Philippine Supreme Court Jurisprudence > Year 2016 > June 2016 Decisions > G.R. No. 205061, June 08, 2016 - EMERTIA G. MALIXI, Petitioner, v. MEXICALI PHILIPPINES AND/OR FRANCESCA MABANTA, Respondents.:

Before us is a Petition for Review on Certiorari¹ seeking to set aside the August 29, 2012 Decision² of the Court of Appeals (CA) in CA-G.R. SP No. 115413, which dismissed the Petition for Certiorari filed therewith and affirmed the May 28, 2010 Resolution³ of the National Labor Relations Commission (NLRC) reinstating respondents Mexicali Philippines (Mexicali) and Francesca Mabanta's appeal, partly granting it and ordering petitioner Emerita G. Malixi's (petitioner) reinstatement but without the payment of backwages. Likewise assailed is the December 14, 2012 Resolution⁴ of the CA denying petitioner's Motion for Reconsideration.⁵

Antecedent Facts

This case arose from an Amended Complaint⁶ for illegal dismissal and non�payment of service charges, moral and exemplary damages and attorney's fees filed by petitioner against respondents Mexicali and its General Manager, Francesca Mabanta, on February 4, 2009 before the Labor Arbiter, docketed as NLRC NCR Case No. 12-17618-08.

Petitioner alleged that on August 12, 2008, she was hired by respondents as a team leader assigned at the delivery service, receiving a daily wage of Three Hundred Eighty Two Pesos (P382.00) sans employment contract and identification card (ID). In October 2008, Mexicali's training officer, Jay Teves (Teves), informed her of the management's intention to transfer and appoint her as store manager at a newly opened branch in Alabang Town Center, which is a joint venture between Mexicali and Calexico Food Corporation (Calexico), due to her satisfactory performance. She was apprised that her monthly salary as the new store manager would be Fifteen Thousand Pesos (P15,000,00) with service charge, free meal and side tip. She then subsequently submitted a resignation letter⁷ dated October 15, 2008, as advised by Teves. On October 17, 2008, she started working as the store manager of Mexicali in Alabang Town Center although, again, no employment contract and ID were issued to her. However, in December 2008, she was compelled by Teves to sign an end-of-contract letter by reason of a criminal complaint for sexual harassment she filed on December 3, 2008 against Mexicali's operations manager, John Pontero (Pontero), for the sexual advances made against her during Pontero's visits at Alabang branch.⁸ When she refused to sign the end-of-contract letter, Mexicali's administrative officer, Ding Luna (Luna), on December 15, 2008, personally went to the branch and caused the signing of the same. Upon her vehement refusal to sign, she was informed by Luna that it was her last day of work.

Respondents, however, denied responsibility over petitioner's alleged dismissal. They averred that petitioner has resigned from Mexicali in October 2008 and hence, was no longer Mexicali's employee at the time of her dismissal but rather an employee of Calexico, a franchisee of Mexicali located in Alabang Town Center which is a separate and distinct corporation.

In her reply, petitioner admitted having resigned from Mexicali but averred that her resignation was a condition for her promotion as store manager at Mexicali's Alabang Town Center branch. She asserted that despite her resignation, she remained to be an employee of Mexicali because Mexicali was the one who engaged her, dismissed her and controlled the performance of her work as store manager in the newly opened branch.

