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Republic of the Philippines SUPREME COURT Manila G.R. No.

L-31341 March 31, 1976 PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION (PALEA) and PHILIPPINE AIR LINES SUPERVISORS' ASSOCIATION (PALSA), petitioners, vs. PHILIPPINE AIR INES, INC., respondent. G.R. No. L-31341-43 March 31, 1976 PHILIPPINE AIR LINES, INC., petitioner, vs. PHILIPPINE AIR LINES EMPLOYEES' ASSOCIATION, PHILIPPINE AIR LINES SUPERVISORS' ASSOCIATION, and the COURT OF INDUSTRIAL RELATIONS, respondents. Siguion Reyna, Montecillo, Belo & Ongsiako for Philippines Air lines, Inc. Laquihon & Legayada for Philippine Air Lines Supervisors' Association (PALEA). MAKASIAR, J.: Before US are consolidated petitions to review the Court of industrial Relations en banc resolution dated October 9, 1969 in CIR Case No. 43-IPA. In G.R. No. L-31341 (PALEA vs. PAL), petitioners question the date of effectivity of the adjudicated pay differentials due to the monthly-salaried employees of Philippine Air Lines, Inc. In G.R. No. L-31343 (PAL vs. PALEA), petitioner assails the reversal by the Court of Industrial Relations of its earlier resolution on the method employed by the Philippine Air Lines in computing the basic daily and hourly rate of its monthly salaried employees. On February 14, 1963, the Philippine Air Lines Employees' Association (PALEA) and the Philippine Air Lines Supervisors' Association (PALSA) petitioners in G.R. No. L-31341 and respondents in G.R. No. 31343 commenced an action against the Philippine Air Lines (PAL) in the Court of Industrial Relations, praying that PAL be ordered to revise its method of computing the basic daily and hourly rate of its monthly salaried employees, and necessarily, to pay them their accrued sala differentials. Sought to be revised is PAL's formula in computing wages of its employees: Monthly salary x 12 365 (No. of calendar = x (Basic dailr rate) days in a year) x 8 = Basic hourly rate The unions would like PAL to modify the above formula in this wise: Monthly salary x 12 No. of actual working = x (Basic daily rate) days x 8 = Basic hourly rate On May 23, 1964, the Court of Industrial Relations, through Presiding Judge Jose S. Bautista, issued an order denying the unions' prayer for a modified wage formula. Pertinent portion of the order reads: On the issue of rate of pay, PALSA and PALEA seek to change the long standing method in PAL of computing the basic daily and hourly rate of monthly salaried employees for the purpose of determining overtime pay, Sunday and legal holiday premium pay, night differential pay, vacation and sick leave pay, to wit, the monthly salary multiplied by 12 and dividing the product thereof by 365 and then the quotient by 8. PALEA and PALSA claim that the method of computing the basic daily and hourly rate of monthly salaried employees of PAL prior to the implementation of the 40-hour week schedule in PAL should be by dividing the monthly salary by 26 working days, and after the 40-hour week schedule, by dividing the monthly salary by 20 working days, and then dividing the quotient thereof in each case by 8. From the records, however, it appears that for may years since 1952, and even previously, PAL has been consistently and regularly determining the basic and hourly rates of monthly salaried employees by multiplying the monthly salary by 12 momths and dividing the product by 365 days to arive at the basic daily rate, and dividing the quotient by 8 to compute the basic hourly rate. There has been no attempt to revise this formula notwithstanding the various negotiations PAL and with the unions ever since its operations, and it was only on July 18, 1962, when PALSA, for the first time, proposed that it be changed in accordance with what is now alleged in the petition. This, however, was a mere proposal by PALSA for the adoption of a new formula; it was not a demand for the application of a

formula claimed to be correct under the law. Under this circumstance, PALSA and PALEA are estopped from questioning the correctness and propriety of PAL's method of determining the basic hourly and daily rate of pay of its monthly salaried personnel, and considering the long period of time that elapsed before they brought their petition, are barred from insisting or demanding a different rate of pay formula. xxx xxx xxx Upon the foregoing, the Court, therefore, declares PAL's method of computing the basic daily and hourly rate of its monthly salaried employees as legal and proper, and denies the petition of PALSA and PALEA. xxx xxx xxx (pp. 47-48, 49, rec. G.R. No. L-31343). On May 30, 1964, complaining unions promptly moved for the reconsideration of the above-sais order (p. 51, rec. G.R. No. L-31343). On June 9, 1964, the unions filed their memorandum in support of their motion for reconsideration alleging that the questioned order is (a) contrary to law, and (b) contrary to evidence adduced during the trial (p. 53, ree G.R. No. L-31343). The unions attributed error to PAL's wage formula, particularly in the use of 365 days as divisor. The unions contended that the use of 365 days as divisor would necessarily include off-days which, under the terms of the collective bargaining agreements entered into between the parties, were not paid days. This is so since for work done on an off-day, an employee was paid 100% plus 25%, or 100% plus 37- of his regular working hour rate. On the issue of prescription, the unions pointed out: With respect to the period of prescription, it is clear that since the claim arises from the written contracts or collective bargaining agreements between the petitioner unions and the PAL, the action thereon prescribes in ten years from the time the right of action accrues, in accordance with Article 1144 of the New Civil Code. .... (p. 68, rec., G.R. No. L-31343). On June 26, 1964, the Philippine Air Lines answered point by point the unions' memorandum, in a prompt reply. On October 9, 1969, the Court of Industrial Relations, through Presiding Judge Arsenio I. Martinez, ordered the reversal of its decision dated May 34, 1964 and sustained the unions' method of age computation. The industrial court, however, ordered the computation of pay differentials in accordance with the sustained method of computation effective only July 1, 1957. Said the Court of Industrial Relations in this regard: ... In this connection, however, it will be noted as previously stated, that this case was considered as an incident of Case No. 39-IPA, in which the issues involved were related to the respondent PAL of the 40-Hour Week Law (Rep. Act 1880) from the date of its effectivity July 1, 1957. ... This Cout therefore belives that in justice and equity and substantial merits of the case, the aforesaid pay differentials due to the employees involved herein by the application of the correct methods of computation of the rate of pay should be paid by the respondent also beginning July 1, 1957 (p. 117, rec., G.R. No. L-31343). From the above resolution, both parties appealed to this COURT. The Philippine Air Lines filed its appeal petition on December 13, 1969, while PALEA filed its petition for review on certiorari on January 3, 1970. I For easy comprehension, WE start with the Philippine Air Lines, Inc. versus Philippine Air Lines Employees Association, Philippine Air Lines Supervisors Association, and the Court of Industrial Relations, G.R. No. L-31343. In this appeal PAL emphasizes three assignments of error, to wit: 1. RESPONDENT CIR ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN HOLDING THAT THE METHOD OF COMPUTATION USED BY PAL IN DETERMINING TIIE BASIC DAILY OR HOURLY RATE OF ITS MONTLY SALARIED EMPLOYEES WHICH IS: MONTHLY SALARY x 1 365 (NO. OF CALENDAR DAYS IN YEAR) = x (BASIC DAILY RATE) x 8 = BASIC HOURLY RATE 8 IS NOT CORRECT, CONSIDERING THAT PAL, A PUBLIC UTILITY WHERE THERE IS WORK EVERYDAY OF THE WEEK FOR MANY YEARS EVEN BEFORE REPUBLIC ACT 602 AND WITH THE CONSENT AND APPROVAL OF THE EMPLOYEES, CONSISTENT WITH SECTION 19 OF

REPUBLIC ACT 602 PROHIBITING REDUCTION OF WAGES FOR OFF DAYS-WHICH WAS SUSTAINED BY THIS HONORABLE COURT IN AUTOMOTIVE PARTS & EQUIPMENT CO., INC. VS. JOSE B. LINGAD, G.R. NO. L- 26406, OCTOBER 31, 1969 HAS BEEN TREATING OFFSITE DAYS, 11 AS SATURDAYS, SUNDAYS, COMPANY OBSERVED HOLIDAYS OR ANY OTHER DESIGNATED HOLIDAYS AS PAID DAYS. 2. RESPONDENT CIR ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN NOT FINDING. THAT RESPONDENT UNIONS, BY THEIR LONG PERIOD OF CONSENT, ACQUIESCENCE, INACTION AND ACCEPTANCE OF BENEFITS THEREUNDER, ARE ESTOPPED AND BARRED FROM CLAIMING THAT PAL'S FORMULA FOR DETERMINING THE BASIC DAILY AND HOURLY RATE OF PAY IS INCORRECT. 3. RESPONDENT CIR ERED AND ACTED IN EXCESS OF ITS JURISDICTION IN SENTENCING PAL TO PAY DIFFERENTIALS FOR OVERTIME WORK, NIGHTWORK, HOLIDAY AND SUNDAY PAY FROM JULY 1, 1957 CONSIDERING THAT UNDER THE THREE-YEAR PRESCRIPTIVE PERIOD PROVIDED IN SECTION 7-a OF COMMONWEALTH ACT NO. 444, AS AMENDED, THE EIGHT-HOUR LABOR LAW, RESPONDENT UNIONS, ASSUMING THEY HAD ANY CAUSE OF ACTION, COULD RECOVER ONLY FROM FEBRUARY 14, 1960 UP TO THE PRESENT, SINCE RESPONDENT UNIONS FILED THEIR ACTION ONLY ON FEBRUARY 14, 1963. A PAL's maiden argument has a strong tendency to mislead. In an effort to emphasize that off-days are paid and therefore should be reckoned with in determing the divisor for computing daily and hourly rate, PAL leans heavily on what it considers as additional payment of 125% or 137 %, as the case may be, of an employee's basic hourly rate, given to a worker who worked on his off-days. PAL would like us to believe that the word "Additional" all but accentuates the existence of a regular basic rate; otherwise, the 125% or 137% shall be in addition to what? The industrial court, however, had this to say: Moreover, it will be noted that before September 4, 1961, a monthly salaried employee of PAL had to work 304 days only in a year,a nd after said date, he had to work only 258 days in ayear, to be entitled to his equivalent yearly salary. When he worked on his off-day, he was paid accordingly (125% or 137%), indicating that his off-days were not with pay. It seems illogical for said employe to be paid 125% or 137 % of his basic daily rate, if such off-days are already wtih pay, as indicated by the company (p. 107, rec., G.R. No. L-31343, emphasis supplied). WE agree. There should hardly be any doubt that off-days are not paid days, Precisely, off-days are rest days for the worker. He is not required to work on such days. This finds support not only in the basic principle in labor that the basis of remuneration or compensation is actual service rendered, but in the ever pervading labor spirit aimed at humanizing the conditions of hie working man. Since during his off-days an employee is not compelled to work he cannot, conversely, demand for his corresponding pay. If, however, a worker works on his off-day, our welfare laws duly reward him with a premium higher than what he would receive when he works on his regular working day. Such being the case, the divisor in computing an employee's basic daily rate should be the actual working days in a yar The number of off-days are not to be counted precisely because on such off-days, an employee is not required to work. Simple common sense dictates that should an employee opt not to work which he can legally do on an off-day, and for such he gets no pay, he would be unduly robbed of a portion of his legitimate pay if and when in computing his basic daily and hourly rate, such off-day is deemed subsumed by the divisor. For it is elementary in the fundamental process of division that with a constant dividend, the bigger your divisor is, the smaller our quotient will be. It bears emphasis that OUR view above constitutes the rationale behind the landmark ruling, surprisingly, by the same trial Judge Jose S. Bautista of the Court of Industrial Relations, in National Waterworks and Sewerage Authority vs. NWSA Consolidated Unions, et al., (G.R. No. L-18938, August 31, 1964, 11 SCRA 766, 793-794), to which decision WE gave OUR affirmance. PAL maintains that the NAWASA doctrine should not apply to a public utility like PAL which, from the nature of its operations, requires a whole-year-round, uninterrupted work by personnel. What PAL apparently forgets is that just like it, NAWASA is also a public utility which likewise requires its workers to work the

whole year round. Moreover, the NAWASA is a government-owned corporation to which PAL is akin, it being a government-controlled corporation. As will later be stated herein, PAL inked with the representative unions of the employees collective bargaining agreements wherein it bound itself to duly compensate employer working on their off-days. The same situation obtained in the NAWASA case, wherein WE held: And in the collective bargaining agreement entered into between the NAWASA and respondent unions it was agreed that all existing benefits enjoyed by the employees and laborers prior to its effectivity shall remain in force and shall form part of the agreement, among which certainly is the 25% additional compensation for work on Sundays and legal holidays theretofore enjoyed by said laborers and employees. It may, therefore, be said that while under Commonwealth Act No. 444 a public utility is not required to pay additional compensation to its employees and workers for work done on Sundays and legal holidays, there is, however, no prohibition ofr it to pay such additional compensation if it voluntarily agrees to do so. The NAWASA committed itself to pay this additional compensation. It must pay not because of compulsion of law but because of contractual obligation (11 SCRA 766, 776). The settled NAWASA doctrine should not be disturbed. B PAL also vigorously argues that the unions' longstanding silence with respect, and acquiescence, to PAL's method of computation has placed them in estoppel to impugn the correctness of the questioned wage formula. PAL furthermore contends that laches has likewise set in precisely because of stich long-standing inaction. Our jurisprudence on estoppel is, however, to the effect that: ... (I)t is meet to recall that "mere innocent silence will not work estoppel. There must also be some element of turpitude or neglignece connected with the silence by which another is misled to his injury" (Civil Code of the philippines by Tolentino, Vol. IV, p. 600) ... [Beronilla vs. GSISK, G.R. No. L-21723, Nov. 26, 1970, 36 SCRA 44, 46, 55, emphasis supplied]. In the case befor US, it is not denied that PAL's formula of determining daily and hourly rate of pay has been decided and adopted by it unilaterally without the knowedge and express consent of the employees. It was only later on that the employees came to know of the formula's irregularity and its being violative of the collective bargaining agreements previously executed by PAL and the unions. Precisely, PALSA immediately proposed that PAL and the unions. Precisely, PALSA immediately proposed that PAL use the correct method of computation, which proposa PAL chose to ignore. Clearly, therefore, the alleged long-standing silence by the PAL employees is in truth and in fact innocent silence, which cannot place a party in estoppel. The rationale for this is not difficult to see. The doctrine of estoppel had its origin in equity. As such, its applicability depends, to a large extent, on the circumstances surrounding a particular case. Where, therefore, the neglect or omission alleged to haveplaced a party in estoppel cannot be invoked. This was the essence of OUR ruling in the case of Mirasol vs. Municipality of Tabaco (43 Phil. 610, 614). And this, in quintessence, was the compelling reason why in Lodovica vs. Court of Appeals (L-29678, July 18, 1975, 65 SCRA 154, 158), WE held that a party who had no knowledge of or gave no consent to a transaction may not be estopped by it. Furthermore, jurisprudence likewise fortifies the position that in the interest of public policy, estoppel and laches cannot arrest recover of evertime compensation. The case of Manila Terminal Co. vs. CIR (G.R. NO. L9265, April 29, 1957, 91 Phil. 625), is squarely in point. In this case We intoned. The principle of estoppel and laches cannot well be invoked agains the Association. In the first place, it would be contrary to the spirit of the Eight-Hour Labor Law, under which, as already seen, the laborers cannot waive their right to extra compensation. In the second place, the law principally obligates the employer to observe it, as much so that it punishes the employer for its employer for its violation and leaves the employee or laborer is in such a disadvantageous position as to be naturally reluctant or even apprehensive in asserting any claim which may cause the employher to devise a way for exercising his right to terminate the employment. If the principle of estoppel and laches is to be applied, it may bring about a situation, whereby the employee or laborer, who cannot expressly renounce their right to extra compensation under the Eight-Hour Labor Law, may be compelled to accomplish the same

thing by mere silence or lapse of time, thereby frustrating the purpose of the law by indirection (91 Phil. 625, 633, emphasis supplied). In another count, the unilateral adoption by PAL of an irregular wage formula being an act against public policy, the doctrine of estoppel cannot give validity to the same (Auyong Hian vs. Court of Tax Appeals, 59 SCRA 110, 112). II G.R. No. L-31341 is an appeal from that portion of the en banc resolution of the Court of Industrial Relations dated October 9, 1969 in case 43-IPA making the payment of the adjudicated pay differentials effective only from July 1, 1957. In their lone assignment of error, February 14, 1953, or ten (10) years from the date of the filing of their original complaint; because the claim for pay differentials is based on written contracts i.e., the collective bargaining agreements between PAL and the employees' representative uniuons and under Article 1144(1) of the Civil Code, actions based on written contracts prescribe in ten (10) years. PAL, on the other hand, maintains that the employees' claim for pay differential is"an action to enforce a cause of action under the Eight-Hour Labor Law (CA No. 444, as amended): (p. 592, rec., G.R. No. L-31341). As such, the applicable provision is Section 7-a of CA No. 4444, which reads: Sec. 7-a. Any action to enforce any cause of action under this Act shall be commenced within three years after the cause of action accrued, otherwise such action shall be forever barred; provided, however, that actions already commenced before the effecitve date of this Act shall not be affected by the period herein prescribed (As amended by Rep. Act No. 1993, approved June 22, 1957, emphasis supplied). Moreover, PAL argues that even assuming that the issue calls for the application of Article 1144(1) of the New Civil Code, a general law, still in case of conflict, Commonwealth ACt No. 444, as amended, should prevail because the latter is a special law. WE believe that the present case calls for the application of the Civil Code provisions on the prescriptive period in the filing of actions based on written contracts. The rason should be fairly obvious. Petitioners' claim fundamentally involves the strict compliance by PAL of the pvosions on wage computation embodied in the collective bargaining agreements inked between it and the employees representative unions. These collective bargaining agreements were: the PAS-PALEA collective bargaining agreement of 1952-53; the PALPALEA collective bargaining agreement of 1956-59; the PAL-PALEA collective bargaining agreement of 195961 (with Article VI as supplement); the PAL-PALEA agreement of September 4, 1961; the PAL-ACAP collective bargaining agreement of 1952-54; the PAL-ACAP collective bargaining agreement of September 6, 1955; the PAL-ACAP collective bargaining agreement of 1959-61; the PAL-PALSA collective bargaining agreement of 1959-62; and the supplementary PAL-PALSA collective bargaining agreement (pp. 54-55, rec., G.R. No. L31343). The three-year prescribed period fixed in the Eight-Hour Labor Law (CA No. 444, as amended) will apply, if the claim for differentials for overtime work is solely based on said law, and not on a collective bargaining agreement or any other contract. In the instant cases, the claim for overtime compensation is not so much because of Commonwealth Act No. 444, as amended, but because the claim is a demandable right of the employees, by reason of the above-mentioned collective bargaining agreements. That is precisely why petitioners did not make any reference as to the computation for overtime work under the Eight-Hour Labor Law (Secs. 3 and 4, CA No. 444), and instead inissited that work computation provided in the collective bargaining agreements between the parties be observed. Since the claim for pay differentials is principally anchored on the written contracts between the litigants, the ten-year prescriptive period between the litigants, the ten-year prescriptive period provided by Art. 1144(1) of the New Civil Code should govern. (General Insurance and Surety Corp. vs. Republic, L-13873, January 31, 1963, 7 SCRA 4; Heirs of the Deceased Juan Sindiong vs. Committee on Burnt Areas and Improvements of Cebu, L-15975, April 30, 1964, 10 SCRA 715; Conde vs. Cuenca and Malaga, L-9405, July 31, 1956; Veluz vs. Veluz, L-23261, July 31, 1968, 24 SCRA 559). Finally, granting arguendo that there is doubt as to what labor legislation to apply to the grievances of the employees in the cases at bar, it is OUR view that that legislation which would enhance the plight of the workers should be followed, consonant with the express pronouncement of the New Civil Code that: In case of doubt, all labor legislation and labor contracts should be construed in favor of the safety and decent living of the laborer (Article 1702).

