Contents

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA

T. YABUTMISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR, Petitioners, .................... 2
vs. .............................................................................................................................................. 2
PEARLIE ANN F. ALCARAZ, Respondent. ................................................................................... 2
CHERYLL SANTOS LEUS, Petitioner,......................................................................................... 14
vs. ............................................................................................................................................ 14
ST. SCHOLASTICA'S COLLEGE WESTGROVE and/or SR. EDNA QUIAMBAO, OSB, Respondents.
................................................................................................................................................ 14
ERNESTO G. YMBONG, Petitioner, .......................................................................................... 27

SABLAN, RICHARD PANCHO, RODRIGO ESTRABELA, DANNY KADUSALE and ALLYROBYL

OLPUS, Respondents. .............................................................................................................. 42
HACIENDA CATAYWA/MANUEL VILLANUEVA, owner, JOEMARIE VILLANUEVA, manager,
MANCY AND SONS ENTERPRISES, INC., Petitioners, v. ROSARIO LOREZO, Respondent. ....... 48
GMA NETWORK, INC., Petitioner, ........................................................................................... 53
vs. ............................................................................................................................................ 53
CARLOS P. PABRIGA, GEOFFREY F. ARIAS, KIRBY N. CAMPO, ARNOLD L. LAGAHIT, and
ARMANDO A. CATUBIG, Respondents. ................................................................................... 53
NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN AND MA. CRISTINA
SUMAYAO, Petitioners, ........................................................................................................... 64
vs. ............................................................................................................................................ 64

vs. ............................................................................................................................................ 27

ABS-CBN CORPORATION (FORMERLY, ABS-CBN BROADCASTING CORPORATION) AND

AMALIA VILLAFUERTE, Respondents. ..................................................................................... 64

ABS-CBN BROADCASTING CORPORATION, VENERANDA SY AND DANTE LUZON,

Respondents. .......................................................................................................................... 27

COLEGIO DEL SANTISIMO ROSARIO AND SR. ZENAIDA S. MOFADA, OP, PETITIONERS, ........ 70

FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO MERCADO, JR., ANTONIO

MERCADO, JOSE CABRAL, LUCIA MERCADO, ASUNCION GUEVARA, ANITA MERCADO,
MARINA MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO, BRIGIDA ALCANTARA,
EMERLITA MERCADO, ROMEO GUEVARA, ROMEO MERCADO and LEON SANTILLAN,
petitioners, .............................................................................................................................. 36
vs. ............................................................................................................................................ 36
NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD DIVISION; LABOR ARBITER
LUCIANO AQUINO, RAB-III; AURORA L. CRUZ; SPOUSES FRANCISCO DE BORJA and LETICIA DE
BORJA; and STO. NIO REALTY, INCORPORATED, respondents. ............................................ 36
UNIVERSAL ROBINA SUGAR MILLING CORPORATION and RENE CABATI, Petitioners, .......... 42
vs. ............................................................................................................................................ 42
FERDINAND ACIBO, ROBERTO AGUILAR, EDDIE BALDOZA, RENE ABELLAR, DIOMEDES
ALICOS, MIGUEL ALICOS, ROGELIO AMAHIT, LARRY AMASCO, FELIPE BALANSAG, ROMEO
BALANSAG, MANUEL BANGOT, ANDY BANJAO, DIONISIO BENDIJO, JR., JOVENTINO BROCE,
ENRICO LITERAL, RODGER RAMIREZ, BIENVENIDO RODRIGUEZ, DIOCITO PALAGTIW, ERNIE

vs. ............................................................................................................................................ 70
EMMANUEL ROJO,* RESPONDENT. ........................................................................................ 70
UNITED TOURIST PROMOTIONS (UTP) and ARIEL D. JERSEY, Petitioners, ............................. 77
vs. ............................................................................................................................................ 77
HARLAND B. KEMPLIN, Respondents. ..................................................................................... 77

EN BANC

G.R. No. 192571

July 23, 2013

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE,

EDWIN D. FEIST, MARIA OLIVIA T. YABUTMISA, TERESITA C.
BERNARDO, AND ALLAN G. ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.
DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated December 10,2009
and Resolution3 dated June 9, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 101045
which pronounced that the National Labor Relations Commission (NLRC) did not gravely
abuse its discretion when it ruled that respondent Pearlie Ann F. Alcaraz (Alcaraz) was
illegally dismissed from her employment.

On June 27, 2004, petitioner Abbott Laboratories, Philippines (Abbott) caused the
publication in a major broadsheet newspaper of its need for a Medical and Regulatory
Affairs Manager (Regulatory Affairs Manager) who would: (a) be responsible for drug safety
surveillance operations, staffing, and budget; (b) lead the development and implementation
of standard operating procedures/policies for drug safety surveillance and vigilance; and (c)
act as the primary interface with internal and external customers regarding safety
operations and queries.4 Alcaraz - who was then a Regulatory Affairs and Information
Manager at Aventis Pasteur Philippines, Incorporated (another pharmaceutical company like
Abbott) showed interest and submitted her application on October 4, 2004.5

On December 7, 2004, Abbott formally offered Alcaraz the abovementioned position which
was an item under the companys Hospira Affiliate Local Surveillance Unit (ALSU)
department.6 In Abbotts offer sheet.7 it was stated that Alcaraz was to be employed on a
probationary basis.8 Later that day, she accepted the said offer and received an electronic
mail (e-mail) from Abbotts Recruitment Officer, petitioner Teresita C. Bernardo (Bernardo),
confirming the same. Attached to Bernardos e-mail were Abbotts organizational chart and
a job description of Alcarazs work.9

On February 12, 2005, Alcaraz signed an employment contract which stated, inter alia, that
she was to be placed on probation for a period of six (6) months beginning February 15,
2005 to August 14, 2005. The said contract was also signed by Abbotts General Manager,
petitioner Edwin Feist (Feist):10

PROBATIONARY EMPLOYMENT

Dear Pearl,
The Facts

After having successfully passed the pre-employment requirements, you are hereby
appointed as follows:

Position Title : Regulatory Affairs Manager

Department : Hospira

Welcome to Abbott!

Very truly yours,

Sgd.
EDWIN D. FEIST

The terms of your employment are:

Nature of Employment : Probationary

Effectivity : February 15, 2005 to August 14, 2005

General Manager

CONFORME:

Sgd.
PEARLIE ANN FERRER-ALCARAZ

Basic Salary : P110,000.00/ month

It is understood that you agree to abide by all existing policies, rules and regulations of the
company, as well as those, which may be hereinafter promulgated.

Unless renewed, probationary appointment expires on the date indicated subject to earlier
termination by the Company for any justifiable reason.

If you agree to the terms and conditions of your employment, please signify your conformity
below and return a copy to HRD.

During Alcarazs pre-employment orientation, petitioner Allan G. Almazar (Almazar),

Hospiras Country Transition Manager, briefed her on her duties and responsibilities as
Regulatory Affairs Manager, stating that: (a) she will handle the staff of Hospira ALSU and
will directly report to Almazar on matters regarding Hopiras local operations, operational
budget, and performance evaluation of the Hospira ALSU Staff who are on probationary
status; (b) she must implement Abbotts Code of Good Corporate Conduct (Code of
Conduct), office policies on human resources and finance, and ensure that Abbott will hire
people who are fit in the organizational discipline; (c) petitioner Kelly Walsh (Walsh),
Manager of the Literature Drug Surveillance Drug Safety of Hospira, will be her immediate
supervisor; (d) she should always coordinate with Abbotts human resource officers in the
management and discipline of the staff; (e) Hospira ALSU will spin off from Abbott in early
2006 and will be officially incorporated and known as Hospira, Philippines. In the interim,

Hospira ALSU operations will still be under Abbotts management, excluding the technical
aspects of the operations which is under the control and supervision of Walsh; and (f) the
processing of information and/or raw material data subject of Hospira ALSU operations will
be strictly confined and controlled under the computer system and network being
maintained and operated from the United States. For this purpose, all those involved in
Hospira ALSU are required to use two identification cards: one, to identify them as Abbotts
employees and another, to identify them as Hospira employees.11

On March 3, 2005, petitioner Maria Olivia T. Yabut-Misa (Misa), Abbotts Human Resources
(HR) Director, sent Alcaraz an e-mail which contained an explanation of the procedure for
evaluating the performance of probationary employees and further indicated that Abbott
had only one evaluation system for all of its employees. Alcaraz was also given copies of
Abbotts Code of Conduct and Probationary Performance Standards and Evaluation (PPSE)
and Performance Excellence Orientation Modules (Performance Modules) which she had to
apply in line with her task of evaluating the Hospira ALSU staff.12

Abbotts PPSE procedure mandates that the job performance of a probationary employee
should be formally reviewed and discussed with the employee at least twice: first on the
third month and second on the fifth month from the date of employment. The necessary
Performance Improvement Plan should also be made during the third-month review in case
of a gap between the employees performance and the standards set. These performance
standards should be discussed in detail with the employee within the first two (2) weeks on
the job. It was equally required that a signed copy of the PPSE form must be submitted to
Abbotts Human Resources Department (HRD) and shall serve as documentation of the
employees performance during his/her probationary period. This shall form the basis for
recommending the confirmation or termination of the probationary employment.13

During the course of her employment, Alcaraz noticed that some of the staff had disciplinary
problems. Thus, she would reprimand them for their unprofessional behavior such as nonobservance of the dress code, moonlighting, and disrespect of Abbott officers. However,
Alcarazs method of management was considered by Walsh to be "too strict."14 Alcaraz

approached Misa to discuss these concerns and was told to "lie low" and let Walsh handle
the matter. Misa even assured her that Abbotts HRD would support her in all her
management decisions.15

On April 12, 2005, Alcaraz received an e-mail from Misa requesting immediate action on the
staffs performance evaluation as their probationary periods were about to end. This Alcaraz
eventually submitted.16

On April 20, 2005, Alcaraz had a meeting with petitioner Cecille Terrible (Terrible), Abbotts
former HR Director, to discuss certain issues regarding staff performance standards. In the
course thereof, Alcaraz accidentally saw a printed copy of an e-mail sent by Walsh to some
staff members which essentially contained queries regarding the formers job performance.
Alcaraz asked if Walshs action was the normal process of evaluation. Terrible said that it
was not.17

