SECOND DIVISION

[G.R. No. 204555. July 6, 2020.]

PEDRITO R. PARAYDAY and JAIME REBOSO , petitioners, vs.

SHOGUN SHIPPING CO., INC., 1 respondent.

DECISION

HERNANDO, J : p

This Petition for Review on Certiorari 2 assails the May 11, 2012
Decision 3 of the Court of Appeals (CA) in CA-G.R. SP No. 112075, which set
aside the August 28, 2009 Decision 4 and October 27, 2009 Resolution 5 of
the National Labor Relations Commission (NLRC) declaring herein petitioners
Pedrito R. Parayday (Parayday) and Jaime Reboso (Reboso) to have been
illegally dismissed from employment. In a November 19, 2012 Resolution, 6
the CA refused to reconsider its earlier Decision.
Antecedent Facts
This case stemmed from a complaint 7 for illegal dismissal and
regularization, underpayment of wages, overtime pay, rest day pay, holiday
pay, holiday premium, service incentive leave (SIL), thirteenth (13th) month
pay, and night shift differential pay, and claims for moral and exemplary
damages, and attorney's fees filed by Parayday and Reboso against
respondent Shogun Shipping Co., Inc. 8 (Shogun Ships), and Vicente R.
Cordero (Cordero) and Antonio "Nonie" C. Raymundo (Raymundo), President
and Vice-President, respectively, of Shogun Ships. HTcADC

Petitioners Parayday and Reboso alleged that they were employed

sometime in October 1996 and March 1997, respectively, as fitters/welders
by Oceanview/VRC Lighterage Co., Inc., and VRC/Oceanview Shipbuilders
Co., Inc. (collectively referred to as "Oceanview"), corporations engaged in
the business of ship building. As fitters/welders, petitioners' duties and
responsibilities included, among others, assembling, welding, fitting, and
installing materials or components using electrical welding equipment,
and/or repairing and securing parts and assemblies of Oceanview barges. 9
In support of their allegation that they were employees of Oceanview,
petitioners presented a copy of Parayday's Oceanview Identification Card
(ID), 10 and Certificate of Employment (COE) dated February 5, 2001. 11
Sometime in 2003, Oceanview changed its corporate name to "Shogun
Ships Inc.," herein respondent. Shogun Ships maintained the same line of
business, and retained in its employ Oceanview employees, such as
petitioners.
In the course of their employment with Oceanview and later with
Shogun Ships, petitioners worked for seven days every week, and were paid
a daily salary of Three Hundred Fifty Pesos (P350.00) until their separation
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 from employment with Shogun Ships sometime in May 2008. Petitioners
alleged that Shogun Ships furnished to them handwritten payslips or Time
Keeper's Reports which indicated their names, the hours and days worked,
and the amount of compensation received by them in a given workweek. 12
Petitioners further alleged that Shogun Ships failed to pay them their
overtime pay, holiday pay, and premium pay despite having rendered work
during holidays, Sundays, and rest days. Shogun Ships likewise did not pay
petitioners their SIL and 13th month pay.
Sometime in May 2006, petitioners were assigned to Lamao, Limay,
Bataan to do a welding job on one of the barges of Shogun Ships, M/T
Daniela Natividad. On May 11, 2006, an explosion occurred which caused
petitioners to sustain third degree burns on certain parts of their bodies.
Petitioners were then hospitalized from May 11, 2006 until June 6, 2006.
Although medical expenses were borne by Shogun Ships, petitioners were
not paid their salaries while on hospital confinement. It was only on June 7,
2006, or after petitioners were discharged from the hospital, that Shogun
Ships resumed payment of their salaries until the first week of August 2006.
Thereafter, Shogun Ships discontinued providing petitioners financial
assistance for payment of their medical expenses.
Petitioners alleged that subsequently the management of Shogun
Ships verbally dismissed them from service effective May 1, 2008 due to
lack of work as fitters/welders.
On its part, respondent denied outright that petitioners were engaged
by Shogun Ships as regular employees. In support of its claim that no
employer-employee relationship existed between Shogun Ships and
petitioners, respondent pointed out that Shogun Ships, which is a
corporation engaged in the business of domestic cargo shipping, was only
incorporated sometime in November 2002, 13 several years after petitioners
were engaged by Oceanview as its fitters/welders in 1996/1997. Anent
petitioners' allegation of change of corporate name of Oceanview to Shogun
Ships, respondent maintained that there was no such change of corporate
name and that Oceanview was a separate and distinct entity from Shogun
Ships.
Respondent alleged that, at best, petitioners were helpers brought in
by regular employees of Shogun Ships on certain occasions when repairs
were needed to be done on its barges. Respondent clarified that the regular
employees of Shogun Ships occasionally called in their friends and nearby
neighbors, such as petitioners, who were seeking temporary work as helpers
until such time the needed repairs on the barges were carried out or
completed. Shogun Ships compensated them for services rendered since the
work done by these helpers were for the necessary repairs of its barges.
Shogun Ships, however, did not engage them on a regular basis since their
work on the barges was merely temporary or occasional. Moreover, Shogun
Ships already had in its employ regular employees for its technical,
mechanical, and electrical needs. Concomitantly, helpers were free to seek
employment elsewhere at any given time.

