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G.R. No. 169207. March 25, 2010.*

WPP MARKETING COMMUNICATIONS, INC., JOHN

STEEDMAN, MARK WEBSTER, and NOMINADA
LANSANG, petitioners, vs. JOCELYN M. GALERA,
respondent.

G.R. No. 169239. March 25, 2010.*

JOCELYN M. GALERA, petitioner, vs. WPP MARKETING

COMMUNICATIONS, INC., JOHN STEEDMAN, MARK
WEBSTER, and NOMINADA LANSANG, respondents.

Corporation Law; Corporate Officers; Under Section 25 of the

Corporation Code, the corporate officers are the president,
secretary, treasurer and such other officers as may be provided in
the by-laws.—Corporate officers are given such character either
by the Corporation Code or by the corporation’s by-laws. Under
Section 25 of the Corporation Code, the corporate officers are the
president, secretary, treasurer and such other officers as may be
provided in the by-laws. Other officers are sometimes created by
the charter or by-laws of a corporation, or the board of directors
may be empowered under the by-laws of a corporation to create
additional offices as may be necessary.
Labor Law; Termination of Employment; Employer must
furnish the worker sought to be dismissed with two written notices
before termination of employment can be legally effected; Failure to
comply with the requirements taints the dismissal with illegality.
—The law further requires that the employer must furnish the
worker sought to be dismissed with two written notices before
termination of employment can be legally effected: (1) notice
which apprises the employee of the particular acts or omissions
for which his dismissal is sought; and (2) the subsequent notice
which informs the employee of the employer’s decision to dismiss
him. Failure to comply with the requirements taints the dismissal
with illegality. WPP’s acts clearly show that Galera’s dismissal
did not comply with the two-notice rule.

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* SECOND DIVISION.

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WPP Marketing Communications, Inc. vs. Galera

Same; Labor Code; Recruitment; Employment Permit; The law

and the rules are consistent in stating that the employment permit
must be acquired prior to employment.—This is Galera’s dilemma:
Galera worked in the Philippines without a proper work permit
but now wants to claim employee’s benefits under Philippine
labor laws. The law and the rules are consistent in stating that
the employment permit must be acquired prior to employment.
The Labor Code states: “Any alien seeking admission to the
Philippines for employment purposes and any domestic or foreign
employer who desires to engage an alien for employment in the
Philippines shall obtain an employment permit from the
Department of Labor.”

PETITIONS for review on certiorari of the decision and

resolution of the Court of Appeals.
   The facts are stated in the opinion of the Court.
  Sycip, Salazar, Hernandez & Gatmaitan for WPP
Marketing Communications, Inc., John Steedman, Mark
Webster and Nominada Lansang.
  Picazo, Buyco, Tan, Fider & Santos; Cervantes,
Jurisprudencia and Partners; and Egmedio J. Castillon, Jr.
for Jocelyn M. Galera.

CARPIO, Acting C.J.:

The Case

G.R. Nos. 169207 and 169239 are petitions for review1

assailing the Decision2 promulgated on 14 April 2005 as
well as the Resolution3 promulgated on 1 August 2005 of
the Court of

_______________

1 Under Rule 45 of the 1997 Rules of Civil Procedure.

2 Rollo (G.R. No. 169207), pp. 10-43; Rollo, (G.R. No. 169239), pp. 40-
73. Penned by Associate Justice Vicente Q. Roxas with Associate Justices
Renato C. Dacudao and Lucas P. Bersamin, concurring; Associate Justice
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Jose Catral Mendoza, concurring and dissenting; and Associate Justice

Celia C. Librea-Leagogo, dissenting.
3 Rollo (G.R. No. 169207), pp. 63-64; Rollo, (G.R. No. 169239), pp. 93-
94. Penned by Associate Justice Vicente Q. Roxas with Asso-

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WPP Marketing Communications, Inc. vs. Galera

Appeals (appellate court) in CA-G.R. SP No. 78721. The

appellate court granted and gave due course to the petition
filed by Jocelyn M. Galera (Galera). The appellate court’s
decision reversed and set aside that of the National Labor
Relations Commission (NLRC), and directed WPP
Marketing Communications, Inc. (WPP) to pay Galera
backwages, separation pay, unpaid housing benefit, unpaid
personal and accident insurance benefits, cash value under
the company’s pension plan, 30 days paid holiday benefit,
moral damages, exemplary damages, 10% of the total
judgment award as attorney’s fees, and costs of the suit.