On May 16, 2005, Alcaraz was called to a meeting with Walsh and Terrible where she was
informed that she failed to meet the regularization standards for the position of Regulatory
Affairs Manager.18 Thereafter, Walsh and Terrible requested Alcaraz to tender her
resignation, else they be forced to terminate her services. She was also told that, regardless
of her choice, she should no longer report for work and was asked to surrender her office
identification cards. She requested to be given one week to decide on the same, but to no
avail.19

On May 17, 2005, Alcaraz told her administrative assistant, Claude Gonzales (Gonzales), that
she would be on leave for that day. However, Gonzales told her that Walsh and Terrible
already announced to the whole Hospira ALSU staff that Alcaraz already resigned due to
health reasons.20

On May 23, 2005, Walsh, Almazar, and Bernardo personally handed to Alcaraz a letter
stating that her services had been terminated effective May 19, 2005.21 The letter detailed
the reasons for Alcarazs termination particularly, that Alcaraz: (a) did not manage her
time effectively; (b) failed to gain the trust of her staff and to build an effective rapport with
them; (c) failed to train her staff effectively; and (d) was not able to obtain the knowledge
and ability to make sound judgments on case processing and article review which were
necessary for the proper performance of her duties.22 On May 27, 2005, Alcaraz received
another copy of the said termination letter via registered mail.23

Alcaraz felt that she was unjustly terminated from her employment and thus, filed a
complaint for illegal dismissal and damages against Abbott and its officers, namely, Misa,
Bernardo, Almazar, Walsh, Terrible, and Feist.24 She claimed that she should have already
been considered as a regular and not a probationary employee given Abbotts failure to
inform her of the reasonable standards for her regularization upon her engagement as
required under Article 29525 of the Labor Code. In this relation, she contended that while
her employment contract stated that she was to be engaged on a probationary status, the
same did not indicate the standards on which her regularization would be based.26 She
further averred that the individual petitioners maliciously connived to illegally dismiss her
when: (a) they threatened her with termination; (b) she was ordered not to enter company
premises even if she was still an employee thereof; and (c) they publicly announced that she
already resigned in order to humiliate her.27

On the contrary, petitioners maintained that Alcaraz was validly terminated from her
probationary employment given her failure to satisfy the prescribed standards for her
regularization which were made known to her at the time of her engagement.28

In a Decision dated March 30, 2006,29 the LA dismissed Alcarazs complaint for lack of
merit.

The LA rejected Alcarazs argument that she was not informed of the reasonable standards
to qualify as a regular employee considering her admissions that she was briefed by Almazar
on her work during her pre-employment orientation meeting30 and that she received
copies of Abbotts Code of Conduct and Performance Modules which were used for
evaluating all types of Abbott employees.31 As Alcaraz was unable to meet the standards
set by Abbott as per her performance evaluation, the LA ruled that the termination of her
probationary employment was justified.32 Lastly, the LA found that there was no evidence
to conclude that Abbotts officers and employees acted in bad faith in terminating Alcarazs
employment.33

Displeased with the LAs ruling, Alcaraz filed an appeal with the National Labor Relations
Commission (NLRC).

The NLRC Ruling

On September 15, 2006, the NLRC rendered a Decision,34 annulling and setting aside the
LAs ruling, the dispositive portion of which reads:

WHEREFORE, the Decision of the Labor Arbiter dated 31 March 2006 [sic] is hereby
reversed, annulled and set aside and judgment is hereby rendered:
The LA Ruling
1. Finding respondents Abbot [sic] and individual respondents to have committed illegal
dismissal;

2. Respondents are ordered to immediately reinstate complainant to her former position

without loss of seniority rights immediately upon receipt hereof;

should have been evaluated on.37 It further observed that Abbott did not comply with its
own standard operating procedure in evaluating probationary employees.38 The NLRC was
also not convinced that Alcaraz was terminated for a valid cause given that petitioners
allegation of Alcarazs "poor performance" remained unsubstantiated.39

3. To jointly and severally pay complainant backwages computed from 16 May 2005 until
finality of this decision. As of the date hereof the backwages is computed at

Petitioners filed a motion for reconsideration which was denied by the NLRC in a Resolution
dated July 31, 2007.40

a. Backwages for 15 months -

Aggrieved, petitioners filed with the CA a Petition for Certiorari with Prayer for Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction, docketed as CA G.R. SP
No. 101045 (First CA Petition), alleging grave abuse of discretion on the part of NLRC when it
ruled that Alcaraz was illegally dismissed.41

b. 13th month pay -

PhP 1,650,000.00

110,000.00

TOTAL PhP 1,760,000.00

4. Respondents are ordered to pay complainant moral damages of P50,000.00 and
exemplary damages of P50,000.00.

5. Respondents are also ordered to pay attorneys fees of 10% of the total award.

Pending resolution of the First CA Petition, Alcaraz moved for the execution of the NLRCs
Decision before the LA, which petitioners strongly opposed. The LA denied the said motion
in an Order dated July 8, 2008 which was, however, eventually reversed on appeal by the
NLRC.42 Due to the foregoing, petitioners filed another Petition for Certiorari with the CA,
docketed as CA G.R. SP No. 111318 (Second CA Petition), assailing the propriety of the
execution of the NLRC decision.43

6. All other claims are dismissed for lack of merit.

The CA Ruling
SO ORDERED.35

The NLRC reversed the findings of the LA and ruled that there was no evidence showing that
Alcaraz had been apprised of her probationary status and the requirements which she
should have complied with in order to be a regular employee.36 It held that Alcarazs
receipt of her job description and Abbotts Code of Conduct and Performance Modules was
not equivalent to her being actually informed of the performance standards upon which she

With regard to the First CA Petition, the CA, in a Decision44 dated December 10, 2009,
affirmed the ruling of the NLRC and held that the latter did not commit any grave abuse of
discretion in finding that Alcaraz was illegally dismissed.

It observed that Alcaraz was not apprised at the start of her employment of the reasonable
standards under which she could qualify as a regular employee.45 This was based on its
examination of the employment contract which showed that the same did not contain any
standard of performance or any stipulation that Alcaraz shall undergo a performance
evaluation before she could qualify as a regular employee.46 It also found that Abbott was
unable to prove that there was any reasonable ground to terminate Alcarazs
employment.47 Abbott moved for the reconsideration of the aforementioned ruling which
was, however, denied by the CA in a Resolution48 dated June 9, 2010.

The CA likewise denied the Second CA Petition in a Resolution dated May 18, 2010 (May 18,
2010 Resolution) and ruled that the NLRC was correct in upholding the execution of the
NLRC Decision.49 Thus, petitioners filed a motion for reconsideration.

While the petitioners motion for reconsideration of the CAs May 18, 2010 Resolution was
pending, Alcaraz again moved for the issuance of a writ of execution before the LA. On June
7, 2010, petitioners received the LAs order granting Alcarazs motion for execution which
they in turn appealed to the NLRC through a Memorandum of Appeal dated June 16, 2010
(June 16, 2010 Memorandum of Appeal ) on the ground that the implementation of the
LAs order would render its motion for reconsideration moot and academic.50

with the certification requirement under Section 5, Rule 7 of the Rules of Court when they
failed to disclose in the instant petition the filing of the June 16, 2010 Memorandum of
Appeal filed before the NLRC.54

The Issues Before the Court

The following issues have been raised for the Courts resolution: (a) whether or not
petitioners are guilty of forum shopping and have violated the certification requirement
under Section 5, Rule 7 of the Rules of Court; (b) whether or not Alcaraz was sufficiently
informed of the reasonable standards to qualify her as a regular employee; (c) whether or
not Alcaraz was validly terminated from her employment; and (d) whether or not the
individual petitioners herein are liable.

The Courts Ruling

A. Forum Shopping and

Violation of Section 5, Rule 7

Meanwhile, petitioners motion for reconsideration of the CAs May 18, 2010 Resolution in
the Second CA Petition was denied via a Resolution dated October 4, 2010.51 This attained
finality on January 10, 2011 for petitioners failure to timely appeal the same.52 Hence, as it
stands, only the issues in the First CA petition are left to be resolved.

Incidentally, in her Comment dated November 15, 2010, Alcaraz also alleges that petitioners
were guilty of forum shopping when they filed the Second CA Petition pending the
resolution of their motion for reconsideration of the CAs December 10, 2009 Decision i.e.,
the decision in the First CA Petition.53 She also contends that petitioners have not complied

of the Rules of Court.

At the outset, it is noteworthy to mention that the prohibition against forum shopping is
different from a violation of the certification requirement under Section 5, Rule 7 of the
Rules of Court. In Sps. Ong v. CA,55 the Court explained that:

x x x The distinction between the prohibition against forum shopping and the certification
requirement should by now be too elementary to be misunderstood. To reiterate,
compliance with the certification against forum shopping is separate from and independent

of the avoidance of the act of forum shopping itself. There is a difference in the treatment
between failure to comply with the certification requirement and violation of the
prohibition against forum shopping not only in terms of imposable sanctions but also in the
manner of enforcing them. The former constitutes sufficient cause for the dismissal without
prejudice to the filing of the complaint or initiatory pleading upon motion and after hearing,
while the latter is a ground for summary dismissal thereof and for direct contempt. x x x. 56

As to the first, forum shopping takes place when a litigant files multiple suits involving the
same parties, either simultaneously or successively, to secure a favorable judgment. It exists
where the elements of litis pendentia are present, namely: (a) identity of parties, or at least
such parties who represent the same interests in both actions; (b) identity of rights asserted
and relief prayed for, the relief being founded on the same facts; and (c) the identity with
respect to the two preceding particulars in the two (2) cases is such that any judgment that
may be rendered in the pending case, regardless of which party is successful, would amount
to res judicata in the other case.57

In this case, records show that, except for the element of identity of parties, the elements of
forum shopping do not exist. Evidently, the First CA Petition was instituted to question the
ruling of the NLRC that Alcaraz was illegally dismissed. On the other hand, the Second CA
Petition pertains to the propriety of the enforcement of the judgment award pending the
resolution of the First CA Petition and the finality of the decision in the labor dispute
between Alcaraz and the petitioners. Based on the foregoing, a judgment in the Second CA
Petition will not constitute res judicata insofar as the First CA Petition is concerned. Thus,
considering that the two petitions clearly cover different subject matters and causes of
action, there exists no forum shopping.

