter after it found that ABC is not a mere positions with the same rights and benefits and the same
labor contractor but a legitimate independent contractor. In so salary rates as its regular employees.
ruling, the NLRC took into account the following: (1)
ABC/Caberte Sr. has the power of control over respondents Respondent Petron Corporation is likewise ordered to pay
as Caberte Sr. was the one controlling and supervising petitioner's attorney's fees equivalent to ten percent (10%) of
respondents in their work. While Petron intervened at times, the monetary award.
the same was limited to safety precautions due to the
hazardous nature of the products the workers were dealing All other claims are dismissed for lack of merit.
with; (2) ABC possessed sufficient capital and equipment per
the various documents that Petron submitted showing the Costs against private respondent Petron.
former's financial capability to maintain its status as an
accredited contractor of the latter. In fact, Caberte Sr. was SO ORDERED.[36]
even able to establish ABC's Bacolod City Office; and, (3) Petron's Motion for Reconsideration[37] was denied by the
ABC/Caberte Sr. has the power to hire and dismiss CA in its Resolution[38] dated March 4, 2008. Hence, this
respondents. Hence, the dispositive portion of the present recourse.
Decision, viz:

WHEREFORE, premises considered, this appeal is Issues

DISMISSED and the decision of the Executive Labor Arbiter
is AFFIRMED. Petron presents the following grounds for review:

SO ORDERED.[32] XXX THE COURT OF APPEALS SERIOUSLY ERRED AND

Respondents filed a Motion for Reconsideration which was, DECIDED A QUESTION OF SUBSTANCE IN A MANNER
however, denied in the NLRC Resolution[33] dated November NOT IN ACCORD WITH LAW AND WITH APPLICABLE
27, 2003. JURISPRUDENCE IN FINDING THAT ABC CONTRACTING
SERVICES IS A MERE LABOR-ONLY CONTRACTOR AND
Proceedings before the Court of Appeals IN HOLDING THAT RESPONDENTS ARE THUS REGULAR
EMPLOYEES OF THE COMPANY CONSIDERING THAT:
Aggrieved, respondents filed a Petition
for Certiorari[34] before the CA ascribing upon the NLRC THERE IS A LEGITIMATE SERVICE CONTRACTING
grave abuse of discretion amounting to lack or in excess of AGREEMENT BETWEEN THE COMPANY AND ABC
jurisdiction in holding that they are not employees of Petron. CONTRACTING SERVICES;

The CA, in a Decision[35] dated November 14, 2007, found
merit in respondents' Petition. It ruled that ABC is engaged in
labor-only contracting because: first, it did not have
substantial capital or investment in the form of tools,
equipment, implements, machineries and work premises,
actually and directly used in the performance or completion of
the job it contracted out from Petron; second, the work
assigned to respondents were directly related to Petron's
business; and, third, the nature of Petron's business requires
it to exercise control over the performance of respondents'
work. Consequently, the CA declared respondents as
Petron's regular employees. And since Petron did not comply
with the requirements under the Labor Code when it
terminated their employment, respondents were illegally
dismissed and therefore entitled to reinstatement without loss
of seniority rights and other privileges, with the alternative
relief of separation pay in lieu of reinstatement, and to full
backwages, inclusive of allowances, and to other benefits or
their monetary equivalent computed from the time
compensation was withheld up to the time of actual
reinstatement. The CA, however, denied respondents' claims
for moral and exemplary damages in the absence of bad faith
in Petron's act of dismissing them but awarded respondents
10% attorney's fees for having to litigate to protect their
interests. The dispositive portion of the Decision reads:
THE CONTRACTED SERVICES THAT RESPONDENTS
PERFORMED ARE NOT DIRECTLY RELATED AND
NECESSARY OR DESIRABLE TO THE COMPANY'S
PRINCIPAL BUSINESS;
ABC CONTRACTING SERVICES CARRIES ON AN
INDEPENDENT BUSINESS AND POSSESSES
SUBSTANTIAL CAPITAL AND INVESTMENT;
RESPONDENTS ARE EMPLOYEES OF ABC
CONTRACTING SERVICES.[39]
Petron asserts that ABC, as an independent contractor,
rendered janitorial, utility and LPG assistance services by
virtue of legitimate contracts entered into by and between
them. As such, the services rendered by respondents were
purely maintenance and utility works which are not directly
related, necessary and desirable to Petron's main business.
Petron likewise insists that ABC is not a labor-only contractor
as it carries on an independent business and uses its own
equipment, tools, materials and supplies in the performance
of its contracted services. Further, it asserts that ABC wielded
and exercised the power of selection or engagement,
payment of wages, discipline or dismissal, and of control over
respondents.

WHEREFORE, in view of the foregoing, the decision of the

National Labor Relations Commission dated May 14, 2003, in Our Ruling

6

The Petition has no merit.
Labor-only contracting and permissible job contracting,
defined; a contractor is presumed by law to be a labor-only
contractor; anyone claiming the supposed status of an
independent contractor bears the burden of proving the same.
As defined under Article 106 of the Labor Code, labor-only
contracting, a prohibited act, is an arrangement where the
contractor, who does not have substantial capital or
investment in the form of tools, equipment, machineries, work
premises, among others, supplies workers to an employer and
the workers recruited are performing activities which are
directly related to the principal business of such employer.
Permissible or legitimate job contracting or subcontracting, on
the other hand, "refers to an arrangement whereby a principal
agrees to put out or farm out with the 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. A person is considered engaged in legitimate job
contracting or subcontracting if the following conditions
concur: (a) the contractor carries on a distinct and
independent business and partakes the contract work on his
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 his work except as to the results thereof; (b)
the contractor has substantial capital or investment; and (c)
the agreement between the principal and the contractor or
subcontractor assures the contractual employees' entitlement
to all labor and occupational safety and health standards, free
exercise of the right to self-organization, security of tenure,
and social welfare benefits."[40]
To determine whether a contractor is engaged in labor-only
contracting or permissible job contracting, "the totality of the
facts and the surrounding circumstances of the case are to be
considered."[41]
Petron contends that the CA erred in ruling that ABC is a
labor-only contractor since respondents failed to prove that
ABC is not an independent contractor. The contention,
however, is incorrect. The law presumes a contractor to be a
labor-only contractor and the employees are not expected to
prove the negative fact that the contractor is a labor-only
contractor.[42] Thus, it is not respondents but Petron which
bears the burden of establishing that ABC is not a labor-only
contractor but a legitimate independent contractor. As held
in Alilin v. Petron Corporation,[43] "where the principal is the
one claiming that the contractor is a legitimate contractor, the
burden of proving the supposed status of the contractor rests
on the principal."
Petron failed to overcome the presumption that ABC is a
labor-only contractor.
Foremost, Petron banks on the contracts of services it entered
into with ABC. It contends that the said contracts were
legitimate business transactions and were not only for the
purpose of ABC providing manpower or labor-only to Petron,
but rather for specific services pertaining to janitorial, utility
and LPG assistance.
Suffice it to state, however, that Petron cannot place reliance
on the contracts it entered into with ABC since these are not
determinative of the true nature of the parties' relationship. As
held in Babas v. Lorenzo Shipping Corporation,[44] the
character of the business, whether as labor-only contractor or
as a job contractor, should be determined by the criteria set
by statute and the parties cannot dictate by the mere
expedience of a unilateral declaration in a contract the
character of their business.
Next, Petron endeavours to prove that ABC is a legitimate
independent contractor.
To restate, a contractor is deemed to be a labor-only
contractor if the following elements are present: (i) the
contractor does not have substantial capital or investment to
actually perform the job, work or service under its own account
and responsibility; and (ii) the employees recruited, supplied
or placed by such contractor are performing activities which
are directly related to the main business of the
principal.[45] Conversely, in proving that ABC is not a labor-
only contractor, it is incumbent upon Petron to show that ABC
has substantial capital or investment and that respondents
were performing activities which were not directly related to
Petron's principal business.
To show that ABC has substantial capital or investment,
Petron submitted, among others, ABC's BIR Certificate of
Registration, VAT Return, BIR Confirmation Receipt, TIN,
Individual Income Tax Return, Mayor's Permit and DTI
Certificate of Registration. However, the Court observes that
these documents are not conclusive evidence of ABC's
financial capability. At most, they merely show that ABC is
engaged in business and licensed by the appropriate
government agencies.
As for the financial statements presented, it appears that only
the audited financial statements of ABC for the years 1992,
1993 and 1994 were submitted. As aptly observed by the CA,
these documents cannot be given much credence considering
that the service contracts between Petron and ABC
commenced in 1996 and ended in 1999. However, no audited
financial statements for the years material to this case (1996,
1997, 1998 and 1999) were submitted. Also, as per record,
ABC was obligated to submit to Petron at least once every two
years its latest audited financial statements, among others, as
a requirement for the retention of its status as an accredited
contractor of Petron.[46] If it is true that ABC continued to
possess its financial qualification after 1994, Petron should
have presented ABC's financial statements for the said years
which are presumed to be in Petron's possession considering
that they are part of the requirements that it itself set for its
accredited contractors.
Neither does the performance bond taken out by ABC serve
as significant evidence of its substantial capital. As aptly
explained by the CA:
The performance bond posted by ABC Contracting Services
likewise fails to convince us that the former has substantial
capital or investment inasmuch as it was not shown that the
performance bond in the amount of P596,799.51 was enough
to cover not only payrolls, rentals and equipment but also
possible damages to the equipment and to third parties and
other contingent liabilities. Moreover, this Court takes judicial
notice that bonds of this nature are issued upon payment of a
small percentage as premium without necessarily requiring
any guarantee.
If at all, the bond was a convenient smoke screen to disguise
the real nature of ABC's employment as an agent of
Petron.[47]
7
Anent substantial investment in the form of equipment, tools,
implements, machineries and work premises, Petron likewise
failed to show that ABC possessed the same. Instead, what is
evident in the records was that ABC had been renting a forklift
from Petron in order to carry out the job of
respondents.[48] This only shows that ABC does not own
basic equipment needed in the performance of respondents'
job. Similarly and again as correctly held by the CA, the fact
that ABC leased a property for the establishment of its
Bacolod office is immaterial since it was not shown that it was
used in the performance or completion of the job contracted
out. "Substantial capital or investment," under Section 5, Rule
VIII-A, Book III of the Omnibus Rules Implementing the Labor
Code (Implementing Rules), as amended by Department
Order No. 18-02,[49] does not include those which are not
actually and directly used in the performance of the job
contracted out.
Going now to the activities performed by respondents, Petron
avers that the same were not necessary or desirable to its
principal business. In fact, the service contracts it entered into
with ABC clearly referred to respondents' functions as
maintenance and utility works only which are remote to its
principal business of manufacturing and distributing
petroleum products.
The Court finds otherwise. Gestupa, Ponteras, Develos,
Blanco and Mariano were LPG fillers and maintenance crew;
Caberte was an LPG operator supervisor; Te was a
warehouseman and utility worker; and Servicio and Galorosa
were tanker receiving crew and utility workers. Undoubtedly,
the work they rendered were directly related to Petron's main
business, vital as they are in the manufacture and distribution
of petroleum products. Besides, some of the respondents
were already working for Petron even before it engaged ABC
as a contractor in 1996. Albeit it was made to appear that they
were under the different contractors that Petron engaged over
the years, respondents have been regularly performing the
same tasks within the premises of Petron. This "the repeated
and continuing need for the performance of the job is sufficient
evidence of the necessity, if not indispensability of the activity
to the business."[50]
What further militates against Perron's claim that ABC, as an
alleged independent contractor, is the true employer of
respondents, is the fact that Petron has the power of control
over respondents in the performance of their work. It bears
stressing that the power of control merely calls for the
existence of the right to control and not necessarily the
exercise thereof.[51] Here, Petron admitted in its Position
Paper that the supervision of a Petron employee is required
over LPG and tanker assistance jobs for inventory control and
safety checking purposes. It explained that due to the
hazardous nature of its products, constant checking of the
procedures in their handling is essential considering the high
possibility of fatal accidents. It also admitted that it was the
one supplying the needed materials and equipment in
discharging these functions to better insure the integrity,
quality and safety of its products.
From the foregoing, it is clear that Petron failed to discharge
its burden of proving that ABC is not a labor-only contractor.
Consequently, and as warranted by the facts, the Court
declares ABC as a mere labor-only contractor. "A finding that
a contractor is a 'labor-only' contractor is equivalent to
declaring that there is an employer-employee relationship
between the principal and the employees of the supposed
contractor, and the 'labor-only' contractor is considered as a
mere agent of the principal, the real
employer."[52] Accordingly in this case, Petron is declared to
be the true employer of respondents who are considered
regular employees in view of the fact that they have been
regularly performing activities which are necessary and
desirable to the usual business of Petron for a number of
years.
Respondents, except Antonio Caberte, Jr., were illegally
dismissed.
With respect to respondents' dismissal, Petron claimed that
the same sprang from the termination or conclusion of the
service contracts it entered into with ABC. As earlier held,
respondents are considered regular employees. In cases of
regular employment, an employer may only terminate the
services of an employee for just or authorized causes under
the law.[53] As the reason given by Petron dismissing
respondents does not constitute a just or authorized cause for
termination,[54] the latter are declared to have been illegally
dismissed. Respondents are thus entitled to all the remedies
of an illegally dismissed employee, i.e., backwages and
reinstatement, or if no longer feasible, separation pay. The CA
is thus correct in ruling that respondents are entitled to
reinstatement without loss of seniority rights and other
privileges. However, if reinstatement is no longer feasible,
respondents are entitled to receive separation pay equivalent
to one month salary for every year of service. In addition,
respondents are entitled to full backwages from the time they
were not allowed to work on July 1, 1999 up to actual
reinstatement or finality of this Decision as the case may be.
An exception must be taken, however, with respect to Caberte
Jr. From the beginning, Petron disputes the fact he ever
worked for Petron. Therefore, before his case against Petron
can prosper, Caberte Jr. must first establish that an employer-
employee relationship existed between them since it is basic
that the issue of illegal dismissal is premised on the existence
of such relationship between the parties.[55]Unfortunately,
nowhere in the records does it show that he indeed worked
for Petron. Consequently, his complaint should be dismissed.
WHEREFORE, the petition is DENIED. The November 14,
2007 Decision and the March 4, 2008 Resolution of the Court
of Appeals in CA-G.R. SP No. 82356 are MODIFIED in that:
(1) the Complaint of respondent Antonio Caberte, Jr. against
petitioner Petron Corporation is dismissed; and (2) petitioner
Petron Corporation is ordered to reinstate all of the
respondents, except for Antonio Caberte, Jr., to their former
positions with the same rights and benefits and the same
salary rates as its regular employees, or if reinstatement is no
longer feasible, to separation pay equivalent to one month
salary for every year of service and to pay them their full
backwages from July 1, 1999 until actual
reinstatement or upon finality of this Decision as the case may
be, as well as attorney's fees equivalent to 10% of the
monetary award, with costs against Petron Corporation.
SO ORDERED.
8