The Facts

The appellate court narrated the facts as follows:

“Petitioner is Jocelyn Galera (GALERA), a [sic] American

citizen who was recruited from the United States of America by
private respondent John Steedman, Chairman-WPP Worldwide
and Chief Executive Officer of Mindshare, Co., a corporation
based in Hong Kong, China, to work in the Philippines for private
respondent WPP Marketing Communications, Inc. (WPP), a
corporation registered and operating under the laws of
Philippines. GALERA accepted the offer and she signed an
Employment Contract entitled “Confirmation of Appointment and
Statement of Terms and Conditions” (Annex “B” to Petition for
Certiorari). The relevant portions of the contract entered into
between the parties are as follows:
Particulars:
Name:                    Jocelyn M. Galera
Address:                 163 Mediterranean Avenue
                              Hayward, CA 94544
Position:                  Managing Director
                               Mindshare Philippines
Annual Salary:        Peso 3,924,000
Start Date:              1 September 1999

_______________

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 ciate Justices Renato C. Dacudao and Lucas P. Bersamin, concurring; Associate

Justice Jose Catral Mendoza, concurring and dissenting; and Associate Justice
Celia C. Librea-Leagogo, dissenting.

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Commencement Date: 1 September 1999

(for continuous service)
Office: Mindshare Manila
6. Housing Allowance
The Company will provide suitable housing in Manila at
a maximum cost (including management fee and other
associated costs) of Peso 576,000 per annum.
   7. Other benefits.
The Company will provide you with a fully maintained
company car and a driver.
The Company will continue to provide medical, health,
life and personal accident insurance plans, to an amount
not exceeding Peso 300,000 per annum, in accordance with
the terms of the respective plans, as provided by JWT
Manila.
The Company will reimburse you and your spouse one
way business class air tickets from USA to Manila and the
related shipping and relocation cost not exceeding US$5,000
supported by proper documentation. If you leave the
Company within one year, you will reimburse the Company
in full for all costs of the initial relocation as described
therein.
You will participate in the JWT Pension Plan under the
terms of this plan, the Company reserves the right to
transfer this benefit to a Mindshare Pension Plan in the
future, if so required.
   8. Holidays
You are entitled to 20 days paid holiday in addition to
public holidays per calendar year to be taken at times
agreed with the Company. Carry-over of unused accrued
holiday entitlement into a new holiday year will not
normally be allowed. No payment will be made for holidays
not taken. On termination of your employment, unless you
have been summarily dismissed, you will be entitled to
receive payment for unused accrued holiday pay. Any
holiday taken in excess of your entitlement shall be
deducted from your final salary payment.

426

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WPP Marketing Communications, Inc. vs. Galera

   9. Leave Due to Sickness or Injury

The maximum provision for sick leave is 15 working days
per calendar year.
   12. Invention/Know-How
Any discovery, invention, improvement in procedure,
trademark, trade name, designs, copyrights or get-ups
made, discovered or created by you during the continuance
of your employment hereunder relating to the business of
the Company shall belong to and shall be the absolute
property of the Company. If required to do so by the
Company (whether during or after the termination of your
employment) you shall at the expense of the company
execute all instruments and do all things necessary to vest
in ownership for all other rights, title and interests
(including any registered rights therein) in such discovery,
invention, improvement in procedure, trademark, trade
name, design, copyright or get-up in the Company (or its
Nominee) absolutely and as sole beneficial owner.
   14. Notice.
The first three months of your employment will be a trial
period during which either you or the Company may
terminate your employment on one week’s notice. If at the
end of that period, the Company is satisfied with your
performance, you will become a permanent employee.
Thereafter you will give Company and the Company will
give you three months notice of termination of employment.
The above is always subject to the following: (1) the
Company’s right to terminate the contract of employment
on no or short notice where you are in breach of contract; (2)
your employment will at any event cease without notice on
your retirement date when you are 60 years of age.
                           SIGNED JOCELYN M. GALERA 8-16-99
                                  Date of Borth [sic] 12-25-55
Employment of GALERA with private respondent WPP became
effective on September 1, 1999 solely on the instruction of the
CEO and upon signing of the contract, without any further action
from the Board of Directors of private respondent WPP.
Four months had passed when private respondent WPP filed
before the Bureau of Immigration an application for petitioner

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GALERA to receive a working visa, wherein she was designated

as Vice President of WPP. Petitioner alleged that she was
constrained to sign the application in order that she could remain
in the Philippines and retain her employment.
Then, on December 14, 2000, petitioner GALERA alleged she
was verbally notified by private respondent STEEDMAN that her
services had been terminated from private respondent WPP. A
termination letter followed the next day.”4

On 3 January 2001, Galera filed a complaint for illegal

dismissal, holiday pay, service incentive leave pay, 13th
month pay, incentive plan, actual and moral damages, and
attorney’s fees against WPP and/or John Steedman
(Steedman), Mark Webster (Webster) and Nominada
Lansang (Lansang). The case was docketed as NLRC NCR
Case No. 30-01-00044-01.