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 To lend credence to respondent's claim that petitioners were merely
occasionally engaged by employees of Shogun Ships with the view of helping
petitioners earn additional income, respondent presented the sworn
statements and affidavits 14 of Lito C. Panao and Virgilio Soriano, Jr., Shogun
Ships' Vessel Materials Coordinator and Warehouseman, respectively.
Sometime in 2008, the regular employees of Shogun Ships ceased
calling helpers to work on the repairs of the barges since they could already
be completed without the helpers' assistance. It was during this time that
petitioners started demanding work from Shogun Ships, which the latter
could not provide as there was no work to be done on the barges. aScITE

Ruling of the Labor Arbiter

On April 27, 2009, Labor Arbiter Eduardo G. Magno promulgated a
Decision, 15 the dispositive portion of which states:
WHEREFORE, Respondent Shogun Ships Co., Inc. is hereby
ordered to reinstate complainants Pedrito R. Parayday and Jaime
Reboso to their former position without loss of seniority rights with full
backwages from time of dismissal until fully reinstated.
The computation of backwages from date of dismissal until date
of this decision is as follows:

PEDRITO R. PARAYDAY - P108,150.00

and

JAIME REBOSO - P108,150.00

The claims for underpayment of wages and benefit are hereby

denied for lack of factual basis.
The claim for damages and attorney's fees are likewise denied
for lack of factual basis.
SO ORDERED. 16

The Labor Arbiter held that petitioners were regular employees of

Shogun Ships considering that they: (1) performed tasks necessary and
desirable to its business; and (2) rendered more than one year of service at
the time of their dismissal from employment. On the issue of illegal
dismissal, the Labor Arbiter ruled in favor of petitioners and held that
respondent failed to prove that petitioners were dismissed for just or
authorized cause and that they were afforded procedural due process. In
computing the amount of petitioners' backwages, the Labor Arbiter took into
consideration petitioners' years of service not only with Shogun Ships, but
also with its predecessor, Oceanview.
Ruling of the National Labor Relations Commission
In its appeal 17 to the NLRC, respondent averred that the Labor Arbiter
committed serious error amounting to grave abuse of discretion in finding
that petitioners were regular employees of Shogun Ships, and that
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 petitioners were illegally dismissed from employment. Respondent mainly
contended that using the four-fold test, petitioners cannot be considered as
employees of Shogun Ships. Respondent also argued that the Labor Arbiter
erred in ruling that Shogun Ships is one and the same entity as Oceanview,
since Shogun Ships, unlike Oceanview which is engaged in ship building, is
engaged in the business of domestic cargo shipping. Respondent added that
the petitioners' functions as fitters/welders cannot be regarded as necessary
and desirable to the business of cargo shipping as its barges are not
consistently in a state of disrepair. As petitioners are not employees of
Shogun Ships, respondent insisted that no dismissal ever took place, much
more any illegal dismissal.
In its August 28, 2009 Decision, 18 the NLRC dismissed the appeal and
affirmed the findings of the Labor Arbiter that petitioners were regular
employees of Shogun Ships and that they were illegally dismissed from
employment. The dispositive of the Decision states, as follows:
WHEREFORE, premises considered, the appeal from the
Decision dated April 27, 2009 is hereby DISMISSED for lack of merit.
SO ORDERED. 19

The NLRC took note of petitioners' allegations that after the May 11,
2006 explosion, they continued to render their services to Shogun Ships and
even reported back for work in August 2006, which respondent did not
categorically deny in its pleadings. Thus, even when their date of
engagement with Shogun Ships was counted from the date of the incident, it
would appear that petitioners have already rendered more than one year of
service with Shogun Ships when they were purportedly dismissed from
employment on May 1, 2008. On this premise, the NLRC held that the
repeated and continuing need of petitioners' services as fitters/welders was
sufficient evidence of the necessity if not indispensability of their functions,
thus making them regular employees of Shogun Ships.
The NLRC also did not lend credence to the affidavits of Lito C. Panao
and Virgilio Soriano, Jr. for the reason that they were biased witnesses.
On the issue of illegal dismissal, the NLRC affirmed the findings of the
Labor Arbiter and held that respondent failed to prove that petitioners were
dismissed for just or authorized cause.
Ruling of the Court of Appeals
Aggrieved, respondent filed a Petition for Certiorari 20 (with Prayer for
the Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining
Order) before the CA ascribing upon the NLRC grave abuse of discretion
amounting to lack or in excess of jurisdiction when it held that petitioners
were employees of Shogun Ships and that they were illegally dismissed from
employment.
In their Comment 21 to respondent's Petition for Certiorari, petitioners
averred that the application of the four-fold test proved that they were
employees of Shogun Ships. Petitioners also contended that their
employment arrangement with Shogun Ships, i.e., on a "per need" basis,
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 was formulated to prevent them from acquiring regular employment status.
Petitioners also harped on the supposed insufficiency of documentary
evidence furnished by respondent which merely consisted of a copy of
Shogun Ships' Certificate of Incorporation. Petitioners also claimed
reinstatement and payment of their backwages and other monetary claims,
including damages and attorney's fees.
In compliance with its July 8, 2010 Resolution, 22 the parties filed their
respective memoranda 23 with the CA. HEITAD

On May 11, 2012, the CA rendered its assailed Decision 24 granting

respondent's Petition for Certiorari and setting aside the August 28, 2009
Decision and October 27, 2009 Resolution of the NLRC. The dispositive
portion of the May 11, 2012 Decision reads as follows:
WHEREFORE, the petition is GRANTED. [sic] Setting aside the
NLRC's Decision dated August 28, 2009 and Resolution dated October
27, 2009, the complaint for illegal dismissal and other money claims
is consequently dismissed.
SO ORDERED. 25

The CA concluded that petitioners failed to adduce substantial

evidence to prove the existence of an employer-employee relationship
between them and Shogun Ships. Considering the same, the CA held that
there was no dismissal to speak of, much more any illegal dismissal.
While it took note of petitioners' Time Keeper's Reports which
supposedly indicated that they have been reporting for work for seven days
a week, the CA gave them no credence considering petitioners' failure to
establish their genuineness and due execution. The CA also found that the
records of the case were bereft of evidence which would prove that
petitioners were continuously employed by Shogun Ships.
Additionally, the CA held that petitioners failed to prove that
Oceanview were one and the same entity as Shogun Ships. The appellate
court explained in this wise, viz.:
We have to stress, at this point, that a corporation has a
personality separate and distinct from those of its stockholders and
other corporations to which it may be connected. We cannot assume
that the above-named companies are one and the same. Neither are
we prepared to "pierce the veil of corporate fiction" as said doctrine
comes into play "only during the trial of the case after the court has
already acquired jurisdiction over the corporation," matters which are
not present here. Worse, to apply such doctrine, it is important that
the obtaining facts be properly pleaded and proved, i.e., after
conducting a hearing during a full-blown trial, a matter which equally
is not true here. Besides, the piercing of the corporate veil has to be
done with caution, albeit the Court will not hesitate to disregard the
corporate veil when it is misused or when necessary in the interest of
justice. 26 (Citations omitted)
Petitioners filed a motion for reconsideration 27 but the CA denied the
same in its November 19, 2012 Resolution. 28 Hence, the instant Petition.

