RAMY GALLEGO, PETITIONER, VS. BAYER PHILIPPINES, INC., DANPIN GUILLERMO, PRODUCT IMAGE MARKETING, INC., AND EDGARDO BERGONIA, RESPONDENTS.

Gallego versus Bayer Philippines

The Case

This is a labor case about who, in law, was Ramy Gallego's employer, and whether he was illegally dismissed. Gallego sued Bayer Philippines, its district sales manager Danpin Guillermo, Product Image Marketing and Services, and its president Edgardo Bergonia after he stopped reporting for work in 2002. The case matters because it is a clean teaching vehicle on the distinction between permissible job contracting and prohibited labor-only contracting, and on the control test for the existence of an employer-employee relationship. It also reminds us that in an illegal dismissal case, the employee must first prove by substantial evidence that a dismissal actually happened before the burden shifts to the employer.

Procedural History

Gallego filed a complaint for illegal dismissal with the National Labor Relations Commission, with claims for reinstatement, backwages, separation pay, unpaid wages, holiday pay, premium pay, service incentive leave, allowances, damages, and attorney's fees. The Labor Arbiter ruled in his favor, declaring Bayer and Product Image guilty of illegal dismissal and ordering reinstatement plus money awards. On appeal, the National Labor Relations Commission reversed the Labor Arbiter. It held that Product Image was an independent contractor and therefore Gallego's employer, and that there was no evidence he was dismissed by either Product Image or Bayer. It sustained Product Image's claim of abandonment. Gallego's motion for reconsideration was denied, so he went up to the Court of Appeals by petition for certiorari. The Court of Appeals dismissed his petition outright because he failed to attach the complaint and the parties' position papers filed with the Labor Arbiter. His motion for reconsideration was denied. He then came to the Supreme Court by petition for review on certiorari.

Facts

In April 1992, Bayer Philippines hired Ramy Gallego as a crop protection technician to promote and market Bayer products. Under the supervision of a Bayer sales representative for Panay Island, he made farm visits across the municipalities of Panay to convince farmers to buy Bayer products. In 1996 his work with Bayer came to a halt, and he sought employment elsewhere. Bayer eventually reemployed him in 1997, but this time through Product Image and Marketing Services, whose president and general manager was Edgardo Bergonia. He performed the same task, promoting Bayer products to farmers and dealers in Panay Island, solely for the benefit of Bayer.

By Gallego's account, in October 2001 the newly assigned Bayer sales representative, Pet Pascual, directed him to submit a resignation letter, and he refused. In January 2002 he was summoned by his supervisors, including Danpin Guillermo, Bayer's district sales manager for Panay, and ordered to quit and to return all service equipment issued to him, and again he refused. He continued working and receiving compensation until the end of January 2002. On April 7, 2002 he received a memorandum transferring his area of responsibility to Luzon; he sought reconsideration but got none. He claimed that Guillermo and Bergonia spread rumors reaching dealers in Antique that he was no longer connected with Bayer and that any transaction with him would no longer be honored as of April 30, 2002.

Believing he had been terminated, Gallego filed his complaint on June 6, 2002. Bayer and Guillermo denied any employer-employee relationship with him. They explained that his work at Bayer arose only from a Contract of Promotional Services between Bayer and Product Image, under which Product Image was to promote and market Bayer products on its own account and in its own manner and method, and that as an independent contractor Product Image retained exclusive control over him through full-time supervisors. Product Image and Bergonia admitted hiring him on a contractual basis on April 7, 1997 to promote and market Bayer products under that same contract. They alleged he was a field worker with no fixed hours who worked under minimal supervision, his performance gauged only by accomplishment reports certified by Bayer as de facto supervisor. They insisted he was not dismissed; he went on official leave from January 23 to 31, 2002, stopped reporting thereafter, and failed to report to a reassignment to South Luzon effective March 15, 2002 under a personnel reorganization program.