The Labor Arbiter’s Ruling

In his Decision dated 31 January 2002, Labor Arbiter

Edgardo M. Madriaga (Arbiter Madriaga) held WPP,
Steedman, Webster, and Lansang liable for illegal
dismissal and damages. Arbiter Madriaga stated that
Galera was not only illegally dismissed but was also not
accorded due process. Arbiter Madriaga explained, thus:

“[WPP] failed to observe the two-notice rule. [WPP] through

respondent Steedman for a five (5) minute meeting on December
14, 2000 where she was verbally told that as of that day, her
employment was being terminated. [WPP] did not give [Galera]
an opportunity to defend herself and explain her side. [Galera]
was even prohibited from reporting for work that day and was
told not to report for work the next day as it would be awkward
for her and respondent Steedman to be in the same premises after
her termination. [WPP] only served [Galera] her written notice of
termination only on 15 December 2001, one day after she was
verbally apprised thereof.”

_______________

4 Rollo (G.R. No. 169207), pp. 12-15; Rollo (G.R. No. 169239), pp. 42-45.

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The law mandates that the dismissal must be properly done

otherwise, the termination is gravely defective and may be
declared unlawful as we hereby hold [Galera’s] dismissal to be
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illegal and unlawful. Where there is no showing of a clear, valid

and legal cause for the termination of employment, the law
considers the matter a case of illegal dismissal and the burden is
on the employer to prove that the termination was for a valid or
authorized cause. The law mandates that both the substantive
and procedural aspects of due process should be observed. The
facts clearly show that respondents were remiss on both aspects.
Perforce, the dismissal is void and unlawful.
xxxx
Considering the work performance and achievements of
[Galera] for the year 2000, we do not find any basis for the alleged
claim of incompetence by herein respondents. Had [Galera] been
really incompetent, she would not have been able to generate
enormous amounts [sic] of revenues and business for [WPP]. She
also appears to be well liked as a leader by her subordinates, who
have come forth in support of [Galera]. These facts remain
undisputed by respondents.
A man’s job being a property right duly protected by our laws,
an employer who deprives an employee [of] the right to defend
himself is liable for damages consistent with Article 32 of the
Civil Code. To allow an employer to terminate the employment of
his worker based merely on allegations without proof places the
[employee] in an uncertain situation. The unflinching rule in
illegal dismissal cases is that the employer bears the burden of
proof.
In the instant case, respondents have not been able to muster
evidence to counter [Galera’s] allegations. [Galera’s] allegations
remain and stand absent proof from respondents rebutting them.
Hence, our finding of illegal dismissal against respondents who
clearly have conspired in bad faith to deprive [Galera] of her right
to substantive and procedural due process.”5

The dispositive portion of Arbiter Madriaga’s decision

reads as follows:

_______________

5  Rollo (G.R. No. 169207), pp. 337-341; Rollo (G.R. No. 169239), pp.
299-303.

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“WHEREFORE, premises considered, we hereby hold herein

respondents liable for illegal dismissal and damages, and award to
[Galera], by virtue of her expatriate status, the following:

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a. Reinstatement without loss of seniority rights.

b. Backwages amounting to $120,000 per year at P50.00 to US $1
exchange rate, 13th month pay, transportation and housing
benefits.
c. Remuneration for business acquisitions amounting to Two Million
Eight Hundred Fifty Thousand Pesos (P2,850,000.00) and Media
Plowback Incentive equivalent to Three Million Pesos
(P3,000,000.00) or a total of not less than One Hundred Thousand
US Dollars ($100,000.00).
d. US Tax Protection of up to 35% coverage equivalent to Thirty
Eight Thousand US Dollars ($38,000).
e. Moral damages including implied defamation and punitive
damages equivalent to Two Million Dollars (US$2,000,000.00).
f. Exemplary damages equivalent to One Million Dollars
($1,000,000.00).
g. Attorney’s fees of 10% of the total award herein.
SO ORDERED.”6