Proceedings before the Labor Arbiter

In a Decision⁹ dated August 27, 2009, the Labor Arbiter declared petitioner to have been illegally dismissed by respondents. By piercing the veil of corporate fiction, the Labor Arbiter ruled that Mexicali and Calexico are one and the same with interlocking board of directors. The Labor Arbiter sustained petitioner's claim that she is an employee of Mexicali as she was hired at Calexico by Mexicali's corporate officers and also dismissed by them and hence, held Mexicali responsible for petitioner's dismissal. The Labor Arbiter then observed that petitioner was only forced to resign as a condition for her promotion, thus, cannot be utilized by Mexicali as a valid defense. As the severance from employment was attended by fraud, petitioner was awarded moral and exemplary damages. The dispositive portion of the Decision reads:
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WHEREFORE, premises considered, respondents are hereby declared guilty of illegal dismissal and ORDERED to reinstate complainant to her former position even pending appeal. All the respondents are hereby jointly and severally ordered to pay complainant the following:

1. Full backwages from date of dismissal to date of actual reinstatement which to date amounts to P139,013.94.
   
   
2. Moral damages in the sum of P100,000.00.
   
   
3. Exemplary damages in the sum of P50,000.00.
   

SO ORDERED.¹⁰ChanRoblesVirtualawlibrary

Proceedings before the National Labor Relations Commission

On October 26, 2009, respondents filed an Appeal Memorandum with Prayer for Injunction¹¹ with the NLRC, averring that the Labor Arbiter erred in: (1) holding them liable for the acts of Calexico, which is a separate entity created with a different purpose, principal office, directors/incorporators, properties, management and business plans from Mexicali as evidenced by their respective Articles of Incorporation and By-Laws;¹² (2) ruling that petitioner's resignation was not voluntary; and, (3) ruling that there is an employer-employee relationship between petitioner and Mexicali on the basis of petitioner's mere allegation that she was hired and dismissed by Mexicali's officers.

In a Resolution¹³ dated November 25, 2009, the NLRC dismissed the appeal for having been filed beyond the 10-day reglementary period to appeal. The NLRC rioted that the Appeal Memorandum was filed only on October 26, 2009 despite respondents' receipt of the Labor Arbiter's Decision on October 13, 2009 (as stated in the Appeal Memorandum).

Respondents filed a Motion for Reconsideration and Motion for Issuance of TRO/Injunction¹⁴ explaining that the Appeal Memorandum filed by them contained a typographical error as to the date of actual receipt of the Labor Arbiter's Decision; that while a copy of the said decision was received by them on October 13, 2009, the same was only received by their counsel of record on October 15, 2009¹⁵ which is the reckoning date of the 10-day reglementary period within which to appeal.

In a Resolution¹⁶ dated May 28, 2010, the NLRC granted respondents' motion and reinstated the appeal. The NLRC ruled that pursuant to its Rules of Procedure, the date to reckon the 10-day reglementary period should be the date when the counsel actually received the copy of the Labor Arbiter's Decision and that respondents' appeal was filed on time.

The NLRC likewise ruled on the merits of the appeal. It partly granted it by sustaining respondents' contention that Mexicali and Calexico are separate and distinct entities, Calexico being the true employer of petitioner at the time of her dismissal. Contrary to the findings of the Labor Arbiter, petitioner voluntarily resigned from Mexicali to transfer to Calexico in consideration of a higher pay and upon doing so severed her employment ties with Mexicali. The NLRC, nevertheless, ordered Mexicali, being the employer of Teves and Luna who caused petitioner's termination from her employment with Calexico, to reinstate petitioner to her job at Calexico but without paying her any backwages. The dispositive portion of the NLRC Resolution reads:
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WHEREFORE, premises considered, this Commission GRANTS the Motion, for Reconsideration of its 25 November 2009 Resolution which dismissed the appeal for having been filed out of time.

This Commission also PARTLY GRANTS the appeal of respondents-appellants and the Decision of the Labor Arbiter dated 27 August 2009 is MODIFIED ordering Mexicali Food Corporation to cause the reinstatement of complainant-appellee to his former position as store manager at its franchisee Calexico Food Corporation within ten (10) days from receipt of this Resolution without backwages.