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 Issues
Petitioners raised the following issues for resolution:
I
THE [CA] SERIOUSLY ERRED IN FINDING THE TIME KEEPER'S REPORTS
SUBMITTED BY THE PETITIONERS AS INSUFFICIENT EVIDENCE OF
ESTABLISHING THEIR CONTINUOUS EMPLOYMENT WITH THE
RESPONDENTS ON THE GROUND THAT THEIR GENUINENESS AND DUE
EXECUTION WERE NOT ESTABLISHED.
II
THE [CA] SERIOUSLY ERRED IN RELYING ON THE BARE ASSERTION OF
THE RESPONDENTS THAT PETITIONERS WERE MERELY
"OCCASIONALLY CALLED IN" TO SERVE AS HELPERS.
III
THE [CA] SERIOUSLY ERRED IN AVOIDING TO PIERCE THE CORPORATE
VEIL, ALLEGING A FULL[-]BLOWN TRIAL HAS TO BE HAD,
NOTWITHSTANDING THAT IT WAS PROPERLY PLEADED AND PROVED
BY THE PETITIONERS.
IV
THE [CA] ERRED IN ENTERTAINING AND GRANTING RESPONDENTS'
PETITION FOR CERTIORARI UNDER RULE 65.
[V]
THE [CA] SERIOUSLY ERRED IN IGNORING THE NOTICE OF CHANGE
OF COUNSEL WHEN IT RECOGNIZED THE COUNSEL WHO HAS NO
AUTHORITY FROM PETITIONERS.
For brevity and clarity, the issues of the instant case may be simplified
as follows: (1) whether petitioners were regular employees of Shogun Ships;
and (2) whether petitioners were validly dismissed from employment.
Our Ruling
The Court grants the Petition.
Preliminary Matters
The issue of whether or not an employer-
employee relationship existed between
petitioners and Shogun Ships is essentially
a question of fact.
At the outset, as to whether or not petitioners were regular employees
of Shogun Ships, or whether or not an employer-employee relationship
existed between petitioners and Shogun Ships, are essentially questions of
fact 29 which, as a rule, cannot be entertained in a Petition for Review on
Certiorari filed under Rule 45 of the Rules of Court. Consistent therewith is
the doctrine that this Court is not a trier of facts, and this is strictly adhered
to in labor cases. 30 However, where, like in the instant case, there is a
conflict between the factual findings of the Labor Arbiter and the NLRC, on
one hand, and those of the CA, on the other hand, it becomes proper for this
Court, in the exercise of its equity jurisdiction, to review the facts and re-
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 examine the records of the case. 31 Thus, this Court shall take cognizance of
and resolve the factual issues involved in this case.
ATICcS

Shogun Ships and Oceanview are two

separate and distinct entities.
As a preliminary to a determination of the first issue,i.e., whether
petitioners were regular employees of Shogun Ships, petitioners contend
that they were employed by Oceanview as far back as 1996/1997. Sometime
in 2003, Oceanview supposedly changed its corporate name to Shogun
Ships, herein respondent. Petitioners would thus make it appear that
Oceanview and Shogun Ships are one and the same entity, which
conveniently makes them employees of Shogun Ships since 1996/1997, or
for a period of 11 years until they were dismissed from employment on May
1, 2008. Along the same lines, the Labor Arbiter, in his Decision,
categorically held that Oceanview is the predecessor of Shogun Ships.
Notably, the contention of petitioners would support the conclusion
that an employer-employee relationship indeed existed between petitioners
and Shogun Ships based on the following premises: (1) that petitioners were
engaged as fitters/welders by Shogun Ships through Oceanview; and (2) that
petitioners were rendering their services to Oceanview, now Shogun Ships,
as early as 1996/1997 or for a period of 11 years until their dismissal from
employment on May 1, 2008.
In its Decision, the CA held that it cannot assume that Oceanview and
Shogun Ships are one and the same since the two corporations have
personalities that are separate and distinct from each other and, as such,
must be taken distinctly and separately from one another. Moreover, the CA
refused to apply the doctrine of piercing the veil of corporate fiction in the
absence of a full-blown trial where facts pertaining thereto are properly
pleaded and proved, and for lack of jurisdiction over Oceanview.
Petitioners, in asking this Court to treat Oceanview and Shogun Ships
as one entity, insisted that the obtaining facts which would justify the
application of piercing the veil of corporate fiction, i.e., that Oceanview
changed its corporate name to Shogun Ships, have been properly pleaded
and proved by petitioners during the proceedings before the Labor Arbiter
and the NLRC.
The records, however, are bereft of evidence which would show that
Shogun Ships was formerly known as Oceanview or that Oceanview changed
its corporate name to Shogun Ships.
Other than their bare allegations, petitioners could have presented
before the labor tribunals Oceanview's amended Articles of Incorporation
indicating that it changed its name to Shogun Ships, which petitioners,
however, failed to do in this case. Nor did petitioners present any evidence
which would show Oceanview's corporate affiliation with Shogun Ships, i.e.,
that Oceanview was indeed the predecessor of Shogun Ships. What is clear
is that Shogun Ships was only incorporated in 2002, several years after
petitioners were supposedly engaged by Oceanview in 1996/1997.
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 Considering the foregoing premises, this Court is inclined to agree with
the respondent and the CA that Shogun Ships and Oceanview are indeed two
separate and distinct corporate entities. This Court will thus apply the
general doctrine of separate juridical personality — that a corporation has a
legal personality separate and distinct from that of its stockholders and other
corporations to which it may be connected. 32
Moreover, it is a well-established rule in labor proceedings that the
Labor Arbiter, or this Court for that matter, cannot acquire jurisdiction over
the person of the respondent until he/she is validly served with summons, or
that he/she voluntarily appears in court. 33 In this connection, this Court
already ruled in Kukan International Corporation v. Reyes 34 that compliance
with the modes of acquiring jurisdiction over the person of the defendant or
respondent cannot be dispensed with in applying the doctrine of piercing the
veil of corporate fiction, thus:
The principle of piercing the veil of corporate fiction, and the
resulting treatment of two related corporations as one and the same
juridical person with respect to a given transaction, is basically
applied only to determine established liability; it is not available to
confer on the court a jurisdiction it has not acquired, in the first place,
over a party not impleaded in a case. Elsewise put, a corporation
not impleaded in a suit cannot be subject to the court's
process of piercing the veil of its corporate fiction. In that
situation, the court has not acquired jurisdiction over the corporation
and, hence, any proceedings taken against that corporation and its
property would infringe on its right to due process. x x x 35 (Emphasis
supplied, citation omitted)
Moreover, this Court also held that "the doctrine of piercing the veil of
corporate entity can only be raised during a full-blown trial over a cause of
action duly commenced involving parties duly brought under the authority of
the court by way of service of summons or what passes as such service." 36
Otherwise stated, the above doctrine will only come into play once the
court has already acquired jurisdiction over the corporation. Only then would
it be allowed to present evidence for or against piercing the veil of corporate
fiction. Thus, if the Labor Arbiter or the NLRC in this case have not acquired
jurisdiction over the corporation, it would be improper for this Court to pierce
the corporate veil as this would offend the corporation's right to due process.
37 In this case, it bears noting that Oceanview was never impleaded as a