MATLING IND. VS. COROS
BERSAMIN, J.:
This case reprises the jurisdictional conundrum of whether a
complaint for illegal dismissal is cognizable by the Labor
Arbiter (LA) or by the Regional Trial Court (RTC). The
determination of whether the dismissed officer was a regular
employee or a corporate officer unravels the conundrum. In
the case of the regular employee, the LA has jurisdiction;
otherwise, the RTC exercises the legal authority to adjudicate.
In this appeal via petition for review on certiorari, the
petitioners challenge the decision dated September 13,
2002[1] and the resolution dated April 2, 2003,[2] both
promulgated in C.A.-G.R. SP No. 65714 entitled Matling
Industrial and Commercial Corporation, et al. v. Ricardo R.
Coros and National Labor Relations Commission, whereby by
the Court of Appeals (CA) sustained the ruling of the National
Labor Relations Commission (NLRC) to the effect that the LA
had jurisdiction because the respondent was not a corporate
officer of petitioner Matling Industrial and Commercial
Corporation (Matling).
Antecedents
After his dismissal by Matling as its Vice President for Finance
and Administration, the respondent filed on August 10,
2000 a complaint for illegal suspension and illegal dismissal
against Matling and some of its corporate officers (petitioners)
in the NLRC, Sub-Regional Arbitration Branch
XII, Iligan City.[3]
The petitioners moved to dismiss the complaint,[4] raising the
ground, among others, that the complaint pertained to the
jurisdiction of the Securities and Exchange Commission
(SEC) due to the controversy being intra-corporate inasmuch
as the respondent was a member of Matlings Board of
Directors aside from being its Vice-President for Finance and
Administration prior to his termination.
The respondent opposed the petitioners motion to
dismiss,[5] insisting that his status as a member of Matlings
Board of Directors was doubtful, considering that he had not
been formally elected as such; that he did not own a single
share of stock in Matling, considering that he had been made
to sign in blank an undated indorsement of the certificate of
stock he had been given in 1992; that Matling had taken back
and retained the certificate of stock in its custody; and that
even assuming that he had been a Director of Matling, he had
been removed as the Vice President for Finance and
Administration, not as a Director, a fact that the notice of his
termination dated April 10, 2000 showed.
On October 16, 2000, the LA granted the petitioners motion to
dismiss,[6] ruling that the respondent was a corporate officer
because he was occupying the position of Vice President for
Finance and Administration and at the same time was a
Member of the Board of Directors of Matling; and that,
consequently, his removal was a corporate act of Matling and
the controversy resulting from such removal was under the
jurisdiction of the SEC, pursuant to Section 5, paragraph (c)
of Presidential Decree No. 902.
Ruling of the NLRC
The respondent appealed to the NLRC,[7] urging that:
I
THE HONORABLE LABOR ARBITER COMMITTED GRAVE
ABUSE OF DISCRETION GRANTING APPELLEES
MOTION TO DISMISS WITHOUT GIVING THE APPELLANT
AN OPPORTUNITY TO FILE HIS OPPOSITION THERETO
THEREBY VIOLATING THE BASIC PRINCIPLE OF DUE
PROCESS.
II
THE HONORABLE LABOR ARBITER COMMITTED AN
ERROR IN DISMISSING THE CASE FOR LACK OF
JURISDICTION.
On March 13, 2001, the NLRC set aside the dismissal,
concluding that the respondents complaint for illegal
dismissal was properly cognizable by the LA, not by the SEC,
because he was not a corporate officer by virtue of his position
in Matling, albeit high ranking and managerial, not being
among the positions listed in Matlings Constitution and By-
Laws.[8] The NLRC disposed thuswise:
WHEREFORE, the Order appealed from is SET ASIDE. A
new one is entered declaring and holding that the case at
bench does not involve any intracorporate matter. Hence,
jurisdiction to hear and act on said case is vested with the
Labor Arbiter, not the SEC, considering that the position of
Vice-President for Finance and Administration being held by
complainant-appellant is not listed as among respondent's
corporate officers.
Accordingly, let the records of this case be REMANDED to the
Arbitration Branch of origin in order that the Labor Arbiter
below could act on the case at bench, hear both parties,
receive their respective evidence and position papers fully
observing the requirements of due process, and resolve the
same with reasonable dispatch.
SO ORDERED.
The petitioners sought reconsideration,[9] reiterating that the
respondent, being a member of the Board of Directors, was a
corporate officer whose removal was not within the LAs
jurisdiction.
The petitioners later submitted to the NLRC in support of
the motion for reconsideration the certified machine copies of
Matlings Amended Articles of Incorporation and By Laws to
prove that the President of Matling was thereby granted full
power to create new offices and appoint the officers thereto,
and the minutes of special meeting held on June 7, 1999 by
Matlings Board of Directors to prove that the respondent was,
indeed, a Member of the Board of Directors.[10]
Nonetheless, on April 30, 2001, the NLRC denied the
petitioners motion for reconsideration.[11]
Ruling of the CA
The petitioners elevated the issue to the CA by petition
for certiorari, docketed as C.A.-G.R. No. SP 65714,
contending that the NLRC committed grave abuse of
discretion amounting to lack of jurisdiction in reversing the
correct decision of the LA.
In its assailed decision promulgated on September 13,
2002,[12] the CA dismissed the petition for certiorari,
explaining:
9

For a position to be considered as a corporate office, or, for
that matter, for one to be considered as a corporate officer,
the position must, if not listed in the by-laws, have been
created by the corporation's board of directors, and the
occupant thereof appointed or elected by the same board of
directors or stockholders. This is the implication of the ruling
in Tabang v. National Labor Relations Commission, which
reads:
The president, vice president, secretary and treasurer are
commonly regarded as the principal or executive officers of a
corporation, and modern corporation statutes usually
designate them as the officers of the corporation.
However, other offices 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.
It has been held that an 'office' is created by the charter of the
corporation and the officer is elected by the directors or
stockholders. On the other hand, an 'employee' usually
occupies no office and generally is employed not by action of
the directors or stockholders but by the managing officer of
the corporation who also determines the compensation to be
paid to such employee.
This ruling was reiterated in the subsequent cases
of Ongkingco v. National Labor Relations
Commission and De Rossi v. National Labor Relations
Commission.
The position of vice-president for administration and finance,
which Coros used to hold in the corporation, was not created
by the corporations board of directors but only by its president
or executive vice-president pursuant to the by-laws of the
corporation. Moreover, Coros appointment to said position
was not made through any act of the board of directors
or stockholders of the corporation. Consequently, the position
to which Coros was appointed and later on removed from, is
not a corporate office despite its nomenclature, but an
ordinary office in the corporation.
Coros alleged illegal dismissal therefrom is, therefore, within
the jurisdiction of the labor arbiter.
WHEREFORE, the petition for certiorari is hereby
DISMISSED.
SO ORDERED.
The CA denied the petitioners motion for
reconsideration on April 2, 2003.[13]
Issue
Thus, the petitioners are now before the Court for a review
on certiorari, positing that the respondent was a
stockholder/member of the Matlings Board of Directors as
well as its Vice President for Finance and Administration;
and that the CA consequently erred in holding that the LA
had jurisdiction.
The decisive issue is whether the respondent was a corporate
officer of Matling or not. The resolution of the issue determines
whether the LA or the RTC had jurisdiction over
his complaint for illegal dismissal.
Ruling
The appeal fails.
I Regulation Code, the SECs jurisdiction over all intra-
The Law on Jurisdiction in Dismissal Cases
As a rule, the illegal dismissal of an officer or other employee
of a private employer is properly cognizable by the LA. This is
pursuant to Article 217 (a) 2 of the Labor Code, as amended,
which provides as follows:
Article 217. Jurisdiction of the Labor Arbiters and the
Commission. - (a) Except as otherwise provided under this
Code, the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days
after the submission of the case by the parties for decision
without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases
that workers may file involving wages, rates of pay, hours of
work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and
lockouts; and
6. Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other claims
arising from employer-employee relations, including those of
persons in domestic or household service, involving an
amount exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for
reinstatement.
(b) The Commission shall have exclusive appellate
jurisdiction over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies
shall be disposed of by the Labor Arbiter by referring the same
to the grievance machinery and voluntary arbitration as may
be provided in said agreements. (As amended by Section 9,
Republic Act No. 6715, March 21, 1989).
Where the complaint for illegal dismissal concerns a
corporate officer, however, the controversy falls under the
jurisdiction of the Securities and Exchange Commission
(SEC), because the controversy arises out of intra-corporate
or partnership relations between and among stockholders,
members, or associates, or between any or all of them and
the corporation, partnership, or association of which they are
stockholders, members, or associates, respectively; and
between such corporation, partnership, or association and the
State insofar as the controversy concerns their individual
franchise or right to exist as such entity; or because the
controversy involves the election or appointment of a director,
trustee, officer, or manager of suchcorporation, partnership,
or association.[14] Such controversy, among others, is known
as an intra-corporate dispute.
Effective on August 8, 2000, upon the passage of Republic
Act No. 8799,[15] otherwise known as The Securities
corporate disputes was transferred to the RTC, pursuant to
Section 5.2 of RA No. 8799, to wit:
10