The Ruling of the NLRC

The First Division of the NLRC reversed the ruling of

Arbiter Madriaga. In its Decision7 promulgated on 19
February 2003, the NLRC stressed that Galera was WPP’s
Vice-President, and therefore, a corporate officer at the
time she was removed by the Board of Directors on 14
December 2000. The NLRC stated thus:

_______________

6 Rollo (G.R. No. 169207), p. 344; Rollo (G.R. No. 169239), p. 306.
7 Rollo (G.R. No. 169239), pp. 140-150. Per Curiam decision signed by
Commissioners Roy V. Señeres and Victoriano R. Calaycay.

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“It matters not that her having been elected by the Board to an
added position of being a member of the Board of Directors did not
take effect as her May 31, 2000 election to such added position
was conditioned to be effective upon approval by SEC of the
Amended By-Laws, an approval which took place only in
February 21, 2001, i.e., after her removal on December 14, 2000.
What counts is, at the time of her removal, she continued to be
WPP’s Vice President, a corporate officer, on hold over capacity.
Ms. Galera’s claim that she was not a corporate officer at the
time of her removal because her May 31, 2000 election as Vice

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President for Media, under WPP’s Amended By-Laws, was subject

to the approval by the Securities and Exchange Commission and
that the SEC approved the Amended By-Laws only in February
2001. Such claim is unavailing. Even if Ms. Galera’s subsequent
election as Vice President for Media on May 31, 2000 was subject
to approval by the SEC, she continued to hold her previous
position as Vice President under the December 31, 1999 election
until such time that her successor is duly elected and qualified. It
is a basic principle in corporation law, which principle is also
embodied in WPP’s by-laws, that a corporate officer continues to
hold his position as such until his successor has been duly elected
and qualified. When Ms. Galera was elected as Vice President on
December 31, 1999, she was supposed to have held that position
until her successor has been duly elected and qualified. The
record shows that Ms. Galera was not replaced by anyone. She
continued to be Vice President of WPP with the same operational
title of Managing Director for Mindshare and continued to
perform the same functions she was performing prior to her May
31, 2000 election.
In the recent case of Dily Dany Nacpil v. International
Broadcasting Corp., the definition of corporate officer for purposes
of intra-corporate controversy was even broadened to include a
Comptroller/Assistant Manager who was appointed by the
General Manager, and whose appointment was later approved by
the Board of Directors. In this case, the position of comptroller
was not even expressly mentioned in the By-Laws of the
corporation, and yet, the Supreme Court found him to be a
corporate officer. The Court ruled that—
(since) petitioner’s appointment as comptroller required
the approval and formal action of IBC’s Board of Directors
to become valid, it is clear therefore that petitioner is a
corporate officer whose dismissal may be the subject of a
controversy

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cognizable by the SEC... Had the petitioner been an

ordinary employee, such board action would not have been
required.
Such being the case, the imperatives of law require that we
hold that the Arbiter below had no jurisdiction over Galera’s case
as, again, she was a corporate officer at the time of her removal.
WHEREFORE, the appeals of petitioner from the Decision of
Labor Arbiter Edgardo Madriaga dated January 31, 2002 and his
Order dated March 21, 2002, respectively, are granted. The

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January 31, 2002 decision of the Labor Arbiter is set aside for
being null and void and the temporary restraining order we
issued on April 24, 2002 is hereby made permanent. The
complaint of Jocelyn Galera is dismissed for lack of jurisdiction.
SO ORDERED.”8

In its Resolution9 promulgated on 4 June 2003, the

NLRC further stated:

“We are fully convinced that this is indeed an intra-corporate

dispute which is beyond the labor arbiter’s jurisdiction. These
consolidated cases clearly [involve] the relationship between a
corporation and its officer and is properly within the definition of
an intra-corporate relationship which, under P.D. No. 902-A, is
within the jurisdiction of the SEC (now the commercial courts).
Such being the case, We are constrained to rule that the Labor
Arbiter below had no jurisdiction over Ms. Galera’s complaint for
illegal dismissal.
WHEREFORE, the motion for reconsideration filed by Ms.
Galera is hereby denied for lack of merit. We reiterate our
February 19, 2003 Decision setting aside the Labor Arbiter’s
Decision dated January 31, 2002 for being null and void.
SO ORDERED.”10

Galera assailed the NLRC’s decision and resolution

before the appellate court and raised a lone assignment of
error.