party respondent and was never validly served with summons. Nor was
Oceanview represented by any authorized representative during the
proceedings before the Labor Arbiter or the NLRC. It was merely dragged to
the case by mere reference of its name in petitioners' Sama-Samang
Sinumpaang Salaysay. 38 TIADCc

Accordingly, this Court agrees with the CA that there was no full-blown
trial as to the propriety of applying the said doctrine for the reason that
Oceanview was never validly impleaded as a party respondent in the instant
illegal dismissal case. Considering that this Court has not acquired
jurisdiction over Oceanview, precisely because it was not properly impleaded
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 herein as a party respondent, application of the said doctrine would be
unwarranted.
On the issue of the existence of an
employer-employee relationship.
The proper resolution of this case necessarily hinges upon the
existence of an employer-employee relationship. Necessarily, therefore,
before a determination of legality or illegality of petitioners' dismissal can be
had, the existence of an employment relationship between petitioners and
Shogun Ships must be first established. Sy v. Court of Appeals 39 is
instructive, viz.:
Three issues are to be resolved: (1) Whether or not an
employer-employee relationship existed between petitioners and
respondent Sahot; (2) Whether or not there was valid dismissal; and
(3) Whether or not respondent Sahot is entitled to separation pay.
Crucial to the resolution of this case is the determination of the
first issue. Before a case for illegal dismissal can prosper, an
employer-employee relationship must first be established. (Citation
omitted)
This Court, in Palomado v. National Labor Relations Commission , 40 also
held in this wise:
An indispensable precondition of illegal dismissal is the prior
existence of an employer-employee relationship; in this case, since it
was established that there was no such relationship between
petitioner and private respondent Tan, therefore the allegation of
illegal dismissal does not have any leg to stand on. The claims for
backwages, separation pay and other benefits must likewise fail.
It is thus first incumbent upon this Court to resolve whether petitioners
were indeed employees of Shogun Ships. Without such fact of an
employment relationship being established, as in this case where respondent
has denied outright such fact, then it would be futile on the part of this Court
to determine the legality or illegality of petitioners' dismissal.
Test in determining the existence of an
employer-employee relationship.
Both the Labor Arbiter and the NLRC ruled that petitioners were
employees of Shogun Ships considering that their tasks as fitters/welders
were necessary and desirable to its business of cargo shipping, and that
both petitioners have been rendering their services to Shogun Ships for
more than one year. In concluding that no employer-employee relationship
existed between petitioners and Shogun Ships, the CA, on its part, applied
the four-fold test in this wise:
In determining the existence of an employer-employee
relationship, the Supreme Court has invariably adhered to the four-
fold test, viz.: (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; and (4) the power
to control the employee's conduct, or the so called "control test,"
considered to be the most important element.
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 In this case, private respondents miserably failed to adduce
substantial evidence to prove the existence of any of the
aforementioned elements. 41
To be clear, in determining the existence of an employer-employee
relationship, this Court has time and again applied the "four-fold test" which
has the following elements, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power to discipline and dismiss;
and (d) the employer's power to control the employee with respect to the
means and methods by which the work is to be accomplished. 42
By holding that petitioners were employees of Shogun Ships pursuant
to their functions and years of service with it, the Labor Arbiter and the NLRC
appeared to have invariably applied Article 295 (formerly Article 280) of the
Labor Code, as amended, which states:
Art. 295 (280). Regular and Casual employment . — The
provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where
the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That any employee
who has rendered at least one year of service, whether such service
is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment
shall continue while such activity exists. (Emphasis supplied)
From the foregoing recitals, Article 295 of the Labor Code merely
distinguishes between certain kinds of employees, particularly, regular and
casual employees, for purposes of determining their rights to certain
benefits, such as to join or form a union, or to security of tenure. 43
Moreover, an employer-employee relationship may cover peripheral or
core activities of the employer's business. Thus, while a worker's task is not
directly related, or necessary and desirable to the business of the employer,
this does not mean, however, that no employer-employee relationship exists
between the worker and the employer. Accordingly, the determination of the
existence of an employer-employee relationship is defined by law according
to the facts of each case, regardless of the nature of the activities involved.
44 AIDSTE