SO ORDERED.¹⁷ChanRoblesVirtualawlibrary

Proceedings before the Court of Appeals

Petitioner sought recourse with the CA via Petition for Certiorari.¹⁸ It was petitioner's contention that the NLRC erred in reinstating respondents' appeal despite being filed beyond the reglementary period; in resolving the issue of dismissal considering that only the timeliness of the appeal was the sole issue raised in respondents' motion for reconsideration; and in holding that she was not illegally dismissed but voluntarily resigned from Mexicali.

In a Decision¹⁹ dated August 29, 2012, the CA dismissed the Petition for Certiorari and affirmed the May 28, 2010 Resolution of the NLRC. The CA ruled that the NLRC correctly reinstated respondents' appeal and properly resolved the issues raised therein to conform with the well-settled principle of expeditious administration of justice. The CA also agreed with the NLRC that there was no illegal dismissal since petitioner voluntarily tendered her resignation to assume a position in Calexico.

Petitioner moved for reconsideration which was denied by the CA in its Resolution²⁰ of December 14, 2012.

Hence, this Petition.

Issues

I
WHETHER THE COURT OF APPEALS ERRED IN SUSTAINING THE NATIONAL LABOR RELATIONS COMMISSION'S DECISION REINSTATING THE RESPONDENTS' APPEAL DESPITE BEING FILED OUT OF TIME.

II
WHETHER THE COURT OF APPEALS ERRED IN SUSTAINING THE NATIONAL LABOR RELATIONS COMMISSION'S RESOLUTION (TO THE RESPONDENTS' MOTION FOR RECONSIDERATION) PARTLY GRANTING THE RESPONDENTS' APPEAL (REGARDING THE ISSUE OF ILLEGAL DISMISSAL) DESPITE BEING A NON-ISSUE IN THEIR MOTION FOR RECONSIDERATION.

III
WHETHER THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN HOLDING THAT THERE WAS NO ILLEGAL DISMISSAL.

IV

WHETHER THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN HOLDING THAT THE PETITIONER RESIGNED FROM HER EMPLOYMENT WITH THE RESPONDENTS.

V

WHETHER THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN FAILING TO RULE ON THE ISSUE OF WHETHER OR NOT THE PETITIONER IS ENTITLED TO THE AWARD OF MORAL AND EXEMPLARY DAMAGES RENDERED BY THE LABOR ARBITER, DESPITE BEING RAISED IN THE PETITIONER'S PETITION FOR CERTIORARI.²¹ChanRoblesVirtualawlibrary

Petitioner maintains that the CA gravely erred in affirming the NLRC's reinstatement of respondents' appeal despite being filed out of time and the NLRC's ruling that there was no illegal dismissal, arguing that it is a non-issue in respondents' motion for reconsideration and there was absence of any valid cause for terminating her employment with Mexicali.

Our Ruling

The Petition has no merit.

The appeal before the NLRC was filed on time.

Section 6, Rule III of the 2005 Revised Rules of Procedure of the NLRC (2005 NLRC Rules) expressly mandates that "(f)or purposes of appeal, the period shall be counted from receipt of such decisions, resolutions, or orders by the counsel or representative of record." This procedure is in line with the established rule that if a party has appeared by counsel, service upon him shall be made upon his counsel.²² "The purpose of the rule is to maintain a uniform procedure calculated to place in competent hands the prosecution of a party's case."²³ Thus, Section 9, Rule III of the NLRC Rules provides that "(a)ttorneys and other representatives of parties shall have authority to bind their clients in all matters of procedure x x x."

Accordingly, the 10-day period for filing an appeal with the NLRC should be counted from the receipt by respondents' counsel of a copy of the Labor Arbiter's Decision on October 15, 2009. Petitioner's contention that the reckoning period should be the date respondents actually received the Decision on October 13, 2009 is bereft of any legal basis. As mentioned, when a party to a suit appears by counsel, service of every judgment and all orders of the court must be sent to the counsel. Notice to counsel is an effective notice to the client, while notice to the client and not his counsel is not notice in law.²⁴ Therefore, receipt of notice by the counsel of record is the reckoning point of the reglementary period.²⁵ From the receipt of the Labor Arbiter's Decision by respondent's counsel on October 15, 2009, the 10^th day falls on October 25, 2009 which is a Sunday, hence, Monday, October 26, 2009, is the last day to file the appeal. Consequently, respondents' appeal was timely filed.