In this regard, Section 5(b), Rule 7 of the Rules of Court requires that a plaintiff who files a
case should provide a complete statement of the present status of any pending case if the
latter involves the same issues as the one that was filed. If there is no such similar pending
case, Section 5(a) of the same rule provides that the plaintiff is obliged to declare under
oath that to the best of his knowledge, no such other action or claim is pending.

Records show that the issues raised in the instant petition and those in the June 16, 2010
Memorandum of Appeal filed with the NLRC likewise cover different subject matters and
causes of action. In this case, the validity of Alcarazs dismissal is at issue whereas in the said
Memorandum of Appeal, the propriety of the issuance of a writ of execution was in
question.

Thus, given the dissimilar issues, petitioners did not have to disclose in the present petition
the filing of their June 16, 2010 Memorandum of Appeal with the NLRC. In any event,
considering that the issue on the propriety of the issuance of a writ of execution had been
resolved in the Second CA Petition which in fact had already attained finality the matter
of disclosing the June 16, 2010 Memorandum of Appeal is now moot and academic.

Having settled the foregoing procedural matter, the Court now proceeds to resolve the
substantive issues.

B. Probationary employment;
grounds for termination.

As to the second, Alcaraz further imputes that the petitioners violated the certification
requirement under Section 5, Rule 7 of the Rules of Court58 by not disclosing the fact that it
filed the June 16, 2010 Memorandum of Appeal before the NLRC in the instant petition.

A probationary employee, like a regular employee, enjoys security of tenure. However, in

cases of probationary employment, aside from just or authorized causes of termination, an
additional ground is provided under Article 295 of the Labor Code, i.e., the probationary

employee may also be terminated for failure to qualify as a regular employee in accordance
with the reasonable standards made known by the employer to the employee at the time of
the engagement.59 Thus, the services of an employee who has been engaged on
probationary basis may be terminated for any of the following: (a) a just or (b) an authorized
cause; and (c) when he fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer.60

sufficiently made aware of his probationary status as well as the length of time of the
probation.

Corollary thereto, Section 6(d), Rule I, Book VI of the Implementing Rules of the Labor Code
provides that if the employer fails to inform the probationary employee of the reasonable
standards upon which the regularization would be based on at the time of the engagement,
then the said employee shall be deemed a regular employee, viz.:

The exception to the foregoing is when the job is self-descriptive in nature, for instance, in
the case of maids, cooks, drivers, or messengers.61 Also, in Aberdeen Court, Inc. v.
Agustin,62 it has been held that the rule on notifying a probationary employee of the
standards of regularization should not be used to exculpate an employee who acts in a
manner contrary to basic knowledge and common sense in regard to which there is no need
to spell out a policy or standard to be met. In the same light, an employees failure to
perform the duties and responsibilities which have been clearly made known to him
constitutes a justifiable basis for a probationary employees non-regularization.

(d) In all cases of probationary employment, the employer shall make known to the
employee the standards under which he will qualify as a regular employee at the time of his
engagement. Where no standards are made known to the employee at that time, he shall
be deemed a regular employee.

In this case, petitioners contend that Alcaraz was terminated because she failed to qualify as
a regular employee according to Abbotts standards which were made known to her at the
time of her engagement. Contrarily, Alcaraz claims that Abbott never apprised her of these
standards and thus, maintains that she is a regular and not a mere probationary employee.

In other words, the employer is made to comply with two (2) requirements when dealing
with a probationary employee: first, the employer must communicate the regularization
standards to the probationary employee; and second, the employer must make such
communication at the time of the probationary employees engagement. If the employer
fails to comply with either, the employee is deemed as a regular and not a probationary
employee.

The Court finds petitioners assertions to be well-taken.

Keeping with these rules, an employer is deemed to have made known the standards that
would qualify a probationary employee to be a regular employee when it has exerted
reasonable efforts to apprise the employee of what he is expected to do or accomplish
during the trial period of probation. This goes without saying that the employee is

A punctilious examination of the records reveals that Abbott had indeed complied with the
above-stated requirements. This conclusion is largely impelled by the fact that Abbott
clearly conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs Manager
prior to, during the time of her engagement, and the incipient stages of her employment.
On this score, the Court finds it apt to detail not only the incidents which point out to the
efforts made by Abbott but also those circumstances which would show that Alcaraz was
well-apprised of her employers expectations that would, in turn, determine her
regularization:

(a) On June 27, 2004, Abbott caused the publication in a major broadsheet newspaper of its
need for a Regulatory Affairs Manager, indicating therein the job description for as well as
the duties and responsibilities attendant to the aforesaid position; this prompted Alcaraz to
submit her application to Abbott on October 4, 2004;

(b) In Abbotts December 7, 2004 offer sheet, it was stated that Alcaraz was to be employed
on a probationary status;

(c) On February 12, 2005, Alcaraz signed an employment contract which specifically stated,
inter alia, that she was to be placed on probation for a period of six (6) months beginning
February 15, 2005 to August 14, 2005;

(d) On the day Alcaraz accepted Abbotts employment offer, Bernardo sent her copies of
Abbotts organizational structure and her job description through e-mail;

(e) Alcaraz was made to undergo a pre-employment orientation where Almazar informed
her that she had to implement Abbotts Code of Conduct and office policies on human
resources and finance and that she would be reporting directly to Walsh;

(f) Alcaraz was also required to undergo a training program as part of her orientation;

(g) Alcaraz received copies of Abbotts Code of Conduct and Performance Modules from
Misa who explained to her the procedure for evaluating the performance of probationary
employees; she was further notified that Abbott had only one evaluation system for all of its
employees; and

(h) Moreover, Alcaraz had previously worked for another pharmaceutical company and had
admitted to have an "extensive training and background" to acquire the necessary skills for
her job.63

Considering the totality of the above-stated circumstances, it cannot, therefore, be doubted

that Alcaraz was well-aware that her regularization would depend on her ability and
capacity to fulfill the requirements of her position as Regulatory Affairs Manager and that
her failure to perform such would give Abbott a valid cause to terminate her probationary
employment.

Verily, basic knowledge and common sense dictate that the adequate performance of ones
duties is, by and of itself, an inherent and implied standard for a probationary employee to
be regularized; such is a regularization standard which need not be literally spelled out or
mapped into technical indicators in every case. In this regard, it must be observed that the
assessment of adequate duty performance is in the nature of a management prerogative
which when reasonably exercised as Abbott did in this case should be respected. This is
especially true of a managerial employee like Alcaraz who was tasked with the vital
responsibility of handling the personnel and important matters of her department.

In fine, the Court rules that Alcarazs status as a probationary employee and her consequent
dismissal must stand. Consequently, in holding that Alcaraz was illegally dismissed due to
her status as a regular and not a probationary employee, the Court finds that the NLRC
committed a grave abuse of discretion.

To elucidate, records show that the NLRC based its decision on the premise that Alcarazs
receipt of her job description and Abbotts Code of Conduct and Performance Modules was
not equivalent to being actually informed of the performance standards upon which she
should have been evaluated on.64 It, however, overlooked the legal implication of the other
attendant circumstances as detailed herein which should have warranted a contrary finding

that Alcaraz was indeed a probationary and not a regular employee more particularly the
fact that she was well-aware of her duties and responsibilities and that her failure to
adequately perform the same would lead to her non-regularization and eventually, her
termination.

D. Employers violation of
company policy and
procedure.

Accordingly, by affirming the NLRCs pronouncement which is tainted with grave abuse of
discretion, the CA committed a reversible error which, perforce, necessitates the reversal of
its decision.

C. Probationary employment;

Nonetheless, despite the existence of a sufficient ground to terminate Alcarazs

employment and Abbotts compliance with the Labor Code termination procedure, it is
readily apparent that Abbott breached its contractual obligation to Alcaraz when it failed to
abide by its own procedure in evaluating the performance of a probationary employee.

termination procedure.
Veritably, a company policy partakes of the nature of an implied contract between the
employer and employee. In Parts Depot, Inc. v. Beiswenger,68 it has been held that:
A different procedure is applied when terminating a probationary employee; the usual twonotice rule does not govern.65 Section 2, Rule I, Book VI of the Implementing Rules of the
Labor Code states that "if the termination is brought about by the x x x failure of an
employee to meet the standards of the employer in case of probationary employment, it
shall be sufficient that a written notice is served the employee, within a reasonable time
from the effective date of termination."

As the records show, Alcaraz's dismissal was effected through a letter dated May 19, 2005
which she received on May 23, 2005 and again on May 27, 2005. Stated therein were the
reasons for her termination, i.e., that after proper evaluation, Abbott determined that she
failed to meet the reasonable standards for her regularization considering her lack of time
and people management and decision-making skills, which are necessary in the
performance of her functions as Regulatory Affairs Manager.66 Undeniably, this written
notice sufficiently meets the criteria set forth above, thereby legitimizing the cause and
manner of Alcarazs dismissal as a probationary employee under the parameters set by the
Labor Code.67

Employer statements of policy . . . can give rise to contractual rights in employees without
evidence that the parties mutually agreed that the policy statements would create
contractual rights in the employee, and, hence, although the statement of policy is signed by
neither party, can be unilaterally amended by the employer without notice to the employee,
and contains no reference to a specific employee, his job description or compensation, and
although no reference was made to the policy statement in pre-employment interviews and
the employee does not learn of its existence until after his hiring. Toussaint, 292 N.W .2d at
892. The principle is akin to estoppel. Once an employer establishes an express personnel
policy and the employee continues to work while the policy remains in effect, the policy is
deemed an implied contract for so long as it remains in effect. If the employer unilaterally
changes the policy, the terms of the implied contract are also thereby changed.1wphi1
(Emphasis and underscoring supplied.)

Hence, given such nature, company personnel policies create an obligation on the part of
both the employee and the employer to abide by the same.