Article 295 should, therefore, not be used as a criterion to determine

the existence of an employer-employee relationship. More importantly, the
same provision does not apply where the existence of an employment
relationship is in dispute. 45 The CA was therefore correct in applying the
four-fold test in determining petitioners' employment status with Shogun
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 Ships.
Petitioners are regular employees of
Shogun Ships.
"In an illegal dismissal case, the onus probandi rests on the employer
to prove that its dismissal of an employee was for a valid cause. However
[as mentioned above], before a case for illegal dismissal can prosper, an
employer-employee relationship must first be established." 46
In this jurisdiction, each party must prove his affirmative allegation.
Since petitioners' case against respondents was premised on the existence
of an employment relationship between them and Shogun Ships, petitioners
must prove by their own evidence that such an employer-employee
relationship indeed existed. 47 While it has been held that no particular form
of evidence is required to prove such relationship, or that any competent and
relevant evidence to prove the relationship may be admitted, 48 this Court
believes that a finding of such relationship must still rest on substantial
evidence, 49 or "such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion." 50 This is in accordance with the oft-
repeated rule that in labor cases, as in other administrative and quasi-
judicial proceedings, the quantum of proof necessary is substantial evidence.
51

In proving their employment relationship with Shogun Ships,

petitioners presented the following documentary evidence: (1) photocopy of
Parayday's Oceanview ID; 52 (2) photocopy of Parayday's COE dated
February 5, 2001 issued by "Oceanview Shipbuilding Co., Inc."; 53 and (3)
photocopy of handwritten payslips or Time Keeper's Reports. 54
Significantly, Parayday's Oceanview ID and COE provides no
evidentiary value that petitioners were indeed employees of Shogun Ships. A
perusal thereof clearly shows that the same was issued by Oceanview, and
not Shogun Ships. The documents presented do not even make reference to
Shogun Ships. As Shogun Ships has a distinct juridical personality from
Oceanview, as discussed above, the Court is not inclined to conclude that
said documents came from, or were issued by Shogun Ships. Save for herein
petitioner Reboso, the ID and COE, at best, only demonstrate the
employment relationship of petitioner Parayday with Oceanview, which,
significantly, ceased in February 2001.
The CA did not also consider the Time Keeper's Reports as one of such
proofs that petitioners were employees of Shogun Ships since the
genuineness and due execution of the said reports were unverifiable.
We agree. While the reports may show petitioners' inclusion in the
employer's payroll which may serve as a badge of regular employment, we
are inclined to agree with the respondent that these reports were
uncorroborated and could have been easily concocted or fabricated to suit
the personal interest and purpose of petitioners. Notably, neither of the
petitioners attested to the genuineness of the document, nor that the same
were executed or signed in their presence. Petitioners did not even disclose
the maker of the records, or that the signature appearing thereon is
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 genuine. 55
I n Uichico v. National Labor Relations Commission , 56 this Court held
that:
It is true that administrative and quasi-judicial bodies like the NLRC
are not bound by the technical rules of procedure in the adjudication
of cases. However, this procedural rule should not be construed as a
license to disregard certain fundamental evidentiary rules. While the
rules of evidence prevailing in the courts of law or equity are not
controlling in proceedings before the NLRC, the evidence presented
before it must at least have a modicum of admissibility for it to be
given some probative value. x x x (Citations omitted)
Even if the records were admissible, they would not suffice to show
petitioners' employment status with Shogun Ships. The reports presented by
petitioners made no reference to Shogun Ships or Oceanview, or to any
employer for that matter. These documents do not even indicate the years
during which they were issued to petitioners. As correctly held by the CA,
these reports cannot be considered as sufficient evidence to show that
petitioners were engaged by Shogun Ships since 1996/1997.
Considering the foregoing premises, this Court is constrained to
reexamine the facts of the instant case based on the allegations and sworn
statements presented by the parties.
In its Decision, the CA found that petitioners failed to establish their
employment relationship with Shogun Ships. AaCTcI

This Court disagrees.