WHEREFORE, THE APPEALED RESOLUTION IS HEREBY AFFIRMED, WITH THE MODIFICATION THAT PAY DIFFERENTIALS BE PAID EFFECTIVE FEBRUARY 14, 1953. WITH COSTS AGAINST PHILIPPINE AIR LINES, INC. IN BOTH CASES. Teehankee (Chairman), Esguerra, Muoz Palma and Martin, JJ., concur. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 146667 January 23, 2007 JOHN F. McLEOD, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (First Division), FILIPINAS SYNTHETIC FIBER CORPORATION (FILSYN), FAR EASTERN TEXTILE MILLS, INC., STA. ROSA TEXTILES, INC., (PEGGY MILLS, INC.), PATRICIO L. LIM, and ERIC HU, Respondents. DECISION CARPIO, J.: The Case This is a petition for review1 to set aside the Decision2 dated 15 June 2000 and the Resolution3 dated 27 December 2000 of the Court of Appeals in CA-G.R. SP No. 55130. The Court of Appeals affirmed with modification the 29 December 1998 Decision4 of the National Labor Relations Commission (NLRC) in NLRC NCR 02-00949-95. The Facts The facts, as summarized by the Labor Arbiter and adopted by the NLRC and the Court of Appeals, are as follows: On February 2, 1995, John F. McLeod filed a complaint for retirement benefits, vacation and sick leave benefits, non-payment of unused airline tickets, holiday pay, underpayment of salary and 13th month pay, moral and exemplary damages, attorneys fees plus interest against Filipinas Synthetic Corporation (Filsyn), Far Eastern Textile Mills, Inc., Sta. Rosa Textiles, Inc., Patricio Lim and Eric Hu. In his Position Paper, complainant alleged that he is an expert in textile manufacturing process; that as early as 1956 he was hired as the Assistant Spinning Manager of Universal Textiles, Inc. (UTEX); that he was promoted to Senior Manager and worked for UTEX till 1980 under its President, respondent Patricio Lim; that in 1978 Patricio Lim formed Peggy Mills, Inc. with respondent Filsyn having controlling interest; that complainant was absorbed by Peggy Mills as its Vice President and Plant Manager of the plant at Sta. Rosa, Laguna; that at the time of his retirement complainant was receiving P60,000.00 monthly with vacation and sick leave benefits; 13th month pay, holiday pay and two round trip business class tickets on a ManilaLondon-Manila itinerary every three years which is convertible to cas[h] if unused; that in January 1986, respondents failed to pay vacation and leave credits and requested complainant to wait as it was short of funds but the same remain unpaid at present; that complainant is entitled to such benefit as per CBA provision (Annex "A"); that respondents likewise failed to pay complainants holiday pay up to the present; that complainant is entitled to such benefits as per CBA provision (Annex "B"); that in 1989 the plant union staged a strike and in 1993 was found guilty of staging an illegal strike; that from 1989 to 1992 complainant was entitled to 4 round trip business class plane tickets on a Manila-London-Manila itinerary but this benefit not (sic) its monetary equivalent was not given; that on August 1990 the respondents reduced complainants monthly salary of P60,000.00 by P9,900.00 till November 1993 or a period of 39 months; that in 1991 Filsyn sold Peggy Mills, Inc. to Far Eastern Textile Mills, Inc. as per agreement (Annex "D") and this was renamed as Sta. Rosa Textile with Patricio Lim as Chairman and President; that complainant worked for Sta. Rosa until November 30 that from time to time the owners of Far Eastern consulted with complainant on technical aspects of reoperation of the plant as per correspondence (Annexes "D-1" and "D-2"); that when complainant reached and applied retirement age at the end of 1993, he was only given a reduced 13th month pay of P44,183.63, leaving a balance of P15,816.87; that thereafter the owners of Far Eastern Textiles decided for cessation of operations of Sta. Rosa Textiles; that on two occasions, complainant wrote letters (Annexes "E-1" to "E-2") to Patricio Lim requesting for his retirement and other benefits; that in the last quarter of 1994 respondents offered complainant compromise settlement of only P300,000.00 which complainant rejected;

that again complainant wrote a letter (Annex "F") reiterating his demand for full payment of all benefits and to no avail, hence this complaint; and that he is entitled to all his money claims pursuant to law. On the other hand, respondents in their Position Paper alleged that complainant was the former VicePresident and Plant Manager of Peggy Mills, Inc.; that he was hired in June 1980 and Peggy Mills closed operations due to irreversible losses at the end of July 1992 but the corporation still exists at present; that its assets were acquired by Sta. Rosa Textile Corporation which was established in April 1992 but still remains non-operational at present; that complainant was hired as consultant by Sta. Rosa Textile in November 1992 but he resigned on November 30, 1993; that Filsyn and Far Eastern Textiles are separate legal entities and have no employer relationship with complainant; that respondent Patricio Lim is the President and Board Chairman of Sta. Rosa Textile Corporation; that respondent Eric Hu is a Taiwanese and is Director of Sta. Rosa Textiles, Inc.; that complainant has no cause of action against Filsyn, Far Eastern Textile Ltd., Sta. Rosa Textile Corporation and Eric Hu; that Sta. Rosa only acquired the assets and not the liabilities of Peggy Mills, Inc.; that Patricio Lim was only impleaded as Board Chairman of Sta. Rosa Textile and not as private individual; that while complainant was Vice President and Plant Manager of Peggy Mills, the union staged a strike up to July 1992 resulting in closure of operations due to irreversible losses as per Notice (Annex "1"); that complainant was relied upon to settle the labor problem but due to his lack of attention and absence the strike continued resulting in closure of the company; and losses to Sta. Rosa which acquired its assets as per their financial statements (Annexes "2" and "3"); that the attendance records of complainant from April 1992 to November 1993 (Annexes "4" and "5") show that he was either absent or worked at most two hours a day; that Sta. Rosa and Peggy Mills are interposing counterclaims for damages in the total amount of P36,757.00 against complainant; that complainants monthly salary at Peggy Mills was P50,495.00 and not P60,000.00; that Peggy Mills, does not have a retirement program; that whatever amount complainant is entitled should be offset with the counterclaims; that complainant worked only for 12 years from 1980 to 1992; that complainant was only hired as a consultant and not an employee by Sta. Rosa Textile; that complainants attendance record of absence and two hours daily work during the period of the strike wipes out any vacation/sick leave he may have accumulated; that there is no basis for complainants claim of two (2) business class airline tickets; that complainants pay already included the holiday pay; that he is entitled to holiday pay as consultant by Sta. Rosa; that he has waived this benefit in his 12 years of work with Peggy Mills; that he is not entitled to 13th month pay as consultant; and that he is not entitled to moral and exemplary damages and attorneys fees. In his Reply, complainant alleged that all respondents being one and the same entities are solidarily liable for all salaries and benefits and complainant is entitled to; that all respondents have the same address at 12/F B.A. Lepanto Building, Makati City; that their counsel holds office in the same address; that all respondents have the same offices and key personnel such as Patricio Lim and Eric Hu; that respondents Position Paper is verified by Marialen C. Corpuz who knows all the corporate officers of all respondents; that the veil of corporate fiction may be pierced if it is used as a shield to perpetuate fraud and confuse legitimate issues; that complainant never accepted the change in his position from Vice-President and Plant Manger to consultant and it is incumbent upon respondents to prove that he was only a consultant; that the Deed of Dation in Payment with Lease (Annex "C") proves that Sta. Rosa took over the assets of Peggy Mills as early as June 15, 1992 and not 1995 as alleged by respondents; that complainant never resigned from his job but applied for retirement as per letters (Annexes "E-1", "E-2" and "F"); that documents "G", "H" and "I" show that Eric Hu is a top official of Peggy Mills that the closure of Peggy Mills cannot be the fault of complainant; that the strike was staged on the issue of CBA negotiations which is not part of the usual duties and responsibilities as Plant Manager; that complainant is a British national and is prohibited by law in engaging in union activities; that as per Resolution (Annex "3") of the NLRC in the proper case, complainant testified in favor of management; that the alleged attendance record of complainant was lifted from the logbook of a security agency and is hearsay evidence; that in the other attendance record it shows that complainant was reporting daily and even on Saturdays; that his limited hours was due to the strike and cessation of operations; that as plant manager complainant was on call 24 hours a day; that respondents must pay complainant the unpaid portion of his salaries and his retirement benefits that cash voucher No. 17015 (Annex "K") shows that complainant drew the monthly salary of P60,000.00 which was reduced to P50,495.00 in August 1990 and therefore without the consent of complainant; that complainant was assured that he will be paid the deduction as soon as the company improved its financial standing but this assurance was never fulfilled; that Patricio Lim promised complainant his retirement pay as per the latters letters (Annexes "E-1", "E-2" and "F"); that the law itself provides for retirement benefits; that Patricio Lim by way of Memorandum (Annex "M") approved vacation

and sick leave benefits of 22 days per year effective 1986; that Peggy Mills required monthly paid employees to sign an acknowledgement that their monthly compensation includes holiday pay; that complainant was not made to sign this undertaking precisely because he is entitled to holiday pay over and above his monthly pay; that the company paid for complainants two (2) round trip tickets to London in 1983 and 1986 as reflected in the complainants passport (Annex "N"); that respondents claim that complainant is not entitled to 13th month pay but paid in 1993 and all the past 13 years; that complainant is entitled to moral and exemplary damages and attorneys fees; that all doubts must be resolved in favor of complainant; and that complainant reserved the right to file perjury cases against those concerned. In their Reply, respondents alleged that except for Peggy Mills, the other respondents are not proper persons in interest due to the lack of employer-employee relationship between them and complainant; that undersigned counsel does not represent Peggy Mills, Inc. In a separate Position Paper, respondent Peggy Mills alleged that complainant was hired on February 10, 1991 as per Board Minutes (Annex "A"); that on August 19, 1987, the workers staged an illegal strike causing cessation of operations on July 21, 1992; that respondent filed a Notice of Closure with the DOLE (Annex "B"); that all employees were given separation pay except for complainant whose task was extended to December 31, 1992 to wind up the affairs of the company as per vouchers (Annexes "C" and "C-1"); that respondent offered complainant his retirement benefits under RA 7641 but complainant refused; that the regular salaries of complainant from closure up to December 31, 1992 have offset whatever vacation and sick leaves he accumulated; that his claim for unused plane tickets from 1989 to 1992 has no policy basis, the companys formula of employees monthly rate x 314 days over 12 months already included holiday pay; that complainants unpaid portion of the 13th month pay in 1993 has no basis because he was only an employee up to December 31, 1992; that the 13th month pay was based on his last salary; and that complainant is not entitled to damages.5 On 3 April 1998, the Labor Arbiter rendered his decision with the following dispositive portion: WHEREFORE, premises considered, We hold all respondents as jointly and solidarily liable for complainants money claims as adjudicated above and computed below as follows: Retirement Benefits (one month salary for every year of service) 6/80 - 11/30/93 = 14 years P60,000 x 14.0 mos. P840,000.00 Vacation and Sick Leave (3 yrs.) P2,000.00 x 22 days x 3 yrs. 132,000.00 Underpayment of Salaries (3 yrs.) P60,000 - P50,495 = P9,505 P 9,505 x 36.0 mos. ... 342,180.00 Holiday Pay (3 yrs.) P2,000 x 30 days . 60,000.00 Underpayment of 13th month pay (1993) ... 15,816.87 Moral Damages .. 3,000,000.00 Exemplary Damages .. 1,000,000.00 10% Attorneys Fees . 138,999.68 TOTAL P5,528,996.55 Unused Airline Tickets (3 yrs.) (To be converted in Peso upon payment) $2,450.00 x 3.0 [yrs.].. $7,350.00 SO ORDERED.6 Filipinas Synthetic Fiber Corporation (Filsyn), Far Eastern Textile Mills, Inc. (FETMI), Sta. Rosa Textiles, Inc. (SRTI), Patricio L. Lim (Patricio), and Eric Hu appealed to the NLRC. The NLRC rendered its decision on 29 December 1998, thus: WHEREFORE, the Decision dated 3 April 1998 is hereby REVERSED and SET ASIDE and a new one is entered ORDERING respondent Peggy Mills, Inc. to pay complainant his retirement pay equivalent to 22.5 days for every year of service for his twelve (12) years of service from 1980 to 1992 based on a salary rate of P50,495.00 a month. All other claims are DISMISSED for lack of merit. SO ORDERED.7

John F. McLeod (McLeod) filed a motion for reconsideration which the NLRC denied in its Resolution of 30 June 1999.8 McLeod thus filed a petition for certiorari before the Court of Appeals assailing the decision and resolution of the NLRC.9 The Ruling of the Court of Appeals On 15 June 2000, the Court of Appeals rendered judgment as follows: WHEREFORE, the decision dated December 29, 1998 of the NLRC is hereby AFFIRMED with the MODIFICATION that respondent Patricio Lim is jointly and solidarily liable with Peggy Mills, Inc., to pay the following amounts to petitioner John F. McLeod: 1. retirement pay equivalent to 22.5 days for every year of service for his twelve (12) years of service from 1980 to 1992 based on a salary rate of P50,495, a month; 2. moral damages in the amount of one hundred thousand (P100,000.00) Pesos; 3. exemplary damages in the amount of fifty thousand (P50,000.00) Pesos; and 4. attorneys fees equivalent to 10% of the total award. No costs is awarded. SO ORDERED.10 The Court of Appeals rejected McLeods theory that all respondent corporations are the same corporate entity which should be held solidarily liable for the payment of his monetary claims. The Court of Appeals ruled that the fact that (1) all respondent corporations have the same address; (2) all were represented by the same counsel, Atty. Isidro S. Escano; (3) Atty. Escano holds office at respondent corporations address; and (4) all respondent corporations have common officers and key personnel, would not justify the application of the doctrine of piercing the veil of corporate fiction. The Court of Appeals held that there should be clear and convincing evidence that SRTI, FETMI, and Filsyn were being used as alter ego, adjunct or business conduit for the sole benefit of Peggy Mills, Inc. (PMI), otherwise, said corporations should be treated as distinct and separate from each other. The Court of Appeals pointed out that the Articles of Incorporation of PMI show that it has six incorporators, namely, Patricio, Jose Yulo, Jr., Carlos Palanca, Jr., Cesar R. Concio, Jr., E. A. Picasso, and Walter Euyang. On the other hand, the Articles of Incorporation of Filsyn show that it has 10 incorporators, namely, Jesus Y. Yujuico, Carlos Palanca, Jr., Patricio, Ang Beng Uh, Ramon A. Yulo, Honorio Poblador, Jr., Cipriano Azada, Manuel Tomacruz, Ismael Maningas, and Benigno Zialcita, Jr. The Court of Appeals pointed out that PMI and Filsyn have only two interlocking incorporators and directors, namely, Patricio and Carlos Palanca, Jr. Reiterating the ruling of this Court in Laguio v. NLRC,11 the Court of Appeals held that mere substantial identity of the incorporators of two corporations does not necessarily imply fraud, nor warrant the piercing of the veil of corporate fiction. The Court of Appeals also pointed out that when SRTI and PMI executed the Dation in Payment with Lease, it was clear that SRTI did not assume the liabilities PMI incurred before the execution of the contract. The Court of Appeals held that McLeod failed to substantiate his claim that all respondent corporations should be treated as one corporate entity. The Court of Appeals thus upheld the NLRCs finding that no employer-employee relationship existed between McLeod and respondent corporations except PMI. The Court of Appeals ruled that Eric Hu, as an officer of PMI, should be exonerated from any liability, there being no proof of malice or bad faith on his part. The Court of Appeals, however, ruled that McLeod was entitled to recover from PMI and Patricio, the companys Chairman and President. The Court of Appeals pointed out that Patricio deliberately and maliciously evaded PMIs financial obligation to McLeod. The Court of Appeals stated that, on several occasions, despite his approval, Patricio refused and ignored to pay McLeods retirement benefits. The Court of Appeals stated that the delay lasted for one year prompting McLeod to initiate legal action. The Court of Appeals stated that although PMI offered to pay McLeod his retirement benefits, this offer for P300,000 was still below the "floor limits" provided by law. The Court of Appeals held that an employee could demand payment of retirement benefits as a matter of right. The Court of Appeals stated that considering that PMI was no longer in operation, its "officer should be held liable for acting on behalf of the corporation." The Court of Appeals also ruled that since PMI did not have a retirement program providing for retirement benefits of its employees, Article 287 of the Labor Code must be followed. The Court of Appeals thus upheld the NLRCs finding that McLeod was entitled to retirement pay equivalent to 22.5 days for every year of service from 1980 to 1992 based on a salary rate of P50,495 a month.

The Court of Appeals held that McLeod was not entitled to payment of vacation, sick leave and holiday pay because as Vice President and Plant Manager, McLeod is a managerial employee who, under Article 82 of the Labor Code, is not entitled to these benefits. The Court of Appeals stated that for McLeod to be entitled to payment of service incentive leave and holidays, there must be an agreement to that effect between him and his employer. Moreover, the Court of Appeals rejected McLeods argument that since PMI paid for his two round-trip tickets Manila-London in 1983 and 1986, he was also "entitled to unused airline tickets." The Court of Appeals stated that the fact that PMI granted McLeod "free transport to and from Manila and London for the year 1983 and 1986 does not ipso facto characterize it as regular that would establish a prevailing company policy." The Court of Appeals also denied McLeods claims for underpayment of salaries and his 13th month pay for the year 1994. The Court of Appeals upheld the NLRCs ruling that it could be deduced from McLeods own narration of facts that he agreed to the reduction of his compensation from P60,000 to P50,495 in August 1990 to November 1993. The Court of Appeals found the award of moral damages for P50,000 in order because of the "stubborn refusal" of PMI and Patricio to respect McLeods valid claims. The Court of Appeals also ruled that attorneys fees equivalent to 10% of the total award should be given to McLeod under Article 2208, paragraph 2 of the Civil Code.12 Hence, this petition. The Issues McLeod submits the following issues for our consideration: 1. Whether the challenged Decision and Resolution of the 14th Division of the Court of Appeals promulgated on 15 June 2000 and 27 December 2000, respectively, in CA-G.R. SP No. 55130 are in accord with law and jurisprudence; 2. Whether an employer-employee relationship exists between the private respondents and the petitioner for purposes of determining employer liability to the petitioner; 3. Whether the private respondents may avoid their financial obligations to the petitioner by invoking the veil of corporate fiction; 4. Whether petitioner is entitled to the relief he seeks against the private respondents; 5. Whether the ruling of [this] Court in Special Police and Watchman Association (PLUM) Federation v. National Labor Relations Commission cited by the Office of the Solicitor General is applicable to the case of petitioner; and 6. Whether the appeal taken by the private respondents from the Decision of the labor arbiter meets the mandatory requirements recited in the Labor Code of the Philippines, as amended.13 The Courts Ruling The petition must fail. McLeod asserts that the Court of Appeals should not have upheld the NLRCs findings that he was a managerial employee of PMI from 20 June 1980 to 31 December 1992, and then a consultant of SRTI up to 30 November 1993. McLeod asserts that if only for this "brazen assumption," the Court of Appeals should not have sustained the NLRCs ruling that his cause of action was only against PMI. These assertions do not deserve serious consideration. Records disclose that McLeod was an employee only of PMI.14 PMI hired McLeod as its acting Vice President and General Manager on 20 June 1980.15 PMI confirmed McLeods appointment as Vice President/Plant Manager in the Special Meeting of its Board of Directors on 10 February 1981.16 McLeod himself testified during the hearing before the Labor Arbiter that his "regular employment" was with PMI.17 When PMIs rank-and-file employees staged a strike on 19 August 1989 to July 1992, PMI incurred serious business losses.18 This prompted PMI to stop permanently plant operations and to send a notice of closure to the Department of Labor and Employment on 21 July 1992.19 PMI informed its employees, including McLeod, of the closure.20 PMI paid its employees, including managerial employees, except McLeod, their unpaid wages, sick leave, vacation leave, prorated 13th month pay, and separation pay. Under the compromise agreement between PMI and its employees, the employer-employee relationship between them ended on 25 November 1992.21 Records also disclose that PMI extended McLeods service up to 31 December 1992 "to wind up some affairs" of the company.22 McLeod testified on cross-examination that he received his last salary from PMI in December 1992.23 It is thus clear that McLeod was a managerial employee of PMI from 20 June 1980 to 31 December 1992.

However, McLeod claims that after FETMI purchased PMI in January 1993, he "continued to work at the same plant with the same responsibilities" until 30 November 1993. McLeod claims that FETMI merely renamed PMI as SRTI. McLeod asserts that it was for this reason that when he reached the retirement age in 1993, he asked all the respondents for the payment of his benefits.24 These assertions deserve scant consideration. What took place between PMI and SRTI was dation in payment with lease. Pertinent portions of the contract that PMI and SRTI executed on 15 June 1992 read: WHEREAS, PMI is indebted to the Development Bank of the Philippines ("DBP") and as security for such debts (the "Obligations") has mortgaged its real properties covered by TCT Nos. T-38647, T-37136, and T-37135, together with all machineries and improvements found thereat, a complete listing of which is hereto attached as Annex "A" (the "Assets"); WHEREAS, by virtue of an inter-governmental agency arrangement, DBP transferred the Obligations, including the Assets, to the Asset Privatization Trust ("APT") and the latter has received payment for the Obligations from PMI, under APTs Direct Debt Buy-Out ("DDBO") program thereby causing APT to completely discharge and cancel the mortgage in the Assets and to release the titles of the Assets back to PMI; WHEREAS, PMI obtained cash advances from SRTC in the total amount of TWO HUNDRED TEN MILLION PESOS (P210,000,000.00) (the "Advances") to enable PMI to consummate the DDBO with APT, with SRTC subrogating APT as PMIs creditor thereby; WHEREAS, in payment to SRTC for PMIs liability, PMI has agreed to transfer all its rights, title and interests in the Assets by way of a dation in payment to SRTC, provided that simultaneous with the dation in payment, SRTC shall grant unto PMI the right to lease the Assets under terms and conditions stated hereunder; xxxx NOW THEREFORE, for and in consideration of the foregoing premises, and of the terms and conditions hereinafter set forth, the parties hereby agree as follows: 1. CESSION. In consideration of the amount of TWO HUNDRED TEN MILLION PESOS (P210,000,000.00), PMI hereby cedes, conveys and transfers to SRTC all of its rights, title and interest in and to the Assets by way of a dation in payment.25 (Emphasis supplied) As a rule, a corporation that purchases the assets of another will not be liable for the debts of the selling corporation, provided the former acted in good faith and paid adequate consideration for such assets, except when any of the following circumstances is present: (1) where the purchaser expressly or impliedly agrees to assume the debts, (2) where the transaction amounts to a consolidation or merger of the corporations, (3) where the purchasing corporation is merely a continuation of the selling corporation, and (4) where the selling corporation fraudulently enters into the transaction to escape liability for those debts.26 None of the foregoing exceptions is present in this case. Here, PMI transferred its assets to SRTI to settle its obligation to SRTI in the sum of P210,000,000. We are not convinced that PMI fraudulently transferred these assets to escape its liability for any of its debts. PMI had already paid its employees, except McLeod, their money claims. There was also no merger or consolidation of PMI and SRTI. Consolidation is the union of two or more existing corporations to form a new corporation called the consolidated corporation. It is a combination by agreement between two or more corporations by which their rights, franchises, and property are united and become those of a single, new corporation, composed generally, although not necessarily, of the stockholders of the original corporations. Merger, on the other hand, is a union whereby one corporation absorbs one or more existing corporations, and the absorbing corporation survives and continues the combined business. The parties to a merger or consolidation are called constituent corporations. In consolidation, all the constituents are dissolved and absorbed by the new consolidated enterprise. In merger, all constituents, except the surviving corporation, are dissolved. In both cases, however, there is no liquidation of the assets of the dissolved corporations, and the surviving or consolidated corporation acquires all their properties, rights and franchises and their stockholders usually become its stockholders. The surviving or consolidated corporation assumes automatically the liabilities of the dissolved corporations, regardless of whether the creditors have consented or not to such merger or consolidation.27 In the present case, there is no showing that the subject dation in payment involved any corporate merger or consolidation. Neither is there any showing of those indicative factors that SRTI is a mere instrumentality of PMI.

Moreover, SRTI did not expressly or impliedly agree to assume any of PMIs debts. Pertinent portions of the subject Deed of Dation in Payment with Lease provide, thus: 2. WARRANTIES AND REPRESENTATIONS. PMI hereby warrants and represents the following: xxxx (e) PMI shall warrant that it will hold SRTC or its assigns, free and harmless from any liability for claims of PMIs creditors, laborers, and workers and for physical injury or injury to property arising from PMIs custody, possession, care, repairs, maintenance, use or operation of the Assets except ordinary wear and tear;28 (Emphasis supplied) Also, McLeod did not present any evidence to show the alleged renaming of "Peggy Mills, Inc." to "Sta. Rosa Textiles, Inc." Hence, it is not correct for McLeod to treat PMI and SRTI as the same entity. Respondent corporations assert that SRTI hired McLeod as consultant after PMI stopped operations.29 On the other hand, McLeod asserts that he was respondent corporations employee from 1980 to 30 November 1993.30 However, McLeod failed to present any proof of employer-employee relationship between him and Filsyn, SRTI, or FETMI. McLeod testified, thus: ATTY. ESCANO: Do you have any employment contract with Far Eastern Textile? WITNESS: It is my belief up the present time. ATTY. AVECILLA: May I request that the witness be allowed to go through his Annexes, Your Honor. ATTY. ESCANO: Yes, but I want a precise answer to that question. If he has an employment contract with Far Eastern Textile? WITNESS: Can I answer it this way, sir? There is not a valid contract but I was under the impression taking into consideration that the closeness that I had at Far Eastern Textile is enough during that period of time of the development of Peggy Mills to reorganize a staff. I was under the basic impression that they might still retain my status as Vice President and Plant Manager of the company. ATTY. ESCANO: But the answer is still, there is no employment contract in your possession appointing you in any capacity by Far Eastern? WITNESS: There was no written contract, sir. xxxx ATTY. ESCANO: So, there is proof that you were in fact really employed by Peggy Mills? WITNESS: Yes, sir. ATTY. ESCANO: Of course, my interest now is to whether or not there is a similar document to present that you were employed by the other respondents like Filsyn Corporation? WITNESS: I have no document, sir. ATTY. ESCANO: What about Far Eastern Textile Mills? WITNESS: I have no document, sir. ATTY. ESCANO: And Sta. Rosa Textile Mills? WITNESS: There is no document, sir.31 xxxx ATTY. ESCANO: Q Yes. Let me be more specific, Mr. McLeod. Do you have a contract of employment from Far Eastern Textiles, Inc.?