Records show that Abbotts PPSE procedure mandates, inter alia, that the job performance
of a probationary employee should be formally reviewed and discussed with the employee
at least twice: first on the third month and second on the fifth month from the date of
employment. Abbott is also required to come up with a Performance Improvement Plan
during the third month review to bridge the gap between the employees performance and
the standards set, if any.69 In addition, a signed copy of the PPSE form should be submitted
to Abbotts HRD as the same would serve as basis for recommending the confirmation or
termination of the probationary employment.70

In this case, it is apparent that Abbott failed to follow the above-stated procedure in
evaluating Alcaraz. For one, there lies a hiatus of evidence that a signed copy of Alcarazs
PPSE form was submitted to the HRD. It was not even shown that a PPSE form was
completed to formally assess her performance. Neither was the performance evaluation
discussed with her during the third and fifth months of her employment. Nor did Abbott
come up with the necessary Performance Improvement Plan to properly gauge Alcarazs
performance with the set company standards.

While it is Abbotts management prerogative to promulgate its own company rules and even
subsequently amend them, this right equally demands that when it does create its own
policies and thereafter notify its employee of the same, it accords upon itself the obligation
to faithfully implement them. Indeed, a contrary interpretation would entail a
disharmonious relationship in the work place for the laborer should never be mired by the
uncertainty of flimsy rules in which the latters labor rights and duties would, to some
extent, depend.

In this light, while there lies due cause to terminate Alcarazs probationary employment for
her failure to meet the standards required for her regularization, and while it must be
further pointed out that Abbott had satisfied its statutory duty to serve a written notice of
termination, the fact that it violated its own company procedure renders the termination of
Alcarazs employment procedurally infirm, warranting the payment of nominal damages. A
further exposition is apropos.

Case law has settled that an employer who terminates an employee for a valid cause but
does so through invalid procedure is liable to pay the latter nominal damages.

In Agabon v. NLRC (Agabon),71 the Court pronounced that where the dismissal is for a just
cause, the lack of statutory due process should not nullify the dismissal, or render it illegal,
or ineffectual. However, the employer should indemnify the employee for the violation of
his statutory rights.72 Thus, in Agabon, the employer was ordered to pay the employee
nominal damages in the amount of P30,000.00.73

Proceeding from the same ratio, the Court modified Agabon in the case of Jaka Food
Processing Corporation v. Pacot (Jaka)74 where it created a distinction between
procedurally defective dismissals due to a just cause, on one hand, and those due to an
authorized cause, on the other.

It was explained that if the dismissal is based on a just cause under Article 282 of the Labor
Code (now Article 296) but the employer failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered because the dismissal process was, in
effect, initiated by an act imputable to the employee; if the dismissal is based on an
authorized cause under Article 283 (now Article 297) but the employer failed to comply with
the notice requirement, the sanction should be stiffer because the dismissal process was
initiated by the employers exercise of his management prerogative.75 Hence, in Jaka,
where the employee was dismissed for an authorized cause of retrenchment76 as

contradistinguished from the employee in Agabon who was dismissed for a just cause of
neglect of duty77 the Court ordered the employer to pay the employee nominal damages
at the higher amount of P50,000.00.

Evidently, the sanctions imposed in both Agabon and Jaka proceed from the necessity to
deter employers from future violations of the statutory due process rights of employees.78
In similar regard, the Court deems it proper to apply the same principle to the case at bar
for the reason that an employers contractual breach of its own company procedure albeit
not statutory in source has the parallel effect of violating the laborers rights. Suffice it to
state, the contract is the law between the parties and thus, breaches of the same impel
recompense to vindicate a right that has been violated. Consequently, while the Court is
wont to uphold the dismissal of Alcaraz because a valid cause exists, the payment of
nominal damages on account of Abbotts contractual breach is warranted in accordance
with Article 2221 of the Civil Code.79

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; (b) 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; (c) they agree to hold themselves personally and solidarily liable with the
corporation; or (d) they are made by specific provision of law personally answerable for
their corporate action.80

In this case, Alcaraz alleges that the individual petitioners acted in bad faith with regard to
the supposed crude manner by which her probationary employment was terminated and
thus, should be held liable together with Abbott. In the same vein, she further attributes the
loss of some of her remaining belongings to them.81

Alcarazs contention fails to persuade.

Anent the proper amount of damages to be awarded, the Court observes that Alcarazs
dismissal proceeded from her failure to comply with the standards required for her
regularization. As such, it is undeniable that the dismissal process was, in effect, initiated by
an act imputable to the employee, akin to dismissals due to just causes under Article 296 of
the Labor Code. Therefore, the Court deems it appropriate to fix the amount of nominal
damages at the amount of P30,000.00, consistent with its rulings in both Agabon and Jaka.

E. Liability of individual
petitioners as corporate
officers.

It is hornbook principle that personal liability of corporate directors, trustees or officers

attaches only when: (a) they assent to a patently unlawful act of the corporation, or when

A judicious perusal of the records show that other than her unfounded assertions on the
matter, there is no evidence to support the fact that the individual petitioners herein, in
their capacity as Abbotts officers and employees, acted in bad faith or were motivated by ill
will in terminating

Alcarazs services. The fact that Alcaraz was made to resign and not allowed to enter the
workplace does not necessarily indicate bad faith on Abbotts part since a sufficient ground
existed for the latter to actually proceed with her termination. On the alleged loss of her
personal belongings, records are bereft of any showing that the same could be attributed to
Abbott or any of its officers. It is a well-settled rule that bad faith cannot be presumed and
he who alleges bad faith has the onus of proving it. All told, since Alcaraz failed to prove any
malicious act on the part of Abbott or any of its officers, the Court finds the award of moral
or exemplary damages unwarranted.

WHEREFORE, the petition is GRANTED. The Decision dated December 10, 2009 and
Resolution dated June 9, 2010 of the Court of Appeals in CA-G.R. SP No. 101045 are hereby
REVERSED and SET ASIDE. Accordingly, the Decision dated March 30, 2006 of the Labor
Arbiter is REINSTATED with the MODIFICATION that petitioner Abbott Laboratories,
Philippines be ORDERED to pay respondent Pearlie Ann F. Alcaraz nominal damages in the
amount of P30,000.00 on account of its breach of its own company procedure.

SO ORDERED.

G.R. No. 187226

relations, got pregnant out of wedlock, married the father of her child, and was dismissed by
SSCW, in that order. The question that has to be resolved is whether the petitioner's
conduct constitutes a ground for her dismissal.

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to annul and set aside the Decision1 dated September 24, 2008 and Resolution2
dated March 2, 2009 issued by the Court of Appeals (CA) in CA-G.R. SP No. 100188, which
affirmed the Resolutions dated February 28, 20073 and May 21, 20074 of the National Labor
Relations Commission (NLRC)in NLRC CA No. 049222-06.

January 28, 2015

The Facts

CHERYLL SANTOS LEUS, Petitioner,

SSCW is a catholic and sectarian educational institution in Silang, Cavite. In May 2001, SSCW
hired the petitioner as an Assistant to SSCWs Director of the Lay Apostolate and Community
Outreach Directorate.

vs.
ST. SCHOLASTICA'S COLLEGE WESTGROVE and/or SR. EDNA
QUIAMBAO, OSB, Respondents.

Sometime in 2003, the petitioner and her boyfriend conceived a child out of wedlock. When
SSCW learned of the petitioners pregnancy, Sr. Edna Quiambao (Sr. Quiambao), SSCWs
Directress, advised her to file a resignation letter effective June 1, 2003. In response, the
petitioner informed Sr. Quiambao that she would not resign from her employment just
because she got pregnant without the benefit of marriage.5

DECISION

REYES, J.:

Cheryll Santos Leus (petitioner) was hired by St. Scholastica's College Westgrove (SSCW), a
Catholic educational institution, as a non-teaching personnel, engaged in pre-marital sexual

On May 28, 2003, Sr. Quiambao formally directed the petitioner to explain in writing why
she should not be dismissed for engaging in pre-marital sexual relations and getting
pregnant as a result thereof, which amounts to serious misconduct and conduct
unbecoming of an employee of a Catholic school.6

In a letter7 dated May 31, 2003, the petitioner explained that her pregnancy out of wedlock
does not amount to serious misconduct or conduct unbecoming of an employee. She
averred that she is unaware of any school policy stating that being pregnant out of wedlock
is considered as a serious misconduct and, thus, a ground for dismissal. Further, the
petitioner requested a copy of SSCWs policy and guidelines so that she may better respond
to the charge against her. On June 2, 2003, Sr. Quiambao informed the petitioner that,
pending the promulgation of a "Support Staff Handbook," SSCW follows the 1992 Manual of
Regulations for Private Schools (1992 MRPS) on the causes for termination of employments;
that Section 94(e) of the 1992 MRPS cites "disgraceful or immoral conduct" as a ground for
dismissal in addition to the just causes for termination of employment provided under
Article 282 of the Labor Code.8

On June 4, 2003, the petitioner, through counsel, sent Sr. Quiambao a letter,9 which, in
part, reads:

To us, pre-marital sex between two consenting adults without legal impediment to marry
each other who later on married each other does not fall within the contemplation of
"disgraceful or immoral conduct" and "serious misconduct" of the Manual of Regulations for
Private Schools and the Labor Code of the Philippines.

Your argument that what happened to our client would set a bad example to the students
and other employees of your school is speculative and is more imaginary than real. To
dismiss her on that sole ground constitutes grave abuse of management prerogatives.

Considering her untarnished service for two years, dismissing her with her present condition
would also mean depriving her to be more secure in terms of financial capacity to sustain
maternal needs.10

In a letter11 dated June 6, 2003, SSCW, through counsel, maintained that pre-marital sexual
relations, evenif between two consenting adults without legal impediment to marry, is
considered a disgraceful and immoral conduct or a serious misconduct, which are grounds
for the termination of employment under the 1992 MRPS and the Labor Code. That SSCW,
as a Catholic institution of learning, has the right to uphold the teaching of the Catholic
Church and expect its employees to abide by the same. They further asserted that the
petitioners indiscretion is further aggravated by the fact that she is the Assistant to the
Director of the Lay Apostolate and Community Outreach Directorate, a position of
responsibility that the students look up to as rolemodel. The petitioner was again directed
to submit a written explanation on why she should not be dismissed.

On June 9, 2003, the petitioner informed Sr. Quiambao that she adopts her counsels letter
dated June 4, 2003 as her written explanation.12

Consequently, in her letter13 dated June 11, 2003, Sr. Quiambao informed the petitioner
that her employment with SSCW is terminated on the ground of serious misconduct. She
stressed that pre-marital sexual relations between two consenting adults with no
impediment to marry, even if they subsequently married, amounts to immoral conduct. She
further pointed out that SSCW finds unacceptable the scandal brought about by the
petitioners pregnancy out of wedlock as it ran counter to the moral principles that SSCW
stands for and teaches its students.