The application of the four-fold test in this case shows that an
employer-employee relationship did exist between petitioners and Shogun
Ships.
While this Court cannot give credence to petitioners' allegations that
they were engaged by Shogun Ships through Oceanview as early as
1996/1997 for reasons already stated above, it is worth noting that
respondent have not categorically denied that sometime in May 2006,
petitioners were engaged, or at the least, were permitted by herein
respondent to work on repairs on one of the barges of Shogun Ships, M/T
Daniela Natividad. Respondent did not also deny that petitioners worked for
Shogun Ships until they were supposedly verbally dismissed from
employment on May 1, 2008. Notably, respondent even admitted that
petitioners were called in to do repairs on the barges of Shogun Ships.
Significantly, respondent have not denied that petitioners were duly
compensated for any work done by them on the barges. Respondent even
categorically admitted that Shogun Ships provided petitioners financial
assistance when they were hospitalized from May 11, 2006 until June 6,
2006. Respondent also have not disproved the allegation of petitioners that
Shogun Ships continued to pay petitioners' salaries after they were
discharged from hospitalization on June 7, 2006.
Respondent also have not categorically denied that petitioners were
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 verbally dismissed on May 1, 2008, as in fact, respondent's allegations, i.e.,
that petitioners' "work to repair was only done when there is work available
for them. Once the repair was done, petitioners were paid for work done, and
it ends there" 57 corroborated petitioners' claims that cessation of their
services was determined by Shogun Ships.
All told, the fact that the aforesaid allegations of petitioners were not
controverted by herein respondent lends credence to petitioners' assertions
that Shogun Ships: (1) engaged them as its employees; (2) paid their
salaries for services rendered; and (3) had ultimate discretion to dismiss
their services after the needed repairs on the barges were carried out. It is
worth noting that Rule 8, Section 11, of the Rules of Court, which
supplements the NLRC Rules of Procedure, 58 provides that allegations which
are not specifically denied are deemed admitted. 59
As regards Shogun Ship's power of control over petitioners, respondent
contended that Shogun Ships did not direct the manner and method in which
petitioners do their work. It bears emphasis, however, that the control test
calls merely for the existence of the right to control the manner of doing the
work and not the actual exercise of the right. 60 Thus, in Dy Keh Beng v.
International Labor and Marine Union of the Philippines, 61 this Court held
that an employer's power of control, particularly over personnel working
under the employer, is deemed inferred, more so when said personnel are
working at the employer's establishment:
Petitioner contends that the private respondents "did not meet
the control test in the light of the x x x definition of the terms
employer and employee, because there was no evidence to show that
petitioner had the right to direct the manner and method of
respondent's work." Moreover, it is argued that petitioner's evidence
showed that "Solano worked on a pakiaw basis" and that he stayed in
the establishment only when there was work.
While this Court upholds the control test under which an
employer-employee relationship exists "where the person for whom
the services are performed reserves a right to control not only the
end to be achieved but also the means to be used in reaching such
end," it finds no merit with petitioner's arguments as stated above. It
should be borne in mind that the control test calls merely for the
existence of the right to control the manner of doing the work, not the
actual exercise of the right. Considering the finding by the Hearing
Examiner that the establishment of Dy Keh Beng is "engaged in the
manufacture of baskets known as kaing," it is natural to expect that
those working under Dy would have to observe, among others, Dy's
requirements of size and quality of the kaing. Some control would
necessarily be exercised by Dy as the making of the kaing would be
subject to Dy's specifications. Parenthetically, since the work on the
baskets is done at Dy's establishments, it can be inferred that the
proprietor Dy could easily exercise control on the men he employed.
Clearly, considering that petitioners were working on the barges
alongside regular employees of Shogun Ships and that they were taking
orders from its engineers as to the required specifications on how the barges
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 of Shogun Ships should be repaired, which respondent herein failed to deny,
it may be thus logically inferred that Shogun Ships, to some degree,
exercised control or had the right to control the work of petitioners.
We now go to the next issue: Did petitioners attain regular employment
status?
Respondent maintains that petitioners cannot be placed in the same
category as regular employees of Shogun Ships considering that they were
merely called in occasionally by its regular employees, or on a "as per need"
basis, and that their engagement as welders was dependent on the
availability of the work needed on the repairs of the barges. In support of
these allegations, respondent presented the sworn statements of Mr. Panao
and Mr. Soriano, Jr., regular employees of Shogun Ships. Moreover,
respondent insisted that petitioners' functions as fitters/welders cannot be
regarded as those which are necessary and desirable to the business of
cargo shipping.
While both the Labor Arbiter and the NLRC, on one hand, held that
petitioners were regular employees of Shogun Ships, the CA ruled, on the
other hand, that petitioners could not have attained regular employment
status as they failed to prove that they were continuously employed by
Shogun Ships.
Article 295 of the Labor Code "provides for two (2) types of regular
employees, namely: (a) those who are engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the
employer (first category); and (b) those who have rendered at least one year
of service, whether continuous or broken, with respect to the activity in
which they are employed (second category)." 62
The regular employment status of a person is defined and prescribed
by law and not by what the parties say it should be. 63 Thus, while
respondent was of the belief that rendering occasional work for Shogun
Ships prevented the parties from creating an employment relationship,
much more for petitioners from attaining regular employment status,
provision of law, however, dictates that they were regular employees of
Shogun Ships.
First, the records of the case are bereft of evidence that petitioners
were duly informed of the nature and status of their engagement with
Shogun Ships. Notably, in the absence of a clear agreement or contract,
whether written or otherwise, which would clearly show that petitioners were
properly informed of their employment status with Shogun Ships, petitioners
enjoy the presumption of regular employment in their favor. 64 EcTCAD