The NLRC has authority to resolve the appeal on its merits despite being a non-issue in respondents' motion for reconsideration.

Petitioner still argues that the NLRC gravely abused its discretion in ruling on the merits of the case despite being a non-issue in the motion for reconsideration, She contends that in resolving the issue of the legality or illegality of her dismissal, which was not raised in respondents' motion for reconsideration, the NLRC deprived her of the opportunity to properly refute or oppose respondents' evidence thereby violating her right to due process.

The contention is untenable. The essence of procedural due process is that a party to a case must be given sufficient opportunity to be heard and to present evidence.²⁶ Indeed, petitioner had this opportunity to present her own case and submit evidence to support her allegations. She has submitted her position paper with supporting documents as well as reply to respondents' position paper to refute respondents' evidence before the Labor Arbiter.

On the basis of these documents submitted by the parties, the NLRC then resolved the merits of respondents' appeal. The Court finds that the NLRC has authority to rely on the available evidence obtaining in the records. Article 221 of the Labor Code allows the NLRC to decide the case on the basis of the position papers and other documents submitted by the parties without resorting to the technical rules of evidence observed in the regular courts of justice.²⁷ After all, the NLRC is not bound by the technical niceties of law and procedure and the rules obtaining in the courts of law.²⁸ In any event, the NLRC is mandated to use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.²⁹

Petitioner voluntarily resigned from Mexicali. No employer-employee relationship between petitioner and Mexicali at the time of alleged dismissal.

Ruling on the substantive matters, the Court finds that there exists no employer-employee relationship between petitioner and respondents as to hold the latter liable for illegal dismissal.

The CA, affirming the NLRC, found that petitioner voluntarily resigned from Mexicali. Petitioner, however, claims that she was induced into resigning considering the higher position and attractive salary package; moreover, she avers that her resignation cannot effectively sever her employment ties with Mexicali.

We disagree. "Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an office, with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act of relinquishment, the acts of the employee before and after the alleged resignation must be considered in determining whether he or she, in fact, intended to sever his or her employment."³⁰ Here, petitioner tendered her resignation letter preparatory to her transfer to Calexico for a higher position and pay. In the said letter, she expressed her gratitude and appreciation for the two months of her employment with Mexicali and intimated that she regrets having to leave the company. Clearly, expressions of gratitude and appreciation as well as manifestation of regret in leaving the company negates the notion that she was forced and coerced to resign. In the same vein, an inducement for a higher position and salary cannot defeat the voluntariness of her actions. It should be emphasized that petitioner had an option to decline the offer for her transfer, however, she opted to resign on account of a promotion and increased pay. "In termination cases, the employee is not afforded any option; the employee is dismissed and his only recourse is to institute a complaint for illegal dismissal against his employer x x x."³¹ Clearly, this does not hold true for petitioner in the instant case. Further, as aptly observed by the CA, petitioner is a managerial employee, who, by her educational background could not have been coerced, forced or induced into resigning from her work.

Upon petitioner's resignation, petitioner ceased to be an employee of Mexicali and chose to be employed at Calexico. Petitioner, however, claims that Mexicali and Calexico are one and the same and that Mexicali was still her employer upon her transfer to Calexico since she was hired and dismissed by Mexicali's officers and that Mexicali exercised the power of control over her work performance.