_______________

8 Id., at pp. 148-150.

9 Rollo (G.R. No. 169207), pp. 502-505; Rollo (G.R. No. 169239), pp.
151-154.
10 Rollo (G.R. No. 169207), pp. 504-505; Rollo (G.R. No. 169239), pp.
153-154.

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WPP Marketing Communications, Inc. vs. Galera

“The National Labor Relations Commission acted with grave

abuse of discretion amounting to lack or excess of jurisdiction
when it reversed the decision of the Labor Arbiter not on the
merits but for alleged lack of jurisdiction.”11

The Decision of the Appellate Court

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The appellate court reversed and set aside the decision

of the NLRC. The appellate court ruled that the NLRC’s
dismissal of Galera’s appeal is not in accord with
jurisprudence. A person could be considered a “corporate
officer” only if appointed as such by a corporation’s Board of
Directors, or if pursuant to the power given them by either
the Articles of Incorporation or the By-Laws.12
The appellate court explained:

“A corporation, through its board of directors, could only act in

the manner and within the formalities, if any, prescribed by its
charter or by the general law. If the action of the Board is ultra
vires such is motu proprio void ab initio and without legal effect
whatsoever. The by-laws of a corporation are its own private laws
which substantially have the same effect as the laws of the
corporation. They are, in effect, written into the charter. In this
sense, they beome part of the fundamental law of the corporation
with which the corporation and its directors and officers must
comply.
Even if petitioner GALERA had been appointed by the Board of
Directors on December 31, 1999, private respondent WPP’s By-
Laws provided for only one Vice-President, a position already
occupied by private respondent Webster. The same defect also
stains the Board of Directors’ appointment of petitioner GALERA
as a Director of the corporation, because at that time the By-Laws
provided for only five directors. In addition, the By-laws only
empowered the Board of Directors to appoint a general manager
and/or assistant general manager as corporate officers in addition
to a chairman, president, vice-president and treasurer. There is
no mention of a corporate officer entitled “Managing Director.”

_______________

11 Rollo (G.R. No. 169207), p. 18.

12 Rollo (G.R. No. 169207), p. 21; Rollo (G.R. No. 169239), p. 51.

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     Hence, when the Board of Directors enacted the Resolutions

of December 31, 1999 and May 31, 2000, it exceeded its authority
under the By-Laws and are, therefore, ultra vires. Although
private respondent WPP sought to amend these defects by filing
Amended By-Laws with the Securities and Exchange
Commission, they did not validate the ultra vires resolutions
because the Amended By-Laws did not take effect until February
16, 2001, when it was approved by the SEC. Since by-laws operate
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only prospectively, they could not validate the ultra vires

resolutions.”13

The dispositive portion of the appellate court’s decision

reads:

“WHEREFORE, the petition is hereby GRANTED and GIVEN DUE

COURSE. The assailed Decision of the National Labor Relations
Commission is hereby REVERSED and SET ASIDE and a new one is
entered DIRECTING private respondent WPP MARKETING
COMMUNICATIONS, INC. to:
1. Pay [Galera] backwages at the peso equivalent of US$120,000.00
per annum plus three months from her summary December 14,
2000 dismissal up to March 14, 2001 because three months notice
is required under the contract, plus 13th month pay, bonuses and
general increases to which she would have been normally entitled,
had she not been dismissed and had she not been forced to stop
working, including US tax protection of up to 35% coverage which
she had been enjoying as an expatriate;
2. Pay x x x GALERA the peso equivalent of US$185,000.00
separation pay (1 ½ years);
3. Pay x x x GALERA any unpaid housing benefit for the 18 ½
months of her employment in the service to the Company as an
expatriate in Manila, Philippines at the rate of P576,000 per year;
unpaid personal and accident insurance benefits for premiums at
the rate of P300,000.00 per year; whatever cash value in the JWT
Pension Plan; and thirty days paid holiday benefit under the
contract for the 1 ½ calendar years with the Company;

_______________

13 Rollo (G.R. No. 169207), pp. 33-34; Rollo (G.R. No. 169239), pp. 63-
64.

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4. Pay x x x GALERA the reduced amount of PhP2,000,000.00 as

moral damages;
5. Pay [Galera] the reduced amount of PhP1,000,000.00 as
exemplary damages;
6. Pay [Galera] an amount equivalent to 10% of the judgment award
as attorney’s fees;
7. Pay the cost of the suit.
SO ORDERED.”14

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Respondents filed a motion for reconsideration on 5 May