Second , petitioners were performing activities which are usually

necessary or desirable in the business or trade of Shogun Ships. This
connection can be determined by considering the nature of the work
performed by petitioners and its relation to the scheme of the particular
business or trade of Shogun Ships in its entirety. 65 As Shogun Ships is
engaged in the business of domestic cargo shipping, it is essential, if at all
necessary, that Shogun Ships must continuously conduct vital repairs for the
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 proper maintenance of its barges. The desirability of petitioners functions is
bolstered by the fact that Shogun Ships itself precisely retained in its employ
regular employees whose duties and responsibilities included, among others,
performing necessary repair and maintenance work on the barges.
Third, irrespective of whether petitioners' duties or functions are
usually necessary and desirable in the usual trade or business of Shogun
Ships, the fact alone that petitioners were allowed to work for it for a period
of more than one (1) year, albeit intermittently since May 2006 until they
were dismissed from employment on May 1, 2008, was indicative of the
regularity and necessity of welding activities to its business. As such, their
employment is deemed to be regular with respect to such activities and
while such activities exist.
In sum, we hold that petitioners have proven by substantial evidence
— which only entails evidence to support a conclusion, "even if other minds,
equally reasonable, might conceivably opine otherwise" 66 that they were
regular employees of Shogun Ships. In any event, it is well-settled in this
jurisdiction that in any controversy between a laborer and his master, doubts
reasonably arising from the evidence are resolved in favor of the laborer. 67
Petitioners were illegally dismissed from
employment.
Having gained regular status, petitioners could only be dismissed for
just or authorized cause after they had been accorded due process. Thus,
the query: Were they dismissed in accordance with law?
It is an established principle that the dismissal of an employee is
justified where there was a just cause and the employee was afforded due
process prior to dismissal. The burden of proof to establish these twin
requirements is on the employer, who must present clear, accurate,
consistent, and convincing evidence to that effect. 68
Here, respondent was unable to discharge the burden of proof required
to establish petitioners' dismissal from employment was legal and valid. The
records also failed to show that respondent afforded petitioners due process
prior to their dismissal, as in fact, they were merely verbally dismissed, and
were thus not served notices informing them of the grounds for which their
dismissal was sought. Clearly, petitioners' dismissal was not carried out in
accordance with law and was, therefore, illegal.
In view therefore of petitioners' illegal dismissal, reinstatement and
payment of backwages must necessarily be made. Petitioners' backwages
must be computed from the time they were unjustly dismissed from
employment on May 1, 2008 up to actual reinstatement.
Petitioners' claims of underpayment of
wages and benefits, damages and
attorney's fees, and solidary liability of
individual respondents Cordero and
Raymundo.
This Court is aware that the Labor Arbiter, in his April 27, 2009
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 Decision, which was affirmed by the NLRC, denied petitioners' claims for
underpayment of wages and benefits. Petitioners' claims for damages and
attorney's fees were similarly denied for lack of merit. A perusal of the Labor
Arbiter's Decision would also show that liability as to payment of petitioners'
full backwages and award for reinstatement rested solely on Shogun Ships,
to the exclusion of herein individual respondents Cordero and Raymundo.
The pertinent portion of the April 27, 2009 Decision of the Labor Arbiter
reads, as follows:
Accordingly, respondent company has to reiterate [sic] complainants
to their former position without loss of their seniority rights with full
backwages from time of dismissal until fully reinstated.
On the money claims, we deny the claims of underpayment of
wages and benefits for lack of factual basis thereof. Likewise[,] the
claim for damages and attorney's fees are likewise denied for lack of
factual basis. 69
Notably, notwithstanding the above findings, the records would bear
that petitioners did not appeal from the April 27, 2009 Decision of the Labor
Arbiter. It was only before this Court that herein petitioners resurrected their
claims for underpayment of wages and benefits, including damages and
attorney's fees. 70
Article 223 of the Labor Code, which sets forth the rules on appeal from
the Labor Arbiter's decision, provides:
ART. 229 (223). Appeal. — Decisions, awards, or orders of
the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders. x x x
Meanwhile, Section 21, Rule V of the 2011 NLRC Rules of Procedure, as
amended, provides: HSAcaE

SECTION 21. FINALITY OF THE DECISION OR ORDER AND

ISSUANCE OF CERTIFICATE OF FINALITY . — (a) Finality of the Decision
or Order of the Labor Arbiter. — If no appeal is filed with the Regional
Arbitration Branch of origin within the time provided under Article 223
(now 229) of the Labor Code, as amended, and Section 1, Rule VI of
these Rules, the decision or order of the Labor Arbiter shall become
final and executory after ten (10) calendar days from receipt thereof
by the counsel or authorized representative or the parties if not
assisted by counsel or representative. (As amended by En Banc
Resolution No. 11-12, Series of 2012)
I n Industrial Management International Development Corporation
(INIMACO) v. National Labor Relations Commission, 71 this Court held that:
It is an elementary principle of procedure that the resolution of
the court in a given issue as embodied in the dispositive part of a
decision or order is the controlling factor as to settlement of rights of
the parties. Once a decision or order becomes final and executory, it
is removed from the power or jurisdiction of the court which rendered
it to further alter or amend it. x x x (Citations omitted)
Thus, parties who do not appeal from a judgment can no longer seek
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 modification or reversal of the same. Considering that petitioners failed to
question the findings of the Labor Arbiter, as even affirmed by the NLRC,
that they are not entitled to their monetary claims consisting of
underpayment of salaries and benefits, and claims for damages and
attorney's fees, including Shogun Ship's exclusive liability for payment of
petitioners' backwages, said findings have therefore long become final and
can no longer be impugned in this action. 72
Since the April 27, 2009 Decision of the Labor Arbiter, insofar as the
unappealed portion of the said Decision is concerned, is already final and
executory against the petitioners, respondents have already acquired vested
rights by virtue of said judgment. "[J]ust as the losing party has the privilege
to file an appeal within the prescribed period, so does the winner also have
the correlative right to enjoy the finality of the decision." 73
Other matters.
Petitioners impute fault on the CA for serving to Atty. Napoleon
Banzuela, petitioners' former counsel, its May 11, 2012 Decision, and not to
petitioners' counsel on record. The Law Firm of Velandrez and Associates,
despite receipt of the Notice of Change in the Composition of the Law Office
on January 26, 2012. 74 On this point, this Court finds that the CA committed
no error when it served to Atty. Banzuela its May 11, 2012 Decision since it
was only on July 17, 2012 that the Court of Appeals received Atty. Banzuela's
Motion to Withdraw as Counsel 75 of petitioners.
In the matter of petitioners' motion to cite respondent for direct
contempt of court for supposedly misrepresenting facts and using insulting
language against petitioners, we find the same unmeritorious. While it is
well-established that contemptuous statements made in pleadings filed with
the court constitute direct contempt, 76 a perusal of respondent's Comment
(to petitioners' Petition) would show that no such contemptuous language
was utilized. Moreover, this Court finds that respondent has not employed
deceitful acts which would serve as basis for the charge of direct contempt.
WHEREFORE, the instant Petition is GRANTED. The May 11, 2012
Decision and November 19, 2012 Resolution of the Court of Appeals in CA-
G.R. SP No. 112075 are REVERSED and SET ASIDE. The August 28, 2009
Decision and October 27, 2009 Resolution of the NLRC, which declared
petitioners Pedrito R. Parayday and Jaime Reboso to have been illegally
dismissed from employment, are REINSTATED and AFFIRMED.
The case is REMANDED to the Labor Arbiter for the purpose of re-
computation of petitioners' full backwages.
SO ORDERED.
Perlas-Bernabe, Inting, Delos Santos and Gaerlan, * JJ., concur.