Thereupon, the petitioner filed a complaint for illegal dismissal with the Regional Arbitration
Branch of the NLRC in Quezon City against SSCW and Sr. Quiambao (respondents). In her
position paper,14 the petitioner claimed that SSCW gravely abused its management
prerogative as there was no just cause for her dismissal. She maintained that her pregnancy
out of wedlock cannot be considered as serious misconduct since the same is a purely
private affair and not connected in any way with her duties as an employee of SSCW.
Further, the petitioner averred that she and her boyfriend eventually got married even prior
to her dismissal.

For their part, SSCW claimed that there was just cause to terminate the petitioners
employment with SSCW and that the same is a valid exercise of SSCWs management
prerogative. They maintained that engaging in pre-marital sex, and getting pregnant as a
result thereof, amounts to a disgraceful or immoral conduct, which is a ground for the
dismissal of an employee under the 1992 MRPS.

They pointed out that SSCW is a Catholic educational institution, which caters exclusively to
young girls; that SSCW would lose its credibility if it would maintain employees who do not
live up to the values and teachings it inculcates to its students. SSCW further asserted that
the petitioner, being an employee of a Catholic educational institution, should have strived
to maintain the honor, dignity and reputation of SSCW as a Catholic school.15

The LA further held that teachers and school employees, both in their official and personal
conduct, must display exemplary behavior and act in a manner that is beyond reproach.

The petitioner appealed to the NLRC, insisting that there was no valid ground for the
termination of her employment. She maintained that her pregnancy out of wedlock cannot
be considered as "serious misconduct" under Article 282 of the Labor Code since the same
was not of such a grave and aggravated character. She asserted that SSCW did not present
any evidence to establish that her pregnancy out of wedlock indeed eroded the moral
principles that it teaches its students.18

The Ruling of the NLRC

The Ruling of the Labor Arbiter

On February 28, 2006, the Labor Arbiter (LA) rendered a Decision,16 in NLRC Case No. 617657-03-C which dismissed the complaint filed by the petitioner. The LA found that there
was a valid ground for the petitioners dismissal; that her pregnancy out of wedlock is
considered as a "disgraceful and immoral conduct." The LA pointed out that, as an employee
of a Catholic educational institution, the petitioner is expected to live up to the Catholic
values taught by SSCW to its students. Likewise, the LA opined that:

Further, a deep analysis of the facts would lead us to disagree with the complainant that she
was dismissed simply because she violate[d] a Catholic [teaching]. It should not be taken in
isolation but rather it should be analyzed in the lightof the surrounding circumstances as a
whole. We must also take into [consideration] the nature of her work and the nature of her
employer-school. For us, it is not just an ordinary violation. It was committed by the
complainant in an environment where her strict adherence to the same is called for and
where the reputation of the school is at stake. x x x.17

On February 28, 2007, the NLRC issued a Resolution,19 which affirmed the LA Decision
dated February 28, 2006. The NLRC pointed out that the termination of the employment of
the personnel of private schools is governed by the 1992 MRPS; that Section 94(e) thereof
cites "disgraceful or immoral conduct" as a just cause for dismissal, in addition to the
grounds for termination of employment provided for under Article 282 of the Labor Code.
The NLRC held that the petitioners pregnancy out of wedlock is a "disgraceful or immoral
conduct" within the contemplation of Section 94(e) of the 1992 MRPS and, thus, SSCW had
a valid reason to terminate her employment.

The petitioner sought reconsideration20 of the Resolution dated February 28, 2007 but it
was denied by the NLRC in its Resolution21 dated May 21, 2007.

Unperturbed, the petitioner filed a petition22 for certiorari with the CA, alleging that the
NLRC gravely abused its discretion in ruling that there was a valid ground for her dismissal.

She maintained that pregnancy out of wedlock cannot be considered as a disgraceful or

immoral conduct; that SSCW failed to prove that its students were indeed gravely
scandalized by her pregnancy out of wedlock. She likewise asserted that the NLRC erred in
applying Section 94(e) of the 1992 MRPS.

Under Section 94 (e) of the [MRPS], and even under Article 282 (serious misconduct) of the
Labor Code, "disgraceful and immoral conduct" is a basis for termination of employment.

xxxx
The Ruling of the CA

On September 24, 2008, the CA rendered the herein assailed Decision,23 which denied the
petition for certiorari filed by the petitioner. The CA held that it is the provisions of the 1992
MRPS and not the Labor Code which governs the termination of employment of teaching
and non-teaching personnel of private schools, explaining that:

It is a principle of statutory construction that where there are two statutes that apply to a
particular case, that which was specially intended for the said case must prevail. Petitioner
was employed by respondent private Catholic institution which undeniably follows the
precepts or norms of conduct set forth by the Catholic Church. Accordingly, the Manual of
Regulations for Private Schools followed by it must prevail over the Labor Code, a general
statute. The Manual constitutes the private schools Implementing Rules and Regulations of
Batas Pambansa Blg. 232 or the Education Act of 1982. x x x.24

The CA further held that the petitioners dismissal was a valid exercise of SSCWs
management prerogative to discipline and impose penalties on erring employees pursuant
toits policies, rules and regulations. The CA upheld the NLRCs conclusion that the
petitioners pregnancy out of wedlock is considered as a "disgraceful and immoral conduct"
and, thus, a ground for dismissal under Section 94(e) of the 1992 MRPS. The CA likewise
opined that the petitioners pregnancy out of wedlock is scandalous per segiven the work
environment and social milieu that she was in, viz:

Petitioner contends that her pre-marital sexual relations with her boyfriend and her
pregnancy prior to marriage was not disgraceful or immoral conduct sufficient for her
dismissal because she was not a member of the schools faculty and there is no evidence
that her pregnancy scandalized the school community.

We are not persuaded. Petitioners pregnancy prior to marriage is scandalous in itself given
the work environment and social milieu she was in. Respondent school for young ladies
precisely seeks to prevent its students from situations like this, inculcating in them strict
moral values and standards. Being part of the institution, petitionersprivate and public life
could not be separated. Her admitted pre-marital sexual relations was a violation of private
respondents prescribed standards of conduct that views pre-marital sex as immoral
because sex between a man and a woman must only take place within the bounds of
marriage.

Finally, petitioners dismissal is a valid exercise of the employer-schools management

prerogative to discipline and impose penalties on erring employees pursuant to its policies,
rules and regulations. x x x.25 (Citations omitted)

The petitioner moved for reconsideration26 but it was denied by the CA in its Resolution27
dated March 2, 2009.

Hence, the instant petition.

Issues

Essentially, the issues set forth by the petitioner for this Courts decision are the following:
first, whether the CA committed reversible error in ruling that it is the 1992 MRPS and not
the Labor Code that governs the termination of employment of teaching and non-teaching
personnel of private schools; and second, whether the petitionerspregnancy out of wedlock
constitutes a valid ground to terminate her employment.

The Court notes that the argument against the validity of the 1992 MRPS, specifically
Section 94 thereof, is raised by the petitioner for the first time in the instant petition for
review. Nowhere in the proceedings before the LA, the NLRC or the CA did the petitioner
assail the validity of the provisions of the 1992 MRPS.

"It is well established that issues raised for the first time on appeal and not raised in the
proceedings in the lower court are barred by estoppel. Points of law, theories, issues, and
arguments not brought to the attention of the trial court ought not to be considered by a
reviewing court, as these cannot be raised for the first time on appeal. To consider the
alleged facts and arguments belatedly raised would amount to trampling on the basic
principles of fair play, justice, and due process."28

The Ruling of the Court

The Court grants the petition.

First Issue: Applicability of the 1992 MRPS

The petitioner contends that the CA, in ruling that there was a valid ground to dismiss her,
erred in applying Section 94 of the 1992 MRPS. Essentially, she claims that the 1992 MRPS
was issued by the Secretary of Education as the revised implementing rules and regulations
of Batas Pambansa Bilang 232 (BP 232) or the "Education Act of 1982." That there is no
provision in BP 232, which provides for the grounds for the termination of employment of
teaching and non-teaching personnel of private schools. Thus, Section 94 of the 1992 MRPS,
which provides for the causes of terminating an employment, isinvalid as it "widened the
scope and coverage" of BP 232.

The Court does not agree.

In any case, even if the Court were to disregard the petitioners belated claim of the
invalidity of the 1992 MRPS, the Court still finds the same untenable.

The 1992 MRPS, the regulation in force at the time of the instant controversy, was issued by
the Secretary of Education pursuant to BP 232. Section 7029 of BP 232 vests the Secretary of
Education with the authority to issue rules and regulations to implement the provisions of
BP 232. Concomitantly, Section 5730 specifically empowers the Department of Education to
promulgate rules and regulations necessary for the administration, supervision and
regulation of the educational system in accordance with the declared policy of BP 232.

The qualifications of teaching and non-teaching personnel of private schools, as well as the
causes for the termination of their employment, are an integral aspect of the educational
system of private schools. Indubitably, ensuring that the teaching and non-teaching
personnel of private schools are not only qualified, but competent and efficient as well goes
hand in hand with the declared objective of BP 232 establishing and maintaining relevant
quality education.31 It is thus within the authority of the Secretary of Education to issue a

rule, which provides for the dismissal of teaching and non-teaching personnel of private
schools based on their incompetence, inefficiency, or some other disqualification.

Moreover, Section 69 of BP 232 specifically authorizes the Secretary of Education to

"prescribe and impose such administrative sanction as he may deem reasonable and
appropriate in the implementing rules and regulations" for the "[g]ross inefficiency of the
teaching or non-teaching personnel" of private schools.32 Accordingly, contrary to the
petitioners claim, the Court sees no reason to invalidate the provisions of the 1992 MRPS,
specifically Section 94 thereof. Second Issue: Validity of the Petitioners Dismissal

The validity of the petitioners dismissal hinges on the determination of whether pregnancy
out of wedlock by an employee of a catholic educational institution is a cause for the
termination of her employment.