2005. Galera filed a motion for partial reconsideration
and/or clarification on the same date. The appellate court
found no reason to revise or reverse its previous decision
and subsequently denied the motions in a Resolution
promulgated on 1 August 2005.15

The Issues

WPP, Steedman, Webster, and Lansang raised the

following grounds in G.R. No. 169207:

I. The Court of Appeals seriously erred in ruling that the NLRC has
jurisdiction over [Galera’s] complaint because she was not an
employee. [Galera] was a corporate officer of WPP from the
beginning of her term until her removal from office.
II. Assuming arguendo that the Court of Appeals correctly ruled
that the NLRC has jurisdiction over [Galera’s] complaint, it should
have remanded the case to the Labor Arbiter for reception of
evidence on the merits of the case.
III. [Galera] is an alien, hence, can never attain a regular or
permanent working status in the Philippines.

_______________

14 Rollo (G.R. No. 169207), p. 42; Rollo (G.R. No. 169239), p. 72.
15 Rollo (G.R. No. 169207), pp. 63-64; Rollo (G.R. No. 169239), pp. 93-
94.

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WPP Marketing Communications, Inc. vs. Galera

IV. [Galera] is not entitled to recover backwages, other benefits and

damages from WPP.16

On the other hand, in G.R. No. 169239, Galera raised

the following grounds in support of her petition:

“The CA decision should be consistent with Article 279 of the

Labor Code and applicable jurisprudence, that full backwages and
separation pay (when in lieu of reinstatement), should be
reckoned from time of dismissal up to time of reinstatement (or
payment of separation pay, in case separation instead of
reinstatement is awarded).
Accordingly, petitioner Galera should be awarded full backwages
and separation pay for the period from 14 December 2000 until

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the finality of judgment by the respondents, or, at the very least,

up to the promulgation date of the CA decision.
The individual respondents Steedman, Webster and Lansang
must be held solidarily liable with respondent WPP for the
wanton and summary dismissal of petitioner Galera, to be
consistent with law and jurisprudence as well as the specific
finding of the CA of bad faith on the part of respondents.”17

This Court ordered the consolidation of G.R. Nos.

169207 and 169239 in a resolution dated 16 January
2006.18

The Ruling of the Court

In its consolidated comment, the Office of the Solicitor

General (OSG) recommended that (A) the Decision dated
14 April 2005 of the appellate court finding (1) Galera to be
a regular employee of WPP; (2) the NLRC to have
jurisdiction over the present case; and (3) WPP to have
illegally dismissed Galera, be affirmed; and (B) the case
remanded to the Labor Arbiter for the computation of the
correct monetary award. Despite the OSG’s
recommendations, we see that Galera’s

_______________

16 Rollo (G.R. No. 169207), pp. 83-84.

17 Rollo (G.R. No. 169239), pp. 18-19.
18 Rollo (G.R. No. 169207), p. 879; Rollo (G.R. No. 169239), p. 470.

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436 SUPREME COURT REPORTS ANNOTATED

WPP Marketing Communications, Inc. vs. Galera

failure to seek an employment permit prior to her

employment poses a serious problem in seeking relief
before this Court. Hence, we settle the various issues
raised by the parties for the guidance of the bench and bar.

Whether Galera is an Employee or a Corporate

Officer

Galera, on the belief that she is an employee, filed her

complaint before the Labor Arbiter. On the other hand,
WPP, Steedman, Webster and Lansang contend that
Galera is a corporate officer; hence, any controversy
regarding her dismissal is under the jurisdiction of the
Regional Trial Court. We agree with Galera.
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Corporate officers are given such character either by the

Corporation Code or by the corporation’s by-laws. Under
Section 25 of the Corporation Code, the corporate officers
are the president, secretary, treasurer and such other
officers as may be provided in the by-laws.19 Other officers
are sometimes created by the charter or by-laws of a
corporation, or the board of directors may be empowered
under the by-laws of a corporation to create additional
offices as may be necessary.
An examination of WPP’s by-laws resulted in a finding
that Galera’s appointment as a corporate officer (Vice-
President with the operational title of Managing Director of
Mindshare) during a special meeting of WPP’s Board of
Directors is an appointment to a non-existent corporate
office. WPP’s by-laws provided for only one Vice-President.
At the time of Galera’s appointment on 31 December 1999,
WPP already had one Vice-President in the person of
Webster. Galera cannot be said to be a director of WPP also
because all five directorship positions provided in the by-
laws are already occupied. Finally, WPP cannot rely on its
Amended By-Laws to support its argument that Galera is a
corporate officer. The Amended By-Laws provided for more
than one Vice-President and for

_______________

19 Easycall Communications Phils., Inc. v. King, G.R. No. 145901, 15

December 2005, 478 SCRA 102.