5.2. The Commissions jurisdiction over all cases enumerated
under Section 5 of Presidential Decree No. 902-A is
hereby transferred to the Courts of general jurisdiction or the
appropriate Regional Trial Court: Provided, that the Supreme
Court in the exercise of its authority may designate the
Regional Trial Court branches that shall exercise jurisdiction
over these cases. The Commission shall retain jurisdiction
over pending cases involving intra-corporate disputes
submitted for final resolution which should be resolved within
one (1) year from the enactment of this Code. The
Commission shall retain jurisdiction over pending suspension
of payments/rehabilitation cases filed as of 30 June 2000 until
finally disposed.
Considering that the respondents complaint for illegal
dismissal was commenced on August 10, 2000, it might come
under the coverage of Section 5.2 of RA No. 8799, supra,
should it turn out that the respondent was a corporate, not a
regular, officer of Matling.
II
Was the Respondents Position of Vice President
for Administration and Finance a Corporate Office?
We must first resolve whether or not the respondents position
as Vice President for Finance and Administration was a
corporate office. If it was, his dismissal by the Board of
Directors rendered the matter an intra-corporate dispute
cognizable by the RTC pursuant to RA No. 8799.
The petitioners contend that the position of Vice President for
Finance and Administration was a corporate office, having
been created by Matlings President pursuant to By-Law No.
V, as amended,[16] to wit:
BY LAW NO. V
Officers
The President shall be the executive head of the corporation;
shall preside over the meetings of the stockholders and
directors; shall countersign all certificates, contracts and other
instruments of the corporation as authorized by the Board of
Directors; shall have full power to hire and discharge any or
all employees of the corporation; shall have full power to
create new offices and to appoint the officers thereto as he
may deem proper and necessary in the operations of the
corporation and as the progress of the business and welfare
of the corporation may demand; shall make reports to the
directors and stockholders and perform all such other duties
and functions as are incident to his office or are properly
required of him by the Board of Directors. In case of the
absence or disability of the President, the Executive Vice
President shall have the power to exercise his functions.
The petitioners argue that the power to create corporate
offices and to appoint the individuals to assume the offices
was delegated by Matlings Board of Directors to its President
through By-Law No. V, as amended; and that any office the
President created, like the position of the respondent, was as
valid and effective a creation as that made by the Board of
Directors, making the office a corporate office. In justification,
they cite Tabang v. National Labor Relations
Commission,[17] which held that other offices 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 officers as may be necessary.
The respondent counters that Matlings By-Laws did not list his
position as Vice President for Finance and Administration as
one of the corporate offices; that Matlings By-Law No. III listed
only four corporate officers, namely: President, Executive Vice
President, Secretary, and Treasurer; [18] that the corporate
offices contemplated in the phrase and such other officers as
may be provided for in the by-laws found in Section 25 of
the Corporation Code should be clearly and expressly stated
in the By-Laws; that the fact that Matlings By-Law No. III dealt
with Directors & Officers while its By-Law No. V dealt
with Officers proved that there was a differentiation between
the officers mentioned in the two provisions, with those
classified under By-Law No. V being ordinary or non-
corporate officers; and that the officer, to be considered as a
corporate officer, must be elected by the Board of Directors or
the stockholders, for the President could only appoint an
employee to a position pursuant to By-Law No. V.
We agree with respondent.
Section 25 of the Corporation Code provides:
Section 25. Corporate officers, quorum.--Immediately after
their election, the directors of a corporation must formally
organize by the election of a president, who shall be a director,
a treasurer who may or may not be a director, a secretary who
shall be a resident and citizen of the Philippines, and such
other officers as may be provided for in the by-laws. Any two
(2) or more positions may be held concurrently by the same
person, except that no one shall act as president and
secretary or as president and treasurer at the same time.
The directors or trustees and officers to be elected shall
perform the duties enjoined on them by law and the by-laws
of the corporation. Unless the articles of incorporation or the
by-laws provide for a greater majority, a majority of the
number of directors or trustees as fixed in the articles of
incorporation shall constitute a quorum for the transaction of
corporate business, and every decision of at least a majority
of the directors or trustees present at a meeting at which there
is a quorum shall be valid as a corporate act, except for the
election of officers which shall require the vote of a majority of
all the members of the board.
Directors or trustees cannot attend or vote by proxy at board
meetings.
Conformably with Section 25, a position must be expressly
mentioned in the By-Laws in order to be considered as a
corporate office. Thus, the creation of an office pursuant to or
under a By-Law enabling provision is not enough to make a
position a corporate office. Guerrea v. Lezama,[19] the first
ruling on the matter, held that the only officers of a corporation
were those given that character either by the Corporation
Code or by the By-Laws; the rest of the corporate officers
could be considered only as employees or subordinate
officials. Thus, it was held in Easycall Communications Phils.,
Inc. v. King:[20]
An office is created by the charter of the corporation and the
officer is elected by the directors or stockholders. On the other
hand, an employee occupies no office and generally is
employed not by the action of the directors or stockholders but
by the managing officer of the corporation who also
determines the compensation to be paid to such employee.
In this case, respondent was appointed vice president for
nationwide expansion by Malonzo, petitioner's general
manager, not by the board of directors of petitioner. It was also
Malonzo who determined the compensation package of
11
respondent. Thus, respondent was an employee, not a
corporate officer. The CA was therefore correct in ruling that
jurisdiction over the case was properly with the NLRC, not the
SEC (now the RTC).
This interpretation is the correct application of Section 25 of
the Corporation Code, which plainly states that the corporate
officers are the President, Secretary, Treasurer and such
other officers as may be provided for in the By-Laws.
Accordingly, the corporate officers in the context of PD No.
902-A are exclusively those who are given that character
either by the Corporation Code or by the corporations By-
Laws.
A different interpretation can easily leave the way open for the
Board of Directors to circumvent the constitutionally
guaranteed security of tenure of the employee by the
expedient inclusion in the By-Laws of an enabling clause on
the creation of just any corporate officer position.
It is relevant to state in this connection that the SEC, the
primary agency administering the Corporation Code, adopted
a similar interpretation of Section 25 of the Corporation
Code in its Opinion dated November 25, 1993,[21] to wit:
Thus, pursuant to the above provision (Section 25 of the
Corporation Code), whoever are the corporate officers
enumerated in the by-laws are the exclusive Officers of the
corporation and the Board has no power to create other
Offices without amending first the corporate By-
laws. However, the Board may create appointive positions
other than the positions of corporate Officers, but the persons
occupying such positions are not considered as corporate
officers within the meaning of Section 25 of the Corporation
Code and are not empowered to exercise the functions of the
corporate Officers, except those functions lawfully delegated
to them. Their functions and duties are to be determined by
the Board of Directors/Trustees.
Moreover, the Board of Directors of Matling could not validly
delegate the power to create a corporate office to the
President, in light of Section 25 of the Corporation
Code requiring the Board of Directors itself to elect the
corporate officers. Verily, the power to elect
the corporate officers was a discretionary power that the law
exclusively vested in the Board of Directors, and could not be
delegated to subordinate officers or agents.[22] The office of
Vice President for Finance and Administration created by
Matlings President pursuant to By Law No. V was an ordinary,
not a corporate, office.
To emphasize, the power to create new offices and the power
to appoint the officers to occupy them vested by By-Law No.
V merely allowed Matlings President to create non-corporate
offices to be occupied by ordinary employees of Matling. Such
powers were incidental to the Presidents duties as the
executive head of Matling to assist him in the daily operations
of the business.
The petitioners reliance on Tabang, supra, is misplaced. The
statement in Tabang, to the effect that offices not expressly
mentioned in the By-Laws but were created pursuant to a By-
Law enabling provision were also considered corporate
offices, was plainly obiter dictum due to the position subject of
the controversy being mentioned in the By-Laws. Thus, the
Court held therein that the position was a corporate office, and
that the determination of the rights and liabilities arising from
the ouster from the position was an intra-corporate
controversy within the SECs jurisdiction.
In Nacpil v. Intercontinental Broadcasting
Corporation,[23] which may be the more appropriate
ruling, the position subject of the controversy was not
expressly mentioned in the By-Laws, but was created
pursuant to a By-Law enabling provision authorizing the Board
of Directors to create other offices that the Board of Directors
might see fit to create. The Court held there that the position
was a corporate office, relying on the obiter dictum in Tabang.
Considering that the observations earlier made herein show
that the soundness of their dicta is not
unassailable, Tabang and Nacpil should no longer be
controlling.
III
Did Respondents Status as Director and
Stockholder Automatically Convert his Dismissal
into an Intra-Corporate Dispute?
Yet, the petitioners insist that because the respondent was a
Director/stockholder of Matling, and relying on Paguio v.
National Labor Relations Commission[24] and Ongkingko v.
National Labor Relations Commission,[25] the NLRC had no
jurisdiction over his complaint, considering that any case for
illegal dismissal brought by a stockholder/officer against the
corporation was an intra-corporate matter that must fall under
the jurisdiction of the SEC conformably with the context of PD
No. 902-A.
The petitioners insistence is bereft of basis.
To begin with, the reliance on Paguio and Ongkingko is
misplaced. In both rulings, the complainants were undeniably
corporate officers due to their positions being expressly
mentioned in the By-Laws, aside from the fact that both of
them had been duly elected by the respective Boards of
Directors. But the herein respondents position of Vice
President for Finance and Administration was not expressly
mentioned in the By-Laws; neither was the position of Vice
President for Finance and Administration created by Matlings
Board of Directors. Lastly, the President, not the Board of
Directors, appointed him.
True it is that the Court pronounced in Tabang as follows:
Also, an intra-corporate controversy is one which arises
between a stockholder and the corporation. There is no
distinction, qualification or any exemption whatsoever. The
provision is broad and covers all kinds of controversies
between stockholders and corporations.[26]
However, the Tabang pronouncement is not controlling
because it is too sweeping and does not accord with reason,
justice, and fair play. In order to determine whether a dispute
constitutes an intra-corporate controversy or not, the Court
considers two elements instead, namely: (a) the status or
relationship of the parties; and (b) the nature of the question
that is the subject of their controversy. This was our thrust
in Viray v. Court of Appeals:[27]
The establishment of any of the relationships mentioned
above will not necessarily always confer jurisdiction over the
dispute on the SEC to the exclusion of regular courts. The
statement made in one case that the rule admits of no
exceptions or distinctions is not that absolute. The better
policy in determining which body has jurisdiction over a case
would be to consider not only the status or relationship of the
parties but also the nature of the question that is the subject
of their controversy.
12
Not every conflict between a corporation and its stockholders
involves corporate matters that only the SEC can resolve in
the exercise of its adjudicatory or quasi-judicial powers. If, for
example, a person leases an apartment owned by a
corporation of which he is a stockholder, there should be no
question that a complaint for his ejectment for non-payment of
rentals would still come under the jurisdiction of the regular
courts and not of the SEC. By the same token, if one person
injures another in a vehicular accident, the complaint for
damages filed by the victim will not come under the jurisdiction
of the SEC simply because of the happenstance that both
parties are stockholders of the same corporation. A contrary
interpretation would dissipate the powers of the regular courts
and distort the meaning and intent of PD No. 902-A.
In another case, Mainland Construction Co., Inc. v.
Movilla,[28] the Court reiterated these determinants thuswise:
In order that the SEC (now the regular courts) can take
cognizance of a case, the controversy must pertain to any of
the following relationships:
a) between the corporation, partnership or association and the
public;
b) between the corporation, partnership or association and its
stockholders, partners, members or officers;
c) between the corporation, partnership or association and the
State as far as its franchise, permit or license to operate is
concerned; and
d) among the stockholders, partners or associates
themselves.
The fact that the parties involved in the controversy are all
stockholders or that the parties involved are the stockholders
and the corporation does not necessarily place the dispute
within the ambit of the jurisdiction of SEC. The better policy to
be followed in determining jurisdiction over a case should be
to consider concurrent factors such as the status or
relationship of the parties or the nature of the question that is
the subject of their controversy. In the absence of any one of
these factors, the SEC will not have jurisdiction. Furthermore,
it does not necessarily follow that every conflict between the
corporation and its stockholders would involve such corporate
matters as only the SEC can resolve in the exercise of its
adjudicatory or quasi-judicial powers.[29]
The criteria for distinguishing between corporate officers who
may be ousted from office at will, on one hand, and ordinary
corporate employees who may only be terminated for just
cause, on the other hand, do not depend on the nature of the
services performed, but on the manner of creation of the
office. In the respondents case, he was supposedly at once
an employee, a stockholder, and a Director of Matling. The
circumstances surrounding his appointment to office must be
fully considered to determine whether the dismissal
constituted an intra-corporate controversy or a labor
termination dispute. We must also consider whether his status
as Director and stockholder had any relation at all to his
appointment and subsequent dismissal as Vice President for
Finance and Administration.
Obviously enough, the respondent was not appointed as Vice
President for Finance and Administration because of his being
a stockholder or Director of Matling. He had started working
for Matling on September 8, 1966, and had been employed
continuously for 33 years until his termination on April 17,
2000, first as a bookkeeper, and his climb in 1987 to his last
position as Vice President for Finance and Administration had
been gradual but steady, as the following sequence indicates:
1966 Bookkeeper
1968 Senior Accountant
1969 Chief Accountant
1972 Office Supervisor
1973 Assistant Treasurer
1978 Special Assistant for Finance
1980 Assistant Comptroller
1983 Finance and Administrative Manager
1985 Asst. Vice President for Finance and Administration
1987 to April 17, 2000 Vice President for Finance and
Administration
Even though he might have become a stockholder of Matling
in 1992, his promotion to the position of Vice President for