In resolving the foregoing question,the Court will assess the matter from a strictly neutral
and secular point of view the relationship between SSCW as employer and the petitioner
as an employee, the causes provided for by law in the termination of suchrelationship, and
the evidence on record. The ground cited for the petitioners dismissal, i.e., pre-marital
sexual relations and, consequently, pregnancy outof wedlock, will be assessed as to whether
the same constitutes a valid ground for dismissal pursuant to Section 94(e) of the 1992
MRPS.

In a petition for review under Rule 45 of the Rules of Court, such as the instant petition,
where the CAs disposition in a labor case is sought to be calibrated, the Courts review
isquite limited. In ruling for legal correctness, the Court has to view the CA decision in the
same context that the petition for certiorari it ruled upon was presented to it; the Court has
to examine the CA decision from the prism of whether it correctly determined the presence
or absence of grave abuse of discretion in the NLRC decision before it, not on the basis of
whether the NLRC decision on the merits of the case was correct.33

The phrase "grave abuse of discretion" is well-defined in the Courts jurisprudence. It exists
where an act of a court or tribunal is performed with a capricious or whimsical exercise
ofjudgment equivalent to lack of jurisdiction.34 The determination of the presence or
absence of grave abuse of discretion does not include an inquiry into the correctness of the
evaluation of evidence, which was the basis of the labor agency in reaching its conclusion.35

Nevertheless, while a certiorari proceeding does not strictly include an inquiry as to the
correctness of the evaluation of evidence (that was the basis of the labor tribunals in
determining their conclusion), the incorrectness of its evidentiary evaluation should not
result in negating the requirement of substantial evidence. Indeed, when there is a showing
that the findings or conclusions, drawn from the same pieces of evidence, were arrived at
arbitrarily or in disregard of the evidence on record, they may be reviewed by the courts. In
particular, the CA can grant the petition for certiorariif it finds that the NLRC, in its assailed
decision or resolution, made a factual finding not supported by substantial evidence. A
decision that is not supported by substantial evidence is definitely a decision tainted with
grave abuse of discretion.36

The standard of review in a Rule 45

petition from the CA decision in

The labor tribunals respective

labor cases.

conclusions that the petitioners

pregnancy is a "disgraceful or
immoral conduct" were arrived at

arbitrarily.
The totality of the circumstances
The CA and the labor tribunals affirmed the validity of the petitioners dismissal pursuant to
Section 94(e) of the 1992 MRPS, which provides that:

surrounding the conduct alleged to

be disgraceful or immoral must be
assessed against the prevailing

Sec. 94. Causes of Terminating Employment In addition to the just causes enumerated in
the Labor Code, the employment of school personnel, including faculty, may be terminated
for any of the following causes:

norms of conduct.

xxxx

In Chua-Qua v. Clave,37 the Court stressed that to constitute immorality, the circumstances
of each particular case must be holistically considered and evaluated in light of the
prevailing norms of conductand applicable laws.38 Otherwise stated, it is not the totality of
the circumstances surrounding the conduct per se that determines whether the same is
disgraceful or immoral, but the conduct that is generally accepted by society as respectable
or moral. If the conduct does not conform to what society generally views as respectable or
moral, then the conduct is considered as disgraceful or immoral. Tersely put, substantial
evidence must be presented, which would establish that a particular conduct, viewed in
light of the prevailing norms of conduct, is considered disgraceful or immoral.

The labor tribunals concluded that the petitioners pregnancy out of wedlock, per se, is
"disgraceful and immoral"considering that she is employed in a Catholic educational
institution. In arriving at such conclusion, the labor tribunals merely assessed the fact of the
petitioners pregnancy vis--visthe totality of the circumstances surrounding the same.

Thus, the determination of whether a conduct is disgraceful or immoral involves a two-step

process: first, a consideration of the totality of the circumstances surrounding the conduct;
and second, an assessment of the said circumstances vis--visthe prevailing norms of
conduct, i.e., what the society generally considers moral and respectable.

However, the Court finds no substantial evidence to support the aforementioned conclusion
arrived at by the labor tribunals. The fact of the petitioners pregnancy out of wedlock,
without more, is not enough to characterize the petitioners conduct as disgraceful or
immoral. There must be substantial evidence to establish that pre-marital sexual relations
and, consequently, pregnancy outof wedlock, are indeed considered disgraceful or immoral.

That the petitioner was employed by a Catholic educational institution per se does not
absolutely determine whether her pregnancy out of wedlock is disgraceful or immoral.
There is still a necessity to determine whether the petitioners pregnancy out of wedlock is
considered disgraceful or immoral in accordance with the prevailing norms of conduct.

xxxx

e. Disgraceful or immoral conduct;

Public and secular morality should

determine the prevailing norms of

religious freedom therefore requires that government be neutral in matters of religion;

governmental reliance upon religious justification is inconsistent with this policy of
neutrality.

conduct, not religious morality.

However, determining what the prevailing norms of conduct are considered disgraceful or
immoral is not an easy task. An individuals perception of what is moral or respectable is a
confluence of a myriad of influences, such as religion, family, social status, and a cacophony
of others. In this regard, the Courts ratiocination in Estrada v. Escritor39 is instructive.

In Estrada, an administrative case against a court interpreter charged with disgraceful and
immoral conduct, the Court stressed that in determining whether a particular conduct can
be considered as disgraceful and immoral, the distinction between public and secular
morality on the one hand, and religious morality, on the other, should be kept in mind.40
That the distinction between public and secular morality and religious morality is important
because the jurisdiction of the Court extends only to public and secular morality.41 The
Court further explained that:

The morality referred to in the law is public and necessarily secular, not religiousx x x.
"Religious teachings as expressed in public debate may influence the civil public order but
public moral disputes may be resolved only on grounds articulable in secular terms."
Otherwise, if government relies upon religious beliefs in formulating public policies and
morals, the resulting policies and morals would require conformity to what some might
regard as religious programs or agenda.The non-believers would therefore be compelled to
conform to a standard of conduct buttressed by a religious belief, i.e., to a "compelled
religion," anathema to religious freedom. Likewise, if government based its actions upon
religious beliefs, it would tacitly approve or endorse that belief and thereby also tacitly
disapprove contrary religious or non-religious views that would not support the policy. As a
result, government will not provide full religious freedom for all its citizens, or even make it
appear that those whose beliefs are disapproved are second-class citizens. Expansive

In other words, government action, including its proscription of immorality as expressed in

criminal law like concubinage, must have a secular purpose. That is, the government
proscribes this conduct because it is "detrimental (or dangerous) to those conditions upon
which depend the existence and progress of human society" and not because the conduct is
proscribed by the beliefs of one religion or the other. Although admittedly, moral judgments
based on religion might have a compelling influence on those engaged in public
deliberations over what actions would be considered a moral disapprobation punishable by
law. After all, they might also be adherents of a religion and thus have religious opinions and
moral codes with a compelling influence on them; the human mind endeavors to regulate
the temporal and spiritual institutions of society in a uniform manner, harmonizing earth
with heaven. Succinctly put, a law could be religious or Kantian or Aquinian or utilitarian in
its deepest roots, but it must have an articulable and discernible secular purpose and
justification to pass scrutiny of the religion clauses.x x x.42 (Citations omitted and emphases
ours)

Accordingly, when the law speaks of immoral or, necessarily, disgraceful conduct, it pertains
to public and secular morality; it refers to those conducts which are proscribed because they
are detrimental to conditions upon which depend the existence and progress of human
society. Thus, in Anonymous v. Radam,43 an administrative case involving a court utility
worker likewise charged with disgraceful and immoral conduct, applying the doctrines laid
down in Estrada, the Court held that:

For a particular conduct to constitute "disgraceful and immoral" behavior under civil service
laws, it must be regulated on account of the concerns of public and secular morality. It
cannot be judged based on personal bias, specifically those colored by particular mores. Nor
should it be grounded on "cultural" values not convincingly demonstrated to have been
recognized in the realm of public policy expressed in the Constitution and the laws. At the

same time, the constitutionally guaranteed rights (such as the right to privacy) should be
observed to the extent that they protect behavior that may be frowned upon by the
majority.

Under these tests, two things may be concluded from the fact that an unmarried woman
gives birth out of wedlock:

(1) if the father of the child is himself unmarried, the woman is not ordinarily
administratively liable for disgraceful and immoral conduct.It may be a not-so-ideal situation
and may cause complications for both mother and child but it does not give cause for
administrative sanction. There is no law which penalizes an unmarried mother under those
circumstances by reason of her sexual conduct or proscribes the consensual sexual activity
between two unmarried persons. Neither does the situation contravene any fundamental
state policy as expressed in the Constitution, a document that accommodates various belief
systems irrespective of dogmatic origins.

(2) if the father of the child born out of wedlock is himself married to a woman other
thanthe mother, then there is a cause for administrative sanction against either the father
or the mother. In sucha case, the "disgraceful and immoral conduct" consists of having
extramarital relations with a married person. The sanctity of marriage is constitutionally
recognized and likewise affirmed by our statutes as a special contract of permanent union.
Accordingly, judicial employees have been sanctioned for their dalliances with married
persons or for their own betrayals of the marital vow of fidelity.

In this case, it was not disputed that, like respondent, the father of her child was unmarried.
Therefore, respondent cannot be held liable for disgraceful and immoral conduct simply
because she gave birth to the child Christian Jeon out of wedlock.44 (Citations omitted and
emphases ours)

Both Estrada and Radamare administrative cases against employees in the civil service. The
Court, however, sees no reason not to apply the doctrines enunciated in Estrada and
Radamin the instant case. Estrada and Radamalso required the Court to delineate what
conducts are considered disgraceful and/or immoral as would constitute a ground for
dismissal. More importantly, as in the said administrative cases, the instant case involves an
employees security of tenure; this case likewise concerns employment, which is not merely
a specie of property right, but also the means by which the employee and those who
depend on him live.45

It bears stressing that the right of an employee to security of tenure is protected by the
Constitution. Perfunctorily, a regular employee may not be dismissed unless for cause
provided under the Labor Code and other relevant laws, in this case, the 1992 MRPS. As
stated above, when the law refers to morality, it necessarily pertains to public and secular
morality and not religious morality. Thus, the proscription against "disgraceful or immoral
conduct" under Section 94(e) of the 1992 MRPS, which is made as a cause for dismissal,
must necessarily refer to public and secular morality. Accordingly, in order for a conduct
tobe considered as disgraceful or immoral, it must be "detrimental (or dangerous) to those
conditions upon which depend the existence and progress of human society and not
because the conduct is proscribed by the beliefs of one religion or the other."