A No, sir. Q What about Sta. Rosa Textile Mills, do you have an employment contract from this company? A No, sir. xxxx Q And what about respondent Eric Hu. Have you had any contract of employment from Mr. Eric Hu? A Not a direct contract but I was taken in and I told to take over this from Mr. Eric Hu. Automatically, it confirms that Mr. Eric Hu, in other words, was under the control of Mr. Patricio Lim at that period of time. Q No documents to show, Mr. McLeod? A No. No documents, sir.32 McLeod could have presented evidence to support his allegation of employer-employee relationship between him and any of Filsyn, SRTI, and FETMI, but he did not. Appointment letters or employment contracts, payrolls, organization charts, SSS registration, personnel list, as well as testimony of co-employees, may serve as evidence of employee status.33 It is a basic rule in evidence that parties must prove their affirmative allegations. While technical rules are not strictly followed in the NLRC, this does not mean that the rules on proving allegations are entirely ignored. Bare allegations are not enough. They must be supported by substantial evidence at the very least.34 However, McLeod claims that "for purposes of determining employer liability, all private respondents are one and the same employer" because: (1) they have the same address; (2) they are all engaged in the same business; and (3) they have interlocking directors and officers.35 This assertion is untenable. A corporation is an artificial being invested by law with a personality separate and distinct from that of its stockholders and from that of other corporations to which it may be connected.36 While a corporation may exist for any lawful purpose, the law will regard it as an association of persons or, in case of two corporations, merge them into one, when its corporate legal entity is used as a cloak for fraud or illegality. This is the doctrine of piercing the veil of corporate fiction. The doctrine applies only when such corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime,37 or when it is made as a shield to confuse the legitimate issues, or where a corporation is the mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.38 To disregard the separate juridical personality of a corporation, the wrongdoing must be established clearly and convincingly. It cannot be presumed.39 Here, we do not find any of the evils sought to be prevented by the doctrine of piercing the corporate veil. Respondent corporations may be engaged in the same business as that of PMI, but this fact alone is not enough reason to pierce the veil of corporate fiction.40 In Indophil Textile Mill Workers Union v. Calica,41 the Court ruled, thus: In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the creation of the corporation is a devise to evade the application of the CBA between petitioner Union and private respondent Company. While we do not discount the possibility of the similarities of the businesses of private respondent and Acrylic, neither are we inclined to apply the doctrine invoked by petitioner in granting the relief sought. The fact that the businesses of private respondent and Acrylic are related, that some of the employees of the private respondent are the same persons manning and providing for auxiliary services to the units of Acrylic, and that the physical plants, offices and facilities are situated in the same compound, it is our considered opinion that these facts are not sufficient to justify the piercing of the corporate veil of Acrylic.42 (Emphasis supplied) Also, the fact that SRTI and PMI shared the same address, i.e., 11/F BA-Lepanto Bldg., Paseo de Roxas, Makati City,43 can be explained by the two companies stipulation in their Deed of Dation in Payment with Lease that "simultaneous with the dation in payment, SRTC shall grant unto PMI the right to lease the Assets under terms and conditions stated hereunder."44 As for the addresses of Filsyn and FETMI, Filsyn held office at 12th Floor, BA-Lepanto Bldg., Paseo de Roxas, Makati City,45 while FETMI held office at 18F, Tun Nan Commercial Building, 333 Tun Hwa South Road, Sec. 2, Taipei, Taiwan, R.O.C.46 Hence, they did not have the same address as that of PMI. That respondent corporations have interlocking incorporators, directors, and officers is of no moment. The only interlocking incorporators of PMI and Filsyn were Patricio and Carlos Palanca, Jr.47 While Patricio was Director and Board Chairman of Filsyn, SRTI, and PMI,48 he was never an officer of FETMI. Eric Hu, on the other hand, was Director of Filsyn and SRTI.49 He was never an officer of PMI.

Marialen C. Corpuz, Filsyns Finance Officer,50 testified on cross-examination that (1) among all of Filsyns officers, only she was the one involved in the management of PMI; (2) only she and Patricio were the common officers between Filsyn and PMI; and (3) Filsyn and PMI are "two separate companies."51 Apolinario L. Posio, PMIs Chief Accountant, testified that "SRTI is a different corporation from PMI."52 At any rate, the existence of interlocking incorporators, directors, and officers is not enough justification to pierce the veil of corporate fiction, in the absence of fraud or other public policy considerations.53 In Del Rosario v. NLRC,54 the Court ruled that substantial identity of the incorporators of corporations does not necessarily imply fraud. In light of the foregoing, and there being no proof of employer-employee relationship between McLeod and respondent corporations and Eric Hu, McLeods cause of action is only against his former employer, PMI. On Patricios personal liability, it is settled that in the absence of malice, bad faith, or specific provision of law, a stockholder or an officer of a corporation cannot be made personally liable for corporate liabilities.55 To reiterate, a corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it. The rule is that obligations incurred by the corporation, acting through its directors, officers, and employees, are its sole liabilities.56 Personal liability of corporate directors, trustees or officers attaches only when (1) they assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or gross negligence in directing its affairs, or when there is a conflict of interest resulting in damages to the corporation, its stockholders or other persons; (2) they consent to the issuance of watered down stocks or when, having knowledge of such issuance, do not forthwith file with the corporate secretary their written objection; (3) they agree to hold themselves personally and solidarily liable with the corporation; or (4) they are made by specific provision of law personally answerable for their corporate action.57 Considering that McLeod failed to prove any of the foregoing exceptions in the present case, McLeod cannot hold Patricio solidarily liable with PMI. The records are bereft of any evidence that Patricio acted with malice or bad faith. Bad faith is a question of fact and is evidentiary. Bad faith does not connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and conscious wrongdoing. It means breach of a known duty through some ill motive or interest. It partakes of the nature of fraud.58 In the present case, there is nothing substantial on record to show that Patricio acted in bad faith in terminating McLeods services to warrant Patricios personal liability. PMI had no other choice but to stop plant operations. The work stoppage therefore was by necessity. The company could no longer continue with its plant operations because of the serious business losses that it had suffered. The mere fact that Patricio was president and director of PMI is not a ground to conclude that he should be held solidarily liable with PMI for McLeods money claims. The ruling in A.C. Ransom Labor Union-CCLU v. NLRC,59 which the Court of Appeals cited, does not apply to this case. We quote pertinent portions of the ruling, thus: (a) Article 265 of the Labor Code, in part, expressly provides: "Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with full backwages." Article 273 of the Code provides that: "Any person violating any of the provisions of Article 265 of this Code shall be punished by a fine of not exceeding five hundred pesos and/or imprisonment for not less than one (1) day nor more than six (6) months." (b) How can the foregoing provisions be implemented when the employer is a corporation? The answer is found in Article 212 (c) of the Labor Code which provides: "(c) Employer includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer.". The foregoing was culled from Section 2 of RA 602, the Minimum Wage Law. Since RANSOM is an artificial person, it must have an officer who can be presumed to be the employer, being the "person acting in the interest of (the) employer" RANSOM. The corporation, only in the technical sense, is the employer. The responsible officer of an employer corporation can be held personally, not to say even criminally, liable for non-payment of back wages. That is the policy of the law. xxxx (c) If the policy of the law were otherwise, the corporation employer can have devious ways for evading payment of back wages. In the instant case, it would appear that RANSOM, in 1969, foreseeing the

possibility or probability of payment of back wages to the 22 strikers, organized ROSARIO to replace RANSOM, with the latter to be eventually phased out if the 22 strikers win their case. RANSOM actually ceased operations on May 1, 1973, after the December 19, 1972 Decision of the Court of Industrial Relations was promulgated against RANSOM.60 (Emphasis supplied) Clearly, in A.C. Ransom, RANSOM, through its President, organized ROSARIO to evade payment of backwages to the 22 strikers. This situation, or anything similar showing malice or bad faith on the part of Patricio, does not obtain in the present case. In Santos v. NLRC,61 the Court held, thus: It is true, there were various cases when corporate officers were themselves held by the Court to be personally accountable for the payment of wages and money claims to its employees. In A.C. Ransom Labor Union-CCLU vs. NLRC, for instance, the Court ruled that under the Minimum Wage Law, the responsible officer of an employer corporation could be held personally liable for nonpayment of backwages for "(i)f the policy of the law were otherwise, the corporation employer (would) have devious ways for evading payment of backwages." In the absence of a clear identification of the officer directly responsible for failure to pay the backwages, the Court considered the President of the corporation as such officer. The case was cited in Chua vs. NLRC in holding personally liable the vice-president of the company, being the highest and most ranking official of the corporation next to the President who was dismissed for the latters claim for unpaid wages. A review of the above exceptional cases would readily disclose the attendance of facts and circumstances that could rightly sanction personal liability on the part of the company officer. In A.C. Ransom, the corporate entity was a family corporation and execution against it could not be implemented because of the disposition posthaste of its leviable assets evidently in order to evade its just and due obligations. The doctrine of "piercing the veil of corporate fiction" was thus clearly appropriate. Chua likewise involved another family corporation, and this time the conflict was between two brothers occupying the highest ranking positions in the company. There were incontrovertible facts which pointed to extreme personal animosity that resulted, evidently in bad faith, in the easing out from the company of one of the brothers by the other. The basic rule is still that which can be deduced from the Courts pronouncement in Sunio vs. National Labor Relations Commission; thus: We come now to the personal liability of petitioner, Sunio, who was made jointly and severally responsible with petitioner company and CIPI for the payment of the backwages of private respondents. This is reversible error. The Assistant Regional Directors Decision failed to disclose the reason why he was made personally liable. Respondents, however, alleged as grounds thereof, his being the owner of one-half () interest of said corporation, and his alleged arbitrary dismissal of private respondents. Petitioner Sunio was impleaded in the Complaint in his capacity as General Manager of petitioner corporation. There appears to be no evidence on record that he acted maliciously or in bad faith in terminating the services of private respondents. His act, therefore, was within the scope of his authority and was a corporate act. It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality. Petitioner Sunio, therefore, should not have been made personally answerable for the payment of private respondents back salaries.62 (Emphasis supplied) Thus, the rule is still that the doctrine of piercing the corporate veil applies only when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime. In the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be made personally liable for corporate liabilities. Neither Article 212(c) nor Article 273 (now 272) of the Labor Code expressly makes any corporate officer personally liable for the debts of the corporation. As this Court ruled in H.L. Carlos Construction, Inc. v. Marina Properties Corporation:63 We concur with the CA that these two respondents are not liable. Section 31 of the Corporation Code (Batas Pambansa Blg. 68) provides: "Section 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith ... shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders and other persons."

The personal liability of corporate officers validly attaches only when (a) they assent to a patently unlawful act of the corporation; or (b) they are guilty of bad faith or gross negligence in directing its affairs; or (c) they incur conflict of interest, resulting in damages to the corporation, its stockholders or other persons. The records are bereft of any evidence that Typoco acted in bad faith with gross or inexcusable negligence, or that he acted outside the scope of his authority as company president. The unilateral termination of the Contract during the existence of the TRO was indeed contemptible for which MPC should have merely been cited for contempt of court at the most and a preliminary injunction would have then stopped work by the second contractor. Besides, there is no showing that the unilateral termination of the Contract was null and void.64 McLeod is not entitled to payment of vacation leave and sick leave as well as to holiday pay. Article 82, Title I, Book Three of the Labor Code, on Working Conditions and Rest Periods, provides: Coverage. The provisions of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. As used herein, "managerial employees" refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff. (Emphasis supplied) As Vice President/Plant Manager, McLeod is a managerial employee who is excluded from the coverage of Title I, Book Three of the Labor Code. McLeod is entitled to payment of vacation leave and sick leave only if he and PMI had agreed on it. The payment of vacation leave and sick leave depends on the policy of the employer or the agreement between the employer and employee.65 In the present case, there is no showing that McLeod and PMI had an agreement concerning payment of these benefits. McLeods assertion of underpayment of his 13th month pay in December 1993 is unavailing.66 As already stated, PMI stopped plant operations in 1992. McLeod himself testified that he received his last salary from PMI in December 1992. After the termination of the employer-employee relationship between McLeod and PMI, SRTI hired McLeod as consultant and not as employee. Since McLeod was no longer an employee, he was not entitled to the 13th month pay.67 Besides, there is no evidence on record that McLeod indeed received his alleged "reduced 13th month pay of P44,183.63" in December 1993.68 Also unavailing is McLeods claim that he was entitled to the "unpaid monetary equivalent of unused plane tickets for the period covering 1989 to 1992 in the amount of P279,300.00."69 PMI has no company policy granting its officers and employees expenses for trips abroad.70 That at one time PMI reimbursed McLeod for his and his wifes plane tickets in a vacation to London71 could not be deemed as an established practice considering that it happened only once. To be considered a "regular practice," the giving of the benefits should have been done over a long period, and must be shown to have been consistent and deliberate.72 In American Wire and Cable Daily Rated Employees Union v. American Wire and Cable Co., Inc.,73 the Court held that for a bonus to be enforceable, the employer must have promised it, and the parties must have expressly agreed upon it, or it must have had a fixed amount and had been a long and regular practice on the part of the employer. In the present case, there is no showing that PMI ever promised McLeod that it would continue to grant him the benefit in question. Neither is there any proof that PMI and McLeod had expressly agreed upon the giving of that benefit. McLeods reliance on Annex M74 can hardly carry the day for him. Annex M, which is McLeods letter addressed to "Philip Lim, VP Administration," merely contains McLeods proposals for the grant of some benefits to supervisory and confidential employees. Contrary to McLeods allegation, Patricio did not sign the letter. Hence, the letter does not embody any agreement between McLeod and the management that would entitle McLeod to his money claims. Neither can McLeods assertions find support in Annex U.75 Annex U is the Agreement which McLeod and Universal Textile Mills, Inc. executed in 1959. The Agreement merely contains the renewal of the service agreement which the parties signed in 1956. McLeod cannot successfully pretend that his monthly salary of P60,000 was reduced without his consent. McLeod testified that in 1990, Philip Lim explained to him why his salary would have to be reduced. McLeod said that Philip told him that "they were short in finances; that it would be repaid."76 Were McLeod not amenable to that reduction in salary, he could have immediately resigned from his work in PMI.

McLeod knew that PMI was then suffering from serious business losses. In fact, McLeod testified that PMI was not able to operate from August 1989 to 1992 because of the strike. Even before 1989, as Vice President of PMI, McLeod was aware that the company had incurred "huge loans from DBP."77 As it happened, McLeod continued to work with PMI. We find it pertinent to quote some portions of Apolinario Posios testimony, to wit: Q You also stated that before the period of the strike as shown by annex "K" of the reply filed by the complainant which was I think a voucher, the salary of Mr. McLeod was roughly P60,000.00 a month? A Yes, sir. Q And as shown by their annex "L" to their reply, that this was reduced to roughly P50,000.00 a month? A Yes, sir. Q You stated that this was indeed upon the instruction by the Vice-President of Peggy Mills at that time and that was Mr. Philip Lim, would you not? A Yes, sir. Q Of your own personal knowledge, can you say if this was, in fact, by agreement between Mr. Philip Lim or any other officers of Peggy Mills and Mr. McLeod? A If I recall it correctly, I assume it was an agreement, verbal agreement with, between Mr. Philip Lim and Mr. McLeod, because the voucher that we prepared was actually acknowledged by Mr. McLeod, the reduced amount was acknowledged by Mr. McLeod thru the voucher that we prepared. Q In other words, Mr. Witness, you mean to tell us that Mr. McLeod continuously received the reduced amount of P50,000.00 by signing the voucher and receiving the amount in question? A Yes, sir. Q As far as you remember, Mr. Posio, was there any complaint by Mr. McLeod because of this reduced amount of his salary at that time? A I dont have any personal knowledge of any complaint, sir. Q At least, that is in so far as you were concerned, he said nothing when he signed the voucher in question? A Yes, sir. Q Now, you also stated that the reason for what appears to be an agreement between Peggy Mills and Mr. McLeod in so far as the reduction of his salary from P60,000.00 to P50,000.00 a month was because he would have a reduced number of working days in view of the strike at Peggy Mills, is that right? A Yes, sir. Q And that this was so because on account of the strike, there was no work to be done in the company? A Yes, sir.78 xxxx Q Now, you also stated if you remember during the first time that you testified that in the beginning, the monthly salary of the complainant was P60,000.00, is that correct? A Yes, sir. Q And because of the long period of the strike, when there was no work to be done, by agreement with the complainant, his monthly salary was adjusted to only P50,495 because he would not have to report for work on Saturday. Do you remember having made that explanation? A Yes, sir. Q You also stated that the complainant continuously received his monthly salary in the adjusted amount of P50,495.00 monthly signing the necessary vouchers or pay slips for that without complaining, is that not right, Mr. Posio? A Yes, sir.79 Since the last salary that McLeod received from PMI was P50,495, that amount should be the basis in computing his retirement benefits. McLeod must be credited only with his service to PMI as it had a juridical personality separate and distinct from that of the other respondent corporations. Since PMI has no retirement plan,80 we apply Section 5, Rule II of the Rules Implementing the New Retirement Law which provides: 5.1 In the absence of an applicable agreement or retirement plan, an employee who retires pursuant to the Act shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. 5.2 Components of One-half (1/2) Month Salary. For the purpose of determining the minimum retirement pay due an employee under this Rule, the term "one-half month salary" shall include all of the following: (a) Fifteen (15) days salary of the employee based on his latest salary rate. x x x

With McLeod having worked with PMI for 12 years, from 1980 to 1992, he is entitled to a retirement pay equivalent to month salary for every year of service based on his latest salary rate of P50,495 a month. There is no basis for the award of moral damages. Moral damages are recoverable only if the defendant has acted fraudulently or in bad faith, or is guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual obligations. The breach must be wanton, reckless, malicious, or in bad faith, oppressive or abusive.81 From the records of the case, the Court finds no ultimate facts to support a conclusion of bad faith on the part of PMI. Records disclose that PMI had long offered to pay McLeod his money claims. In their Comment, respondents assert that they offered to pay McLeod the sum of P840,000, as "separation benefits, and not P300,000, if only to buy peace and to forestall any complaint" that McLeod may initiate before the NLRC. McLeod admitted at the hearing before the Labor Arbiter that PMI has made this offer ATTY. ESCANO: x x x According to your own statement in your Position Paper and I am referring to page 8, your unpaid retirement benefit for fourteen (14) years of service at P60,000.00 per year is P840,000.00, is that correct? WITNESS: That is correct, sir. ATTY. ESCANO: And this amount is correct P840,000.00, according to your Position Paper? WITNESS: That is correct, sir. ATTY. ESCANO: The question I want to ask is, are you aware that this amount was offered to you sometime last year through your own lawyer, my good friend, Atty. Avecilla, who is right here with us? WITNESS: I was aware, sir. ATTY. ESCANO: So this was offered to you, is that correct? WITNESS: I was told that a fixed sum of P840,000.00 was offered. ATTY. ESCANO: And , of course, the reason, if I may assume, that you declined this offer was that, according to you, there are other claims which you would like to raise against the Respondents which, by your impression, they were not willing to pay in addition to this particular amount? WITNESS: Yes, sir. ATTY. ESCANO: The question now is, if the same amount is offered to you by way of retirement which is exactly what you stated in your own Position Paper, would you accept it or not? WITNESS: Not on the concept without all the basic benefits due me, I will refuse.82 xxxx ATTY. ROXAS: Q You mentioned in the cross-examination of Atty. Escano that you were offered the separation pay in 1994, is that correct, Mr. Witness? WITNESS: A I was offered a settlement of P300,000.00 for complete settlement and that was I think in January or February 1994, sir. ATTY. ESCANO: No. What was mentioned was the amount of P840,000.00. WITNESS: What did you say, Atty. Escano? ATTY. ESCANO: The amount that I mentioned was P840,000.00 corresponding to the . . . . . . . WITNESS: May I ask that the question be clarified, your Honor?