Finance and Administration in 1987 was by virtue of the length
of quality service he had rendered as an employee of Matling.
His subsequent acquisition of the status of
Director/stockholder had no relation to his promotion.
Besides, his status of Director/stockholder was unaffected by
his dismissal from employment as Vice President for Finance
and Administration.
In Prudential Bank and Trust Company v. Reyes,[30] a case
involving a lady bank manager who had risen from the ranks
but was dismissed, the Court held that her complaint for illegal
dismissal was correctly brought to the NLRC, because she
was deemed a regular employee of the bank. The Court
observed thus:
It appears that private respondent was appointed Accounting
Clerk by the Bank on July 14, 1963. From that position she
rose to become supervisor. Then in 1982, she was appointed
Assistant Vice-President which she occupied until her illegal
dismissal on July 19, 1991. The banks contention that she
merely holds an elective position and that in effect she is not
a regular employee is belied by the nature of her work and her
length of service with the Bank. As earlier stated, she rose
from the ranks and has been employed with the Bank since
1963 until the termination of her employment in 1991. As
Assistant Vice President of the Foreign Department of the
Bank, she is tasked, among others, to collect checks drawn
against overseas banks payable in foreign currency and to
ensure the collection of foreign bills or checks purchased,
including the signing of transmittal letters covering the
same. It has been stated that the primary standard of
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.
Additionally, an employee is regular because of the nature of
work and the length of service, not because of the mode or
even the reason for hiring them. As Assistant Vice-President
of the Foreign Department of the Bank she performs tasks
integral to the operations of the bank and her length of service
with the bank totaling 28 years speaks volumes of her status
as a regular employee of the bank. In fine, as a regular
employee, she is entitled to security of tenure; that is, her
services may be terminated only for a just or authorized
cause. This being in truth a case of illegal dismissal, it is no
wonder then that the Bank endeavored to the very end to
establish loss of trust and confidence and serious misconduct
on the part of private respondent but, as will be discussed
later, to no avail.
WHEREFORE, we deny the petition for review on certiorari,
and affirm the decision of the Court of Appeals.
Costs of suit to be paid by the petitioners.
SO ORDERED
13
G.R. No. 201298 February 5, 2014
RAUL C. COSARE, Petitioner,
vs.
BROADCOM ASIA, INC. and DANTE
AREVALO, Respondents.
DECISION
REYES, J.:
Before the Court is a petition for review on certiorari1 under
Rule 45 of the Rules of Court, which assails the
Decision2 dated November 24, 2011 and Resolution3 dated
March 26, 2012 of the Court of Appeals (CA) in CA-G.R. SP.
No. 117356, wherein the CA ruled that the Regional Trial
Court (RTC), and not the Labor Arbiter (LA), had the
jurisdiction over petitioner Raul C. Cosare's (Cosare)
complaint for illegal dismissal against Broadcom Asia, Inc.
(Broadcom) and Dante Arevalo (Arevalo), the President of
Broadcom (respondents).
The Antecedents
The case stems from a complaint4 for constructive dismissal,
illegal suspension and monetary claims filed with the National
Capital Region Arbitration Branch of the National Labor
Relations Commission (NLRC) by Cosare against the
respondents.
Cosare claimed that sometime in April 1993, he was
employed as a salesman by Arevalo, who was then in the
business of selling broadcast equipment needed by television
networks and production houses. In December 2000, Arevalo
set up the company Broadcom, still to continue the business
of trading communication and broadcast equipment. Cosare
was named an incorporator of Broadcom, having been
assigned 100 shares of stock with par value of ₱1.00 per
share.5 In October 2001, Cosare was promoted to the
position of Assistant Vice President for Sales (AVP for Sales)
and Head of the Technical Coordination, having a monthly
basic net salary and average commissions of ₱18,000.00 and
₱37,000.00, respectively.6
Sometime in 2003, Alex F. Abiog (Abiog) was appointed as
Broadcom’s Vice President for Sales and thus, became
Cosare’s immediate superior. On March 23, 2009, Cosare
sent a confidential memo7 to Arevalo to inform him of the
following anomalies which were allegedly being committed by
Abiog against the company: (a) he failed to report to work on
time, and would immediately leave the office on the pretext of
client visits; (b) he advised the clients of Broadcom to
purchase camera units from its competitors, and received
commissions therefor; (c) he shared in the "under the-table
dealings" or "confidential commissions" which Broadcom
extended to its clients’ personnel and engineers; and (d) he
expressed his complaints and disgust over Broadcom’s
uncompetitive salaries and wages and delay in the payment
of other benefits, even in the presence of office staff. Cosare
ended his memo by clarifying that he was not interested in
Abiog’s position, but only wanted Arevalo to know of the
irregularities for the corporation’s sake.
Apparently, Arevalo failed to act on Cosare’s accusations.
Cosare claimed that he was instead called for a meeting by
Arevalo on March 25, 2009, wherein he was asked to tender
his resignation in exchange for "financial assistance" in the
amount of ₱300,000.00.8 Cosare refused to comply with the
directive, as signified in a letter9dated March 26, 2009 which
he sent to Arevalo.
On March 30, 2009, Cosare received from Roselyn Villareal
(Villareal), Broadcom’s Manager for Finance and
Administration, a memo10 signed by Arevalo, charging him of
serious misconduct and willful breach of trust, and providing
in part:
1. A confidential memo was received from the VP for Sales
informing me that you had directed, or at the very least tried
to persuade, a customer to purchase a camera from another
supplier. Clearly, this action is a gross and willful violation of
the trust and confidence this company has given to you being
its AVP for Sales and is an attempt to deprive the company of
income from which you, along with the other employees of this
company, derive your salaries and other benefits. x x x.
2. A company vehicle assigned to you with plate no. UNV 402
was found abandoned in another place outside of the office
without proper turnover from you to this office which had
assigned said vehicle to you. The vehicle was found to be
inoperable and in very bad condition, which required that the
vehicle be towed to a nearby auto repair shop for extensive
repairs.
3. You have repeatedly failed to submit regular sales reports
informing the company of your activities within and outside of
company premises despite repeated reminders. However, it
has been observed that you have been both frequently absent
and/or tardy without proper information to this office or your
direct supervisor, the VP for Sales Mr. Alex Abiog, of your
whereabouts.
4. You have been remiss in the performance of your duties as
a Sales officer as evidenced by the fact that you have not
recorded any sales for the past immediate twelve (12) months.
This was inspite of the fact that my office decided to relieve
you of your duties as technical coordinator between
Engineering and Sales since June last year so that you could
focus and concentrate [on] your activities in sales.11
Cosare was given forty-eight (48) hours from the date of the
memo within which to present his explanation on the charges.
He was also "suspended from having access to any and all
company files/records and use of company assets effective
immediately."12 Thus, Cosare claimed that he was precluded
from reporting for work on March 31, 2009, and was instead
instructed to wait at the office’s receiving section. Upon the
specific instructions of Arevalo, he was also prevented by
Villareal from retrieving even his personal belongings from the
office.
On April 1, 2009, Cosare was totally barred from entering the
company premises, and was told to merely wait outside the
office building for further instructions. When no such
instructions were given by 8:00 p.m., Cosare was impelled to
seek the assistance of the officials of Barangay San Antonio,
Pasig City, and had the incident reported in the barangay
blotter.13
On April 2, 2009, Cosare attempted to furnish the company
with a Memo14 by which he addressed and denied the
accusations cited in Arevalo’s memo dated March 30, 2009.
The respondents refused to receive the memo on the ground
of late filing, prompting Cosare to serve a copy thereof by
registered mail. The following day, April 3, 2009, Cosare filed
the subject labor complaint, claiming that he was
constructively dismissed from employment by the
respondents. He further argued that he was illegally
suspended, as he placed no serious and imminent threat to
the life or property of his employer and co-employees.15
In refuting Cosare’s complaint, the respondents argued that
Cosare was neither illegally suspended nor dismissed from
employment. They also contended that Cosare committed the
following acts inimical to the interests of Broadcom: (a) he
failed to sell any broadcast equipment since the year 2007; (b)
he attempted to sell a Panasonic HMC 150 Camera which
was to be sourced from a competitor; and (c) he made an
unauthorized request in Broadcom’s name for its principal,
Panasonic USA, to issue an invitation for Cosare’s friend, one
Alex Paredes, to attend the National Association of
Broadcasters’ Conference in Las Vegas,
USA.16 Furthermore, they contended that Cosare abandoned
his job17 by continually failing to report for work beginning
April 1, 2009, prompting them to issue on April 14, 2009 a
memorandum18 accusing Cosare of absence without leave
beginning April 1, 2009.
14
The Ruling of the LA
On January 6, 2010, LA Napoleon M. Menese (LA Menese)
rendered his Decision19 dismissing the complaint on the
ground of Cosare’s failure to establish that he was dismissed,
constructively or otherwise, from his employment. For the LA,
what transpired on March 30, 2009 was merely the
respondents’ issuance to Cosare of a show-cause memo,
giving him a chance to present his side on the charges against
him. He explained:
It is obvious that [Cosare] DID NOT wait for respondents’
action regarding the charges leveled against him in the show-
cause memo. What he did was to pre-empt that action by filing
this complaint just a day after he submitted his written
explanation. Moreover, by specifically seeking payment of
"Separation Pay" instead of reinstatement, [Cosare’s] motive
for filing this case becomes more evident.20
It was also held that Cosare failed to substantiate by
documentary evidence his allegations of illegal suspension
and non-payment of allowances and commissions.
Unyielding, Cosare appealed the LA decision to the NLRC.
The Ruling of the NLRC
On August 24, 2010, the NLRC rendered its
Decision21 reversing the Decision of LA Menese. The
dispositive portion of the NLRC Decision reads:
WHEREFORE, premises considered, the DECISION is
REVERSED and the Respondents are found guilty of Illegal
Constructive Dismissal. Respondents BROADCOM ASIA,
INC. and Dante Arevalo are ordered to pay [Cosare’s]
backwages, and separation pay, as well as damages, in the
total amount of ₱1,915,458.33, per attached Computation.
SO ORDERED.22
In ruling in favor of Cosare, the NLRC explained that "due
weight and credence is accorded to [Cosare’s] contention that
he was constructively dismissed by Respondent Arevalo
when he was asked to resign from his employment."23The
fact that Cosare was suspended from using the assets of
Broadcom was also inconsistent with the respondents’ claim
that Cosare opted to abandon his employment.
Exemplary damages in the amount of ₱100,000.00 was
awarded, given the NLRC’s finding that the termination of
Cosare’s employment was effected by the respondents in bad
faith and in a wanton, oppressive and malevolent manner. The
claim for unpaid commissions was denied on the ground of
the failure to include it in the prayer of pleadings filed with the
LA and in the appeal.
The respondents’ motion for reconsideration was
denied.24 Dissatisfied, they filed a petition for certiorari with
the CA founded on the following arguments: (1) the
respondents did not have to prove just cause for terminating
the employment of Cosare because the latter’s complaint was
based on an alleged constructive dismissal; (2) Cosare
resigned and was thus not dismissed from employment; (3)
the respondents should not be declared liable for the payment
of Cosare’s monetary claims; and (4) Arevalo should not be
held solidarily liable for the judgment award.
In a manifestation filed by the respondents during the
pendency of the CA appeal, they raised a new argument, i.e.,
the case involved an intra-corporate controversy which was
within the jurisdiction of the RTC, instead of the LA.25They
argued that the case involved a complaint against a
corporation filed by a stockholder, who, at the same time, was
a corporate officer.
The Ruling of the CA
On November 24, 2011, the CA rendered the assailed
Decision26 granting the respondents’ petition. It agreed with
the respondents’ contention that the case involved an intra-
corporate controversy which, pursuant to Presidential Decree
No. 902-A, as amended, was within the exclusive jurisdiction
of the RTC. It reasoned:
Record shows that [Cosare] was indeed a stockholder of
[Broadcom], and that he was listed as one of its directors.
Moreover, he held the position of [AVP] for Sales which is
listed as a corporate office. Generally, the president, vice-
president, secretary or treasurer are commonly regarded as
the principal or executive officers of a corporation, and
modern corporation statutes usually designate them as the
officers of the corporation. However, it bears mentioning that
under Section 25 of the Corporation Code, the Board of
Directors of [Broadcom] is allowed to appoint such other
officers as it may deem necessary. Indeed, [Broadcom’s] By-
Laws provides:
Article IV
Officer
Section 1. Election / Appointment – Immediately after their
election, the Board of Directors shall formally organize by
electing the President, the Vice-President, the Treasurer, and
the Secretary at said meeting.
The Board, may, from time to time, appoint such other officers
as it may determine to be necessary or proper. x x x
We hold that [the respondents] were able to present
substantial evidence that [Cosare] indeed held a corporate
office, as evidenced by the General Information Sheet which
was submitted to the Securities and Exchange Commission
(SEC) on October 22, 2009.27 (Citations omitted and
emphasis supplied)
Thus, the CA reversed the NLRC decision and resolution, and
then entered a new one dismissing the labor complaint on the
ground of lack of jurisdiction, finding it unnecessary to resolve
the main issues that were raised in the petition. Cosare filed a
motion for reconsideration, but this was denied by the CA via
the Resolution28 dated March 26, 2012. Hence, this petition.
The Present Petition
The pivotal issues for the petition’s full resolution are as
follows: (1) whether or not the case instituted by Cosare was
an intra-corporate dispute that was within the original
jurisdiction of the RTC, and not of the LAs; and (2) whether or
not Cosare was constructively and illegally dismissed from
employment by the respondents.
The Court’s Ruling
The petition is impressed with merit.
Jurisdiction over the controversy
As regards the issue of jurisdiction, the Court has determined
that contrary to the ruling of the CA, it is the LA, and not the
regular courts, which has the original jurisdiction over the
subject controversy. An intra-corporate controversy, which
falls within the jurisdiction of regular courts, has been
regarded in its broad sense to pertain to disputes that involve
any of the following relationships: (1) between the corporation,
partnership or association and the public; (2) between the
corporation, partnership or association and the state in so far
as its franchise, permit or license to operate is concerned; (3)
between the corporation, partnership or association and its
stockholders, partners, members or officers; and (4) among
the stockholders, partners or associates,
themselves.29 Settled jurisprudence, however, qualifies that
when the dispute involves a charge of illegal dismissal, the
action may fall under the jurisdiction of the LAs upon whose
jurisdiction, as a rule, falls termination disputes and claims for
damages arising from employer-employee relations as
provided in Article 217 of the Labor Code. Consistent with this
jurisprudence, the mere fact that Cosare was a stockholder
and an officer of Broadcom at the time the subject controversy
developed failed to necessarily make the case an intra-
corporate dispute.
In Matling Industrial and Commercial Corporation v.
Coros,30 the Court distinguished between a "regular
employee" and a "corporate officer" for purposes of
establishing the true nature of a dispute or complaint for illegal