Thus, in Santos v. NLRC,46 the Court upheld the dismissal of a teacher who had an extramarital affair with his co-teacher, who is likewise married, on the ground of disgraceful and
immoral conduct under Section 94(e) of the 1992 MRPS. The Court pointed out that extramarital affair is considered as a disgraceful and immoral conduct is an afront to the sanctity
of marriage, which is a basic institution of society, viz:

We cannot overemphasize that having an extra-marital affair is an afront to the sanctity of

marriage, which is a basic institution of society. Even our Family Code provides that husband
and wife must live together, observe mutual love, respect and fidelity. This is rooted in the
fact that both our Constitution and our laws cherish the validity of marriage and unity of the

family. Our laws, in implementing this constitutional edict on marriage and the family
underscore their permanence, inviolability and solidarity.47

To stress, pre-marital sexual relations between two consenting adults who have no
impediment to marry each other, and, consequently, conceiving a child out of wedlock,
gauged from a purely public and secular view of morality, does not amount to a disgraceful
or immoral conduct under Section 94(e) of the 1992 MRPS.

The petitioners pregnancy out of

wedlock is not a disgraceful or
immoral conduct since she and the
father of her child have no
impediment to marry each other.

In stark contrast to Santos, the Court does not find any circumstance in this case which
would lead the Court to conclude that the petitioner committed a disgraceful or immoral
conduct. It bears stressing that the petitioner and her boyfriend, at the time they conceived
a child, had no legal impediment to marry. Indeed, even prior to her dismissal, the petitioner
married her boyfriend, the father of her child. As the Court held in Radam, there is no law
which penalizes an unmarried mother by reason of her sexual conduct or proscribes the
consensual sexual activity between two unmarried persons; that neither does such situation
contravene any fundamental state policy enshrined in the Constitution.

Accordingly, the labor tribunals erred in upholding the validity of the petitioners dismissal.
The labor tribunals arbitrarily relied solely on the circumstances surrounding the petitioners
pregnancy and its supposed effect on SSCW and its students without evaluating whether the
petitioners conduct is indeed considered disgraceful or immoral in view of the prevailing
norms of conduct. In this regard, the labor tribunals respective haphazard evaluation of the
evidence amounts to grave abuse of discretion, which the Court will rectify.

The labor tribunals finding that the petitioners pregnancy out of wedlock despite the
absence of substantial evidence is not only arbitrary, but a grave abuse of discretion, which
should have been set right by the CA.

There is no substantial evidence to

prove that the petitioners pregnancy
out of wedlock caused grave scandal

Admittedly, the petitioner is employed in an educational institution where the teachings and
doctrines of the Catholic Church, including that on pre-marital sexual relations, is strictly
upheld and taught to the students. That her indiscretion, which resulted in her pregnancy
out of wedlock, is anathema to the doctrines of the Catholic Church. However, viewed
against the prevailing norms of conduct, the petitioners conduct cannot be considered as
disgraceful or immoral; such conduct is not denounced by public and secular morality. It
may be an unusual arrangement, but it certainly is not disgraceful or immoral within the
contemplation of the law.

to SSCW and its students.

SSCW claimed that the petitioner was primarily dismissed because her pregnancy out of
wedlock caused grave scandal to SSCW and its students. That the scandal brought about by
the petitioners indiscretion prompted them to dismiss her. The LA upheld the respondents
claim, stating that:

In this particular case, an "objective" and "rational evaluation" of the facts and
circumstances obtaining in this case would lead us to focus our attention x x x on the impact
of the act committed by the complainant. The act of the complainant x x x eroded the moral
principles being taught and project[ed] by the respondent [C]atholic school to their young
lady students.48 (Emphasis in the original)

On the other hand, the NLRC opined that:

In the instant case, when the complainant-appellant was already conceiving a child even
before she got married, such is considered a shameful and scandalous behavior, inimical to
public welfare and policy. It eroded the moral doctrines which the respondent Catholic
school, an exclusive school for girls, is teaching the young girls. Thus, when the respondentappellee school terminated complainant-appellants services, it was a valid exercise of its
management prerogative. Whether or not she was a teacher is of no moment. There is no
separate set of rules for non-teaching personnel. Respondents-appellees uphold the
teachings of the Catholic Church on pre-marital sex and that the complainant-appellant as
an employee of the school was expected to abide by this basic principle and to live up with
the standards of their purely Catholic values. Her subsequent marriage did not take away
the fact that she had engaged in pre-marital sex which the respondent-appellee school
denounces as the same is opposed to the teachings and doctrines it espouses.49 (Emphasis
ours)

Settled is the rule that in termination cases, the burden of proving that the dismissal of the
employees was for a valid and authorized cause rests on the employer. It is incumbent upon
the employer to show by substantial evidence that the termination of the employment of
the employees was validly made and failure to discharge that duty would mean that the
dismissal is not justified and therefore illegal.50 "Substantial evidence is more than a mere
scintilla of evidence. It means such relevant evidence as a reasonable mind might accept as
adequateto support a conclusion, even if other minds equally reasonable mightconceivably
opine otherwise."51

Indubitably, bare allegations do not amount to substantial evidence. Considering that the
respondents failed to adduce substantial evidence to prove their asserted cause for the
petitioners dismissal, the labor tribunals should not have upheld their allegations hook, line
and sinker. The labor tribunals respective findings, which were arrived at sans any
substantial evidence, amounts to a grave abuse of discretion, which the CA should have
rectified. "Security of tenure is a right which may not be denied on mere speculation of any
unclearand nebulous basis."52

The petitioners dismissal is not a

valid exercise of SSCWs
management prerogative.

Contrary to the labor tribunals declarations, the Court finds that SSCW failed to adduce
substantial evidence to prove that the petitioners indiscretion indeed caused grave scandal
to SSCW and its students. Other than the SSCWs bare allegation, the records are bereft of
any evidence that would convincingly prove that the petitioners conduct indeed adversely
affected SSCWs integrity in teaching the moral doctrines, which it stands for. The petitioner
is only a non-teaching personnel; her interaction with SSCWs students is very limited. Itis
thus quite impossible that her pregnancy out of wedlock caused such a grave scandal, as
claimed by SSCW, as to warranther dismissal.

The CA be labored the management prerogative of SSCW to discipline its employees. The CA
opined that the petitioners dismissal is a valid exercise of management prerogative to
impose penalties on erring employees pursuant to its policies, rules and regulations.

The Court does not agree.

separation pay, in lieu of actual

The Court has held that "management is free to regulate, according to its own discretion
and judgment, all aspects of employment, including hiring, work assignments, working
methods, time, place and manner of work, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision, lay off of workers and
discipline, dismissal and recall of workers. The exercise of management prerogative,
however, is not absolute as it must beexercised in good faith and with due regard to the
rights of labor." Management cannot exercise its prerogative in a cruel, repressive, or
despotic manner.53

SSCW, as employer, undeniably has the right to discipline its employees and, if need be,
dismiss themif there is a valid cause to do so. However, as already explained, there is no
cause to dismiss the petitioner. Her conduct is not considered by law as disgraceful or
immoral. Further, the respondents themselves have admitted that SSCW, at the time of the
controversy, does not have any policy or rule against an employee who engages in premarital sexual relations and conceives a child as a result thereof. There being no valid basis
in law or even in SSCWs policy and rules, SSCWs dismissal of the petitioner is despotic and
arbitrary and, thus, not a valid exercise of management prerogative.

In sum, the Court finds that the petitioner was illegally dismissed as there was no just cause
for the termination of her employment. SSCW failed to adduce substantial evidence to
establish that the petitioners conduct, i.e., engaging in pre-marital sexual relations and
conceiving a child out of wedlock, assessed in light of the prevailing norms of conduct, is
considered disgraceful or immoral. The labor tribunals gravely abused their discretion in
upholding the validity of the petitioners dismissal as the charge against the petitioner lay
not on substantial evidence, but on the bare allegations of SSCW. In turn, the CA committed
reversible error in upholding the validity of the petitioners dismissal, failing torecognize
that the labor tribunals gravely abused their discretion in ruling for the respondents.

The petitioner is entitled to

reinstatement, full backwages and

attorneys fees, but not to moral and
exemplary damages.

Having established that the petitioner was illegally dismissed, the Court now determines the
reliefs thatshe is entitled to and their extent. Under the law and prevailing jurisprudence,
"an illegally dismissed employee is entitled to reinstatement as a matter of right."54 Aside
from the instances provided under Articles 28355 and 28456 of the Labor Code, separation
pay is, however, granted when reinstatement is no longer feasible because of strained
relations between the employer and the employee. In cases of illegal dismissal, the accepted
doctrine is that separation pay is available in lieu of reinstatement when the latter recourse
is no longer practical or in the best interest of the parties.57

In Divine Word High School v. NLRC,58 the Court ordered the employer Catholic school to
pay the illegally dismissed high school teacher separation pay in lieu of actual reinstatement
since her continued presence as a teacher in the school "may well bemet with antipathy and
antagonism by some sectors in the school community."59

In view of the particular circumstances of this case, it would be more prudent to direct
SSCW to pay the petitioner separation pay inlieu of actual reinstatement. The continued
employment of the petitioner with SSCW would only serve to intensify the atmosphere of
antipathy and antagonism between the parties. Consequently, the Court awards separation
pay to the petitioner equivalent to one (1) month pay for every year of service, with a
fraction of at least six (6) months considered as one (1) whole year, from the time of her
illegal dismissal up to the finality of this judgment, as an alternative to reinstatement.

Also, "employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time their
actual compensation was withheld from them up to the time of their actual reinstatement
but if reinstatement is no longer possible, the backwages shall be computed from the time
of their illegal termination up to the finality of the decision."60 Accordingly, the petitioner is
entitled to an award of full backwages from the time she was illegally dismissed up to the
finality of this decision.