ATTY. ROXAS: Q You mentioned that you were offered for the settlement of your claims in 1994 for P840,000.00, is that right, Mr. Witness? A During that period in time, while the petition in this case was ongoing, we already filed a case at that period of time, sir. There was a discussion. To the best of my knowledge, they are willing to settle for P840,000.00 and based on what the Attorney told me, I refused to accept because I believe that my position was not in anyway due to a compromise situation to the benefits I am entitled to.83 Hence, the awards for exemplary damages and attorneys fees are not proper in the present case.84 That respondent corporations, in their appeal to the NLRC, did not serve a copy of their memorandum of appeal upon PMI is of no moment. Section 3(a), Rule VI of the NLRC New Rules of Procedure provides: Requisites for Perfection of Appeal. (a) The appeal shall be filed within the reglementary period as provided in Section 1 of this Rule; shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 5 of this Rule; shall be accompanied by a memorandum of appeal x x x and proof of service on the other party of such appeal. (Emphasis supplied) The "other party" mentioned in the Rule obviously refers to the adverse party, in this case, McLeod. Besides, Section 3, Rule VI of the Rules which requires, among others, proof of service of the memorandum of appeal on the other party, is merely a rundown of the contents of the required memorandum of appeal to be submitted by the appellant. These are not jurisdictional requirements.85 WHEREFORE, we DENY the petition and AFFIRM the Decision of the Court of Appeals in CA-G.R. SP No. 55130, with the following MODIFICATIONS: (a) the retirement pay of John F. McLeod should be computed at month salary for every year of service for 12 years based on his salary rate of P50,495 a month; (b) Patricio L. Lim is absolved from personal liability; and (c) the awards for moral and exemplary damages and attorneys fees are deleted. No pronouncement as to costs. SO ORDERED. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 166920 February 19, 2007 PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS PETER HENRICHSEN, Petitioners, vs. KLAUS K. SCHONFELD, Respondent. DECISION CALLEJO, SR., J.: Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 76563. The CA decision reversed the Resolution of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 029319-01, which, in turn, affirmed the Decision of the Labor Arbiter in NLRC NCR Case No. 30-12-04787-00 dismissing the complaint of respondent Klaus K. Schonfeld. The antecedent facts are as follows: Respondent is a Canadian citizen and was a resident of New Westminster, British Columbia, Canada. He had been a consultant in the field of environmental engineering and water supply and sanitation. Pacicon Philippines, Inc. (PPI) is a corporation duly established and incorporated in accordance with the laws of the Philippines. The primary purpose of PPI was to engage in the business of providing specialty and technical services both in and out of the Philippines.2 It is a subsidiary of Pacific Consultants International of Japan (PCIJ). The president of PPI, Jens Peter Henrichsen, who was also the director of PCIJ, was based in Tokyo, Japan. Henrichsen commuted from Japan to Manila and vice versa, as well as in other countries where PCIJ had business. In 1997, PCIJ decided to engage in consultancy services for water and sanitation in the Philippines. In October 1997, respondent was employed by PCIJ, through Henrichsen, as Sector Manager of PPI in its Water and Sanitation Department. However, PCIJ assigned him as PPI sector manager in the Philippines. His salary was to be paid partly by PPI and PCIJ. On January 7, 1998, Henrichsen transmitted a letter of employment to respondent in Canada, requesting him to accept the same and affix his conformity thereto. Respondent made some revisions in the letter of employment and signed the contract.3 He then sent a copy to Henrichsen. The letter of employment reads:

Mr. Klaus K. Schonfeld II-365 Ginger Drive New Westminster, B.C. Canada V3L 5L5 Tokyo 7 Dear Mr. Schonfeld, January 1998 Letter of Employment This Letter of Employment with the attached General Conditions of Employment constitutes the agreement under which you will be engaged by our Company on the terms and conditions defined hereunder. In case of any discrepancies or contradictions between this Letter of Employment and the General Conditions of Employment, this Letter of Employment will prevail. You will, from the date of commencement, be ["seconded"] to our subsidiary Pacicon Philippines, Inc. in Manila, hereinafter referred as Pacicon. Pacicon will provide you with a separate contract, which will define that part of the present terms and conditions for which Pacicon is responsible. In case of any discrepancies or contradictions between the present Letter of Employment and the contract with Pacicon Philippines, Inc. or in the case that Pacicon should not live up to its obligations, this Letter of Employment will prevail. 1. Project Country: The Philippines with possible short-term assignments in other countries. 2. Duty Station: Manila, the Philippines. 3. Family Status: Married. 4. Position: Sector Manager, Water and Sanitation. 5. Commencement: 1st October 1997. 6. Remuneration: US$7,000.00 per month. The amount will be paid partly as a local salary (US$2,100.00 per month) by Pacicon and partly as an offshore salary (US$4,900.00) by PCI to bank accounts to be nominated by you. A performance related component corresponding to 17.6% of the total annual remuneration, subject to satisfactory performance against agreed tasks and targets, paid offshore. 7. Accommodation: The company will provide partly furnished accommodation to a rent including association fees, taxes and VAT not exceeding the Pesos equivalent of US$2,900.00 per month. 8. Transportation: Included for in the remuneration. 9. Leave Travels: You are entitled to two leave travels per year. 10. Shipment of Personal Effects: The maximum allowance is US$4,000.00. 11. Mobilization Travel: Mobilization travel will be from New Westminster, B.C., Canada. This letter is send (sic) to you in duplicate; we kindly request you to sign and return one copy to us. Yours sincerely, Pacific Consultants International Jens Peter Henrichsen Above terms and conditions accepted Date: 2 March 1998 (Sgd.) Klaus Schonfeld as annotated and initialed4 Section 21 of the General Conditions of Employment appended to the letter of employment reads: 21 Arbitration Any question of interpretation, understanding or fulfillment of the conditions of employment, as well as any question arising between the Employee and the Company which is in consequence of or connected with his employment with the Company and which can not be settled amicably, is to be finally settled, binding to both parties through written submissions, by the Court of Arbitration in London.5 Respondent arrived in the Philippines and assumed his position as PPI Sector Manager. He was accorded the status of a resident alien. As required by Rule XIV (Employment of Aliens) of the Omnibus Rules Implementing the Labor Code, PPI applied for an Alien Employment Permit (Permit) for respondent before the Department of Labor and Employment (DOLE). It appended respondents contract of employment to the application.1awphi1.net

On February 26, 1999, the DOLE granted the application and issued the Permit to respondent. It reads: Republic of the Philippines Department of Labor & Employment National Capital Region ALIEN EMPLOYMENT PERMIT ISSUED TO: SCHONFELD, KLAUS KURT DATE OF BIRTH: January 11, 1942 NATIONALITY: Canadian POSITION: VP WATER & SANITATION EMPLOYER: PACICON PHILIPPINES, INC. ADDRESS: 27/F Rufino Pacific Towers Bldg., Ayala Ave., Makati City PERMIT ISSUED ON: February 26, 1999 SIGNATURE OF BEARER: VALID UNTIL: January 7, 2000 (Sgd.) APPROVED: BIENVENIDO S. LAGUESMA By: MAXIMO B. ANITO REGIONAL DIRECTOR (Emphasis supplied)6 Respondent received his compensation from PPI for the following periods: February to June 1998, November to December 1998, and January to August 1999. He was also reimbursed by PPI for the expenses he incurred in connection with his work as sector manager. He reported for work in Manila except for occasional assignments abroad, and received instructions from Henrichsen.7 On May 5, 1999, respondent received a letter from Henrichsen informing him that his employment had been terminated effective August 4, 1999 for the reason that PCIJ and PPI had not been successful in the water and sanitation sector in the Philippines.8 However, on July 24, 1999, Henrichsen, by electronic mail,9 requested respondent to stay put in his job after August 5, 1999, until such time that he would be able to report on certain projects and discuss all the opportunities he had developed.10 Respondent continued his work with PPI until the end of business hours on October 1, 1999. Respondent filed with PPI several money claims, including unpaid salary, leave pay, air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI partially settled some of his claims (US$5,635.99), but refused to pay the rest. On December 5, 2000, respondent filed a Complaint11 for Illegal Dismissal against petitioners PPI and Henrichsen with the Labor Arbiter. It was docketed as NLRC-NCR Case No. 30-12-04787-00. In his Complaint, respondent alleged that he was illegally dismissed; PPI had not notified the DOLE of its decision to close one of its departments, which resulted in his dismissal; and they failed to notify him that his employment was terminated after August 4, 1999. Respondent also claimed for separation pay and other unpaid benefits. He alleged that the company acted in bad faith and disregarded his rights. He prayed for the following reliefs: 1. Judgment be rendered in his favor ordering the respondents to reinstate complainant to his former position without loss of seniority and other privileges and benefits, and to pay his full backwages from the time compensation was with held (sic) from him up to the time of his actual reinstatement. In the alternative, if reinstatement is no longer feasible, respondents must pay the complainant full backwages, and separation pay equivalent to one month pay for every year of service, or in the amount of US$16,400.00 as separation pay; 2. Judgment be rendered ordering the respondents to pay the outstanding monetary obligation to complainant in the amount of US$10,131.76 representing the balance of unpaid salaries, leave pay, cost of his air travel and shipment of goods from Manila to Canada; and 3. Judgment be rendered ordering the respondent company to pay the complainant damages in the amount of no less than US $10,000.00 and to pay 10% of the total monetary award as attorneys fees, and costs. Other reliefs just and equitable under the premises are, likewise, prayed for.12 1awphi1.net Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1) the Labor Arbiter had no jurisdiction over the subject matter; and (2) venue was improperly laid. It averred that respondent was a Canadian citizen, a transient expatriate who had left the Philippines. He was employed and dismissed by PCIJ, a foreign corporation with principal office in Tokyo, Japan. Since respondents cause of action was based on his letter of employment executed in Tokyo, Japan dated January 7, 1998, under the principle of lex loci

contractus, the complaint should have been filed in Tokyo, Japan. Petitioners claimed that respondent did not offer any justification for filing his complaint against PPI before the NLRC in the Philippines. Moreover, under Section 12 of the General Conditions of Employment appended to the letter of employment dated January 7, 1998, complainant and PCIJ had agreed that any employment-related dispute should be brought before the London Court of Arbitration. Since even the Supreme Court had already ruled that such an agreement on venue is valid, Philippine courts have no jurisdiction.13 Respondent opposed the Motion, contending that he was employed by PPI to work in the Philippines under contract separate from his January 7, 1998 contract of employment with PCIJ. He insisted that his employer was PPI, a Philippine-registered corporation; it is inconsequential that PPI is a wholly-owned subsidiary of PCIJ because the two corporations have separate and distinct personalities; and he received orders and instructions from Henrichsen who was the president of PPI. He further insisted that the principles of forum non conveniens and lex loci contractus do not apply, and that although he is a Canadian citizen, Philippine Labor Laws apply in this case. Respondent adduced in evidence the following contract of employment dated January 9, 1998 which he had entered into with Henrichsen: Mr. Klaus K. Schonfeld II-365 Ginger Drive New Westminster, B.C. Canada V3L 5L5 Manila 9 January, 1998 Dear Mr. Schonfeld, Letter of Employment This Letter of Employment with the attached General Conditions of Employment constitutes the agreement, under which you will be engaged by Pacicon Philippines, Inc. on the terms and conditions defined hereunder. 1. Project Country: The Philippines with possible assignments in other countries. 2. Duty Station: Manila, the Philippines. 3. Family Status: Married. 4. Position: Sector Manager Water and Sanitation Sector. 5. Commencement: 1 January, 1998. 6. Remuneration: US$3,100.00 per month payable to a bank account to be nominated by you. 7. Accommodation: The company will provide partly furnished accommodation to a rent including association fees, taxes and VAT not exceeding the Pesos equivalent of US$2300.00 per month. 8. Transportation: Included for in the remuneration. 9. Shipment of Personal The maximum allowance is US$2500.00 in Effects: connection with initial shipment of personal effects from Canada. 10. Mobilization Travel: Mobilization travel will be from New Westminster, B.C., Canada. This letter is send (sic) to you in duplicate; we kindly request you to sign and return one copy to us. Yours sincerely, Pacicon Philippines, Inc. Jens Peter Henrichsen President14 According to respondent, the material allegations of the complaint, not petitioners defenses, determine which quasi-judicial body has jurisdiction. Section 21 of the Arbitration Clause in the General Conditions of Employment does not provide for an exclusive venue where the complaint against PPI for violation of the Philippine Labor Laws may be filed. Respondent pointed out that PPI had adopted two inconsistent positions: it was first alleged that he should have filed his complaint in Tokyo, Japan; and it later insisted that the complaint should have been filed in the London Court of Arbitration.15 In their reply, petitioners claimed that respondents employer was PCIJ, which had exercised supervision and control over him, and not PPI. Respondent was dismissed by PPI via a letter of Henrichsen under the letterhead of PCIJ in Japan.16 The letter of employment dated January 9, 1998 which respondent relies upon did not bear his (respondents) signature nor that of Henrichsen. On August 2, 2001, the Labor Arbiter rendered a decision granting petitioners Motion to Dismiss. The dispositive portion reads: WHEREFORE, finding merit in respondents Motion to Dismiss, the same is hereby granted. The instant complaint filed by the complainant is dismissed for lack of merit.

SO ORDERED.17 The Labor Arbiter found, among others, that the January 7, 1998 contract of employment between respondent and PCIJ was controlling; the Philippines was only the "duty station" where Schonfeld was required to work under the General Conditions of Employment. PCIJ remained respondents employer despite his having been sent to the Philippines. Since the parties had agreed that any differences regarding employeremployee relationship should be submitted to the jurisdiction of the court of arbitration in London, this agreement is controlling. On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and affirmed the latters decision in toto.18 Respondent then filed a petition for certiorari under Rule 65 with the CA where he raised the following arguments: I WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE LABOR ARBITERS DECISION CONSIDERING THAT: A. PETITIONERS TRUE EMPLOYER IS NOT PACIFIC CONSULTANTS INTERNATIONAL OF JAPAN BUT RESPONDENT COMPANY, AND THEREFORE, THE LABOR ARBITER HAS JURISDICTION OVER THE INSTANT CASE; AND B. THE PROPER VENUE FOR THE PRESENT COMPLAINT IS THE ARBITRATION BRANCH OF THE NLRC AND NOT THE COURT OF ARBITRATION IN LONDON. II WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE DISMISSAL OF THE COMPLAINT CONSIDERING THAT PETITIONERS TERMINATION FROM EMPLOYMENT IS ILLEGAL: A. THE CLOSURE OF RESPONDENT COMPANYS WATER AND SANITATION SECTOR WAS NOT BONA FIDE. B. ASSUMING ARGUENDO THAT THE CLOSURE OF RESPONDENT COMPANYS WATER AND SANITATION SECTOR WAS JUSTIFIABLE, PETITIONERS DISMISSAL WAS INEFFECTUAL AS THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) AND PETITIONER WAS NOT NOTIFIED THIRTY (30) DAYS BEFORE THE ALLEGED CLOSURE.19 Respondent averred that the absence or existence of a written contract of employment is not decisive of whether he is an employee of PPI. He maintained that PPI, through its president Henrichsen, directed his work/duties as Sector Manager of PPI; proof of this was his letter-proposal to the Development Bank of the Philippines for PPI to provide consultancy services for the Construction Supervision of the Water Supply and Sanitation component of the World Bank-Assisted LGU Urban Water and Sanitation Project.20 He emphasized that as gleaned from Alien Employment Permit (AEP) No. M-029908-5017 issued to him by DOLE on February 26, 1999, he is an employee of PPI. It was PPI president Henrichsen who terminated his employment; PPI also paid his salary and reimbursed his expenses related to transactions abroad. That PPI is a wholly-owned subsidiary of PCIJ is of no moment because the two corporations have separate and distinct personalities. The CA found the petition meritorious. Applying the four-fold test21 of determining an employer-employee relationship, the CA declared that respondent was an employee of PPI. On the issue of venue, the appellate court declared that, even under the January 7, 1998 contract of employment, the parties were not precluded from bringing a case related thereto in other venues. While there was, indeed, an agreement that issues between the parties were to be resolved in the London Court of Arbitration, the venue is not exclusive, since there is no stipulation that the complaint cannot be filed in any other forum other than in the Philippines. On November 25, 2004, the CA rendered its decision granting the petition, the decretal portion of which reads: WHEREFORE, the petition is GRANTED in that the assailed Resolutions of the NLRC are hereby REVERSED and SET ASIDE. Let this case be REMANDED to the Labor Arbiter a quo for disposition of the case on the merits. SO ORDERED.22 A motion for the reconsideration of the above decision was filed by PPI and Henrichsen, which the appellate court denied for lack of merit.23 In the present recourse, PPI and Henrichsen, as petitioners, raise the following issues:

I THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT AN EMPLOYMENT RELATIONSHIP EXISTED BETWEEN PETITIONERS AND RESPONDENT DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND WAS MERELY "SECONDED" TO PETITIONERS SINCE HIS WORK ASSIGNMENT WAS IN MANILA. II THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE LABOR ARBITER A QUO HAS JURISDICTION OVER RESPONDENTS CLAIM DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND HAD AGREED THAT ANY DISPUTE BETWEEN THEM "SHALL BE FINALLY SETTLED BY THE COURT OF ARBITRATION IN LONDON."24 Petitioners fault the CA for reversing the findings of the Labor Arbiter and the NLRC. Petitioners aver that the findings of the Labor Arbiter, as affirmed by the NLRC, are conclusive on the CA. They maintain that it is not within the province of the appellate court in a petition for certiorari to review the facts and evidence on record since there was no conflict in the factual findings and conclusions of the lower tribunals. Petitioners assert that such findings and conclusions, having been made by agencies with expertise on the subject matter, should be deemed binding and conclusive. They contend that it was the PCIJ which employed respondent as an employee; it merely seconded him to petitioner PPI in the Philippines, and assigned him to work in Manila as Sector Manager. Petitioner PPI, being a wholly-owned subsidiary of PCIJ, was never the employer of respondent. Petitioners assert that the January 9, 1998 letter of employment which respondent presented to prove his employment with petitioner PPI is of doubtful authenticity since it was unsigned by the purported parties. They insist that PCIJ paid respondents salaries and only coursed the same through petitioner PPI. PPI, being its subsidiary, had supervision and control over respondents work, and had the responsibilities of monitoring the "daily administration" of respondent. Respondent cannot rely on the pay slips, expenses claim forms, and reimbursement memoranda to prove that he was an employee of petitioner PPI because these documents are of doubtful authenticity. Petitioners further contend that, although Henrichsen was both a director of PCIJ and president of PPI, it was he who signed the termination letter of respondent upon instructions of PCIJ. This is buttressed by the fact that PCIJs letterhead was used to inform him that his employment was terminated. Petitioners further assert that all work instructions came from PCIJ and that petitioner PPI only served as a "conduit." Respondents Alien Employment Permit stating that petitioner PPI was his employer is but a necessary consequence of his being "seconded" thereto. It is not sufficient proof that petitioner PPI is respondents employer. The entry was only made to comply with the DOLE requirements. There being no evidence that petitioner PPI is the employer of respondent, the Labor Arbiter has no jurisdiction over respondents complaint. Petitioners aver that since respondent is a Canadian citizen, the CA erred in ignoring their claim that the principlesof forum non conveniens and lex loci contractus are applicable. They also point out that the principal office, officers and staff of PCIJ are stationed in Tokyo, Japan; and the contract of employment of respondent was executed in Tokyo, Japan. Moreover, under Section 21 of the General Conditions for Employment incorporated in respondents January 7, 1998 letter of employment, the dispute between respondent and PCIJ should be settled by the court of arbitration of London. Petitioners claim that the words used therein are sufficient to show the exclusive and restrictive nature of the stipulation on venue. Petitioners insist that the U.S. Labor-Management Act applies only to U.S. workers and employers, while the Labor Code of the Philippines applies only to Filipino employers and Philippine-based employers and their employees, not to PCIJ. In fine, the jurisdictions of the NLRC and Labor Arbiter do not extend to foreign workers who executed employment agreements with foreign employers abroad, although "seconded" to the Philippines.25 In his Comment,26 respondent maintains that petitioners raised factual issues in their petition which are proscribed under Section 1, Rule 45 of the Rules of Court. The finding of the CA that he had been an employee of petitioner PPI and not of PCIJ is buttressed by his documentary evidence which both the Labor Arbiter and the NLRC ignored; they erroneously opted to dismiss his complaint on the basis of the letter of employment

and Section 21 of the General Conditions of Employment. In contrast, the CA took into account the evidence on record and applied case law correctly. The petition is denied for lack of merit. It must be stressed that in resolving a petition for certiorari, the CA is not proscribed from reviewing the evidence on record. Under Section 9 of Batas Pambansa Blg. 129, as amended by R.A. No. 7902, the CA is empowered to pass upon the evidence, if and when necessary, to resolve factual issues.27 If it appears that the Labor Arbiter and the NLRC misappreciated the evidence to such an extent as to compel a contrary conclusion if such evidence had been properly appreciated, the factual findings of such tribunals cannot be given great respect and finality.28 Inexplicably, the Labor Arbiter and the NLRC ignored the documentary evidence which respondent appended to his pleadings showing that he was an employee of petitioner PPI; they merely focused on the January 7, 1998 letter of employment and Section 21 of the General Conditions of Employment. Petitioner PPI applied for the issuance of an AEP to respondent before the DOLE. In said application, PPI averred that respondent is its employee. To show that this was the case, PPI appended a copy of respondents employment contract. The DOLE then granted the application of PPI and issued the permit. It bears stressing that under the Omnibus Rules Implementing the Labor Code, one of the requirements for the issuance of an employment permit is the employment contract. Section 5, Rule XIV (Employment of Aliens) of the Omnibus Rules provides: SECTION 1. Coverage. This rule shall apply to all aliens employed or seeking employment in the Philippines and the present or prospective employers. SECTION 2. Submission of list. All employers employing foreign nationals, whether resident or non-resident, shall submit a list of nationals to the Bureau indicating their names, citizenship, foreign and local address, nature of employment and status of stay in the Philippines. SECTION 3. Registration of resident aliens. All employed resident aliens shall register with the Bureau under such guidelines as may be issued by it. SECTION 4. 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. SECTION 5. Requirements for employment permit applicants. The application for an employment permit shall be accompanied by the following: (a) Curriculum vitae duly signed by the applicant indicating his educational background, his work experience and other data showing that he possesses technical skills in his trade or profession. (b) Contract of employment between the employer and the principal which shall embody the following, among others: 1. That the non-resident alien worker shall comply with all applicable laws and rules and regulations of the Philippines; 2. That the non-resident alien worker and the employer shall bind themselves to train at least two (2) Filipino understudies for a period to be determined by the Minister; and 3. That he shall not engage in any gainful employment other than that for which he was issued a permit. (c) A designation by the employer of at least two (2) understudies for every alien worker. Such understudies must be the most ranking regular employees in the section or department for which the expatriates are being hired to insure the actual transfer of technology. Under Section 6 of the Rule, the DOLE may issue an alien employment permit based only on the following: (a) Compliance by the applicant and his employer with the requirements of Section 2 hereof; (b) Report of the Bureau Director as to the availability or non-availability of any person in the Philippines who is competent and willing to do the job for which the services of the applicant are desired; (c) His assessment as to whether or not the employment of the applicant will redound to the national interest; (d) Admissibility of the alien as certified by the Commission on Immigration and Deportation; (e) The recommendation of the Board of Investments or other appropriate government agencies if the applicant will be employed in preferred areas of investments or in accordance with the imperative of economic development.