dismissal and determining which body has jurisdiction over it.
15
Succinctly, it was explained that "[t]he determination of
whether the dismissed officer was a regular employee or
corporate officer unravels the conundrum" of whether a
complaint for illegal dismissal is cognizable by the LA or by
the RTC. "In case of the regular employee, the LA has
jurisdiction; otherwise, the RTC exercises the legal authority
to adjudicate.31
Applying the foregoing to the present case, the LA had the
original jurisdiction over the complaint for illegal dismissal
because Cosare, although an officer of Broadcom for being its
AVP for Sales, was not a "corporate officer" as the term is
defined by law. We emphasized in Real v. Sangu Philippines,
Inc.32 the definition of corporate officers for the purpose of
identifying an intra-corporate controversy. Citing Garcia v.
Eastern Telecommunications Philippines, Inc.,33 we held:
" ‘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."34 (Emphasis
ours)
In Tabang v. NLRC,35 the Court also made the following
pronouncement on the nature of corporate offices:
It has been held that an "office" is created by the charter of the
corporation and the officer is elected by the directors and
stockholders. On the other hand, an "employee" usually
occupies no office and generally is employed not by action of
the directors or stockholders but by the managing officer of
the corporation who also determines the compensation to be
paid to such employee.36 (Citations omitted)
As may be deduced from the foregoing, there are two
circumstances which must concur in order for an individual to
be considered a corporate officer, as against an ordinary
employee or officer, namely: (1) the creation of the position is
under the corporation’s charter or by-laws; and (2) the election
of the officer is by the directors or stockholders. 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.
To support their argument that Cosare was a corporate officer,
the respondents referred to Section 1, Article IV of
Broadcom’s by-laws, which reads:
ARTICLE IV
OFFICER
Section 1. Election / Appointment – Immediately after their
election, the Board of Directors shall formally organize by
electing the President, the Vice-President, the Treasurer, and
the Secretary at said meeting.
The Board may, from time to time, appoint such other officers
as it may determine to be necessary or proper. Any two (2) or
more compatible positions may be held concurrently by the
same person, except that no one shall act as President and
Treasurer or Secretary at the same time.37 (Emphasis ours)
This was also the CA’s main basis in ruling that the matter was
an intra-corporate dispute that was within the trial courts’
jurisdiction.
The Court disagrees with the respondents and the CA. As
may be gleaned from the aforequoted provision, the only
officers who are specifically listed, and thus with offices that
are created under Broadcom’s by-laws are the following: the
President, Vice-President, Treasurer and Secretary. Although
a blanket authority provides for the Board’s appointment of
such other officers as it may deem necessary and proper, the
respondents failed to sufficiently establish that the position of
AVP for Sales was created by virtue of an act of Broadcom’s
board, and that Cosare was specifically elected or appointed
to such position by the directors. No board resolutions to
establish such facts form part of the case records. Further, it
was held in Marc II Marketing, Inc. v. Joson38 that an enabling
clause in a corporation’s by-laws empowering its board of
directors to create additional officers, even with the
subsequent passage of a board resolution to that effect,
cannot make such position a corporate office. The board of
directors has no power to create other corporate offices
without first amending the corporate by-laws so as to include
therein the newly created corporate office.39 "To allow the
creation of a corporate officer position by a simple inclusion in
the corporate by-laws of an enabling clause empowering the
board of directors to do so can result in the circumvention of
that constitutionally well-protected right [of every employee to
security of tenure]."40
The CA’s heavy reliance on the contents of the General
Information Sheets41, which were submitted by the
respondents during the appeal proceedings and which plainly
provided that Cosare was an "officer" of Broadcom, was
clearly misplaced. The said documents could neither govern
nor establish the nature of the office held by Cosare and his
appointment thereto. Furthermore, although Cosare could
indeed be classified as an officer as provided in the General
Information Sheets, his position could only be deemed a
regular office, and not a corporate office as it is defined under
the Corporation Code. Incidentally, the Court noticed that
although the Corporate Secretary of Broadcom, Atty. Efren L.
Cordero, declared under oath the truth of the matters set forth
in the General Information Sheets, the respondents failed to
explain why the General Information Sheet officially filed with
the Securities and Exchange Commission in 2011 and
submitted to the CA by the respondents still indicated Cosare
as an AVP for Sales, when among their defenses in the
charge of illegal dismissal, they asserted that Cosare had
severed his relationship with the corporation since the year
2009.
Finally, the mere fact that Cosare was a stockholder of
Broadcom at the time of the case’s filing did not necessarily
make the action an intra- corporate controversy. "Not all
conflicts between the stockholders and the corporation are
classified as intra-corporate. There are other facts to consider
in determining whether the dispute involves corporate matters
as to consider them as intra-corporate controversies."42 Time
and again, the Court has ruled that in determining the
existence of an intra-corporate dispute, the status or
relationship of the parties and the nature of the question that
is the subject of the controversy must be taken into
account.43 Considering that the pending dispute particularly
relates to Cosare’s rights and obligations as a regular officer
of Broadcom, instead of as a stockholder of the corporation,
the controversy cannot be deemed intra-corporate. This is
consistent with the "controversy test" explained by the Court
in Reyes v. Hon. RTC, Br. 142,44 to wit:
Under the nature of the controversy test, the incidents of that
relationship must also be considered for the purpose of
ascertaining whether the controversy itself is intra-corporate.
The controversy must not only be rooted in the existence of
an intra-corporate relationship, but must as well pertain to the
enforcement of the parties’ correlative rights and obligations
under the Corporation Code and the internal and intra-
corporate regulatory rules of the corporation. If the
relationship and its incidents are merely incidental to the
controversy or if there will still be conflict even if the
relationship does not exist, then no intra-corporate
controversy exists.45 (Citation omitted)
It bears mentioning that even the CA’s finding46 that Cosare
was a director of Broadcom when the dispute commenced
16
was unsupported by the case records, as even the General
Information Sheet of 2009 referred to in the CA decision to
support such finding failed to provide such detail.
All told, it is then evident that the CA erred in reversing the
NLRC’s ruling that favored Cosare solely on the ground that
the dispute was an intra-corporate controversy within the
jurisdiction of the regular courts.
The charge of constructive dismissal
Towards a full resolution of the instant case, the Court finds it
appropriate to rule on the correctness of the NLRC’s ruling
finding Cosare to have been illegally dismissed from
employment.
In filing his labor complaint, Cosare maintained that he was
constructively dismissed, citing among other circumstances
the charges that were hurled and the suspension that was
imposed against him via Arevalo’s memo dated March 30,
2009. Even prior to such charge, he claimed to have been
subjected to mental torture, having been locked out of his files
and records and disallowed use of his office computer and
access to personal belongings.47While Cosare attempted to
furnish the respondents with his reply to the charges, the latter
refused to accept the same on the ground that it was filed
beyond the 48-hour period which they provided in the memo.
Cosare further referred to the circumstances that allegedly
transpired subsequent to the service of the memo, particularly
the continued refusal of the respondents to allow Cosare’s
entry into the company’s premises. These incidents were cited
in the CA decision as follows:
On March 31, 2009, [Cosare] reported back to work again. He
asked Villareal if he could retrieve his personal belongings,
but the latter said that x x x Arevalo directed her to deny his
request, so [Cosare] again waited at the receiving section of
the office. On April 1, 2009, [Cosare] was not allowed to enter
the office premises. He was asked to just wait outside of the
Tektite (PSE) Towers, where [Broadcom] had its offices, for
further instructions on how and when he could get his
personal belongings. [Cosare] waited until 8 p.m. for
instructions but none were given. Thus, [Cosare] sought the
assistance of the officials of Barangay San Antonio, Pasig
who advised him to file a labor or replevin case to recover his
personal belongings. x x x.48 (Citation omitted)
It is also worth mentioning that a few days before the issuance
of the memo dated March 30, 2009, Cosare was allegedly
summoned to Arevalo’s office and was asked to tender his
immediate resignation from the company, in exchange for a
financial assistance of ₱300,000.00.49 The directive was said
to be founded on Arevalo’s choice to retain Abiog’s
employment with the company.50 The respondents failed to
refute these claims.
Given the circumstances, the Court agrees with Cosare’s
claim of constructive and illegal dismissal. "[C]onstructive
dismissal occurs when there is cessation of work because
continued employment is rendered impossible, unreasonable,
or unlikely as when there is a demotion in rank or diminution
in pay or when a clear discrimination, insensibility, or disdain
by an employer becomes unbearable to the employee leaving
the latter with no other option but to quit."51 In Dimagan v.
Dacworks United, Incorporated,52 it was explained:
The test of constructive dismissal is whether a reasonable
person in the employee’s position would have felt compelled
to give up his position under the circumstances. It is an act
amounting to dismissal but is made to appear as if it were not.
Constructive dismissal is therefore a dismissal in disguise.
The law recognizes and resolves this situation in favor of
employees in order to protect their rights and interests from
the coercive acts of the employer.53(Citation omitted)
It is clear from the cited circumstances that the respondents
already rejected Cosare’s continued involvement with the
company. Even their refusal to accept the explanation which
Cosare tried to tender on April 2, 2009 further evidenced the
resolve to deny Cosare of the opportunity to be heard prior to
any decision on the termination of his employment. The
respondents allegedly refused acceptance of the explanation
as it was filed beyond the mere 48-hour period which they
granted to Cosare under the memo dated March 30, 2009.
However, even this limitation was a flaw in the memo or notice
to explain which only further signified the respondents’
discrimination, disdain and insensibility towards Cosare,
apparently resorted to by the respondents in order to deny
their employee of the opportunity to fully explain his defenses
and ultimately, retain his employment. The Court emphasized
in King of Kings Transport, Inc. v. Mamac54 the standards to
be observed by employers in complying with the service of
notices prior to termination:
[T]he first written notice to be served on the employees should
contain the specific causes or grounds for termination against
them, and a directive that the employees are given the
opportunity to submit their written explanation within a
reasonable period. "Reasonable opportunity" under the
Omnibus Rules means every kind of assistance that
management must accord to the employees to enable them
to prepare adequately for their defense. This should be
construed as a period of at least five (5) calendar days from
receipt of the notice to give the employees an opportunity to
study the accusation against them, consult a union official or
lawyer, gather data and evidence, and decide on the defenses
they will raise against the complaint. Moreover, in order to
enable the employees to intelligently prepare their explanation
and defenses, the notice should contain a detailed narration
of the facts and circumstances that will serve as basis for the
charge against the employees. A general description of the
charge will not suffice. Lastly, the notice should specifically
mention which company rules, if any, are violated and/or
which among the grounds under Art. 282 is being charged
against the employees.55 (Citation omitted, underscoring
ours, and emphasis supplied)
In sum, the respondents were already resolute on a
severance of their working relationship with Cosare,
notwithstanding the facts which could have been established
by his explanations and the respondents’ full investigation on
the matter. In addition to this, the fact that no further
investigation and final disposition appeared to have been
made by the respondents on Cosare’s case only negated the
claim that they actually intended to first look into the matter
before making a final determination as to the guilt or
innocence of their employee. This also manifested from the
fact that even before Cosare was required to present his side
on the charges of serious misconduct and willful breach of
trust, he was summoned to Arevalo’s office and was asked to
tender his immediate resignation in exchange for financial
assistance.
The clear intent of the respondents to find fault in Cosare was
also manifested by their persistent accusation that Cosare
abandoned his post, allegedly signified by his failure to report
to work or file a leave of absence beginning April 1, 2009. This
was even the subject of a memo56 issued by Arevalo to
Cosare on April 14, 2009, asking him to explain his absence
within 48 hours from the date of the memo. As the records
clearly indicated, however, Arevalo placed Cosare under
suspension beginning March 30, 2009. The suspension
covered access to any and all company files/records and the
use of the assets of the company, with warning that his failure
to comply with the memo would be dealt with drastic
management action. The charge of abandonment was
inconsistent with this imposed suspension. "Abandonment is
the deliberate and unjustified refusal of an employee to
resume his employment. To constitute abandonment of work,
two elements must concur: ‘(1) the employee must have failed
to report for work or must have been absent without valid or
justifiable reason; and (2) there must have been a clear
17
intention on the part of the employee to sever the employer-
employee relationship manifested by some overt
act.’"57Cosare’s failure to report to work beginning April 1,
2009 was neither voluntary nor indicative of an intention to
sever his employment with Broadcom. It was illogical to be
requiring him to report for work, and imputing fault when he
failed to do so after he was specifically denied access to all of
the company’s assets. As correctly observed by the NLRC:
[T]he Respondent[s] had charged [Cosare] of abandoning his
employment beginning on April 1, 2009. However[,] the show-
cause letter dated March 3[0], 2009 (Annex "F", ibid)
suspended [Cosare] from using not only the equipment but the
"assets" of Respondent [Broadcom]. This insults rational
thinking because the Respondents tried to mislead us and
make [it appear] that [Cosare] failed to report for work when
they had in fact had [sic] placed him on suspension. x x x.58
Following a finding of constructive dismissal, the Court finds
no cogent reason to modify the NLRC's monetary awards in
Cosare's favor. In Robinsons Galleria/Robinsons
Supermarket Corporation v. Ranchez,59 the Court reiterated
that an illegally or constructively dismissed employee is
entitled to: (1) either reinstatement, if viable, or separation
pay, if reinstatement is no longer viable; and (2)
backwages.60 The award of exemplary damages was also
justified given the NLRC's finding that the respondents acted
in bad faith and in a wanton, oppressive and malevolent
manner when they dismissed Cosare. It is also by reason of
such bad faith that Arevalo was correctly declared solidarily
liable for the monetary awards.
WHEREFORE, the petition is GRANTED. The Decision dated
November 24, 2011 and Resolution dated March 26, 2012 of
the Court of Appeals in CA-G.R. SP. No. 117356 are SET
ASIDE. The Decision dated August 24, 2010 of the National
Labor Relations Commission in favor of petitioner Raul C.
Cosare is AFFIRMED.
SO ORDERED.
BIENVENIDO L. REYES
Associate Justice
WE CONCUR:

18
 through a letter dated March 26, 2001 which he, however,
refused to receive.

Further, in what respondents believed to be an act of

REAL VS. SANGUPHILS
retaliation, petitioner allegedly encouraged the employees
who had been placed in the manpower pool to file a complaint
DEL CASTILLO, J.:
for illegal dismissal against respondents. Worse, he later
incited those assigned in Epson Precision (Phils.) Inc., Ogino
The perennial question of whether a complaint for illegal
Philippines Corporation, Hitachi Cable Philippines Inc. and
dismissal is intra-corporate and thus beyond the jurisdiction of
Philippine TRC Inc. to stage a strike on April 10 to 16,
the Labor Arbiter is the core issue up for consideration in this
2001. Not satisfied, petitioner together with other employees
case.
also barricaded the premises of respondent corporation. Such
acts respondents posited constitute just cause for petitioners
This Petition for Review on Certiorari assails the
dismissal and that same was validly effected.
Decision[1] dated June 28, 2005 of the Court of Appeals (CA)
in CA-G.R. SP. No. 86017 which dismissed the petition
Rulings of the Labor Arbiter and the National Labor Relations
for certiorari filed before it.
Commission
Factual Antecedents
The Labor Arbiter in a Decision[5] dated June 5, 2003
declared petitioner and his co-complainants as having been
Petitioner Renato Real was the Manager of respondent
illegally dismissed and ordered respondents to reinstate
corporation Sangu Philippines, Inc., a corporation engaged in
complainants to their former positions without loss of seniority
the business of providing manpower for general services, like
rights and other privileges and to pay their full backwages
janitors, janitresses and other maintenance personnel, to
from the time of their dismissal until actually reinstated and
various clients. In 2001, petitioner, together with 29 others
furthermore, to pay them attorneys fees. The Labor Arbiter
who were either janitors, janitresses, leadmen and
found no convincing proof of the causes for which petitioner
maintenance men, all employed by respondent corporation,
was terminated and noted that there was complete absence
filed their respective Complaints[2] for illegal dismissal
of due process in the manner of his termination.
against the latter and respondent Kiichi Abe, the corporations
Vice-President and General Manager. These complaints were
Respondents thus appealed to the National Labor Relations
later on consolidated.
Commission (NLRC) and raised therein as one of the issues
the lack of jurisdiction of the Labor Arbiter over petitioners
With regard to petitioner, he was removed from his position as
complaint. Respondents claimed that petitioner is both a
Manager through Board Resolution 2001-03[3] adopted by
stockholder and a corporate officer of respondent corporation,
respondent corporations Board of Directors. Petitioner
hence, his action against respondents is an intra-corporate
complained that he was neither notified of the Board Meeting
controversy over which the Labor Arbiter has no jurisdiction.
during which said board resolution was passed nor formally
charged with any infraction. He just received from
The NLRC found such contention of respondents to be
respondents a letter[4] dated March 26, 2001 stating that he
meritorious. Aside from petitioners own admission in the
has been terminated from service effective March 25, 2001 for
pleadings that he is a stockholder and at the same time
the following reasons: (1) continuous absences at his post at
occupying a managerial position, the NLRC also gave weight
Ogino Philippines Inc. for several months which was
to the corporations General Information Sheet[6] (GIS) dated
detrimental to the corporations operation; (2) loss of trust and
October 27, 1999 listing petitioner as one of its stockholders,
confidence; and, (3) to cut down operational expenses to
consequently his termination had to be effected through a
reduce further losses being experienced by respondent
board resolution. These, the NLRC opined, clearly
corporation.
established petitioners status as a stockholder and as a
corporate officer and hence, his action against respondent
Respondents, on the other hand, refuted petitioners claim of
corporation is an intra-corporate controversy over which the
illegal dismissal by alleging that after petitioner was appointed
Labor Arbiter has no jurisdiction. As to the other complainants,
Manager, he committed gross acts of misconduct detrimental
the NLRC ruled that there was no dismissal. The NLRC
to the company since 2000. According to them, petitioner
however, modified the appealed decision of the Labor Arbiter
would almost always absent himself from work without
in a Decision[7] dated February 13, 2004, the dispositive
informing the corporation of his whereabouts and that he
portion of which reads:
would come to the office only to collect his salaries. As he was
almost always absent, petitioner neglected to supervise the
WHEREFORE, all foregoing premises considered, the
employees resulting in complaints from various clients about
appealed Decision dated June 5, 2003 is hereby
employees performance. In one instance, petitioner together
MODIFIED. Accordingly, judgment is hereby rendered
with a few others, while apparently drunk, went to the
DISMISSING the complaint of Renato Real for lack of
premises of one of respondents clients, Epson Precision
jurisdiction. As to the rest of the complainants, they are hereby
(Phils.) Inc., and engaged in a heated argument with the
ordered to immediately report back to work but without the
employees therein. Because of this, respondent Abe allegedly
payment of backwages.
received a complaint from Epsons Personnel Manager
concerning petitioners conduct. Respondents likewise
All other claims against respondents including attorneys fees
averred that petitioner established a company engaged in the
are DISMISSED for lack of merit.
same business as respondent corporations and even
submitted proposals for janitorial services to two of the latters
SO ORDERED.
clients. Because of all these, the Board of Directors of
respondent corporation met on March 24, 2001 and adopted
Board Resolution No. 2001-03 removing petitioner as
Still joined by his co-complainants, petitioner brought the case
Manager. Petitioner was thereafter informed of his removal
to the CA by way of petition for certiorari.

