Case Summary (G.R. No. 210741)
Factual Background
Petitioners alleged that they were hired in March and April 2008 as home-based Customer Service Representatives by CyberOne Pty. Ltd. (CyberOne AU) and later promoted to supervisors. In October 2009, respondent Maciej Mikrut, CEO of both CyberOne AU and CyberOne PH, asked petitioners to become incorporators or nominal directors of CyberOne PH, to which they agreed. Petitioners asserted that their salaries were represented as paid by CyberOne PH but that, beginning November 2010, salary reductions and mixed payments occurred, with portions paid by CyberOne AU. In March 2011, petitioners received furlough notices and in April 2011 they received their last salary. They thereupon filed a complaint for illegal dismissal and for unpaid wages, 13th month pay, damages, and attorney’s fees.
Trial Court Proceedings
The Labor Arbiter found that petitioners were not employees of CyberOne PH because CyberOne PH did not exercise control over them. The Arbiter also held that the presumption of separate corporate personality between CyberOne PH and CyberOne AU stood, and that CyberOne AU, being a foreign corporation not doing business in the Philippines, was beyond the Arbiter’s jurisdiction. Accordingly, the Arbiter dismissed the complaint for lack of merit.
NLRC Decision
The National Labor Relations Commission reversed the Labor Arbiter. The NLRC found that petitioners were employees of both CyberOne AU and CyberOne PH and that their status as nominal shareholders or directors did not preclude employee status. The NLRC relied on payroll records showing payments by CyberOne PH for certain periods and found that respondents had effectively terminated petitioners by issuance of furlough notices. The NLRC applied the doctrine of piercing the corporate veil, concluded that CyberOne AU was doing business in the Philippines through CyberOne PH, and ordered reinstatement and payment of backwages and other benefits.
Court of Appeals Decision
The Court of Appeals reversed the NLRC. The CA held that petitioners failed to prove that CyberOne PH hired them or that it exercised control over their work. The appellate court questioned the probative value of the pay slips, observed that many purported payments were in Australian dollars, and emphasized that the furlough notices and job offer pertained to CyberOne AU, not CyberOne PH. The CA also found that the NLRC misapplied the doctrine of piercing the corporate veil, noting that mere common ownership or majority shareholdings by CyberOne AU and Mikrut did not, without more, justify disregarding corporate separateness. The CA therefore dismissed the complaint for illegal dismissal against CyberOne PH.
Issues Presented to the Supreme Court
The Supreme Court identified the principal issues as whether petitioners were employees of CyberOne PH and CyberOne AU, and whether petitioners had been illegally dismissed.
Ruling of the Supreme Court
The Supreme Court denied the petition and affirmed the Court of Appeals. The Court held that the records did not establish that it had acquired jurisdiction over CyberOne AU, a foreign corporation, because there was no valid service of summons upon CyberOne AU and it did not voluntarily appear. The Court agreed with the CA that petitioners failed to prove that they were employees of CyberOne PH, and therefore there was no dismissal by CyberOne PH to be characterized as illegal.
Jurisdiction over CyberOne AU and Extraterritorial Service
The Court examined Sections 12 and 15, Rule 14, of the Rules of Court and concluded that extraterritorial service on a non-resident foreign corporation not doing business in the Philippines is available only in in rem or quasi in rem actions and in the limited modes prescribed. Because the action here was in personam, the Court held that extraterritorial service was inapplicable absent CyberOne AU’s voluntary appearance. Consequently, jurisdiction over CyberOne AU was not acquired and any judgment could bind only respondents properly served, namely CyberOne PH, Mikrut, and Juson.
Application of the Piercing the Corporate Veil Doctrine
The Court reiterated that the doctrine of piercing the corporate veil applies only in three situations: where corporate personality defeats public convenience or evades obligations; in fraud cases; or in alter ego cases where one corporation is a mere instrumentality of another. The Court found no convincing proof that CyberOne PH was organized or used to evade obligations, perpetrate fraud, or act as a mere conduit of CyberOne AU. The mere fact that CyberOne AU and Mikrut owned majority shares did not suffice to justify piercing the corporate veil. The Court therefore declined to impute CyberOne AU’s business activities to CyberOne PH.
Employer-Employee Relationship and the Four-Fold Test
The Court applied the four-fold test for employer-employee relationship: selection and engagement, payment of wages, power of dismissal, and power to control the means and methods of work. The Court fou
...continue reading
Case Syllabus (G.R. No. 210741)
Parties and Procedural Posture
- Petitioners Maria Lea Jane I. Gesolgon and Marie Stephanie N. Santos filed a Petition for Review on Certiorari under Rule 45, Rules of Court from the Court of Appeals' decision dismissing their illegal dismissal complaint.
- Respondents were CyberOne PH., Inc., Maciej Mikrut, and Benjamin Juson, who opposed the petition and defended the corporate independence of CyberOne PH.
- The petition challenged the Court of Appeals' September 2, 2013 Decision and January 10, 2014 Resolution in CA-G.R. SP No. 128807 which set aside the NLRC's November 26, 2012 Decision and January 21, 2013 Resolution.
- The Supreme Court denied the petition and affirmed the Court of Appeals' judgment, with no costs assessed.
Key Factual Allegations
- Petitioners alleged that they were hired on March 3 and April 5, 2008 as home-based remote Customer Service Representatives by CyberOne Pty. Ltd. (CyberOne AU) and were later promoted to Supervisors and Managers.
- Petitioners alleged that in October 2009 they were induced by Maciej Mikrut to serve as incorporators and/or nominal directors of CyberOne PH and that their salaries and promotions were made to appear as paid by CyberOne PH.
- Petitioners alleged salary reduction in November 2010 from P50,000.00 to P36,000.00 with P26,000.00 borne by CyberOne AU and P10,000.00 by CyberOne PH, and receipt of only P20,000.00 each as 13th month pay for 2010.
- Petitioners alleged that in March 2011 they were given three options including indefinite furlough, demotion within CyberOne AU, or irrevocable resignation, and that they accepted furlough and received P13,000.00 each as their last salary in April 2011.
- Petitioners submitted Furlough Notifications dated March 30, 2011 that they contended were notices of dismissal effective April 15, 2011 and requiring return of company property.
Parties' Contentions
- Petitioners contended that they were employees of both CyberOne AU and CyberOne PH, that they were illegally dismissed, and that they suffered underpayment of salaries and 13th month pay with claims for moral and exemplary damages and attorney's fees.
- Respondents denied an employer-employee relationship with CyberOne PH and asserted that petitioners were incorporators or directors and not regular employees of CyberOne PH.
- Respondents further contended that the NLRC lacked jurisdiction over CyberOne AU because it was a foreign corporation not doing business in the Philippines.
Labor Arbiter and NLRC Rulings
- The Labor Arbiter held on March 30, 2012 that petitioners were not employees of CyberOne PH, that CyberOne PH and CyberOne AU were separate entities, and that the NLRC lacked jurisdiction over CyberOne AU, resulting in dismissal of the complaint.
- The National Labor Relations Commission reversed the Labor Arbiter on November 26, 2012 and found petitioners to be employees of both CyberOne AU and CyberOne PH, ruled that petitioners were illegally dismissed, and ordered reinstatement with solidary payment of backwages and 13th month and service incentive leave pay totaling P1,175,113.64 each.
- The NLRC found that pay slips and payroll entries showed payments by CyberOne PH from January 2010 to April 2011 and that the Furlough Notifications were dismissals rather than mere furloughs.
- The NLRC applied the doctrine of piercing the corporate veil and concluded that CyberOne AU was doing business in the Philippines through its participation in the management, supervision, o