Thus, as claimed by respondent, he had an employment contract with petitioner PPI; otherwise, petitioner PPI would not have filed an application for a Permit with the DOLE. Petitioners are thus estopped from alleging that the PCIJ, not petitioner PPI, had been the employer of respondent all along. We agree with the conclusion of the CA that there was an employer-employee relationship between petitioner PPI and respondent using the four-fold test. Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: (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 employees conduct. It is the so-called "control test" which constitutes the most important index of the existence of the employer-employee relationshipthat is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. Stated otherwise, an employeremployee relationship exists where the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end.29 We quote with approval the following ruling of the CA: [T]here is, indeed, substantial evidence on record which would erase any doubt that the respondent company is the true employer of petitioner. In the case at bar, the power to control and supervise petitioners work performance devolved upon the respondent company. Likewise, the power to terminate the employment relationship was exercised by the President of the respondent company. It is not the letterhead used by the company in the termination letter which controls, but the person who exercised the power to terminate the employee. It is also inconsequential if the second letter of employment executed in the Philippines was not signed by the petitioner. An employer-employee relationship may indeed exist even in the absence of a written contract, so long as the four elements mentioned in the Mafinco case are all present.30 The settled rule on stipulations regarding venue, as held by this Court in the vintage case of Philippine Banking Corporation v. Tensuan,31 is that while they are considered valid and enforceable, venue stipulations in a contract do not, as a rule, supersede the general rule set forth in Rule 4 of the Revised Rules of Court in the absence of qualifying or restrictive words. They should be considered merely as an agreement or additional forum, not as limiting venue to the specified place. They are not exclusive but, rather permissive. If the intention of the parties were to restrict venue, there must be accompanying language clearly and categorically expressing their purpose and design that actions between them be litigated only at the place named by them.32 In the instant case, no restrictive words like "only," "solely," "exclusively in this court," "in no other court save ," "particularly," "nowhere else but/except ," or words of equal import were stated in the contract.33 It cannot be said that the court of arbitration in London is an exclusive venue to bring forth any complaint arising out of the employment contract. Petitioners contend that respondent should have filed his Complaint in his place of permanent residence, or where the PCIJ holds its principal office, at the place where the contract of employment was signed, in London as stated in their contract. By enumerating possible venues where respondent could have filed his complaint, however, petitioners themselves admitted that the provision on venue in the employment contract is indeed merely permissive. Petitioners insistence on the application of the principle of forum non conveniens must be rejected. The bare fact that respondent is a Canadian citizen and was a repatriate does not warrant the application of the principle for the following reasons: First. The Labor Code of the Philippines does not include forum non conveniens as a ground for the dismissal of the complaint.34 Second. The propriety of dismissing a case based on this principle requires a factual determination; hence, it is properly considered as defense.35 Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals,36 this Court held that: x x x [a] Philippine Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to have power to enforce its decision. x x x Admittedly, all the foregoing requisites are present in this case.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 76563 is AFFIRMED. This case is REMANDED to the Labor Arbiter for disposition of the case on the merits. Cost against petitioners. SO ORDERED. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 146881 February 5, 2007 COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA, Manager, Petitioners, vs. DR. DEAN N. CLIMACO, Respondent. DECISION AZCUNA, J.: This is a petition for review on certiorari of the Decision of the Court of Appeals1 promulgated on July 7, 2000, and its Resolution promulgated on January 30, 2001, denying petitioners motion for reconsideration. The Court of Appeals ruled that an employer-employee relationship exists between respondent Dr. Dean N. Climaco and petitioner Coca-Cola Bottlers Phils., Inc. (Coca-Cola), and that respondent was illegally dismissed. Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers Phils., Inc. by virtue of a Retainer Agreement that stated: WHEREAS, the COMPANY desires to engage on a retainer basis the services of a physician and the said DOCTOR is accepting such engagement upon terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual agreement hereinafter contained, the parties agree as follows: 1. This Agreement shall only be for a period of one (1) year beginning January 1, 1988 up to December 31, 1988. The said term notwithstanding, either party may terminate the contract upon giving a thirty (30)-day written notice to the other. 2. The compensation to be paid by the company for the services of the DOCTOR is hereby fixed at PESOS: Three Thousand Eight Hundred (P3,800.00) per month. The DOCTOR may charge professional fee for hospital services rendered in line with his specialization. All payments in connection with the Retainer Agreement shall be subject to a withholding tax of ten percent (10%) to be withheld by the COMPANY under the Expanded Withholding Tax System. In the event the withholding tax rate shall be increased or decreased by appropriate laws, then the rate herein stipulated shall accordingly be increased or decreased pursuant to such laws. 3. That in consideration of the above mentioned retainers fee, the DOCTOR agrees to perform the duties and obligations enumerated in the COMPREHENSIVE MEDICAL PLAN, hereto attached as Annex "A" and made an integral part of this Retainer Agreement. 4. That the applicable provisions in the Occupational Safety and Health Standards, Ministry of Labor and Employment shall be followed. 5. That the DOCTOR shall be directly responsible to the employee concerned and their dependents for any injury inflicted on, harm done against or damage caused upon the employee of the COMPANY or their dependents during the course of his examination, treatment or consultation, if such injury, harm or damage was committed through professional negligence or incompetence or due to the other valid causes for action. 6. That the DOCTOR shall observe clinic hours at the COMPANYS premises from Monday to Saturday of a minimum of two (2) hours each day or a maximum of TWO (2) hours each day or treatment from 7:30 a.m. to 8:30 a.m. and 3:00 p.m. to 4:00 p.m., respectively unless such schedule is otherwise changed by the COMPANY as [the] situation so warrants, subject to the Labor Code provisions on Occupational Safety and Health Standards as the COMPANY may determine. It is understood that the DOCTOR shall stay at least two (2) hours a day in the COMPANY clinic and that such two (2) hours be devoted to the workshift with the most number of employees. It is further understood that the DOCTOR shall be on call at all times during the other workshifts to attend to emergency case[s]; 7. That no employee-employer relationship shall exist between the COMPANY and the DOCTOR whilst this contract is in effect, and in case of its termination, the DOCTOR shall be entitled only to such retainer fee as may be due him at the time of termination.2

The Comprehensive Medical Plan,3 which contains the duties and responsibilities of respondent, adverted to in the Retainer Agreement, provided: A. OBJECTIVE These objectives have been set to give full consideration to [the] employees and dependents health: 1. Prompt and adequate treatment of occupational and non-occupational injuries and diseases. 2. To protect employees from any occupational health hazard by evaluating health factors related to working conditions. 3. To encourage employees [to] maintain good personal health by setting up employee orientation and education on health, hygiene and sanitation, nutrition, physical fitness, first aid training, accident prevention and personnel safety. 4. To evaluate other matters relating to health such as absenteeism, leaves and termination. 5. To give family planning motivations. B. COVERAGE 1. All employees and their dependents are embraced by this program. 2. The health program shall cover pre-employment and annual p.e., hygiene and sanitation, immunizations, family planning, physical fitness and athletic programs and other activities such as group health education program, safety and first aid classes, organization of health and safety committees. 3. Periodically, this program will be reviewed and adjusted based on employees needs. C. ACTIVITIES 1. Annual Physical Examination. 2. Consultations, diagnosis and treatment of occupational and non-occupational illnesses and injuries. 3. Immunizations necessary for job conditions. 4. Periodic inspections for food services and rest rooms. 5. Conduct health education programs and present education materials. 6. Coordinate with Safety Committee in developing specific studies and program to minimize environmental health hazards. 7. Give family planning motivations. 8. Coordinate with Personnel Department regarding physical fitness and athletic programs. 9. Visiting and follow-up treatment of Company employees and their dependents confined in the hospital. The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one expired on December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent continued to perform his functions as company doctor to Coca-Cola until he received a letter4 dated March 9, 1995 from petitioner company concluding their retainership agreement effective 30 days from receipt thereof. It is noted that as early as September 1992, petitioner was already making inquiries regarding his status with petitioner company. First, he wrote a letter addressed to Dr. Willie Sy, the Acting President and Chairperson of the Committee on Membership, Philippine College of Occupational Medicine. In response, Dr. Sy wrote a letter5 to the Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City, stating that respondent should be considered as a regular part-time physician, having served the company continuously for four (4) years. He likewise stated that respondent must receive all the benefits and privileges of an employee under Article 157 (b)6 of the Labor Code. Petitioner company, however, did not take any action. Hence, respondent made another inquiry directed to the Assistant Regional Director, Bacolod City District Office of the Department of Labor and Employment (DOLE), who referred the inquiry to the Legal Service of the DOLE, Manila. In his letter7 dated May 18, 1993, Director Dennis P. Ancheta, Legal Service, DOLE, stated that he believed that an employer-employee relationship existed between petitioner and respondent based on the Retainer Agreement and the Comprehensive Medical Plan, and the application of the "four-fold" test. However, Director Ancheta emphasized that the existence of employer-employee relationship is a question of fact. Hence, termination disputes or money claims arising from employer-employee relations exceeding P5,000 may be filed with the National Labor Relations Commission (NLRC). He stated that their opinion is strictly advisory. An inquiry was likewise addressed to the Social Security System (SSS). Thereafter, Mr. Romeo R. Tupas, OICFID of SSS-Bacolod City, wrote a letter8 to the Personnel Officer of Coca-Cola Bottlers Phils., Inc. informing the

latter that the legal staff of his office was of the opinion that the services of respondent partake of the nature of work of a regular company doctor and that he was, therefore, subject to social security coverage. Respondent inquired from the management of petitioner company whether it was agreeable to recognizing him as a regular employee. The management refused to do so. On February 24, 1994, respondent filed a Complaint9 before the NLRC, Bacolod City, seeking recognition as a regular employee of petitioner company and prayed for the payment of all benefits of a regular employee, including 13th Month Pay, Cost of Living Allowance, Holiday Pay, Service Incentive Leave Pay, and Christmas Bonus. The case was docketed as RAB Case No. 06-02-10138-94. While the complaint was pending before the Labor Arbiter, respondent received a letter dated March 9, 1995 from petitioner company concluding their retainership agreement effective thirty (30) days from receipt thereof. This prompted respondent to file a complaint for illegal dismissal against petitioner company with the NLRC, Bacolod City. The case was docketed as RAB Case No. 06-04-10177-95. In a Decision10 dated November 28, 1996, Labor Arbiter Jesus N. Rodriguez, Jr. found that petitioner company lacked the power of control over respondents performance of his duties, and recognized as valid the Retainer Agreement between the parties. Thus, the Labor Arbiter dismissed respondents complaint in the first case, RAB Case No. 06-02-10138-94. The dispositive portion of the Decision reads: WHEREFORE, premises considered, judgment is hereby rendered dismissing the instant complaint seeking recognition as a regular employee. SO ORDERED.11 In a Decision12 dated February 24, 1997, Labor Arbiter Benjamin Pelaez dismissed the case for illegal dismissal (RAB Case No. 06-04-10177-95) in view of the previous finding of Labor Arbiter Jesus N. Rodriguez, Jr. in RAB Case No. 06-02-10138-94 that complainant therein, Dr. Dean Climaco, is not an employee of CocaCola Bottlers Phils., Inc. Respondent appealed both decisions to the NLRC, Fourth Division, Cebu City. In a Decision13 promulgated on November 28, 1997, the NLRC dismissed the appeal in both cases for lack of merit. It declared that no employer-employee relationship existed between petitioner company and respondent based on the provisions of the Retainer Agreement which contract governed respondents employment. Respondents motion for reconsideration was denied by the NLRC in a Resolution14 promulgated on August 7, 1998. Respondent filed a petition for review with the Court of Appeals. In a Decision promulgated on July 7, 2000, the Court of Appeals ruled that an employer-employee relationship existed between petitioner company and respondent after applying the four-fold test: (1) the power to hire the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employers power to control the employee with respect to the means and methods by which the work is to be accomplished. The Court of Appeals held: The Retainer Agreement executed by and between the parties, when read together with the Comprehensive Medical Plan which was made an integral part of the retainer agreements, coupled with the actual services rendered by the petitioner, would show that all the elements of the above test are present. First, the agreements provide that "the COMPANY desires to engage on a retainer basis the services of a physician and the said DOCTOR is accepting such engagement x x x" (Rollo, page 25). This clearly shows that Coca-Cola exercised its power to hire the services of petitioner. Secondly, paragraph (2) of the agreements showed that petitioner would be entitled to a final compensation of Three Thousand Eight Hundred Pesos per month, which amount was later raised to Seven Thousand Five Hundred on the latest contract. This would represent the element of payment of wages. Thirdly, it was provided in paragraph (1) of the agreements that the same shall be valid for a period of one year. "The said term notwithstanding, either party may terminate the contract upon giving a thirty (30) day written notice to the other." (Rollo, page 25). This would show that Coca-Cola had the power of dismissing the petitioner, as it later on did, and this could be done for no particular reason, the sole requirement being the formers compliance with the 30-day notice requirement. Lastly, paragraphs (3) and (6) of the agreements reveal that Coca-Cola exercised the most important element of all, that is, control, over the conduct of petitioner in the latters performance of his duties as a doctor for the company.

It was stated in paragraph (3) that the doctor agrees to perform the duties and obligations enumerated in the Comprehensive Medical Plan referred to above. In paragraph (6), the fixed and definite hours during which the petitioner must render service to the company is laid down. We say that there exists Coca-Colas power to control petitioner because the particular objectives and activities to be observed and accomplished by the latter are fixed and set under the Comprehensive Medical Plan which was made an integral part of the retainer agreement. Moreover, the times for accomplishing these objectives and activities are likewise controlled and determined by the company. Petitioner is subject to definite hours of work, and due to this, he performs his duties to Coca-Cola not at his own pleasure but according to the schedule dictated by the company. In addition, petitioner was designated by Coca-Cola to be a member of its Bacolod Plants Safety Committee. The minutes of the meeting of the said committee dated February 16, 1994 included the name of petitioner, as plant physician, as among those comprising the committee. It was averred by Coca-Cola in its comment that they exercised no control over petitioner for the reason that the latter was not directed as to the procedure and manner of performing his assigned tasks. It went as far as saying that "petitioner was not told how to immunize, inject, treat or diagnose the employees of the respondent (Rollo, page 228). We believe that if the "control test" would be interpreted this strictly, it would result in an absurd and ridiculous situation wherein we could declare that an entity exercises control over anothers activities only in instances where the latter is directed by the former on each and every stage of performance of the particular activity. Anything less than that would be tantamount to no control at all. To our minds, it is sufficient if the task or activity, as well as the means of accomplishing it, is dictated, as in this case where the objectives and activities were laid out, and the specific time for performing them was fixed by the controlling party.15 Moreover, the Court of Appeals declared that respondent should be classified as a regular employee having rendered six years of service as plant physician by virtue of several renewed retainer agreements. It underscored the provision in Article 28016 of the Labor Code stating 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." Further, it held that the termination of respondents services without any just or authorized cause constituted illegal dismissal. In addition, the Court of Appeals found that respondents dismissal was an act oppressive to labor and was effected in a wanton, oppressive or malevolent manner which entitled respondent to moral and exemplary damages. The dispositive portion of the Decision reads: WHEREFORE, in view of the foregoing, the Decision of the National Labor Relations Commission dated November 28, 1997 and its Resolution dated August 7, 1998 are found to have been issued with grave abuse of discretion in applying the law to the established facts, and are hereby REVERSED and SET ASIDE, and private respondent Coca-Cola Bottlers, Phils.. Inc. is hereby ordered to: 1. Reinstate the petitioner with full backwages without loss of seniority rights from the time his compensation was withheld up to the time he is actually reinstated; however, if reinstatement is no longer possible, to pay the petitioner separation pay equivalent to one (1) months salary for every year of service rendered, computed at the rate of his salary at the time he was dismissed, plus backwages. 2. Pay petitioner moral damages in the amount of P50,000.00. 3. Pay petitioner exemplary damages in the amount of P50,000.00. 4. Give to petitioner all other benefits to which a regular employee of Coca-Cola is entitled from the time petitioner became a regular employee (one year from effectivity date of employment) until the time of actual payment. SO ORDERED.17 Petitioner company filed a motion for reconsideration of the Decision of the Court of Appeals. In a Resolution promulgated on January 30, 2001, the Court of Appeals stated that petitioner company noted that its Decision failed to mention whether respondent was a full-time or part-time regular employee. It also questioned how the benefits under their Collective Bargaining Agreement which the Court awarded to respondent could be given to him considering that such benefits were given only to regular employees who render a full days work of not less that eight hours. It was admitted that respondent is only required to work for two hours per day.

The Court of Appeals clarified that respondent was a "regular part-time employee and should be accorded all the proportionate benefits due to this category of employees of [petitioner] Corporation under the CBA." It sustained its decision on all other matters sought to be reconsidered. Hence, this petition filed by Coca-Cola Bottlers Phils., Inc. The issues are: 1. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, CONTRARY TO THE DECISIONS OF THE HONORABLE SUPREME COURT ON THE MATTER. 2. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, AND HOLDING INSTEAD THAT THE WORK OF A PHYSICIAN IS NECESSARY AND DESIRABLE TO THE BUSINESS OF SOFTDRINKS MANUFACTURING, CONTRARY TO THE RULINGS OF THE SUPREME COURT IN ANALOGOUS CASES. 3. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, AND HOLDING INSTEAD THAT THE PETITIONERS EXERCISED CONTROL OVER THE WORK OF THE RESPONDENT. 4. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, AND FINDING THAT THERE IS EMPLOYEREMPLOYEE RELATIONSHIP PURSUANT TO ARTICLE 280 OF THE LABOR CODE. 5. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, AND FINDING THAT THERE EXISTED ILLEGAL DISMISSAL WHEN THE EMPLOYENT OF THE RESPONDENT WAS TERMINATED WITHOUT JUST CAUSE. 6. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, AND FINDING THAT THE RESPONDENT IS A REGULAR PART TIME EMPLOYEE WHO IS ENTITLED TO PROPORTIONATE BENEFITS AS A REGULAR PART TIME EMPLOYEE ACCORDING TO THE PETITIONERS CBA. 7. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, AND FINDING THAT THE RESPONDENT IS ENTITLED TO MORAL AND EXEMPLARY DAMAGES. The main issue in this case is whether or not there exists an employer-employee relationship between the parties. The resolution of the main issue will determine whether the termination of respondents employment is illegal. The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test: (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 employees conduct, or the so-called "control test," considered to be the most important element.18 The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of this case show that no employer-employee relationship exists between the parties. The Labor Arbiter and the NLRC correctly found that petitioner company lacked the power of control over the performance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical Plan, which contains the respondents objectives, duties and obligations, does not tell respondent "how to conduct his physical examination, how to immunize, or how to diagnose and treat his patients, employees of [petitioner] company, in each case." He likened this case to that of Neri v. National Labor Relations Commission,19 which held: In the case of petitioner Neri, it is admitted that FEBTC issued a job description which detailed her functions as a radio/telex operator. However, a cursory reading of the job description shows that what was sought to be controlled by FEBTC was actually the end result of the task, e.g., that the daily incoming and outgoing telegraphic transfer of funds received and relayed by her, respectively, tallies with that of the register. The

guidelines were laid down merely to ensure that the desired end result was achieved. It did not, however, tell Neri how the radio/telex machine should be operated. In effect, the Labor Arbiter held that petitioner company, through the Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not control the means and methods by which respondent performed his assigned tasks. The NLRC affirmed the findings of the Labor Arbiter and stated that it is precisely because the company lacks the power of control that the contract provides that respondent shall be directly responsible to the employee concerned and their dependents for any injury, harm or damage caused through professional negligence, incompetence or other valid causes of action. The Labor Arbiter also correctly found that the provision in the Retainer Agreement that respondent was on call during emergency cases did not make him a regular employee. He explained, thus: Likewise, the allegation of complainant that since he is on call at anytime of the day and night makes him a regular employee is off-tangent. Complainant does not dispute the fact that outside of the two (2) hours that he is required to be at respondent companys premises, he is not at all further required to just sit around in the premises and wait for an emergency to occur so as to enable him from using such hours for his own benefit and advantage. In fact, complainant maintains his own private clinic attending to his private practice in the city, where he services his patients, bills them accordingly -- and if it is an employee of respondent company who is attended to by him for special treatment that needs hospitalization or operation, this is subject to a special billing. More often than not, an employee is required to stay in the employers workplace or proximately close thereto that he cannot utilize his time effectively and gainfully for his own purpose. Such is not the prevailing situation here.1awphi1.net In addition, the Court finds that the schedule of work and the requirement to be on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement. The Court also notes that the Retainership Agreement granted to both parties the power to terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of dismissal or termination. The Court agrees with the Labor Arbiter and the NLRC that there is nothing wrong with the employment of respondent as a retained physician of petitioner company and upholds the validity of the Retainership Agreement which clearly stated that no employer-employee relationship existed between the parties. The Agreement also stated that it was only for a period of 1 year beginning January 1, 1988 to December 31, 1998, but it was renewed on a yearly basis. Considering that there is no employer-employee relationship between the parties, the termination of the Retainership Agreement, which is in accordance with the provisions of the Agreement, does not constitute illegal dismissal of respondent. Consequently, there is no basis for the moral and exemplary damages granted by the Court of Appeals to respondent due to his alleged illegal dismissal. WHEREFORE, the petition is GRANTED and the Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. The Decision and Resolution dated November 28, 1997 and August 7, 1998, respectively, of the National Labor Relations Commission are REINSTATED. No costs. G.R. No. 164652: THELMA DUMPIT-MURILLO vs COURT OF APPEALS, ASSOCIATED BROADCASTING COMPANY, JOSE JAVIER AND EDWARD TAN 8 June 2007 l Labor Standards Fixed-Term Employee vs Regular Employee

Dumpit was hired by ABC as a newscaster in 1995. Her contract with the TV station was repeatedly renewed until 1999. She then wrote Jose Javier (VP for News and Public Affairs of ABC) advising him of her intention to renew the contract. Javier did not respond. Dumpit then demanded reinstatement as well as her backwages, service incentive leave pays and other monetary benefits. ABC said they could only pay her backwages but her other claims had no basis as she was not entitled thereto because she is considered as a talent and not a regular employee.

Dumpit sued ABC. The Labor Arbiter ruled against Dumpit. The National Labor Relations Commission reversed the LA. The Court of Appeals reversed the NLRC and ruled that as per the contract between ABC and Dumpit, Dumpit is a fixed term employee. ISSUE: Whether or not Dumpit is a regular employee. HELD: Yes. Dumpit was a regular employee under contemplation of law. The practice of having fixed-term contracts in the industry does not automatically make all talent contracts valid and compliant with labor law. The assertion that a talent contract exists does not necessarily prevent a regular employment status. The duties of Dumpit as enumerated in her employment contract indicate that ABC had control over the work of Dumpit. Aside from control, ABC also dictated the work assignments and payment of petitioners wages. ABC also had power to dismiss her. All these being present, clearly, there existed an employment relationship between Dumpit and ABC. In addition, her work was continuous for a period of four years. This repeated engagement under contract of hire is indicative of the necessity and desirability of the Dumpits work in ABCs business. THIRD DIVISION

CONSOLIDATED BROADCASTING G.R. No. 168424 SYSTEM, INC., Petitioner, Present: Ynares-Santiago, J. (Chairperson), Austria-Martinez, Chico-Nazario, and Nachura, JJ.

- versus -

DANNY OBERIO, ELNA DE PEDRO, LUISITO VILLAMOR, WILMA SUGATON, RUFO DEITA, JR., EMILY DE GUZMAN, CAROLINE LADRILLO, JOSE ROBERTO Promulgated: REGALADO, ROSEBEL NARCISO & ANANITA TANGETE, Respondents. June 8, 2007 x ---------------------------------------------------------------------------------------- x DECISION YNARES-SANTIAGO, J.:

Assailed in this petition for review is the July 30, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 77098, which affirmed the December 5, 2001 Decision of the National Labor Relations Commission (NLRC) holding that respondents were regular employees of petitioner and that they were illegally dismissed.

Respondents alleged that they were employed as drama talents by DYWB-Bombo Radyo, a radio station owned and operated by petitioner Consolidated Broadcasting System, Inc. They reported for work daily for six days in a week and were required to record their drama production in advance. Some of them were employed by

petitioner since 1974, while the latest one was hired in 1997. Their drama programs were aired not only in Bacolod City but also in the sister stations of DYWB in the Visayas and Mindanao areas.

Sometime in August 1998, petitioner reduced the number of its drama productions from 14 to 11, but was opposed by respondents. After the negotiations failed, the latter sought the intervention of the Department of Labor and Employment (DOLE), which on November 12, 1998, conducted through its Regional Office, an inspection of DWYB station. The results thereof revealed that petitioner is guilty of violation of labor standard laws, such as underpayment of wages, 13th month pay, non-payment of service incentive leave pay, and non-coverage of respondents under the Social Security System.