We rule otherwise. The Labor Arbiter's finding that the two corporations are one and the same with interlocking board of directors has no factual basis. It is basic that "a corporation is an artificial being invested with a personality separate and distinct from those of the stockholders and from other corporations to which it may be connected or related."³² Clear and convincing evidence is needed to warrant the application of the doctrine of piercing the veil of corporate fiction,³³ In our view, the Labor Arbiter failed to provide a clear justification for the application of the doctrine. The Articles of Incorporation and By-Laws of both corporations show that they have distinct business locations and distinct business purposes. It can also be gleaned therein that they have a different set of incorporators or directors since only two out of the five directors of Mexicali are also directors of Calexico. At any rate, the Court has ruled that the existence of interlocking directors, corporate officers and shareholders is not enough justification to disregard the separate corporate personalities.³⁴ To pierce the veil of corporate fiction, there should be clear and convincing proof that fraud, illegality or inequity has been committed against third persons.³⁵ For while respondents' act of not issuing employment contract and ID may be an indication of the proof required, however, this, by itself, is not sufficient evidence to pierce the corporate veil between Mexicali and Calexico.

More importantly, there was no existing employer-employee relationship between petitioner and Mexicali. To prove petitioner's claim of an employer-employee relationship, the following should be established by competent evidence: "(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control over the employee's conduct."³⁶ "Although no particular form of evidence is required to prove the existence of the relationship, and any competent and relevant evidence to prove the relationship may be admitted, a finding mat the relationship exists must nonetheless rest on substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion."³⁷ We find that petitioner failed to establish her claim based on the aforementioned criteria. As to petitioner's allegation that it was Teves who selected and hired her as store manager of Calexico and likewise, together with Luna, initiated her dismissal, suffice it to state that bare allegations, unsubstantiated by evidence, are not equivalent to proof.³⁸ Nevertheless, Teves merely informed petitioner of the management's intention to transfer her and thereafter advised her to execute a resignation letter, to which she complied. Nowhere was there any allegation or proof that Teves was the one who directly hired her as store manager of Calexico. Also, Teves and Luna merely initiated petitioner's dismissal. The end-of-contract purportedly signed by Luna to effectuate her termination was not presented. Again, mere allegation is not synonymous with proof No substantial evidence was adduced to show that respondents had the power to wield petitioner's termination from employment. Anent the element of control, petitioner failed to cite a single instance to prove that she was subject to the control of respondents insofar as the manner in which she should perform her work as store manager. The bare assertion that she was required to work from Friday through Wednesday is not enough indication that the performance of her job was subject to the control of respondents. On the other hand, the payslips³⁹ presented by petitioner reveal that she received her salary from Calexico and no longer from Mexicali starting the month of October 2008.

This Court is, therefore, convinced that petitioner is no longer an employee of respondents considering her resignation. In the absence of an employer-employee relationship between petitioner and respondents, petitioner cannot successfully claim that she was dismissed, much more illegally dismissed, by the latter. The dismissal of petitioner's complaint against respondents is, therefore, proper.

In the Resolution dated May 28, 2010, however, the NLRC ordered respondents to reinstate petitioner as store manager at Calexico but without the payment of backwages, ratiocinating that Mexicali's officers (Teves and Luna) wrongly arrogated upon themselves the power to dismiss petitioner. We view that the NLRC erred in this respect. It is to be noted that Calexico is not a party to this case."It is well-settled that no man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not bound by a judgment rendered by the court."⁴⁰ "Due process requires that a court decision can only bind a party to the litigation and not against one who did not have his day in court."⁴¹ An adjudication in favour of or against Calexico, a stranger to this case, is hence void.chanrobleslaw

WHEREFORE, the Petition is DENIED. The August 29, 2012 Decision and December 14, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 115413 affirming the May 28, 2010 Resolution of the National Labor Relations Commission are AFFIRMED with MODIFICATION that the order for respondent Mexicali Food Corporation to cause the reinstatement of petitioner Emerita G. Malixi to her former position as store manager at Calexico Food Corporation without backwages is DELETED. The Complaint against respondents Mexicali Philippines and/or Francesca Mabanta is DISMISSED.

SO ORDERED.