Footnotes
* Designated as additional member of the Second Division per Special Order No.
2780 dated May 11, 2020.
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 1. Properly referred to as Shogun Ships, Inc. See Articles of Incorporation (Rollo , pp.
187-201).

2. Rollo , pp. 12-60.

3. Id. at 61-74; penned by Associate Justice Vicente S.E. Veloso and concurred in
by Associate Justices Stephen C. Cruz and Myra V. Garcia-Fernandez.
4. Id. at 107-117; penned by Presiding Commissioner Alex A. Lopez and concurred
in by Commissioners Gregorio O. Bilog III and Pablo C. Espiritu, Jr.

5. Id. at 119-120.
6. Id. at 365.

7. CA rollo, pp. 88-89 and 91.

8. See note 1.

9. CA rollo, p. 84.

10. Id. at 173.

11. Id. at 90.

12. Id. at 96-99.

13. Id. at 124-128.

14. Id. at 122-123.

15. Id. at 54-58.

16. Id. at 57-58.

17. Id. at 174-193.

18. Rollo , pp. 107-117.

19. Id. at 116.

20. CA rollo, pp. 3-30.

21. Id. at 236-272.

22. Id. at 273.

23. Id. at 281-316.

24. Rollo , pp. 61-74.

25. Id. at 74.

26. Id. at 73.

27. CA rollo, pp. 347-360.

28. Rollo , p. 406.

29. Legend Hotel (Manila) v. Realuyo, 691 Phil. 226, 236 (2012).

30. PCL Shipping Philippines, Inc. v. National Labor Relations Commission , 540 Phil.
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 65, 74-75 (2006).

31. Reyes v. Glaucoma Research Foundation, Inc. , 760 Phil. 779, 790 (2015).
32. Concept Builders, Inc. v. National Labor Relations Commission , 326 Phil. 955,
964 (1996).

33. Dimson v. Chua , 801 Phil. 778, 787 (2016).

34. 646 Phil. 210 (2010).

35. Id. at 234.

36. Id.

37. Pacific Rehouse Corporation v. Court of Appeals, 730 Phil. 325, 344 (2014).

38. CA rollo, pp. 84-87.

39. 446 Phil. 404, 413 (2003).

40. 327 Phil. 472, 489 (1996).

41. Rollo , pp. 70-71.

42. David v. Macasio, 738 Phil. 293, 307 (2014).

43. Abante Jr. v. Lamadrid Bearing & Parts Corporation, 474 Phil. 415, 427 (2004).
44. Philippine Fuji Xerox Corp. v. National Labor Relations Commission , 324 Phil.
553, 561 (1996).

45. Coca-Cola Bottlers Phils., Inc. v. National Labor Relations Commission, 366 Phil.
581, 590 (1999), citing Singer Sewing Machine Company v. Drilon, 271 Phil.
282, 291 (1991). See also Purefoods Corporation (now San Miguel Purefoods
Co., Inc.) v. National Labor Relations Commission, 592 Phil. 144, 150-151
(2008).

46. Lopez v. Bodega City, 558 Phil. 666, 674 (2007).

47. Reyes v. Glaucoma Research Foundation, Inc. , supra note 31 at 789.

48. Tenazas v. R. Villegas Taxi Transport, 731 Phil. 217, 230 (2014).

49. Javier v. Fly Ace Corporation, 682 Phil. 359, 369 (2012). See also Reyes v.
Glaucoma Research Foundation, Inc., supra note 31 at 790.
50. Functional, Inc. v. Granfil, 676 Phil. 279, 287 (2011).

51. Valencia v. Classique Vinyl Products Corporation, 804 Phil. 492, 504 (2017).
52. CA rollo, p. 173.

53. Id. at 90.

54. Id. at 96-99.

55. RULES OF COURT, Rule 132, Sec. 20.

56. 339 Phil. 242, 250-251 (1997).

57. Rollo , p. 427.
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 58. 2011 NLRC RULES OF PROCEDURE, AS AMENDED, Rule 1, Sec. 3.

59. Traders Royal Bank v. National Labor Relations Commission , 378 Phil. 1081,
1087 (1999).
60. Dy Keh Beng v. International Labor and Marine Union of the Philippines, 179
Phil. 131, 137 (1979).

61. Id. at 136-137.

62. University of Santo Tomas v. Samahang Manggagawa ng UST, 809 Phil. 212,
221 (2017).

63. Fuji Television Network, Inc. v. Espiritu, 749 Phil. 388, 439 (2014), citing Price
v. Innodata Phils., Inc./Innodata Corp., 588 Phil. 568, 580 (2008).
64. See Omni Hauling Services, Inc. v. Bon , 742 Phil. 335, 346 (2014).

65. University of Santo Tomas v. Samahang Manggagawa ng UST, supra note 62 at

62-63, citing Universal Robina Corporation v. Catapang, 509 Phil. 765, 779
(2005).
66. Distribution & Control Products, Inc. v. Santos, G.R. No. 212616, July 10, 2017,
830 SCRA 452, 460, citing Agusan del Norte Electric Cooperative, Inc. v.
Cagampang, 589 Phil. 306, 313 (2008).
67. Masing and Sons Development Corporation v. Rogelio, 670 Phil. 120, 133
(2011).
68. Allied Banking Corporation now merged with Philippine National Bank v.
Calumpang, G.R. No. 219435, January 17, 2018.
69. CA rollo, p. 57.
70. Rollo , pp. 25-32 and 58.

71. 387 Phil. 659, 667 (2000).

72. Silliman University v. Fontelo-Paalan, 552 Phil. 808, 817 (2007).

73. Id. at 818.

74. CA rollo, pp. 339-343.

75. Id. at 370.

76. Ante v. Pascua , 245 Phil. 745, 747 (1988).

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