Petitioner contended that respondents are not its employees and refused to submit the payroll and daily time records despite the subpoena duces tecum issued by the DOLE Regional Director. Petitioner further argued that the case should be referred to the NLRC because the Regional Director has no jurisdiction over the determination of the existence of employer-employee relationship which involves evidentiary matters that are not verifiable in the normal course of inspection.

Vexed by the respondents complaint, petitioner allegedly pressured and intimidated respondents. Respondents Oberio and Delta were suspended for minor lapses and the payment of their salaries were purportedly delayed. Eventually, on February 3, 1999, pending the outcome of the inspection case with the Regional Director, respondents were barred by petitioner from reporting for work; thus, the former claimed constructive dismissal.

On April 8, 1999, the DOLE Regional Director issued an order directing petitioner to pay respondents a total of P318,986.74 representing non-payment/underpayment of the salary and benefits due them. However, on July 8, 1999, the Regional Director reconsidered the April 8, 1999 order and certified the records of the case to the NLRC, Regional Arbitration Branch VI, for determination of employer-employee relationship. appealed said order to the Secretary of Labor. Respondents

On October 12, 1999, respondents filed a case for illegal dismissal, underpayment/non-payment of wages and benefits plus damages against petitioner. On April 10, 2000, the Labor Arbiter dismissed the case without prejudice while waiting for the decision of the Secretary of Labor on the same issue of the existence of an employeremployee relationship between petitioner and respondents.

On appeal to the NLRC, respondents raised the issue of employer-employee relationship and submitted the following to prove the existence of such relationship, to wit: time cards, identification cards, payroll, a show cause order of the station manager to respondent Danny Oberio and memoranda either noted or issued by said manager. Petitioner, on the other hand, did not present any documentary evidence in its behalf and merely denied the

allegations of respondents. It claimed that the radio station pays for the drama recorded by piece and that it has no control over the conduct of respondents.

On December 5, 2001, the NLRC rendered a decision holding that respondents were regular employees of petitioner who were illegally dismissed by the latter. It further held that respondents complied with the requirements of the rule on forum shopping. The decretal portion thereof, provides:

WHEREFORE, premises considered, the decision of Labor Arbiter Ray Alan T. Drilon dated 10 April 2000 is SET ASIDE and VACATED and a new one entered. Ordering respondent Consolidated Broadcasting System, Inc. (Bombo Radyo Philippines), DYWB to reinstate the complainants without loss of seniority rights wi[th] full back wages computed from February 1999 up to the time of actual reinstatement. SO ORDERED. Hence, petitioner filed the instant recourse.

The issues for resolution are as follows: (1) Did respondents violate the rule on forum shopping; (2) whether the NLRC correctly ruled on the merits of the case instead of remanding the case to the Labor Arbiter; (3) whether respondents were employees of petitioner; and (4) whether their dismissal was illegal.

Respondents complaint in the inspection case before the DOLE Regional Director alleged that they were under the employ of petitioner at the time of the filing of said complaint. Pending the resolution thereof, they claimed to have been dismissed; hence, the filing of the present illegal dismissal case before the Labor Arbiter. The causes of action in these two complaints are different, i.e., one for violation of labor standard laws, and the other, for illegal dismissal, but the entitlement of respondents to the reliefs prayed for hinges on the same issue of the existence of an employer-employee relationship. While the decision on the said issue by one tribunal may operate as res judicata on the other, dismissal of the present illegal dismissal case on the ground of forum shopping, would work injustice to respondents because it is the law itself which provides for two separate remedies for their distinct causes of action.

Under Article 217 of the Labor Code, termination cases fall under the jurisdiction of Labor Arbiters. Whereas, Article 128 of the same Code vests the Secretary of Labor or his duly authorized representatives with the power to inspect the employers records to determine and compel compliance with labor standard laws. The exercise of the said power by the Secretary or his duly authorized representatives is exclusive to cases where employer-employee relationship still exists. Thus, in cases where the complaint for violation of labor standard laws preceded the termination of the employee and the filing of the illegal dismissal case, it would not be in consonance with justice to charge the complainants with engaging in forum shopping when the remedy available to them at the

time their causes of action arose was to file separate cases before different fora. Besides, in the instant case, respondent Danny Oberio disclosed in the verification the pendency of the case regarding wage differential. In addition, said case was discussed in detail in the position paper, evincing the absence of any intention on the part of respondents to mislead the Labor Arbiter.

Similarly, in Benguet Management Corporation v. Court of Appeals, petitioner filed separate actions to enjoin the foreclosure of real estate mortgages before the Regional Trial Courts of San Pablo City and Zambales which has jurisdiction over the place where the properties were located. In both cases, petitioner contended, among others, that the loan secured by said mortgages imposed unauthorized penalties, interest and charges. The Court did not find the mortgagors guilty of forum shopping considering that since injunction is enforceable only within the territorial limits of the trial court, the mortgagor is left without remedy as to the properties located outside the jurisdiction of the issuing court, unless an application for injunction is made with another court which has jurisdiction over the latter properties.

By parity of reasoning, it would be unfair to hold respondents in the instant case guilty of forum shopping because the recourse available to them after their termination, but pending resolution of the inspection case before the DOLE, was to file a case for illegal dismissal before the Labor Arbiter who has jurisdiction over termination disputes.

More importantly, substantial justice dictates that this case be resolved on the merits considering that the NLRC and the Court of Appeals correctly found that there existed an employer-employee relationship between petitioner and respondents and that the latters dismissal was illegal, as will be discussed hereunder.

In the same vein, the NLRC correctly ruled on the merits instead of remanding the case to the Labor Arbiter. Respondents specifically raised the issue of the existence of employer-employee relationship but petitioner refused to submit evidence to disprove such relationship on the erroneous contention that to do so would constitute a waiver of the right to question the jurisdiction of the NLRC to resolve the case on the merits. This is rather odd because it was the stand of petitioner in the inspection case before the DOLE that the case should be certified to the NLRC for the resolution of the issue of employer-employee relationship. But when the same issue was proffered before the NLRC, it refused to present evidence and instead sought the dismissal of the case invoking the pendency of the inspection case before the DOLE. Petitioner refused to meet head on the substantial aspect of this controversy and resorted to technicalities to delay its disposition. It must be stressed that labor tribunals are not bound by technical rules and the Court would sustain the expedient disposition of cases so long as the parties are not denied due process. The rule is that, due process is not violated where a person is given the opportunity to be heard, but chooses not to give his or her side of the case. Significantly, petitioner never claimed that it was denied due process. Indeed, no such denial exists because it had all the opportunities to present evidence before the labor

tribunals below, the Court of Appeals, and even before this Court, but chose not to do so for reasons which will not warrant the sacrifice of substantial justice over technicalities.

On the third issue, respondents employment with petitioner passed the four-fold test on employer-employee relations, namely: (1) the selection and engagement of the employee, or the power to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employee.

Petitioner failed to controvert with substantial evidence the allegation of respondents that they were hired by the former on various dates from 1974 to 1997. If petitioner did not hire respondents and if it was the director alone who chose the talents, petitioner could have easily shown, being in possession of the records, a contract to such effect. However, petitioner merely relied on its contention that respondents were piece rate contractors who were paid by results. Note that under Policy Instruction No. 40, petitioner is obliged to execute the necessary contract specifying the nature of the work to be performed, rates of pay, and the programs in which they will work. Moreover, project or contractual employees are required to be apprised of the project they will undertake under a written contract. This was not complied with by the petitioner, justifying the reasonable conclusion that no such contracts exist and that respondents were in fact regular employees.

In ABS-CBN v. Marquez, the Court held that the failure of the employer to produce the contract mandated by Policy Instruction No. 40 is indicative that the so called talents or project workers are in reality, regular employees. Thus

Policy Instruction No. 40 pertinently provides: Program employees are those whose skills, talents or services are engaged by the station for a particular or specific program or undertaking and who are not required to observe normal working hours such that on some days they work for less than eight (8) hours and on other days beyond the normal work hours observed by station employees and are allowed to enter into employment contracts with other persons, stations, advertising agencies or sponsoring companies. The engagement of program employees, including those hired by advertising or sponsoring companies, shall be under a written contract specifying, among other things, the nature of the work to be performed, rates of pay, and the programs in which they will work. The contract shall be duly registered by the station with the Broadcast Media Council within three days from its consummation. (Emphasis supplied) Ironically, however, petitioner failed to adduce an iota proof that the requirements for program employment were even complied with by it. It is basic that project or contractual employees are appraised of the project they will work under a written contract, specifying, inter alia, the nature of work to be performed and the rates of pay and the program in which they will work. Sadly, however, no such written contract was ever presented by the petitioner. Petitioner is in the best of position to present these documents. And because none was presented, we have every reason to surmise that no such written contract was ever accomplished by the parties, thereby belying petitioners posture.

Worse, there was no showing of compliance with the requirement that after every engagement or production of a particular television series, the required reports were filed with the proper government agency, as provided no less under the very Policy Instruction invoked by the petitioner, nor under the Omnibus Implementing Rules of the Labor Code for project employees. This alone bolsters respondents contention that they were indeed petitioners regular employees since their employment was not only for a particular program. Moreover, the engagement of respondents for a period ranging from 2 to 25 years and the fact that their drama programs were aired not only in Bacolod City but also in the sister stations of DYWB in the Visayas and Mindanao areas, undoubtedly show that their work is necessary and indispensable to the usual business or trade of petitioner. The test to determine whether employment is regular or not is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business. Thus, even assuming that respondents were initially hired as project/contractual employees who were paid per drama or per project/contract, the engagement of their services for 2 to 25 years justify their classification as regular employees, their services being deemed indispensable to the business of petitioner.

As to the payment of wages, it was petitioner who paid the same as shown by the payroll bearing the name of petitioner company in the heading with the respective salaries of respondents opposite their names. Anent the power of control, dismissal, and imposition of disciplinary measures, which are indicative of an employer-employee relationship, the same were duly proven by the following: (1) memorandum duly noted by Wilfredo Alejaga, petitioners station manager, calling the attention of the Drama Department to the late submission of scripts by writers and the tardiness and absences of directors and talents, as well as the imposable fines of P100 to P200 for future infractions; (2) the memorandum of the station manager directing respondent Oberio to explain why no disciplinary action should be taken against him for punching the time card of a certain Mrs. Fe Oberio who was not physically present in their office; and (3) the station managers memorandum suspending respondent Oberio for six days for the said infraction which constituted violation of petitioners network policy. All these, taken together, unmistakably show the existence of an employer-employee relationship. Not only did petitioner possess the power of control over their work but also the power to discipline them through the imposition of fines and suspension for violation of company rules and policies.

Finally, we find that respondents were illegally dismissed. In labor cases, the employer has the burden of proving that the dismissal was for a just cause; failure to show this would necessarily mean that the dismissal was unjustified and, therefore, illegal. To allow an employer to dismiss an employee based on mere allegations and generalities would place the employee at the mercy of his employer; and the right to security of tenure, which this Court is bound to protect, would be unduly emasculated. In this case, petitioner merely contended that it was

respondents who ceased to report to work, and never presented any substantial evidence to support said allegation. Petitioner therefore failed to discharge its burden, hence, respondents were correctly declared to have been illegally dismissed.

Furthermore, if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence should be resolved in the formers favor. The policy is to extend the doctrine to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection of labor.

When a person is illegally dismissed, he is entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. In the event, however, that reinstatement is no longer feasible, or if the employee decides not to be reinstated, the employer shall pay him separation pay in lieu of reinstatement. Such a rule is likewise observed in the case of a strained employer-employee relationship or when the work or position formerly held by the dismissed employee no longer exists. In sum, an illegally dismissed employee is entitled to: (1) either reinstatement if viable or separation pay if reinstatement is no longer viable, and (2) backwages. In the instant controversy, reinstatement is no longer viable considering the strained relations between petitioner and respondents. As admitted by the latter, the complaint filed before the DOLE strained their relations with petitioner who eventually dismissed them from service. Payment of separation pay instead of reinstatement would thus better promote the interest of both parties.

Respondents separation pay should be computed based on their respective one (1) month pay, or one-half (1/2) month pay for every year of service, whichever is higher, reckoned from their first day of employment up to finality of this decision. Full backwages, on the other hand, should be computed from the date of their dismissal until the finality of this decision.

WHEREFORE, the petition is DENIED. The July 30, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 77098, finding respondents to be regular employees of petitioner and holding them to be illegally dismissed and directing petitioner to pay full backwages, is AFFIRMED with the MODIFICATION that petitioner is ordered to pay respondents their separation pay instead of effecting their reinstatement. LAKAS SA INDUSTRIYA NG KAPATIRANG HALIGI NG ALYANSA PINAGBUKLOD NG MANGGAGAWANG PROMO NG BURLINGAME vs. BURLINGAME CORPORATION G. R. No. 162833, June 15, 2007 FACTS: Petitioner in this case sought to represent all rank-and-file promo employees of respondent. It alleged that said group of employees is not represented by a Union. So, they filed a petition for certification election before the Department of Labor and Employment. Respondent, however, opposed said petition on the ground that there exists no employer-employee relation between the parties. Respondent here further claimed that the employees sought to

be represented by petitioner are not their employees but the employees of F. Garil Manpower Services, a duly licensed local employment agency. ISSUE: Whether or not there is employer-employee relationship between respondent and the employees sought to be represented by petitioner RULING: In deciding the instant petition, the Supreme Court stressed the four-fold test in determining the existence of employer-employee relationship. The elements to determine the existence of an employment relationship are: 1. the selection and engagement of the employee 2. the payment of wages 3. the power of dismissal and 4. the employers power to control the employees conduct The most important element is the last element. That is, the employer controls the conduct of an employee not only as to the result of the work to be done, but also as to the means and methods to accomplish it. It bears stressing that the facts of the case clearly indicate the existence of employer-employee relationship. The involvement of F. Garil, the employment agency, is limited only to the recruitment aspect. Furthermore, despite of the presence of an stipulation agreed into by the employment agency and herein respondent to the extent that the rank-and-file employees are considered as the employees of the former, the Supreme Court held that said contractual stipulation cannot override factual circumstances firmly establishing the legal existence of an employer-employee relationship.

G.R. No. 162813: FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER UY vs JIMMY LEBATIQUE and THE HONORABLE COURT OF APPEALS 12 February 2007 l Labor Standards Abandonment Service Incentive Leave Field Personnel In March 1996, Lebatique was hired as a driver by FAR EAST AGRICULTURAL SUPPLY, INC. with a daily wage of P223.50. His job as a driver includes the delivery of animal feeds to the clients of the company. He must report either in the morning or in the afternoon to make the deliveries. On January 24, 2000, Lebatique was suspended by Manuel Uy (brother of FEASIs General Manager Alexander Uy) for allegedly using the company vehicle illegally. On the same day, Lebatique filed a complaint for nonpayment of overtime pay against Alexander Uy. Uy summoned Lebatique and asked why he was claiming overtime pay. Lebatique said since he started working with the company he has never been paid OT pay. Uy consulted with his brother. On January 29, 2000, Uy told Lebatique to look for another job. Lebatique then filed an Illegal Dismissal case against the company. The Labor Arbiter ruled in favor of Lebatique. Uy was ordered to reinstate Lebatique and at the same time to pay Lebatique his 13th month pay, back wages (time when case was pending), service incentive leave pay and OT pay all amounting to P196,659.72. Uy argued that Lebatique was not dismissed and that he was merely suspended; that he abandoned his job; and that Lebatique was a field personnel not entitled to overtime pay and service incentive leave. ISSUE: Whether or not Lebatique is a field personnel. HELD: No. Lebatique is a regular employee. Uy illegally dismissed Lebatique when he told him to look for another job. Judging at the sequence of event, Lebatique earned the ire of Uy when he filed a complaint for nonpayment of OT pay on the day Lebatique was suspended by Manuel Uy. Such is not a valid reason for dismissing Lebatique. Uy cannot therefore claim that he merely suspended Lebatique. Further, Lebatique did not abandon his job. His filing of this case is proof enough that he had no intention to abandon his job. To constitute abandonment as a just cause for dismissal, there must be: (a) absence without justifiable reason; and (b) a clear intention, as manifested by some overt act, to sever the employer-employee relationship. None of the above was proven by Uy.

Also, Lebatique is not a field personnel as defined above for the following reasons: (1) company drivers, including Lebatique, are directed to deliver the goods at a specified time and place; (2) they are not given the discretion to solicit, select and contact prospective clients; and (3) Far East issued a directive that company drivers should stay at the clients premises during truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m. As a regular employee, Lebatique is entitled to service incentive leave and OT pay. The Supreme Court affirmed the Labor Arbiters decision but remanded the case for properly computing Lebatiques OT pay taking in to consideration the companys time keeping records. Field Personnel Defined Field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. THIRD DIVISION

ROWELL INDUSTRIAL CORPORATION, Petitioner,

G.R. No. 167714 Present: YNARES-SANTIAGO, J., AUSTRIA-MARTINEZ, CALLEJO, SR.,* CHICO-NAZARIO, and NACHURA, JJ. Promulgated: Chairperson,

- versus -

HON. COURT OF APPEALS and JOEL TARIPE, Respondents.

March 7, 2007

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DECISION

CHICO-NAZARIO, J.:

This case is a Petition for Review under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to set aside the Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 74104, entitled, Rowell Industrial Corp., and/or Edwin Tang vs. National Labor Relations Commission and Joel Taripe, dated 30 September 2004 and 1 April 2005, respectively, which affirmed the Resolutions of the National Labor Relations Commission (NLRC) dated 7 June 2002 and 20 August 2002, finding herein respondent Joel Taripe (Taripe) as a regular employee who had been illegally dismissed from employment by herein petitioner Rowell Industrial Corp. (RIC), thereby ordering petitioner RIC to reinstate respondent Taripe with full backwages, subject to the modification of exonerating Edwin Tang, the RIC General Manager and Vice President, from liability and computing the backwages of herein

respondent Taripe based on the prevailing salary rate at the time of his dismissal. The NLRC Resolutions reversed the Decision of the Labor Arbiter dated 29 September 2000, which dismissed respondent Taripes complaint.

Petitioner RIC is a corporation engaged in manufacturing tin cans for use in packaging of consumer products, e.g., foods, paints, among other things. Respondent Taripe was employed by petitioner RIC on 8 November 1999 as a rectangular power press machine operator with a salary of P223.50 per day, until he was allegedly dismissed from his employment by the petitioner on 6 April 2000.

The controversy of the present case arose from the following facts, as summarized by the NLRC and the Court of Appeals:

On [17 February 2000], [herein respondent Taripe] filed a [C]omplaint against [herein petitioner RIC] for regularization and payment of holiday pay, as well as indemnity for severed finger, which was amended on [7 April 2000] to include illegal dismissal. [Respondent Taripe] alleges that [petitioner RIC] employed him starting [8 November 1999] as power press machine operator, such position of which was occupied by [petitioner RICs] regular employees and the functions of which were necessary to the latters business. [Respondent Taripe] adds that upon employment, he was made to sign a document, which was not explained to him but which was made a condition for him to be taken in and for which he was not furnished a copy. [Respondent Taripe] states that he was not extended full benefits granted under the law and the [Collective Bargaining Agreement] and that on [6 April 2000], while the case for regularization was pending, he was summarily dismissed from his job although he never violated any of the [petitioner RICs] company rules and regulations. [Petitioner RIC], for [its] part, claim[s] that [respondent Taripe] was a contractual employee, whose services were required due to the increase in the demand in packaging requirement of [its] clients for Christmas season and to build up stock levels during the early part of the following year; that on [6 March 2000], [respondent Taripes] employment contract expired. [Petitioner RIC] avers that the information update for union members, which was allegedly filled up by [respondent Taripe] and submitted by the Union to [petitioner] company, it is stated therein that in the six (6) companies where [respondent Taripe] purportedly worked, the latters reason for leaving was finished contract, hence, [respondent Taripe] has knowledge about being employed by contract contrary to his allegation that the document he was signing was not explained to him. [Petitioner RIC] manifest[s] that all benefits, including those under the [Social Security System], were given to him on [12 May 2000].

On 29 September 2000, the Labor Arbiter rendered a Decision dismissing respondent Taripes Complaint based on a finding that he was a contractual employee whose contract merely expired. The dispositive portion of the said Decision reads, thus:

WHEREFORE, premises considered, judgment is hereby rendered declaring this complaint of [herein respondent Taripe] against [herein petitioner RIC] and Mr. Edwin Tang for illegal dismissal DISMISSED for lack of merit. However, on ground of compassionate justice, [petitioner RIC and Mr. Edwin Tang] are hereby ordered to pay [respondent Taripe] the sum of

PHP5,811.00 or one months salary as financial assistance and holiday pay in the sum of PHP894.00, as well as attorneys fees of 10% based on holiday pay (Article 110, Labor Code).

Aggrieved, respondent Taripe appealed before the NLRC. In a Resolution dated 7 June 2002, the NLRC granted the appeal filed by respondent Taripe and declared that his employment with the petitioner was regular in status; hence, his dismissal was illegal. The decretal portion of the said Resolution reads as follows:

WHEREFORE, premises considered, [herein respondent Taripes] appeal is GRANTED. The Labor Arbiters [D]ecision in the above-entitled case is hereby REVERSED. It is hereby declared that [respondent Taripes] employment with [herein petitioner RIC and Mr. Edwin Tang] is regular in status and that he was illegally dismissed therefrom. [Petitioner RIC and Mr. Edwin Tang] are hereby ordered to reinstate [respondent Taripe] and to jointly and severally pay him full backwages from the time he was illegally dismissed up to the date of his actual reinstatement, less the amount of P1,427.67. The award of P894.00 for holiday pay is AFFIRMED but the award of P5,811.00 for financial assistance is deleted. The award for attorneys fees is hereby adjusted to ten percent (10%) of [respondent Taripes] total monetary award.

Dissatisfied, petitioner RIC moved for the reconsideration of the aforesaid Resolution but it was denied in the Resolution of the NLRC dated 20 August 2002.

Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure before the Court of Appeals with the following assignment of errors:

I. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT MISINTERPRETED ARTICLE 280 OF THE LABOR CODE AND IGNORED JURISPRUDENCE WHEN IT DECIDED THAT [RESPONDENT TARIPE] IS A REGULAR EMPLOYEE AND THUS, ILLEGALLY DISMISSED. II. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT ORDERED [EDWIN TANG] TO (sic) JOINTLY AND SEVERALLY LIABLE FOR MONETARY CLAIMS OF [RESPONDEN TARIPE]. III. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT ORDERED PAYMENT OF MONETARY CLAIMS COMPUTED ON AN ERRONEOUS WAGE RATE.

The Court of Appeals rendered the assailed Decision on 30 September 2004, affirming the Resolution of the NLRC dated 7 June 2002, with modifications. Thus, it disposed

WHEREFORE, the Resolutions dated [7 June 2002] and [20 August 2002] of [the NLRC] are affirmed, subject to the modification that [Edwin Tang] is exonerated from liability

and the computation of backwages of [respondent Taripe] shall be based on P223.50, the last salary he received. A Motion for Reconsideration of the aforesaid Decision was filed by petitioner RIC, but the same was denied for lack of merit in a Resolution of the Court of Appeals dated 1 April 2005.