19
Ruling of the Court of Appeals
Before the CA, petitioner imputed upon the NLRC grave
abuse of discretion amounting to lack or excess of jurisdiction
in declaring him a corporate officer and in holding that his
action against respondents is an intra-corporate controversy
and thus beyond the jurisdiction of the Labor Arbiter.
While admitting that he is indeed a stockholder of respondent
corporation, petitioner nevertheless disputed the declaration
of the NLRC that he is a corporate officer thereof. He posited
that his being a stockholder and his being a managerial
employee do not ipso factoconfer upon him the status of a
corporate officer. To support this contention, petitioner called
the CAs attention to the same GIS relied upon by the NLRC
when it declared him to be a corporate officer. He pointed out
that although said information sheet clearly indicates that he
is a stockholder of respondent corporation, he is not an officer
thereof as shown by the entry N/A or not applicable opposite
his name in the officer column. Said column requires that the
particular position be indicated if the person is an officer and
if not, the entry N/A. Petitioner further argued that the fact that
his dismissal was effected through a board resolution does not
likewise mean that he is a corporate officer. Otherwise, all that
an employer has to do in order to avoid compliance with the
requisites of a valid dismissal under the Labor Code is to
dismiss a managerial employee through a board
resolution. Moreover, he insisted that his action for illegal
dismissal is not an intra-corporate controversy as same
stemmed from employee-employer relationship which is well
within the jurisdiction of the Labor Arbiter. This can be
deduced and is bolstered by the last paragraph of the
termination letter sent to him by respondents stating that he is
entitled to benefits under the Labor Code, to wit:
In this connection (his dismissal) you are entitled to separation
pay and other benefits provided for under the Labor Code of
the Philippines.[8] (Emphasis supplied)
In contrast, respondents stood firm that the action against
them is an intra-corporate controversy. It cited Tabang v.
National Labor Relations Commission[9] wherein this Court
declared that an intra-corporate controversy is one which
arises between a stockholder and the corporation; that [t]here
is no distinction, qualification, nor any exemption whatsoever;
and that it is broad and covers all kinds of controversies
between stockholders and corporations. In view of this ruling
and since petitioner is undisputedly a stockholder of the
corporation, respondents contended that the action instituted
by petitioner against them is an intra-corporate controversy
cognizable only by the appropriate regional trial court. Hence,
the NLRC correctly dismissed petitioners complaint for lack of
jurisdiction.
In the assailed Decision[10] dated June 28, 2005, the CA
sided with respondents and affirmed the NLRCs finding that
aside from being a stockholder of respondent corporation,
petitioner is also a corporate officer thereof and consequently,
his complaint is an intra-corporate controversy over which the
labor arbiter has no jurisdiction. Said court opined that if it was
true that petitioner is a mere employee, the respondent
corporation would not have called a board meeting to pass a
resolution for petitioners dismissal considering that it was very
tedious for the Board of Directors to convene and to adopt a
resolution every time they decide to dismiss their managerial
employees. To support its finding, the CA likewise
cited Tabang. As to petitioners co-complainants, the CA
likewise affirmed the NLRCS finding that they were never
dismissed from the service. The dispositive portion of the CA
Decision reads:
WHEREFORE, the instant petition is hereby
DISMISSED. Accordingly, the assailed decision and
resolution of the public respondent National Labor Relations
Commission in NLRC NCR CA No. 036128-03 NLRC SRAB-
IV-05-6618-01-B/05-6619-02-B/05-6620-02-B/10-6637-01-
B/10-6833-01-B, STANDS.
SO ORDERED.
Now alone but still undeterred, petitioner elevated the case to
us through this Petition for Review on Certiorari.
The Parties Arguments
Petitioner continues to insist that he is not a corporate
officer. He argues that a corporate officer is one who holds an
elective position as provided in the Articles of Incorporation or
one who is appointed to such other positions by the Board of
Directors as specifically authorized by its By-Laws. And, since
he was neither elected nor is there any showing that he was
appointed by the Board of Directors to his position as
Manager, petitioner maintains that he is not a corporate officer
contrary to the findings of the NLRC and the CA.
Petitioner likewise contends that his complaint for illegal
dismissal against respondents is not an intra-corporate
controversy. He avers that for an action or suit between a
stockholder and a corporation to be considered an intra-
corporate controversy, same must arise from intra-corporate
relations, i.e., an action involving the status of a stockholder
as such. He believes that his action against the respondents
does not arise from intra-corporate relations but rather from
employer-employee relations. This, according to him, was
even impliedly recognized by respondents as shown by the
earlier quoted portion of the termination letter they sent to him.
For their part, respondents posit that what petitioner is
essentially assailing before this Court is the finding of the
NLRC and the CA that he is a corporate officer of respondent
corporation. To the respondents, the question of whether
petitioner is a corporate officer is a question of fact which, as
held in a long line of jurisprudence, cannot be the subject of
review under this Petition for Review on Certiorari. At any
rate, respondents insist that petitioner who is undisputedly a
stockholder of respondent corporation is likewise a corporate
officer and that his action against them is an intra-corporate
dispute beyond the jurisdiction of the labor tribunals. To
support this, they cited several jurisprudence such as Pearson
& George (S.E. Asia), Inc. v. National Labor Relations
Commission,[11] Philippine School of Business
Administration v. Leano,[12] Fortune Cement Corporation v.
National Labor Relations Commission[13] and again, Tabang
v. National Labor Relations Commission.[14]
Moreover, in an attempt to demolish petitioners claim that the
present controversy concerns employer-employee relations,
respondents enumerated the following facts and
circumstances: (1) Petitioner was an incorporator, stockholder
and manager of respondent company; (2) As an incorporator,
he was one of only seven incorporators of respondent
corporation and one of only four Filipino members of the
Board of Directors; (3) As stockholder, he has One Thousand
(1,000) of the Ten Thousand Eight Hundred (10,800) common
shares held by Filipino stockholders, with a par-value of One
Hundred Thousand Pesos (P100,000.00); (4) His
appointment as manager was by virtue of Section 1, Article IV
of respondent corporations By-Laws; (5) As manager, he had
direct management and authority over all of respondent
corporations skilled employees; (6) Petitioner has shown
himself to be an incompetent manager, unable to properly
supervise the employees and even causing friction with the
20
corporations clients by engaging in unruly behavior while in
clients premises; (7) As if his incompetence was not enough,
in a blatant and palpable act of disloyalty, he established
another company engaged in the same line of business as
respondent corporation; (8) Because of these acts of
incompetence and disloyalty, respondent corporation through
a Resolution adopted by its Board of Directors was finally
constrained to remove petitioner as Manager and declare his
office vacant; (9) After his removal, petitioner urged the
employees under him to stage an unlawful strike by leading
them to believe that they have been illegally dismissed from
employment.[15] Apparently, respondents intended to show
from this enumeration that petitioners removal pertains to his
relationship with respondent corporation, that is, his utter
failure to advance its interest and the prejudice caused by his
acts of disloyalty. For this reason, respondents see the action
against them not as a case between an employer and an
employee as what petitioner alleges, but one by an officer and
at same time a major stockholder seeking to be reinstated to
his former office against the corporation that declared his
position vacant.
Finally, respondents state that the fact that petitioner is being
given benefits under the Labor Code as stated in his
termination letter does not mean that they are recognizing the
employer-employee relations between them. They explain
that the benefits provided under the Labor Code were merely
made by respondent corporation as the basis in determining
petitioners compensation package and that same are merely
part of the perquisites of petitioners office as a director and
manager. It does not and it cannot change the intra-corporate
nature of the controversy. Hence, respondents pray that this
petition be dismissed for lack of merit.
Issues
From the foregoing and as earlier mentioned, the core issue
to be resolved in this case is whether petitioners complaint for
illegal dismissal constitutes an intra-corporate controversy
and thus, beyond the jurisdiction of the Labor Arbiter.
Our Ruling
Two-tier test in determining the existence of intra-corporate
controversy
Respondents strongly rely on this Courts pronouncement in
the 1997 case of Tabang v. National Labor Relations
Commission, to wit:
[A]n intra-corporate controversy is one which arises between
a stockholder and the corporation. There is no distinction,
qualification nor any exemption whatsoever. The provision is
broad and covers all kinds of controversies between
stockholders and corporations.[16]
In view of this, respondents contend that even if petitioner
challenges his being a corporate officer, the present case still
constitutes an intra-corporate controversy as petitioner is
undisputedly a stockholder and a director of respondent
corporation.
It is worthy to note, however, that before the promulgation of
the Tabang case, the Court provided in Mainland
Construction Co., Inc. v. Movilla[17] a better policy in
determining which between the Securities and Exchange
Commission (SEC) and the Labor Arbiter has jurisdiction over
termination disputes,[18] or similarly, whether they are intra-
corporate or not, viz:
The fact that the parties involved in the controversy are all
stockholders or that the parties involved are the stockholders
and the corporation does not necessarily place the dispute
within the ambit of the jurisdiction of the SEC (now the
Regional Trial Court[19]). The better policy to be followed in
determining jurisdiction over a case should be to consider
concurrent factors such as the status or relationship of the
parties or the nature of the question that is subject of their
controversy. In the absence of any one of these factors, the
SEC will not have jurisdiction. Furthermore, it does not
necessarily follow that every conflict between the corporation
and its stockholders would involve such corporate matters as
only SEC (now the Regional Trial Court[20]) can resolve in the
exercise of its adjudicatory or quasi-judicial
powers. (Emphasis ours)
And, while Tabang was promulgated later than Mainland
Construction Co., Inc., the better policy enunciated in the
latter appears to have developed into a standard approach in
classifying what constitutes an intra-corporate
controversy. This is explained lengthily in Reyes v. Regional
Trial Court of Makati, Br. 142,[21] to wit:
Intra-Corporate Controversy
A review of relevant jurisprudence shows a development in
the Courts approach in classifying what constitutes an intra-
corporate controversy. Initially, the main consideration in
determining whether a dispute constitutes an intra-corporate
controversy was limited to a consideration of the intra-
corporate relationship existing between or among the
parties. The types of relationships embraced under Section
5(b) x x x were as follows:
a) between the corporation, partnership or
association and the public;
b) between the corporation, partnership or
association and its stockholders, partners, members or
officers;
c) between the corporation, partnership or
association and the State as far as its franchise, permit or
license to operate is concerned; and
d) among the stockholders, partners or associates
themselves.
The existence of any of the above intra-corporate relations
was sufficient to confer jurisdiction to the SEC (now the RTC),
regardless of the subject matter of the dispute. This came to
be known as the relationship test.
However, in the 1984 case of DMRC Enterprises v. Esta del
Sol Mountain Reserve, Inc., the Court introduced the nature
of the controversy test. We declared in this case that it is not
the mere existence of an intra-corporate relationship that
gives rise to an intra-corporate controversy; to rely on the
relationship test alone will divest the regular courts of their
jurisdiction for the sole reason that the dispute involves a
corporation, its directors, officers, or stockholders. We saw
that there is no legal sense in disregarding or minimizing the
value of the nature of the transactions which gives rise to the
dispute.
Under the nature of the controversy test, the incidents of that
relationship must also be considered for the purpose of
ascertaining whether the controversy itself is intra-
corporate. The controversy must not only be rooted in the
21
existence of an intra-corporate relationship, but must as well
pertain to the enforcement of the parties correlative rights and
obligations under the Corporation Code and the internal and
intra-corporate regulatory rules of the corporation. If the
relationship and its incidents are merely incidental to the
controversy or if there will still be conflict even if the
relationship does not exist, then no intra-corporate
controversy exists.
The Court then combined the two tests and declared that
jurisdiction should be determined by considering not only the
status or relationship of the parties, but also the nature of the
question under controversy. This two-tier test was adopted in
the recent case of Speed Distribution Inc. v. Court of Appeals:
To determine whether a case involves an intra-corporate
controversy, and is to be heard and decided by the branches
of the RTC specifically designated by the Court to try and
decide such cases, two elements must concur: (a) the status
or relationship of the parties, and (2) the nature of the question
that is the subject of their controversy.
The first element requires that the controversy must arise out
of intra-corporate or partnership relations between any or all
of the parties and the corporation, partnership, or association
of which they are not stockholders, members or associates,
between any or all of them and the corporation, partnership or
association of which they are stockholders, members or
associates, respectively; and between such corporation,
partnership, or association and the State insofar as it
concerns the individual franchises. The second element
requires that the dispute among the parties be intrinsically
connected with the regulation of the corporation. If the nature
of the controversy involves matters that are purely civil in
character, necessarily, the case does not involve an intra-
corporate controversy. [Citations omitted.]
Guided by this recent jurisprudence, we thus find no merit in
respondents contention that the fact alone that petitioner is a
stockholder and director of respondent corporation
automatically classifies this case as an intra-corporate
controversy. To reiterate, not all conflicts between the
stockholders and the corporation are classified as intra-
corporate. There are other factors to consider in determining
whether the dispute involves corporate matters as to consider
them as intra-corporate controversies.
What then is the nature of petitioners Complaint for Illegal
Dismissal? Is it intra-corporate and thus beyond the
jurisdiction of the Labor Arbiter? We shall answer this
question by using the standards set forth in the Reyes case.
No intra-corporate relationship between the parties
As earlier stated, petitioners status as a stockholder and
director of respondent corporation is not disputed. What the
parties disagree on is the finding of the NLRC and the CA that
petitioner is a corporate officer. An examination of the
complaint for illegal dismissal, however, reveals that the root
of the controversy is petitioners dismissal as Manager of
respondent corporation, a position which respondents claim
to be a corporate office. Hence, petitioner is involved in this
case not in his capacity as a stockholder or director, but as an
alleged corporate officer. In applying the relationship test,
therefore, it is necessary to determine if petitioner is a
corporate officer of respondent corporation so as to establish
the intra-corporate relationship between the parties. And
albeit respondents claim that the determination of whether
petitioner is a corporate officer is a question of fact which this
Court cannot pass upon in this petition for review on certiorari,
we shall nonetheless proceed to consider the same because
such question is not the main issue to be resolved in this case
but is merely collateral to the core issue earlier mentioned.
Petitioner negates his status as a corporate officer by pointing
out that although he was removed as Manager through a
board resolution, he was never elected to said position nor
was he appointed thereto by the Board of Directors. While the
By-Laws of respondent corporation provides that the Board
may from time to time appoint such officers as it may deem
necessary or proper, he avers that respondents failed to
present any board resolution that he was appointed pursuant
to said By-Laws. He instead alleges that he was hired as
Manager of respondent corporation solely by respondent
Abe. For these reasons, petitioner claims to be a mere
employee of respondent corporation rather than as a
corporate officer.
We find merit in petitioners contention.
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 corporations 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 corporations by-laws.[22]
Respondents claim that petitioner was appointed Manager by
virtue of Section 1, Article IV of respondent corporations By-
Laws which provides:
ARTICLE IV
OFFICER
Section 1. Election/Appointment Immediately after their
election, the Board of Directors shall formally organize by
electing the President, Vice-President, the Secretary at said
meeting.
The Board, may from time to time, appoint such other officers
as it may determine to be necessary or proper. Any two (2) or
more positions may be held concurrently by the same person,
except that no one shall act as President and Treasurer or
Secretary at the same time.
x x x x[23] (Emphasis ours)
We have however examined the records of this case and we
find nothing to prove that petitioners appointment was made
pursuant to the above-quoted provision of respondent
corporations By-Laws. No copy of board resolution appointing
petitioner as Manager or any other document showing that he
was appointed to said position by action of the board was
submitted by respondents. What we found instead were mere
allegations of respondents in their various pleadings[24] that
petitioner was appointed as Manager of respondent
corporation and nothing more. The Court has stressed time
and again that allegations must be proven by sufficient
evidence because mere allegation is definitely not
evidence.[25]
It also does not escape our attention that respondents made
the following conflicting allegations in their Memorandum on
22
Appeal[26] filed before the NLRC which cast doubt on
petitioners status as a corporate officer, to wit:
xxxx
24. Complainant-appellee Renato Real was appointed as the
manager of respondent-appellant Sangu on November 6,
1998. Priorly [sic], he was working at Atlas Ltd. Co. at Mito-
shi, Ibaraki-ken Japan. He was staying in Japan as an illegal
alien for the past eleven (11) years. He had a problem with his
family here in the Philippines which prompted him to
surrender himself to Japans Bureau of Immigration and was
deported back to the Philippines. His former employer, Mr.
Tsutomo Nogami requested Mr. Masahiko Shibata, one of
respondent-appellant Sangus Board of Directors, if
complainant-appellee Renato Real could work as one of its
employees here in the Philippines because he had been
blacklisted at Japans Immigration Office and could no longer
go back to Japan. And so it was arranged that he would serve
as respondent-appellant Sangus manager, receiving a salary
of P25,000.00. As such, he was tasked to oversee the
operations of the company. x x x (Emphasis ours)
xxxx
As earlier stated, complainant-appellee Renato Real
was hired as the manager of respondent-appellant Sangu. As
such, his position was reposed with full trust and confidence.
xxx
While respondents repeatedly claim that petitioner was
appointed as Manager pursuant to the corporations By-Laws,
the above-quoted inconsistencies in their allegations as to
how petitioner was placed in said position, coupled by the fact
that they failed to produce any documentary evidence to prove
that petitioner was appointed thereto by action or with
approval of the board, only leads this Court to believe
otherwise. It has been consistently held that [a]n office is
created by the charter of the corporation and the officer is
elected (or appointed) by the directors or
stockholders.[27] Clearly here, respondents failed to prove
that petitioner was appointed by the board of directors. Thus,
we cannot subscribe to their claim that petitioner is a
corporate officer. Having said this, we find that there is no
intra-corporate relationship between the parties insofar as
petitioners complaint for illegal dismissal is concerned and
that same does not satisfy the relationship test.
Present controversy does not relate to intra-corporate dispute
We now go to the nature of controversy test. As earlier stated,
respondents terminated the services of petitioner for the
following reasons: (1) his continuous absences at his post at
Ogino Philippines, Inc; (2) respondents loss of trust and
confidence on petitioner; and, (3) to cut down operational
expenses to reduce further losses being experienced by the
corporation. Hence, petitioner filed a complaint for illegal
dismissal and sought reinstatement, backwages, moral
damages and attorneys fees. From these, it is not difficult to
see that the reasons given by respondents for dismissing
petitioner have something to do with his being a Manager of
respondent corporation and nothing with his being a director
or stockholder. For one, petitioners continuous absences in
his post in Ogino relates to his performance as
Manager. Second, respondents loss of trust and confidence
in petitioner stemmed from his alleged acts of establishing a
company engaged in the same line of business as respondent
corporations and submitting proposals to the latters clients
while he was still serving as its Manager. While we note that
respondents also claim these acts as constituting acts of
disloyalty of petitioner as director and stockholder, we,
however, think that same is a mere afterthought on their part
to make it appear that the present case involves an element
of intra-corporate controversy. This is because before the
Labor Arbiter, respondents did not see such acts to be disloyal
acts of a director and stockholder but rather, as constituting
willful breach of the trust reposed upon petitioner as
Manager.[28] It was only after respondents invoked the Labor
Arbiters lack of jurisdiction over petitioners complaint in the
Supplemental Memorandum of Appeal[29] filed before the
NLRC that respondents started considering said acts as such.
Third, in saying that they were dismissing petitioner to cut
operational expenses, respondents actually want to save on
the salaries and other remunerations being given to petitioner
as its Manager. Thus, when petitioner sought for
reinstatement, he wanted to recover his position as Manager,
a position which we have, however, earlier declared to be not
a corporate position. He is not trying to recover a seat in the
board of directors or to any appointive or elective corporate
position which has been declared vacant by the
board. Certainly, what we have here is a case of termination
of employment which is a labor controversy and not an intra-
corporate dispute. In sum, we hold that petitioners complaint
likewise does not satisfy the nature of controversy test.
With the elements of intra-corporate controversy being absent
in this case, we thus hold that petitioners complaint for illegal
dismissal against respondents is not intra-corporate. Rather,
it is a termination dispute and, consequently, falls under the
jurisdiction of the Labor Arbiter pursuant to Section 217[30] of
the Labor Code.
We take note of the cases cited by respondents and find them
inapplicable to the case at bar. Fortune Cement Corporation
v. National Labor Relations Commission[31] involves a
member of the board of directors and at the same time a
corporate officer who claims he was illegally dismissed after
he was stripped of his corporate position of Executive Vice-
President because of loss of trust and confidence. On the
other hand, Philippine School of Business Administration v.
Leano[32] and Pearson & George v. National Labor Relations
Commission[33] both concern a complaint for illegal dismissal
by corporate officers who were not re-elected to their
respective corporate positions. The Court declared all these
cases as involving intra-corporate controversies and thus
affirmed the jurisdiction of the SEC (now the RTC)[34] over
them precisely because they all relate to corporate officers
and their removal or non-reelection to their respective
corporate positions. Said cases are by no means similar to the
present case because as discussed earlier, petitioner here is
not a corporate officer.
With the foregoing, it is clear that the CA erred in affirming the
decision of the NLRC which dismissed petitioners complaint
for lack of jurisdiction. In cases such as this, the Court
normally remands the case to the NLRC and directs it to
properly dispose of the case on the merits. However, when
there is enough basis on which a proper evaluation of the
merits of petitioners case may be had, the Court may
dispense with the time-consuming procedure of remand in
order to prevent further delays in the disposition of the
case.[35] It is already an accepted rule of procedure for us to
strive to settle the entire controversy in a single proceeding,
leaving no root or branch to bear the seeds of litigation. If,
based on the records, the pleadings, and other evidence, the
dispute can be resolved by us, we will do so to serve the ends
of justice instead of remanding the case to the lower court for
further proceedings.[36] We have gone over the records
before us and we are convinced that we can now altogether
23
resolve the issue of the validity of petitioners dismissal and Renato Real is AFFIRMED and this case is
hence, we shall proceed to do so. ordered REMANDED to the National Labor Relations
Commission for the computation of petitioners backwages
Petitioners dismissal not in accordance with law and attorneys fees in accordance with this Decision.

