WPP Marketing Communications, Inc., et al. vs. Jocelyn M.

Galera

GR No. 169207; March 25, 2010

Jocelyn M. Galera vs. WPP Marketing Communications, Inc., et al.

GR No. 169239; March 25, 2010

Facts:

Petitioner Jocelyn M. Galera is an American citizen, who was hired by respondent John
Steedman, Chairman of 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. Under the employment contract, Galera would commence employment on
September 1, 1999, with the position of Managing Director of Mindshare Philippines. Thus,
without obtaining an alien employment permit, Galera commenced her employment with WPP
Philippines on the said date. It was only after four months from the time she commenced
employment that private respondent WPP filed before the Bureau of Immigration an application
for petitioner Galera to receive a working visa. In the application, 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.

On December 14, 2000, private respondent Galera was verbally informed by Steedman that her
employment had been terminated. She received her termination letter the following day. Her
termination prompted Galera to commence a complaint for illegal dismissal before the labor
arbiter. The labor arbiter found WPP, Steedman, Webster, and Lansang liable for illegal
dismissal and damages. Furthermore the labor arbiter stated that Galera was not only illegally
dismissed but was also not accorded due process, saying that Galera was not given an
opportunity by WPP to defend herself and explain her side. Thus, WPP did not observe both
substantive and procedural due process in terminating Galeras employment. The labor arbiter
ordered WPP to reinstate Galera and to pay her backwages, transportation and housing
benefits, and moral and exemplary damages, among others.

On appeal, the NLRC reversed the labor arbiters ruling. The NLRC ruled that Galera was
WPPs Vice-President, and therefore, a corporate officer at the time she was removed by the
Board of Directors on 14 December 2000. The NLRC ruled that the labor arbiter had no
jurisdiction over the case because being a corporate officer, a case arising from her termination
is considered as an intra-corporate dispute, which was cognizable by the Securities and
Exchange Commission under P.D. 902-A (but now by the Regional Trial Courts designated as
Commercial Courts by the Supreme Court pursuant to Section 5.2 of RA No.8799).

The Court of Appeals reversed the NLRC. It ruled that Galeras appointment by the Board of
Directors of the WPP as Vice President for Media had no legal effect as WPPs by-laws
provided for only one Vice-President, which at that time was occupied. Furthermore, WPPs by-
laws did not include a managing director as among its corporate officers. The Court of Appeals
ordered WPP to pay Galera backwages and separation pay, as well as housing benefits, moral
and exemplary damages, and attorneys fees, among others.

The case was subsequently elevated to the Supreme Court.

Issues:

1. Is Galera an employee or a corporate officer of WPP?

2. Did the labor arbiter have jurisdiction over the case?

3. Was Galera illegally dismissed?

4. Is Galera entitled to collect the award of backwages and damages even if she did not have
an alien employment permit when she commenced her employment in the Philippines?

Ruling (First Issue):

Galera is an employee of WPP. She is not a corporate officer of WPP. An examination of WPPs
by-laws resulted in a finding that Galeras appointment as a corporate officer (Vice-President
with the operational title of Managing Director of Mindshare) during a special meeting of WPPs
Board of Directors is an appointment to a non-existent corporate office. WPPs by-laws provided
for only one Vice-President. At the time of Galeras appointment on December 31, 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.

The appellate court further justified that Galera was an employee and not a corporate officer by
subjecting WPP and Galeras 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 employers
power to control the employee with respect to the means and methods by which the work is to
be accomplished. The appellate court found that 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 WPP; and Sections 10 and 11 clearly state
that she is subject to the regular disciplinary procedures of WPP.

(Second Issue):

The Labor Arbiter had jurisdiction over the illegal dismissal complaint filed by Galera. Galera
being an employee, the Labor Arbiter and the NLRC had jurisdiction over her illegal dismissal
complaint. Article 217 of the Labor Code vests the Labor Arbiter with the jurisdiction to hear and
decide, among others termination disputes, involving workers, whether agricultural or non-
agricultural.
(Third Issue):

Yes, WPPs dismissal of Galera lacked both substantive and procedural due process.

WPP failed to prove any just or authorized cause for Galeras dismissal. WPP was unable to
substantiate the allegations of Steedmans December 15, 2000 letter to Galera, (questioning her
leadership and competence). Galera, on the other hand, presented documentary evidence in
the form of congratulatory letters, including one from Steedman, which contents are
diametrically opposed to the December 15, 2000 letter. Also, the law 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 employers decision to dismiss him. Failure to comply with the requirements
taints the dismissal with illegality. WPPs acts clearly show that Galeras dismissal did not
comply with the two-notice rule.

(Fourth Issue):

No, Galera could not claim the employees benefits she is entitled under Philippine Labor Laws.
The law and the rules are consistent in stating that the employment permit must be acquired
prior to employment. Article 40 of 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. Section 4, Rule XIV, Book 1 of the Implementing Rules and Regulations
provides, among others, that 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.

Galera cannot come to this Court with unclean hands. To grant Galeras 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 prevail in the present case and we leave the
parties where they are. This ruling, however, does not bar Galera from seeking relief from other
jurisdictions.