Hence, this Petition.

Petitioner RIC comes before this Court with the lone issue of whether the Court of Appeals misinterpreted Article 280 of the Labor Code, as amended, and ignored jurisprudence when it affirmed that respondent Taripe was a regular employee and was illegally dismissed.

Petitioner RIC, in its Memorandum, argues that the Court of Appeals had narrowly interpreted Article 280 of the Labor Code, as amended, and disregarded a contract voluntarily entered into by the parties.

Petitioner RIC emphasizes that while an employees status of employment is vested by law pursuant to Article 280 of the Labor Code, as amended, said provision of law admits of two exceptions, to wit: (1) those employments which have 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 employment; and (2) when the work or services to be performed are seasonal; hence, the employment is for the duration of the season. Thus, there are certain forms of employment which entail the performance of usual and desirable functions and which exceed one year but do not necessarily qualify as regular employment under Article 280 of the Labor Code, as amended.

The Petition is unmeritorious.

A closer examination of Article 280 of the Labor Code, as amended, is imperative to resolve the issue raised in the present case.

In declaring that respondent Taripe was a regular employee of the petitioner and, thus, his dismissal was illegal, the Court of Appeals ratiocinated in this manner:

In determining the employment status of [herein respondent Taripe], reference must be made to Article 280 of the Labor Code, which provides: xxxx Thus, there are two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or

broken, with respect to the activity in which they are employed. [Respondent Taripe] belonged to the first category of regular employees. The purported contract of employment providing that [respondent Taripe] was hired as contractual employee for five (5) months only, cannot prevail over the undisputed fact that [respondent Taripe] was hired to perform the function of power press operator, a function necessary or desirable in [petitioners] business of manufacturing tin cans. [Herein petitioner RICs] contention that the four (4) months length of service of [respondent Taripe] did not grant him a regular status is inconsequential, considering that length of service assumes importance only when the activity in which the employee has been engaged to perform is not necessary or desirable to the usual business or trade of the employer. As aptly ruled by [the NLRC]: In the instant case, there is no doubt that [respondent Taripe], as power press operator, has been engaged to perform activities which are usually necessary or desirable in [petitioner RICs] usual business or trade of manufacturing of tin cans for use in packaging of food, paint and others. We also find that [respondent Taripe] does not fall under any of the abovementioned exceptions. Other that (sic) [petitioner RICs] bare allegation thereof, [it] failed to present any evidence to prove that he was employed for a fixed or specific project or undertaking the completion of which has been determined at the time of his engagement or that [respondent Taripes] services are seasonal in nature and that his employment was for the duration of the season.

Article 280 of the Labor Code, as amended, provides:

ART. 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 services 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]

The aforesaid Article 280 of the Labor Code, as amended, classifies employees into three categories, namely: (1) regular employees or those whose work is necessary or desirable to the usual business of the employer; (2) project employees or those whose 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 services to be performed is seasonal in nature and the employment is for the duration of the season; and (3) casual employees or those who are neither regular nor project employees.

Regular employees are further classified into: (1) regular employees by nature of work; and (2) regular employees by years of service. The former refers to those employees who perform a particular activity which is necessary or desirable in the usual business or trade of the employer, regardless of their length of service; while the latter refers to those employees who have been performing the job, regardless of the nature thereof, for at least a year.

The aforesaid Article 280 of the Labor Code, as amended, however, does not proscribe or prohibit an employment contract with a fixed period. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is nothing essentially contradictory between a definite period of employment and the nature of the employees duties. What Article 280 of the Labor Code, as amended, seeks to prevent is the practice of some unscrupulous and covetous employers who wish to circumvent the law that protects lowly workers from capricious dismissal from their employment. The aforesaid provision, however, should not be interpreted in such a way as to deprive employers of the right and prerogative to choose their own workers if they have sufficient basis to refuse an employee a regular status. Management has rights which should also be protected.

In the case at bar, respondent Taripe signed a contract of employment prior to his admission into the petitioners company. Said contract of employment provides, among other things:

4. That my employment shall be contractual for the period of five (5) months which means that the end of the said period, I can (sic) discharged unless this contract is renewed by mutual consent or terminated for cause.

Based on the said contract, respondent Taripes employment with the petitioner is good only for a period of five months unless the said contract is renewed by mutual consent. And as claimed by petitioner RIC, respondent Taripe, along with its other contractual employees, was hired only to meet the increase in demand for packaging materials during the Christmas season and also to build up stock levels during the early part of the year.

Although Article 280 of the Labor Code, as amended, does not forbid fixed term employment, it must, nevertheless, meet any of the following guidelines in order that it cannot be said to circumvent security of tenure: (1) that the fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or (2) it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter.

In the present case, it cannot be denied that the employment contract signed by respondent Taripe did not mention that he was hired only for a specific undertaking, the completion of which had been determined at the time of his engagement. The said employment contract neither mentioned that respondent Taripes services were seasonal in nature and that his employment was only for the duration of the Christmas season as purposely claimed by petitioner RIC. What was stipulated in the said contract was that respondent Taripes employment was contractual for the period of five months.

Likewise, as the NLRC mentioned in its Resolution, to which the Court of Appeals agreed, other than the bare allegations of petitioner RIC that respondent Taripe was hired only because of the increase in the demand for packaging materials during the Christmas season, petitioner RIC failed to substantiate such claim with any other evidence. Petitioner RIC did not present any evidence which might prove that respondent Taripe was employed for a fixed or specific project or that his services were seasonal in nature.

Also, petitioner RIC failed to controvert the claim of respondent Taripe that he was made to sign the contract of employment, prepared by petitioner RIC, as a condition for his hiring. Such contract in which the terms are prepared by only one party and the other party merely affixes his signature signifying his adhesion thereto is called contract of adhesion. It is an agreement in which the parties bargaining are not on equal footing, the weaker partys participation being reduced to the alternative to take it or leave it. In the present case, respondent Taripe, in need of a job, was compelled to agree to the contract, including the five-month period of employment, just so he could be hired. Hence, it cannot be argued that respondent Taripe signed the employment contract with a fixed term of five months willingly and with full knowledge of the impact thereof.

With regard to the second guideline, this Court agrees with the Court of Appeals that petitioner RIC and respondent Taripe cannot be said to have dealt with each other on more or less equal terms with no moral dominance exercised by the former over the latter. As a power press operator, a rank and file employee, he can hardly be on equal terms with petitioner RIC. As the Court of Appeals said, almost always, employees agree to any terms of an employment contract just to get employed considering that it is difficult to find work given their ordinary qualifications.

Therefore, for failure of petitioner RIC to comply with the necessary guidelines for a valid fixed term employment contract, it can be safely stated that the aforesaid contract signed by respondent Taripe for a period of five months was a mere subterfuge to deny to the latter a regular status of employment.

Settled is the rule that the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the casual business or trade of the

employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety.

Given the foregoing, this Court agrees in the findings of the Court of Appeals and the NLRC that, indeed, respondent Taripe, as a rectangular power press machine operator, in charge of manufacturing covers for four liters rectangular tin cans, was holding a position which is necessary and desirable in the usual business or trade of petitioner RIC, which was the manufacture of tin cans. Therefore, respondent Taripe was a regular employee of petitioner RIC by the nature of work he performed in the company.

Respondent Taripe does not fall under the exceptions mentioned in Article 280 of the Labor Code, as amended, because it was not proven by petitioner RIC that he was employed only for a specific project or undertaking or his employment was merely seasonal. Similarly, the position and function of power press operator cannot be said to be merely seasonal. Such position cannot be considered as only needed for a specific project or undertaking because of the very nature of the business of petitioner RIC. Indeed, respondent Taripe is a regular employee of petitioner RIC and as such, he cannot be dismissed from his employment unless there is just or authorized cause for his dismissal.

Well-established is the rule that regular employees enjoy security of tenure and they can only be dismissed for just cause and with due process, notice and hearing. And in case of employees dismissal, the burden is on the employer to prove that the dismissal was legal. Thus, respondent Taripes summary dismissal, not being based on any of the just or authorized causes enumerated under Articles 282, 283, and 284 of the Labor Code, as amended, is illegal.

Before concluding, we once more underscore the settled precept that factual findings of the NLRC, having deemed to acquire expertise in matters within its jurisdiction, are generally accorded not only respect but finality especially when such factual findings are affirmed by the Court of Appeals; hence, such factual findings are binding on this Court.

WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of the Court of Appeals dated 30 September 2004 and 1 April 2005, respectively, which affirmed with modification the Resolutions of the NLRC dated 7 June 2002 and 20 August 2002, respectively, finding herein respondent Taripe as a regular employee who had been illegally dismissed from employment by petitioner RIC, are hereby AFFIRMED. Costs against petitioner RIC. PNOC-EDC v. NLRC Facts: Danilo Mercado, an employee of the Philippine National Oil Company Energy Development Corporation, was dismissed on the grounds of serious acts of dishonesty and violation of company rules and regulations allegedly committed as follows:

1. Withdrew P1680.00 from company funds, appropriated P680.00 for personal use and paid the nipa supplier P1000.00. 2. Withdrew P28.66 as payment for the fabrication of rubber stamp but appropriated the P8.66 for personal use. 3. Absence without leave and without proper turn-over thus disrupting and delaying company work activities. 4. Vacation leave without prior leave. Mercado filed a complaint against PNOC-EDC before the NLRC Regional Arbitration Branch. After considerations of position papers presented by both parties, the labor arbiter ruled in favor of Mercado. Issues: 1. Whether or not matters of employment of PNOC-EDC is within the jurisdiction of the labor arbiter and the NLRC. 2. Whether or not the labor arbiter and the NLRC are justified in ordering the reinstatement of the private respondent, payment of his savings, 13th month pay, and payment of damages as well as attorneys fees. Held: The High Court affirmed the resolution of the respondent NLRC with modification: reducing moral damages to P10000 and exemplary damages to P5000. 1. The test whether a government-owned or controlled corporation is subject to Civil Service Law is the manner of its creation. Those created by special charter are subject to its provision while those created under General Corporation Law are not within its coverage. The PNOC-EDC, having been incorporated under General Corporation Law, is subject to the provisions of the Labor Law. 2. PNOC-EDCs accusations are not supported by evidence. Loss of trust or breach of confidence is a valid ground for dismissing an employee, but such loss or breach must have some basis. Olongapo Maintenance Services vs. Chantengco [G.R. No. 156146. June 21, 2007] Facts: OMSI is a corporation engaged in the business of providing janitorial and maintenance services to various clients, including GOCCs. On various dates beginning 1986, OMSI hired the respondents as janitors, grass cutters, and degreasers, and assigned them at the NAIA. In 1999, OMSI terminated their employment. Issue: Are they regular employees? Held: Without question, respondents, as janitors, grass cutters, and degreasers, performed work necessary or desirable in the janitorial and maintenance service business of OMSI. The principal test in determining whether an employee is a project employee is whether he/she is assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time the employee is engaged in the project, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. A true project employee should be assigned to a project which begins and ends at determined or determinable times, and be informed thereof at the time of hiring. In the instant case, the record is bereft of proof that the respondents engagement as project employees has been predetermined, as required by law. OMSI did not provide convincing evidence that respondents were informed that they were to be assigned to a specific project or undertaking when OMSI hired them. Notably, the employment contracts for the specific project signed by the respondents were never presented. All that OMSI submitted in the proceedings a quo are the service contracts between OMSI and the MIAA. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 155505 February 15, 2007 EMILIO M. CAPAROSO and JOEVE P. QUINDIPAN, Petitioners, vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, COMPOSITE ENTERPRISES INCORPORATED, and EDITH TAN, Respondents. DECISION CARPIO, J.:

The Case Before the Court is a petition for review assailing the 27 June 2002 Decision1 and 30 September 2002 Resolution2 of the Court of Appeals in CA-G.R. SP No. 67156. The Antecedent Facts Composite Enterprises Incorporated (Composite) is engaged in the distribution and supply of confectioneries to various retail establishments within the Philippines. Emilio M. Caparoso (Caparoso) and Joeve P. Quindipan (Quindipan) were Composites deliverymen. Caparoso alleged that he was hired on 8 November 1998 while Quindipan alleged that he was hired on intermittent basis since 1997. Quindipan further alleged that he had been working continuously with Composite since August 1998. On 8 October 1999, Caparoso and Quindipan (petitioners) were dismissed from the service.1awwphi1.net They filed a consolidated position paper before the Labor Arbiter charging Composite and its Personnel Manager Edith Tan (Tan) with illegal dismissal. Composite and Tan (respondents) alleged that petitioners were both hired on 11 May 1999 as deliverymen, initially for three months and then on a month-to-month basis. Respondents alleged that petitioners termination from employment resulted from the expiration of their contracts of employment on 8 October 1999. The Labor Arbiter ruled that petitioners are regular employees of respondents. In his Decision3 dated 15 June 2000, the Labor Arbiter held: WHEREFORE, premises considered, judgment is hereby rendered declaring complainants to have been illegally dismissed from employment and consequently, respondent COMPOSITE ENTERPRISES CORPORATION is hereby ordered to immediately reinstate complainants to their respective former position[s] without loss of seniority rights and other privileges, with full backwages from the date of dismissal up to the actual date of reinstatement which, as of this date, amounts to P93,155.36, as above computed. SO ORDERED.4 The Labor Arbiter ruled that by the very nature of respondents business and the nature of petitioners services, there is no doubt as to the employment status of petitioners. Respondents appealed to the National Labor Relations Commission (NLRC). In its 9 May 2001 Decision,5 the NLRC set aside the Labor Arbiters Decision and dismissed petitioners complaint for illegal dismissal. The NLRC ruled that the mere fact that the employees duties are necessary or desirable in the business or trade of the employer does not mean that they are forbidden from stipulating the period of employment. The NLRC held that petitioners contracts of employment are valid and binding between the contracting parties and shall be considered as the law between them. The NLRC ruled that petitioners are bound by their employment contracts. Petitioners filed a motion for reconsideration. The NLRC denied the motion in its 9 August 2001 Resolution.6 Petitioners filed a petition for certiorari before the Court of Appeals. The Ruling of the Court of Appeals In its 27 June 2002 Decision, the Court of Appeals dismissed the petition and affirmed the NLRCs 9 May 2001 Decision and 9 August 2001 Resolution. The Court of Appeals held that respondents manpower requirement varies from month to month depending on the demand from their clients for their products. Respondents manpower requirement determines the period of their employees services. Respondents employed petitioners for the purpose of addressing a temporary manpower shortage. Petitioners filed a motion for reconsideration. In its 30 September 2002 Resolution, the Court of Appeals denied the motion for reconsideration. Hence, the petition before this Court. The Issues The petition raises these issues: 1. Whether petitioners are regular employees of respondents; and 2. Whether respondents are guilty of illegal dismissal. The Ruling of this Court The petition has no merit. Petitioners are Not Regular Employees Article 280 of the Labor Code provides:

Art. 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 services 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. Under Article 280 of the Labor Code, a regular employee is (1) one who is engaged to perform activities that are necessary or desirable in the usual trade or business of the employer, or (2) a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed.7 However, even if an employee is engaged to perform activities that are necessary or desirable in the usual trade or business of the employer, it does not preclude the fixing of employment for a definite period. In Brent School, Inc. v. Zamora,8 this Court ruled that the contract, which was entered into before the effectivity of the Labor Code on 1 November 1974, was valid under Republic Act No. 1052 or the Termination Pay Law, as amended. Although the contract was entered into before the effectivity of the Labor Code, the Court traced how the present Article 280 of the Labor Code, which deleted employment with fixed or definite period, evolved. In sustaining the validity of fixed-term employment, the Court explained in Brent: Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employees right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus become pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences.9 The Court thus laid down the criteria under which fixed-term employment could not be said to be in circumvention of the law on security of tenure, thus: 1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or 2. It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter.10 We agree with the Court of Appeals that in this case, the fixed period of employment was knowingly and voluntarily agreed upon by the parties. The Court of Appeals noted that there was no indication of force, duress, or improper pressure exerted on petitioners when they signed the contracts. Further, there was no proof that respondents were regularly engaged in hiring workers for work for a minimum period of five months to prevent the regularization of their employees. Petitioners Employment is akin to Probationary Employment At most, petitioners employment for less than six months can be considered probationary. Article 281 of the Labor Code provides: Art. 281. Probationary Employment. - Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made

known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. Petitioners were hired on 11 May 1999, initially for three months. After the expiration of their contracts, petitioners were hired on a month-to-month basis. Their contracts of employment ended on 8 October 1999. Hence, they were employed for a total of five months. Their employment did not even exceed six months to entitle them to become regular employees. We cannot accept petitioners bare allegations that Caparoso was hired on 8 November 1998 while Quindipan was hired on intermittent basis since 1997. Petitioners failed to substantiate their allegations. The payslips submitted by petitioners to prove their prior employment with respondents are handwritten and indicate only the date and amount of pay. They do not even indicate the name of the employer. The printed payslips during the period of the contracts indicate not only the name of the employer but also the breakdown of petitioners net pay. Petitioners were not Illegally Dismissed from Employment Petitioners terms of employment are governed by their fixed-term contracts. Petitioners fixed-term employment contracts had expired. They were not illegally dismissed from employment. This Court has ruled that "if from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be disregarded for being contrary to public policy."11 In this case, it was not established that respondents intended to deny petitioners their right to security of tenure. Besides, petitioners employment did not exceed six months. Thus, the Court of Appeals did not err in sustaining petitioners dismissal from employment. WHEREFORE, we DENY the petition. We AFFIRM the 27 June 2002 Decision and 30 September 2002 Resolution in CA-G.R. SP No. 67156. G.R. No. 155207: WILHELMINA S. OROZCO vs THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS, PHILIPPINE DAILY INQUIRER, AND LETICIA JIMENEZ MAGSANOC 29 April 2005 / Labor Standards Employee-employer Relationship in a Publication Bond Requirement When Employer Appeals in a Labor Case Orozco was hired as a writer by the Philippine Daily Inquirer in 1990. She was the columnist of Feminist Reflections under the Lifestyle section of the publication. She writes on a weekly basis and on a per article basis (P250-300/article). In 1991, Magsanoc as the editor-in-chief sought to improve the Lifestyle section of the paper. She said there were too many Lifestyle writers and that it was time to reduce the number of writers. Orozcos column was eventually dropped. Orozco filed for a case for Illegal Dismissal against PDI and Magsanoc. Orozco won in the Labor Arbiter. The LA ruled that there exists an employer-employee relationship between PDI and Orozco hence Orozco is entitled to receive backwages, reinstatement, and 13th month pay. PDI appealed to the National Labor Relations Commission. The NLRC denied the appeal because of the failure of PDI to post a surety bond as required by Article 223 of the Labor Code. The Court of Appeals reversed the NLRC. ISSUE: Whether or not there exists an employer-employee relationship between PDI and Orozco. Whether or not PDIs appeal will prosper. HELD: Under Article 223 of the Labor Code: ART. 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. In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employers appeal. It was intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees just and lawful claims. But in this case, this principle is relaxed by the Supreme Court considering the fact that the Labor Arbiter, in ruling that the Orozco is entitled to backwages, did not provide any computation.

The case is then remanded to the Labor Arbiter for the computation. This necessarily pended the resolution of the other issue of whether or not there exists an employer-employee relationship between PDI and Orozco. THIRD DIVISION [G.R. No. 151309, October 15, 2008] BISIG MANGGAGAWA SA TRYCO AND/OR FRANCISCO SIQUIG, AS UNION PRESIDENT, JOSELITO LARIO, VIVENCIO B. BARTE, SATURNINO EGERA AND SIMPLICIO AYA-AY, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA CORPORATION, AND/OR WILFREDO C. RIVERA, RESPONDENTS. DECISION NACHURA, J.: This petition seeks a review of the Decision[1] of the Court of Appeals (CA) dated July 24, 2001 and Resolution dated December 20, 2001, which affirmed the finding of the National Labor Relations Commission (NLRC) that the petitioners' transfer to another workplace did not amount to a constructive dismissal and an unfair labor practice. The pertinent factual antecedents are as follows: Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is located in Caloocan City. Petitioners Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying the positions of helper, shipment helper and factory workers, respectively, assigned to the Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-and-file employees. Tryco and the petitioners signed separate Memorand[a] of Agreement[2] (MOA), providing for a compressed workweek schedule to be implemented in the company effective May 20, 1996. The MOA was entered into pursuant to Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the Implementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for work rendered during those hours. The MOA specifically stated that the employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed workweek schedule is adopted in lieu of the regular workweek schedule which also consists of 46 hours. However, should an employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay. Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of the implementation of a compressed workweek in the company.[3] In January 1997, BMT and Tryco negotiated for the renewal of their collective bargaining agreement (CBA) but failed to arrive at a new agreement. Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of Animal Industry of the Department of Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan City: MR. WILFREDO C. RIVERA President, Tryco Pharma Corporation San Rafael, Bulacan Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan Dear Mr. Rivera:

This is to remind you that your License to Operate as Veterinary Drug and Product Manufacturer is addressed at San Rafael, Bulacan, and so, therefore, your production should be done at the above mentioned address only. Further, production of a drug includes propagation, processing, compounding, finishing, filling, repacking, labeling, advertising, storage, distribution or sale of the veterinary drug product. In no instance, therefore, should any of the above be done at your business office at 117 M. Ponce St., EDSA, Caloocan City. Please be guided accordingly. Thank you. Very truly yours, (sgd.) EDNA ZENAIDA V. VILLACORTE, D.V.M. Chief, Animal Feeds Standard Division[4] Accordingly, Tryco issued a Memorandum[5] dated April 7, 1997 which directed petitioner Aya-ay to report to the company's plant site in Bulacan. When petitioner Aya-ay refused to obey, Tryco reiterated the order on April 18, 1997.[6]Subsequently, through a Memorandum[7] dated May 9, 1997, Tryco also directed petitioners Egera, Lario and Barte to report to the company's plant site in Bulacan. BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair labor practice. In protest, BMT declared a strike on May 26, 1997. In August 1997, petitioners filed their separate complaints[8] for illegal dismissal, underpayment of wages, nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its President, Wilfredo C. Rivera. In their Position Paper,[9] petitioners alleged that the company acted in bad faith during the CBA negotiations because it sent representatives without authority to bind the company, and this was the reason why the negotiations failed. They added that the management transferred petitioners Lario, Barte, Egera and Aya-ay from Caloocan to San Rafael, Bulacan to paralyze the union. They prayed for the company to pay them their salaries from May 26 to 31, 1997, service incentive leave, and overtime pay, and to implement Wage Order No. 4. In their defense, respondents averred that the petitioners were not dismissed but they refused to comply with the management's directive for them to report to the company's plant in San Rafael, Bulacan. They denied the allegation that they negotiated in bad faith, stating that, in fact, they sent the Executive Vice-President and Legal Counsel as the company's representatives to the CBA negotiations. They claim that the failure to arrive at an agreement was due to the stubbornness of the union panel. Respondents further averred that, long before the start of the negotiations, the company had already been planning to decongest the Caloocan office to comply with the government policy to shift the concentration of manufacturing activities from the metropolis to the countryside. The decision to transfer the company's production activities to San Rafael, Bulacan was precipitated by the letter-reminder of the Bureau of Animal Industry. On February 27, 1998, the Labor Arbiter dismissed the case for lack of merit.[10] The Labor Arbiter held that the transfer of the petitioners would not paralyze or render the union ineffective for the following reasons: (1) complainants are not members of the negotiating panel; and (2) the transfer was made pursuant to the directive of the Department of Agriculture. The Labor Arbiter also denied the money claims, ratiocinating that the nonpayment of wages was justified because the petitioners did not render work from May 26 to 31, 1997; overtime pay is not due because of the compressed workweek agreement between the union and management; and service incentive leave pay cannot be claimed by the complainants because they are already enjoying vacation leave with pay for at least five days. As for the claim of noncompliance with Wage Order No. 4, the Labor Arbiter held that the issue should be left to the grievance machinery or voluntary arbitrator.