SO ORDERED.
In an illegal dismissal case, the onus probandi rests on the
employer to prove that [the] dismissal of an employee is for a
valid cause.[37] Here, as correctly observed by the Labor
Arbiter, respondents failed to produce any convincing proof to
support the grounds for which they terminated
petitioner. Respondents contend that petitioner has been
absent for several months, yet they failed to present any proof
that petitioner was indeed absent for such a long time. Also,
the fact that petitioner was still able to collect his salaries after
his alleged absences casts doubts on the truthfulness of such
charge. Respondents likewise allege that petitioner engaged
in a heated argument with the employees of Epson, one of
respondents clients. But just like in the charge of
absenteeism, there is no showing that an investigation on the
matter was done and that disciplinary action was imposed
upon petitioner. At any rate, we have reviewed the records of
this case and we agree with the Labor Arbiter that under the
circumstances, said charges are not sufficient bases for
petitioners termination. As to the charge of breach of trust
allegedly committed by petitioner when he established a new
company engaged in the same line of business as respondent
corporations and submitted proposals to two of the latters
clients while he was still a Manager, we again observe that
these are mere allegations without sufficient proof. To
reiterate, allegations must be proven by sufficient evidence
because mere allegation is definitely not evidence.[38]

Moreover, petitioners dismissal was effected without due

process of law. The twin requirements of notice and hearing
constitute the essential elements of due process. The law
requires the employer to furnish the employee sought to be
dismissed with two written notices before termination of
employment can be legally effected: (1) a written notice
apprising the employee of the particular acts or omissions for
which his dismissal is sought in order to afford him an
opportunity to be heard and to defend himself with the
assistance of counsel, if he desires, and (2) a subsequent
notice informing the employee of the employers decision to
dismiss him. This procedure is mandatory and its absence
taints the dismissal with illegality.[39] Since in this case,
petitioners dismissal was effected through a board resolution
and all that petitioner received was a letter informing him of
the boards decision to terminate him, the abovementioned
procedure was clearly not complied with. All told, we agree
with the findings of the Labor Arbiter that petitioner has been
illegally dismissed. And, as an illegally dismissed employee is
entitled to the two reliefs of backwages and
reinstatement,[40] we affirm the Labor Arbiters judgment
ordering petitioners reinstatement to his former position
without loss of seniority rights and other privileges and
awarding backwages from the time of his dismissal until
actually reinstated. Considering that petitioner has to secure
the services of counsel to protect his interest and necessarily
has to incur expenses, we likewise affirm the award of
attorneys fees which is equivalent to 10% of the total
backwages that respondents must pay petitioner in
accordance with this Decision.

WHEREFORE, the petition is hereby GRANTED. The

assailed June 28, 2005 Decision of the Court of Appeals
insofar as it affirmed the National Labor Relations
Commissions dismissal of petitioners complaint for lack of
jurisdiction, is hereby REVERSED and SET ASIDE. The June
5, 2003 Decision of the Labor Arbiter with respect to petitioner

24