Issues

• Whether or not Product Image is a labor-only contractor, such that Bayer should be deemed Gallego's principal employer.
• Whether or not Gallego was illegally dismissed from his employment.

Applicable Provisions

Section 1 of Rule 65 of the Rules of Court, on the contents of a petition for certiorari, provides:

The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46.

This is the attachment requirement the Court of Appeals invoked when it dismissed Gallego's petition outright.

Section 3 of Rule 46, on non-compliance with the requirements, provides:

The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition.

This is the provision that made the outright dismissal, in the ordinary case, neither grave abuse of discretion nor reversible error of law.

Ruling

On the procedural question, the Court held that the outright dismissal of a petition for failure to comply with the attachment requirement cannot, by and large, be assailed as grave abuse of discretion or reversible error of law. But the Court chose to overlook Gallego's failure to attach the relevant pleadings in view of the serious matters dealt with in the case, and proceeded to the substantial merits. It also noted that although only errors of law are generally reviewed, and the existence of an employer-employee relationship is essentially a question of fact, it may reexamine the findings when those of the National Labor Relations Commission contradict those of the Labor Arbiter.

On the first issue, the Court found substantial evidence that Product Image is a legitimate job contractor, not a labor-only contractor. Product Image held a Department of Labor and Employment Certificate of Registration, and a certificate issued by a public officer carries the presumption of regular performance of official duty, which Gallego's bare assertions failed to rebut. Independently of the certificate, the Court cited Product Image's contract with Bayer for the promotion and marketing of Bayer products, its independent business serving big companies nationwide, its total assets from 1998 to 2000, and its bond posted to answer for employee claims. Applying the four standards for an employer-employee relationship, namely the manner of selection and engagement, the mode of payment of wages, the power of dismissal, and the power of control, the Court found all four vested in Product Image. Gallego accepted a Job Offer from Product Image effective April 7, 1997; Product Image paid his wages and benefits; and both the power to discipline and the power of control belonged to Product Image under the Contract of Promotional Services. Any control Bayer retained, in certifying the veracity of accomplishment reports, pertained only to results and not to the manner and method of doing the work. The Court stressed the control test as most determinative, and concluded that Product Image is ineluctably the employer of Gallego.

On the second issue, the Court found no evidence that Gallego was dismissed. What it found was that he unilaterally stopped reporting for work before filing his complaint, based on his belief that rumors had been spread that his transactions on behalf of Bayer would no longer be honored after April 30, 2002. That belief remained unsubstantiated. The Court restated the rule on burden of proof:

While in cases of illegal dismissal, the employer bears the burden of proving that the dismissal is for a valid or authorized cause, the employee must first establish by substantial evidence the fact of dismissal.

Since Gallego failed to establish the fact of dismissal, there was no illegal dismissal to speak of.

Doctrine

First, in distinguishing permissible job contracting from prohibited labor-only contracting, the totality of the facts and surrounding circumstances must be considered, each case determined by its own facts. A Department of Labor and Employment certificate of registration carries the presumption of regularity and, absent contrary evidence, establishes the contractor's status as a legitimate job contractor. Second, the existence of an employer-employee relationship is determined by four standards: the manner of selection and engagement, the mode of payment of wages, the presence or absence of the power of dismissal, and the presence or absence of control over the employee's conduct, with the control test the most determinative. Control that pertains only to the results of the work, and not to the manner and method of doing it, does not create an employer-employee relationship. Third, in illegal dismissal cases, the employee bears the initial burden of establishing the fact of dismissal by substantial evidence; only then does the burden shift to the employer to prove a valid or authorized cause.

Disposition

The Supreme Court denied the petition, leaving Gallego without relief against Bayer, Guillermo, Product Image, and Bergonia.

Remember This

Memorize this line: the employee must first establish by substantial evidence the fact of dismissal before the employer's burden to prove a valid cause arises. Examiners use this case for the job contracting versus labor-only contracting distinction, the control test, and the procedural point that failure to attach the required pleadings is a ground for dismissal of a certiorari petition.