Carpio,^*(Chairperson), Mendoza, and Leonen, JJ., concur.
Brion, J., on official leave.chanroblesvirtuallawlibrary

Endnotes:

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^* Per Special Order No 2353 dated June 2, 2016.

¹Rollo, pp. 10-29.

² CA rollo, pp. 191-201; penned by Associate Justice Amelita G. Tolentino and concurred in by Associate Justices Ramon R. Garcia and Socorro B. Inting.

³ Id. at 131-145; penned by Commissioner Pablo C. Espiritu, Jr. and concurred in by Presiding Commissioner Alex A. Lopez and Commissioner Gregorio O. Bilog, III.

⁴ Id. at 226-227.

⁵ Id. at 202-209.

⁶ Id. at 20-21.

⁷ Id. at 41.

⁸ See Malixi's Complaint Affidavit, id. at 34-35.

⁹ Id. at 51 -55; penned by Labor Arbiter Ariel Cadiente-Santos.

¹⁰ Id. at 54-55.

¹¹ Id. at 57-66.

¹² Mexicali's Articles of Incorporation and By-Laws, id. at 68-93; Calexico's Articles of Incorporation and By-laws, id. at 94-112.

¹³ Id. at 114-116.

¹⁴ Id. at 117-119.

¹⁵ See Postmaster's Certification dated December 14, 2009, id. at 120.

¹⁶ Id. at 131-145.

¹⁷ Id. at 144.

¹⁸ Id. at 2-19.

¹⁹ Id. at 191-201.

²⁰ Id. at 226-227.

²¹Rollo, pp. 16-17.

²² Rules of Court, Rule 13, Sec. 2.

²³Mancenido v. Court of Appeals, 386 Phil. 627, 636 (2000).

²⁴Ramos v. Spouses Lim, 497 Phil. 560, 564-565 (2005).cralawred

²⁵Waterfront Cebu City Casino Hotel, Inc. v. Ledesma, G.R. No. 197556, March 25, 2015.

²⁶Robusta Agro Marine Products, Inc. v. Gorombalem, 256 Phil. 545, 550 (1989).cralawred

²⁷Suarez v. National Labor Relations Commission, 355 Phil. 236, 243 (1998) citing Manila Doctors Hospital v. National Labor Relations Commission, G.R. No. 64897, February 28, 1985, 235 SCRA 262, 265-267.

²⁸Bantolino v. Coca-Cola Bottlers Phils., Inc., 451 Phil. 839, 846 (2003).

²⁹ The 2005 Revised Rules of Procedure of the National Labor Relations Commission, Rule VII, Section 10.

³⁰Bilbao v. Saudi Arabian Airlines, 678 Phil. 793, 802 (2011).

³¹Samaniego v. National Labor Relations Commission, G.R. No. 93059, June 3, 1991, 198 SCRA 111, 118.

³²Kukan International Corporation v. Hon. Judge Reyes, 646 Phil. 210, 232 (2010).

³³Manila Hotel Corp. v. National Labor Relations Commission, 397 Phil. 1, 19 (2000).

³⁴Velarde v. Lopez, Inc., 464 Phil. 525, 538 (2004).

³⁵Philippine National Bank v. Hydro Resources Contractors Corporation, 706 Phil. 297, 308-309 (2013).

³⁶McBurnie v. Ganzon, G.R. Nos. 178034 & 178117, 186984-85, October 17, 2013, 707 SCRA 646, 690.

³⁷Legend Hotel (Manila), v. Realuyo, 691 Phil. 226, 236-237 (2012).

³⁸Martin v. Court of Appeals, G.R. No. 82248, January 30, 1992, 205 SCRA 591, 597.

³⁹ CA rollo, p. 31.cralawred

⁴⁰Atilano II v. Judge Asaali, 694 Phil. 488, 495 (2012).

⁴¹Fermin v. Hon. Judge Esteves, 573 Phil. 12, 18 (2008).