On October 29, 1999, the NLRC affirmed the Labor Arbiter's Decision, dismissing the case, thus: PREMISES CONSIDERED, the Decision of February 27, 1998 is hereby AFFIRMED and complainants' appeal therefrom DISMISSED for lack of merit. Complainants Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are directed to report to work at respondents' San Rafael Plant, Bulacan but without backwages. Respondents are directed to accept the complainants back to work. SO ORDERED.[11] On December 22, 1999, the NLRC denied the petitioners' motion for reconsideration for lack of merit.[12] Left with no recourse, petitioners filed a petition for certiorari with the CA. On July 24, 2001, the CA dismissed the petition for certiorari and ruled that the transfer order was a management prerogative not amounting to a constructive dismissal or an unfair labor practice. The CA further sustained the enforceability of the MOA, particularly the waiver of overtime pay in light of this Court's rulings upholding a waiver of benefits in exchange of other valuable privileges. The dispositive portion of the said CA decision reads: WHEREFORE, the instant petition is DISMISSED. The Decision of the Labor Arbiter dated February 27, 1998 and the Decision and Resolution of the NLRC promulgated on October 29, 1999 and December 22, 1999, respectively, in NLRC-NCR Case Nos. 08-05715-97, 08-06115-97 and 08-05920-97, are AFFIRMED. SO ORDERED.[13] The CA denied the petitioners' motion for reconsideration on December 20, 2001.[14] Dissatisfied, petitioners filed this petition for review raising the following issues: -ATHE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE PATENTLY ERRONEOUS RULING OF THE LABOR ARBITER AND THE COMMISSION THAT THERE WAS NO DISMISSAL, MUCH LESS ILLEGAL DISMISSAL, OF THE INDIVIDUAL PETITIONERS. -BTHE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AND CONCLUDING THAT PRIVATE RESPONDENTS COMMITTED ACTS OF UNFAIR LABOR PRACTICE. -CTHE COURT OF APPEALS ERRED IN NOT FINDING AND CONCLUDING THAT PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIMS AND TO DAMAGES, AS WELL AS LITIGATION COSTS AND ATTORNEY'S FEES.[15] The petition has no merit. We have no reason to deviate from the well-entrenched rule that findings of fact of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but even finality, and bind us when supported by substantial evidence.[16] This is particularly true when the findings of the Labor Arbiter, the NLRC and the CA are in absolute agreement.[17] In this case, the Labor Arbiter, the NLRC, and the CA uniformly agreed that the petitioners were not constructively dismissed and that the transfer orders did not amount to an unfair labor practice. But if only to disabuse the minds of the petitioners who have persistently pursued this case on the mistaken belief that the labor tribunals and the appellate court committed grievous errors, this Court will go over the issues raised in this petition. Petitioners mainly contend that the transfer orders amount to a constructive dismissal. They maintain that the letter of the Bureau of Animal Industry is not credible because it is not authenticated; it is only a ploy, solicited by respondents to give them an excuse to effect a massive transfer of employees. They point out that the Caloocan City

office is still engaged in production activities until now and respondents even hired new employees to replace them. We do not agree. We refuse to accept the petitioners' wild and reckless imputation that the Bureau of Animal Industry conspired with the respondents just to effect the transfer of the petitioners. There is not an iota of proof to support this outlandish claim. Absent any evidence, the allegation is not only highly irresponsible but is grossly unfair to the government agency concerned. Even as this Court has given litigants and counsel a relatively wide latitude to present arguments in support of their cause, we will not tolerate outright misrepresentation or baseless accusation. Let this be fair warning to counsel for the petitioners. Furthermore, Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively. While the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied.[18] This prerogative extends to the management's right to regulate, according to its own discretion and judgment, all aspects of employment, including the freedom to transfer and reassign employees according to the requirements of its business.[19]Management's prerogative of transferring and reassigning employees from one area of operation to another in order to meet the requirements of the business is, therefore, generally not constitutive of constructive dismissal.[20] Thus, the consequent transfer of Tryco's personnel, assigned to the Production Department was well within the scope of its management prerogative. When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal.[21] However, the employer has the burden of proving that the transfer of an employee is for valid and legitimate grounds. The employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits.[22] Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore, anchor their objection solely on the ground that it would cause them great inconvenience since they are all residents of Metro Manila and they would incur additional expenses to travel daily from Manila to Bulacan. The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal.[23] Objection to a transfer that is grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer.[24] Incidentally, petitioners cite Escobin v. NLRC[25] where the Court held that the transfer of the employees therein was unreasonable. However, the distance of the workplace to which the employees were being transferred can hardly compare to that of the present case. In that case, the employees were being transferred from Basilan to Manila; hence, the Court noted that the transfer would have entailed the separation of the employees from their families who were residing in Basilan and accrual of additional expenses for living accommodations in Manila. In contrast, the distance from Caloocan to San Rafael, Bulacan is not considerably great so as to compel petitioners to seek living accommodations in the area and prevent them from commuting to Metro Manila daily to be with their families. Petitioners, however, went further and argued that the transfer orders amounted to unfair labor practice because it would paralyze and render the union ineffective. To begin with, we cannot see how the mere transfer of its members can paralyze the union. The union was not deprived of the membership of the petitioners whose work assignments were only transferred to another location.

More importantly, there was no showing or any indication that the transfer orders were motivated by an intention to interfere with the petitioners' right to organize. Unfair labor practice refers to acts that violate the workers' right to organize. With the exception of Article 248(f) of the Labor Code of the Philippines, the prohibited acts are related to the workers' right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how unfair, are not unfair labor practices.[26] Finally, we do not agree with the petitioners' assertion that the MOA is not enforceable as it is contrary to law. The MOA is enforceable and binding against the petitioners. Where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking.[27] D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive from the adoption of a compressed workweek scheme, thus: The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at least another day in a week from certain inconveniences that are the normal incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits abovecited that will accrue to the employees. Moreover, the adoption of a compressed workweek scheme in the company will help temper any inconvenience that will be caused the petitioners by their transfer to a farther workplace. Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the employees in the implementation of a compressed workweek scheme: 1. The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which shall not exceed their normal weekly hours of work prior to adoption of the compressed workweek arrangement;

2. There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits
of the employees;

3. If an employee is permitted or required to work in excess of his normal weekly hours of work prior to the
adoption of the compressed workweek scheme, all such excess hours shall be considered overtime work and shall be compensated in accordance with the provisions of the Labor Code or applicable Collective Bargaining Agreement (CBA);

4. Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours
a day may be devised by the parties to the agreement.

5. The effectivity and implementation of the new working time arrangement shall be by agreement of the
parties. PESALA v. NLRC,[28] cited by the petitioners, is not applicable to the present case. In that case, an employment contract provided that the workday consists of 12 hours and the employee will be paid a fixed monthly salary rate that was above the legal minimum wage. However, unlike the present MOA which specifically states that the employee waives his right to claim overtime pay for work rendered beyond eight hours, the employment contract in that case was silent on whether overtime pay was included in the payment of the fixed monthly salary. This necessitated the interpretation by the Court as to whether the fixed monthly rate provided under the employment contract included overtime pay. The Court noted that if the employee is paid only the minimum wage but with

overtime pay, the amount is still greater than the fixed monthly rate as provided in the employment contract. It, therefore, held that overtime pay was not included in the agreed fixed monthly rate. Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of a five-day workweek, there is no room for interpretation and its terms should be implemented as they are written. WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated July 24, 2001 and Resolution dated December 20, 2001 are AFFIRMED. SO ORDERED. SECOND DIVISION [G.R. No. 157680, October 08, 2008] EQUIPMENT TECHNICAL SERVICES OR JOSEPH JAMES DEQUITO, PETITIONERS, VS. COURT OF APPEALS, ALEX ALBINO, REY ALBINO, JULIUS ABANES, MIGUEL ALINAB, CHRISTOPHER BIOL, NELSON CATONG, RENATO DULOT, FLORO PACUNDO, MARCELITO GAMAS, REYNALDO LIMA, SAMMY MESAGAL, ERNESTO PADILLA, AND CONRADO SULIBAGA, RESPONDENTS. DECISION VELASCO JR., J.: This petition for review under Rule 45 assails and seeks the reversal of the Amended Decision and Resolution dated March 3, 2003 and March 24, 2003, respectively, of the Court of Appeals (CA) in CA-G.R. SP No. 67568. The assailed amended decision and resolution effectively set aside and reversed the consolidated resolutions dated July 30, 2001 and September 24, 2001 rendered by the National Labor Relations Commission (NLRC) and reinstated the July 24, 2000 Decision of Labor Arbiter Ermita T. Abrasaldo-Cuyuca in NLRC NCR Case Nos. 00-01-00571-99, 00-02-01429-99, and 00-02-01615-99. Petitioner Equipment Technical Services (ETS) is primarily engaged in the business of sub-contracting plumbing works of on-going building construction. Among its clients was Uniwide Sales, Inc. (Uniwide). Petitioner Joseph James Dequito was, during the period material, occupying the position of manager of ETS,[1] albeit the CA referred to him as ETS' president. On various occasions involving different projects, ETS hired the services of private respondents as pipe fitters, plumbers, or threaders. In December 1998, ETS experienced financial difficulties when Uniwide, its client at the time, failed to pay for the plumbing work being done at its Coastal Mall. As a result, ETS was only able to pay its employees 13th month pay equivalent to two weeks' salary. Unhappy over what they thought was ETS' failure to release the balance of their 13th month pay, private respondents brought their case before the Arbitration Branch of the NLRC, docketed as NLRC NCR Case No. 0001-00571-99 and entitled as Alex Albino, Renato Dulot, Miguel Alinab, Marcelito Gamas, Julius Abanes, Christopher Biol, Sammy Mesagal, Conrado Sulibaga, Floro Pacundo v. Equipment Technical Services or Joseph James Dequito. Later, two other cases were filed against ETS for illegal dismissal and payment of money claims when the complainants thereat were refused work in another ETS project, i.e., Richville project, allegedly because they refused to sign individual employment contracts with ETS. These two other cases were Nelson Catong, Roger Lamayon, Christopher Lamayon v. Equipment Technical Services or Joseph James Dequito, docketed as NLRC NCR Case No. 00-02-01429-99; and Rey Albino, Ernesto Padilla, Reynaldo Lima v. Equipment Technical Services or Joseph James Dequito, docketed as NLRC NCR Case No. 00-02-01615-99. The three cases were consolidated before the labor arbiter. Following failed conciliation efforts, all concerned,

except Roger and Christopher Lamayon, submitted, as the labor arbiter directed, their respective position papers. Private respondents' position[2] is summed up as follows: (1) they are regular employees of ETS; (2) ETS dismissed them without cause and without due process after they filed cases for money claims against ETS in the arbitration branch of the NLRC; (3) ETS has not paid them their salaries, 13th month pay, service incentive leave pay, overtime pay, and premium pay for holidays and rest days; and (4) they are entitled to reinstatement to their former positions with paid backwages in addition to their money claims and payment of attorney's fees. ETS' position[3] may be summed up as follows: (1) private respondents were its contractual/project employees engaged for different projects of the company; (2) they were not illegally dismissed, having been hired on a per project basis; (3) ETS was unable to fully release private respondents' 13th month pay because Uniwide failed to pay for its contracted plumbing project; (4) ETS was forced to abandon the Uniwide project and undertake another project, the Richville project, because the chances of being paid by Uniwide were dim; (5) ETS asked private respondents to sign employment contracts to formalize their previous agreement but said private respondents refused; and (6) as a result, ETS was constrained to deny employment to private respondents as it considered the execution of employment contracts part of management prerogative before employment commences. On July 24, 2000, Labor Arbiter Abrasaldo-Cuyuca issued a Decision, holding that private respondents were ETS' regular, not merely project, employees. Accordingly, ETS was adjudged liable for illegal dismissal and directed to pay private respondents their money claims plus 10% of the total award as attorney's fees. The fallo of the subject decision reads as follows: WHEREFORE, judgment is hereby rendered declaring the dismissal of the complainants illegal. Further, respondents are further ordered to pay the complainants their backwages, proportionate 13th month pay, [holiday] and service incentive leave pay. Ten percent of the total award as attorney's fees. Other claims are dismissed for lack of merit. The complaints of Roger and Christopher all surnamed Lamayon are dismissed without prejudice. The computation prepared by the Computation Unit, NCR, this Commission is attached [sic] forming part of this decision. SO ORDERED.[4] ETS appealed from the above labor arbiter's decision. On July 30, 2001, the NLRC rendered a resolution which, while reversing the labor arbiter's holding with respect to the nature of private respondents' employment and the illegality of their dismissal, nevertheless upheld the validity of the monetary award extended by the labor arbiter, part of which included the award of backwages. The pertinent portion of the modificatory resolution reads as follows: ACCORDINGLY, premises considered, the decision appealed from is hereby MODIFIED in that the findings of regularity of employment and illegal dismissal are hereby VACATED. However, respondents are ordered to give complainants priority in hiring for present and future projects. All other dispositions are hereby AFFIRMED in toto. SO ORDERED. Following the denial on September 24, 2001 of ETS' motion for reconsideration, ETS elevated its case to the CA via a petition for certiorari under Rule 65, the recourse docketed as CA-G.R. SP No. 67568. As its principal contention, ETS ascribed on the NLRC the commission of grave abuse of discretion in affirming the monetary award in favor of private respondents, despite its finding that there was no illegal dismissal in this case. On January 23, 2002, the CA rendered judgment disposing as follows: WHEREFORE, premises considered, the assailed resolutions of the National Labor Relations Commission dated July 30, 2001 and September 24, 2001 are hereby ANNULLED and SET ASIDE and a new one rendered ORDERING petitioner Equipment Technical Services to pay private respondents their holiday pay and service incentive leave pay for the year 1998 and the balance of their 13th month pay for the year 1999. The case is hereby REMANDED to Labor Arbiter Ermita T. Abrasaldo-Cuyuca for the computation of the same.

The complaint against petitioner Joseph James Dequito is hereby DISMISSED, for lack of merit. No pronouncement as to costs. SO ORDERED. Upon motion of private respondents for reconsideration, the CA issued an Amended Decision[5] dated March 3, 2003 vacating its earlier January 23, 2002 decision. The CA, in main support of its present disposition, stated that the NLRC's determination that private respondents are "project workers" is "utterly unsupported by the evidence on record and is patently erroneous" and, therefore, is tainted with grave abuse of discretion.[6] The fallo of the Amended Decision reads: WHEREFORE, premises considered, the present motion for reconsideration is hereby GRANTED. The petition is hereby DENIED DUE COURSE and accordingly DISMISSED, for lack of merit. Our Decision dated January 23, 2002 is hereby RECONSIDERED and SET ASIDE and a new one is hereby entered REVERSING and SETTING ASIDE the assailed Resolutions dated July 30, 2001 and September 24, 2001 of public respondent NLRC in NLRC NCR case No. 00-01-00571-99 (NLRC CA No. 027203-2001), NLRC NCR Case No. 00-02-01429-99 and NLRC NCR Case No. 00-02-01615-99. The Decision dated July 24, 2000 rendered by Labor Arbiter Ermita T. AbrasaldoCuyuca is hereby REINSTATED and AFFIRMED in all respects, including the computation of the monetary awards in favor of private respondents forming part of and attached to the same. With costs against the petitioners. SO ORDERED. Hence, this petition on the submission that, contrary to the findings of the CA, but conformably with the determination of the NLRC, private respondents are seasonal or project workers; the duration of their employment is not permanent but coterminus with the project to which they are assigned and from whose payroll they are paid. As project employees, private respondents cannot, according to petitioners, validly maintain an action for illegal dismissal with prayer for reinstatement and payment of backwages, both reliefs being usually accorded following a finding of illegal dismissal. The petition is without merit. As we see it, as did the CA and the NLRC, the primary question to be resolved and to which all others must yield is whether or not private respondents are project employees. The CA, siding with the labor arbiter, as indicated earlier, answered the poser in the affirmative, while the NLRC resolved it in the negative. As the Court has consistently held, the service of project employees are coterminus with the project and may be terminated upon the end or completion of that project or project phase for which they were hired. Regular employees, in contrast, enjoy security of tenure and are entitled to hold on to their work or position until their services are terminated by any of the modes recognized under the Labor Code.[7] The principal test for determining whether an employee is properly characterized as "project employee," as distinguished from "regular employee," is whether or not "the project employee" was assigned to carry out "a specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project.[8] And as Article 280 of the Labor Code, defining a regular employee vis- -vis a project employee, would have it: Art. 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 x x x. It bears to stress at the outset that ETS admits hiring or employing private respondents to perform plumbing works for various projects. Given this postulate, regular employment may reasonably be presumed and it behooves ETS to prove otherwise, that is, that the employment in question was contractual in nature ending upon the expiration of the term fixed in the contract or for a specific project or undertaking. But the categorical finding of the CA, confirmatory for the most part of that of the labor arbiter, is that not a single written contract of employment fixing

the terms of employment for the duration of the Uniwide project, or any other project, was submitted by ETS despite the latter's allegations that private respondents were merely contractual employees. Records of payroll and other pertinent documents, such as job contracts secured by ETS showing that private respondents were hired for specific projects, were also not submitted by ETS.[9] Moreover, if private respondents were indeed employed as project employees, petitioners should have had submitted a report of termination every time their employment was terminated owing to the completion of each plumbing project. As correctly held by the CA in its Amended Decision, citing Tomas Lao Construction v. NLRC,[10] ETS' failure to report the employment termination and file the necessary papers after every project completion tends to support the claim of private respondents about their not being project employees.[11] Under Policy Instruction No. 20, Series of 1977,[12] the report must be made to the nearest public office employment.[13] The decision in Violeta v. NLRC is also apropos, particularly when it held: [The employer] should have filed as many reports of termination as there were construction projects actually finished if petitioners [employees] were indeed project employees, considering that petitioners were hired and again [hired] for various projects or phases of work therein. Its failure to submit reports of termination cannot but sufficiently convince us further that petitioners are truly regular employees. Just as important, the fact that petitioners had rendered more than one year of service at the time of their dismissal overturns private respondent's allegations that petitioners were hired for a specific or fixed undertaking for a limited period of time.[14] The Court can allow that, in the instant case, private respondents may have initially been hired for specific projects or undertaking of petitioner ETS and, hence, may be classified as project employees. Their repeated rehiring to perform tasks necessary to the usual trade or business of ETS changed the legal situation altogether, for in the later instance, their continuous rehiring took them out from the scope of workers coterminus with specific projects and had made them regular employees. We said as much in Phesco, Inc. v. NLRC that "where the employment of project employees is extended long after the supposed project had been finished, the employees are removed from the scope of project employees and they shall be considered regular employees."[15] Parenthetically, petitioners' assertion that there can be no illegal dismissal of project employees inasmuch as they are not entitled to security of tenure is inaccurate. The constitutionally-protected right of labor to security of tenure covers both regular and project workers.[16] Their termination must be for lawful cause and must be done in a way which affords them proper notice and hearing.[17] In termination disputes, the burden of proving that an employee had been dismissed for a lawful cause or that the exacting procedural requirements under the Labor Code had been complied with lies with the employer.[18] Where there is no showing of a clear, valid, and legal cause for termination of employment, the law considers the case a matter of illegal dismissal.[19] Based on the foregoing criteria, the factual findings of the labor arbiter on the regular nature of private respondents' employment, juxtaposed with ETS' failure to support its "project-workers theory," impel us to dismiss the instant petition. This is as it should be for, to paraphrase Asuncion v. NLRC, if doubt exists between the evidence of the employers and the employees, the scales of justice must be tilted in favor of the latter--the employers must adequately show rationally adequate evidence that their case is preponderantly superior.[20] As did the CA, the Court holds that private respondents are regular employees whose services were terminated without lawful cause and effected without the requisite notice and hearing. In view of the illegality of the dismissal, the fallo of the Decision of Labor Arbiter Abrasaldo-Cuyuca, as reinstated by the CA in its assailed Amended Decision, has to be modified in the sense that private respondents are entitled to reinstatement to their previous positions as pipe fitters or threaders, as the case may be, without loss of rank and seniority rights and with full backwages. At this juncture, the Court wishes to state that it is taking judicial notice of the fact that no corporation is registered with the Securities and Exchange Commission under the name "Equipment Technical Services." It is thus but fair that both petitioners' liability under this Decision be joint and several.

WHEREFORE, the Amended Decision dated March 3, 2003 of the CA in CA-G.R. SP No. 67568, reinstating the July 24, 2000 Decision of Labor Arbiter Abrasaldo-Cuyuca, is AFFIRMED with the MODIFICATION that petitioners are jointly and severally ordered to reinstate private respondents to their former positions, without loss of rank and seniority rights, with backwages from the date of dismissal until reinstated. As modified, the fallo of the labor arbiter's Decision shall read: WHEREFORE, judgment is hereby rendered declaring the dismissal ofprivate respondents illegal. Petitioners ETS and Joseph James Dequito are ordered jointly and severally to reinstate private respondents ALEX ALBINO, REY ALBINO, JULIUS ABANES, MIGUEL ALINAB, CHRISTOPHER BIOL, NELSON CATONG, RENATO DULOT, FLORO PACUNDO, MARCELITO GAMAS, REYNALDO LIMA, SAMMY MESAGAL, ERNESTO PADILLA, and CONRADO SULIBAGA to their respective positions without loss of rank and seniority rights with full backwages from the date of dismissal up to the date of actual reinstatement. Petitioners are likewise jointly and severally liable to private respondents for proportionate 13th month pay, holiday pay, and service incentive leave pay. Ten percent of the total award shall be paid to the counsel of private respondents as attorney's fees. Other claims are dismissed for lack of merit. The complaints of Roger and Christopher, both surnamed Lamayon, are dismissed without prejudice. Costs against petitioners. SO ORDERED.