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VOL. 616, MARCH 25, 2010 437

WPP Marketing Communications, Inc. vs. Galera

two additional directors. Even though WPP’s stockholders

voted for the amendment on 31 May 2000, the SEC
approved the amendments only on 16 February 2001.
Galera was dismissed on 14 December 2000. WPP,
Steedman, Webster, and Lansang did not present any
evidence that Galera’s dismissal took effect with the action
of WPP’s Board of Directors.
The appellate court further justified that Galera was an
employee and not a corporate officer by subjecting WPP
and Galera’s relationship to the four-fold test: (a) the
selection and engagement of the employee; (b) the payment
of wages; (c) the power of dismissal; and (d) the employer’s
power to control the employee with respect to the means

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and methods by which the work is to be accomplished. The

appellate court found:

“x x x Sections 1 and 4 of the employment contract mandate

where and how often she is to perform her work; sections 3, 5, 6
and 7 show that wages she receives are completely controlled by x
x x WPP; and sections 10 and 11 clearly state that she is subject
to the regular disciplinary procedures of x x x WPP.
Another indicator that she was a regular employee and not a
corporate officer is Section 14 of the contract, which clearly states
that she is a permanent employee—not a Vice-President or a
member of the Board of Directors.
 x x x x
Another indication that the Employment Contract was one of
regular employment is Section 12, which states that the rights to
any invention, discovery, improvement in procedure, trademark,
or copyright created or discovered by petitioner GALERA during
her employment shall automatically belong to private respondent
WPP. Under Republic Act 8293, also known as the Intellectual
Property Code, this condition prevails if the creator of the work
subject to the laws of patent or copyright is an employee of the
one entitled to the patent or copyright.
Another convincing indication that she was only a regular
employee and not a corporate officer is the disciplinary procedure
under Sections 10 and 11 of the Employment Contract, which
states that her right of redress is through Mindshare’s Chief
Executive Officer

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438 SUPREME COURT REPORTS ANNOTATED

WPP Marketing Communications, Inc. vs. Galera

for the Asia-Pacific. This implies that she was not under the
disciplinary control of private respondent WPP’s Board of
Directors (BOD), which should have been the case if in fact she
was a corporate officer because only the Board of Directors could
appoint and terminate such a corporate officer.
Although petitioner GALERA did sign the Alien Employment
Permit from the Department of Labor and Employment and the
application for a 9(g) visa with the Bureau of Immigration—both
of which stated that she was private respondent’s WPP’ Vice
President—these should not be considered against her. Assuming
arguendo that her appointment as Vice-President was a valid act,
it must be noted that these appointments occurred after she was
hired as a regular employee. After her appointments, there was
no appreciable change in her duties.”20

Whether the Labor Arbiter and the NLRC

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have jurisdiction over the present case

Galera being an employee, then the Labor Arbiter and
the NLRC have jurisdiction over the present case. Article
217 of the Labor Code provides:

“Jurisdiction of 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 x x x 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;

_______________

20 Rollo (G.R. No. 169207), pp. 34-36; Rollo (G.R. No. 169239), pp. 64-
66.

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VOL. 616, MARCH 25, 2010 439

WPP Marketing Communications, Inc. vs. Galera

5. Cases arising from any violation of Article 264 of this Code,

including questions involving the legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security,
Medicare and other 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 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.”

In contrast, Section 5.2 of Republic Act No. 8799, or the

Securities Regulation Code, states:

“The Commission’s jurisdiction over all cases enumerated

under Section 5 of Presidential Decree No. 902-A is hereby
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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 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.”

The pertinent portions of Section 5 of Presidential

Decree No. 902-A, mentioned above, states:

b) Controversies arising out of intra-corporate or partnership

relations, between and among stockholders, mem-

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440 SUPREME COURT REPORTS ANNOTATED

WPP Marketing Communications, Inc. vs. Galera

bers 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 their individual franchise or
right to exist as such entity;
c) Controversies in the election or appointments of directors,
trustees, officers or managers of such corporations, partnerships
or associations.

Whether WPP illegally dismissed Galera

WPP’s dismissal of Galera lacked both substantive and
procedural due process.
Apart from Steedman’s letter dated 15 December 2000
to Galera, WPP failed to prove any just or authorized cause
for Galera’s dismissal. Steedman’s letter to Galera reads:

‘The operations are currently in a shamble. There is lack of

leadership and confidence in your abilities from within, our
agency partners and some clients.
Most of the staff I spoke with felt they got more guidance and
direction from Minda than yourself. In your role as Managing
Director, that is just not acceptable.
I believe your priorities are mismanaged. The recent situation
where you felt an internal strategy meeting was more important
than a new business pitch is a good example.

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You failed to lead and advise on the two new business pitches. In
both cases, those involved sort (sic) Minda’s input. As I discussed
with you back in July, my directive was for you to lead and review
all business pitches. It is obvious [that] confusion existed
internally right up until the day of the pitch.
The quality output is still not to an acceptable standard, which
was also part of my directive that you needed to focus on back in
July.
I do not believe you understand the basic skills and industry
knowledge required to run a media special operation.”21

_______________

21 Rollo (G.R. No. 169239), p. 267.

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WPP Marketing Communications, Inc. vs. Galera

WPP, Steedman, Webster, and Lansang, however, failed

to substantiate the allegations in Steedman’s letter.
Galera, on the other hand, presented documentary
evidence22 in the form of congratulatory letters, including
one from Steedman, which contents are diametrically
opposed to the 15 December 2000 letter.
The law further requires that the employer must furnish
the worker sought to be dismissed with two written notices
before termination of employment can be legally effected:
(1) notice which apprises the employee of the particular
acts or omissions for which his dismissal is sought; and (2)
the subsequent notice which informs the employee of the
employer’s decision to dismiss him. Failure to comply with
the requirements taints the dismissal with illegality.23
WPP’s acts clearly show that Galera’s dismissal did not
comply with the two-notice rule.

Whether Galera is entitled to the monetary award

WPP, Steedman, Webster, and Lansang argue that

Galera is not entitled to backwages because she is an alien.
They further state that there is no guarantee that the
Bureau of Immigration and the Department of Labor and
Employment will continue to grant favorable rulings on the
applications for a 9(g) visa and an Alien Employment
Permit after the expiry of the validity of Galera’s
documents on 31 December 2000. WPP’s argument is a
circular argument, and assumes what it attempts to prove.

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Had WPP not dismissed Galera, there is no doubt in our

minds that WPP would have taken action for the approval
of documents required for Galera’s continued employment.

_______________

22 Id., at pp. 237-266.

23 Pepsi-Cola Bottling Co. v. NLRC, G.R. No. 101900, 23 June 1992,
210 SCRA 277, 286.

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442 SUPREME COURT REPORTS ANNOTATED

WPP Marketing Communications, Inc. vs. Galera

This is Galera’s dilemma: Galera worked in the

Philippines without a proper work permit but now wants to
claim employee’s benefits under Philippine labor laws.

“Employment of GALERA with private respondent WPP

became effective on September 1, 1999 solely on the
instruction of the CEO and upon signing of the contract, without
any further action from the Board of Directors of private
respondent WPP.
Four months had passed when private respondent WPP
filed before the Bureau of Immigration an application for
petitioner GALERA to receive a working visa, wherein she
was designated as Vice President of WPP. Petitioner alleged that
she was constrained to sign the application in order that she could
remain in the Philippines and retain her employment.”24

The law and the rules are consistent in stating that the
employment permit must be acquired prior to
employment. The Labor Code states: “Any alien seeking
admission to the Philippines for employment purposes and
any domestic or foreign employer who desires to engage an
alien for employment in the Philippines shall obtain an
employment permit from the Department of Labor.”25
Section 4, Rule XIV, Book 1 of the Implementing Rules and
Regulations provides:

“Employment permit required for entry.—No alien seeking

employment, whether as a resident or non-resident, may enter the
Philippines without first securing an employment permit from the
Ministry. If an alien enters the country under a non-working visa
and wishes to be employed thereafter, he may only be allowed to
be employed upon presentation of a duly approved employment
permit.”

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Galera cannot come to this Court with unclean hands.

To grant Galera’s prayer is to sanction the violation of the
Philippine labor laws requiring aliens to secure work
permits before their employment. We hold that the status
quo must

_______________

24 Rollo (G.R. No. 169207), pp. 14-15; Rollo (G.R. No. 169239), pp. 44-
45.
25 First paragraph, Article 40, Labor Code of the Philippines.

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