Nevertheless, the petitioner is not entitled to moral and exemplary damages. "A dismissed
employee isentitled to moral damages when the dismissal is attended by bad faith or fraud
or constitutes an act oppressive to labor, or is done in a manner contrary to good morals,
good customs or public policy. Exemplary damages may be awarded if the dismissal is
effected in a wanton, oppressive or malevolent manner."61

"Bad faith, under the law, does not simply connote bad judgment or negligence.1wphi1 It
imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, or a
breach of a known duty through some motive or interest or ill will that partakes of the
nature of fraud."62

"It must be noted that the burden of proving bad faith rests on the one alleging it"63 since
basic is the principle that good faith is presumed and he who alleges bad faith has the duty
to prove the same.64 "Allegations of bad faith and fraud must be proved by clear and
convincing evidence."65

The records of this case are bereft of any clear and convincing evidence showing that the
respondents acted in bad faith or in a wanton or fraudulent manner in dismissing the
petitioner. That the petitioner was illegally dismissed is insufficient to prove bad faith. A
dismissal may be contrary to law but by itself alone, it does not establish bad faith to entitle
the dismissed employee to moral damages. The award of moral and exemplary damages

cannot be justified solely upon the premise that the employer dismissed his employee
without cause.66

However, the petitioner is entitled to attorneys fees in the amount of 10% of the total
monetary award pursuant to Article 11167 of the Labor Code. "It is settled that where an
employee was forced to litigate and, thus, incur expenses to protect his rights and interest,
the award of attorneys fees is legally and morally justifiable."68

Finally, legal interest shall be imposed on the monetary awards herein granted at the rate of
six percent (6%) per annumfrom the finality of this judgment until fully paid.69

WHEREFORE, in consideration of the foregoing disquisitions, the petition is GRANTED. The

Decision dated September 24, 2008 and Resolution dated March 2, 2009 of the Court of
Appeals in CA-G.R. SP No. 100188 are hereby REVERSED and SET ASIDE.

The respondent, St. Scholasticas College Westgrove, is hereby declared guilty of illegal
dismissal and is hereby ORDERED to pay the petitioner, Cheryll Santos Leus, the following:
(a) separation pay in lieu of actual reinstatement equivalent to one (1) month pay for every
year of service, with a fraction of at least six (6) months considered as one (1) whole year
from the time of her dismissal up to the finality of this Decision; (b) full backwages from the
time of her illegal dismissal up to the finality of this Decision; and (c) attorneys fees
equivalent to ten percent (10%) of the total monetary award. The monetary awards herein
granted shall earn legal interest at the rate of six percent (6%) per annumfrom the date of
the finality of this Decision untilfully paid. The case is REMANDED to the Labor Arbiter for
the computation of petitioners monetary awards.

SO ORDERED.

G.R. No. 184885

March 7, 2012

Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked
as talent, director and scriptwriter for various radio programs aired over DYAB.

ERNESTO G. YMBONG, Petitioner,

vs.
ABS-CBN BROADCASTING CORPORATION, VENERANDA SY AND
DANTE LUZON, Respondents.

On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy No. HR-ER-016 or the
"Policy on Employees Seeking Public Office." The pertinent portions read:

1. Any employee who intends to run for any public office position, must file his/her letter of
resignation, at least thirty (30) days prior to the official filing of the certificate of candidacy
either for national or local election.

DECISION
xxxx
VILLARAMA, JR., J.:

Before us is a Rule 45 Petition seeking to set aside the August 22, 2007 Decision1 and
September 18, 2008 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 86206
declaring petitioner to have resigned from work and not illegally dismissed.

3. Further, any employee who intends to join a political group/party or even with no political
affiliation but who intends to openly and aggressively campaign for a candidate or group of
candidates (e.g. publicly speaking/endorsing candidate, recruiting campaign workers, etc.)
must file a request for leave of absence subject to managements approval. For this
particular reason, the employee should file the leave request at least thirty (30) days prior to
the start of the planned leave period.

The antecedent facts follow:

x x x x3 [Emphasis and underscoring supplied.]
Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting Corporation (ABSCBN) in 1993 at its regional station in Cebu as a television talent, co-anchoring Hoy Gising
and TV Patrol Cebu. His stint in ABS-CBN later extended to radio when ABS-CBN Cebu
launched its AM station DYAB in 1995 where he worked as drama and voice talent, spinner,
scriptwriter and public affairs program anchor.

Because of the impending May 1998 elections and based on his immediate recollection of
the policy at that time, Dante Luzon, Assistant Station Manager of DYAB issued the following
memorandum:

TO : ALL CONCERNED

FROM : DANTE LUZON

eleventh hour. Ymbong, on the other hand, claims that in accordance with the March 25,
1998 Memorandum, he informed Luzon through a letter that he would take a few months
leave of absence from March 8, 1998 to May 18, 1998 since he was running for councilor of
Lapu-Lapu City.

DATE : MARCH 25, 1998

SUBJECT : AS STATED

Please be informed that per company policy, any employee/talent who wants to run for any
position in the coming election will have to file a leave of absence the moment he/she files
his/her certificate of candidacy.

The services rendered by the concerned employee/talent to this company will then be
temporarily suspended for the entire campaign/election period.

For strict compliance.4 [Emphasis and underscoring supplied.]

Luzon, however, admitted that upon double-checking of the exact text of the policy and
subsequent confirmation with the ABS-CBN Head Office, he saw that the policy actually
required suspension for those who intend to campaign for a political party or candidate and
resignation for those who will actually run in the elections.5

As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as
councilor for Naga, Cebu. According to Luzon, he clarified to Patalinghug that he will be
considered resigned and not just on leave once he files a certificate of candidacy. Thus,
Patalinghug wrote Luzon the following letter on April 13, 1998:

Dear Mr. Luzon,

Im submitting to you my letter of resignation as your Drama Production Chief and Talent
due to your companys policy that every person connected to ABS-CBN that should seek an
elected position in the government will be forced to resigned (sic) from his position. So
herewith Im submitting my resignation with a hard heart. But Im still hoping to be
connected again with your prestigious company after the election[s] should you feel that Im
still an asset to your drama production department. Im looking forward to that day and Im
very happy and proud that I have served for two and a half years the most stable and the
most prestigious Radio and TV Network in the Philippines.

As a friend[,] wish me luck and Pray for me. Thank you.

Very Truly Yours,

After the issuance of the March 25, 1998 Memorandum, Ymbong got in touch with Luzon.
Luzon claims that Ymbong approached him and told him that he would leave radio for a
couple of months because he will campaign for the administration ticket. It was only after
the elections that they found out that Ymbong actually ran for public office himself at the

(Sgd.)

Leandro "Boy" Patalinghug6

The Management however gave you more than enough time to end your drama
participation and other involvement with the drama department.

Unfortunately, both Ymbong and Patalinghug lost in the May 1998 elections.

Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to
Luzon, he informed them that they cannot work there anymore because of company policy.
This was stressed even in subsequent meetings and they were told that the company was
not allowing any exceptions. ABS-CBN, however, agreed out of pure liberality to give them a
chance to wind up their participation in the radio drama, Nagbabagang Langit, since it was
rating well and to avoid an abrupt ending. The agreed winding-up, however, dragged on for
so long prompting Luzon to issue to Ymbong the following memorandum dated September
14, 1998:

TO : NESTOR YMBONG

FROM : DANTE LUZON

SUBJECT : AS STATED

DATE : 14 SEPT. 1998

Please be reminded that your services as drama talent had already been automatically
terminated when you ran for a local government position last election.

It has been decided therefore that all your drama participation shall be terminated effective
immediately. However, your involvement as drama spinner/narrator of the drama
"NAGBA[BA]GANG LANGIT" continues until its writer/director Mr. Leandro Patalinghug
wraps it up one week upon receipt of a separate memo issued to him.7

Ymbong in contrast contended that after the expiration of his leave of absence, he reported
back to work as a regular talent and in fact continued to receive his salary. On September
14, 1998, he received a memorandum stating that his services are being terminated
immediately, much to his surprise. Thus, he filed an illegal dismissal complaint8 against ABSCBN, Luzon and DYAB Station Manager Veneranda Sy. He argued that the ground cited by
ABS-CBN for his dismissal was not among those enumerated in the Labor Code, as amended.
And even granting without admitting the existence of the company policy supposed to have
been violated, Ymbong averred that it was necessary that the company policy meet certain
requirements before willful disobedience of the policy may constitute a just cause for
termination. Ymbong further argued that the company policy violates his constitutional right
to suffrage.9

Patalinghug likewise filed an illegal dismissal complaint10 against ABS-CBN.

ABS-CBN prayed for the dismissal of the complaints arguing that there is no employeremployee relationship between the company and Ymbong and Patalinghug. ABS-CBN
contended that they are not employees but talents as evidenced by their talent contracts.
However, notwithstanding their status, ABS-CBN has a standing policy on persons connected
with the company whenever they will run for public office.11

On July 14, 1999, the Labor Arbiter rendered a decision12 finding the dismissal of Ymbong
and Patalinghug illegal, thus:

WHEREFORE, in the light of the foregoing, judgment is rendered finding the dismissal of the
two complainants illegal. An order is issued directing respondent ABS[-]CBN to immediately
reinstate complainants to their former positions without loss of seniority rights plus the
payment of backwages in the amount of P200,000.00 to each complainant.

All other claims are dismissed.

SO ORDERED.13

The Labor Arbiter found that there exists an employer-employee relationship between ABSCBN and Ymbong and Patalinghug considering the stipulations in their appointment
letters/talent contracts. The Labor Arbiter noted particularly that the appointment
letters/talent contracts imposed conditions in the performance of their work, specifically on
attendance and punctuality, which effectively placed them under the control of ABS-CBN.
The Labor Arbiter likewise ruled that although the subject company policy is reasonable and
not contrary to law, the same was not made known to Ymbong and Patalinghug and in fact
was superseded by another one embodied in the March 25, 1998 Memorandum issued by
Luzon. Thus, there is no valid or authorized cause in terminating Ymbong and Patalinghug
from their employment.

In its memorandum of appeal14 before the National Labor Relations Commission (NLRC),
ABS-CBN contended that the Labor Arbiter has no jurisdiction over the case because there is
no employer-employee relationship between the company and Ymbong and Patalinghug,

and that Sy and Luzon mistakenly assumed that Ymbong and Patalinghug could just file a
leave of absence since they are only talents and not employees. In its Supplemental
Appeal,15 ABS-CBN insisted that Ymbong and Patalinghug were engaged as radio talents for
DYAB dramas and personality programs and their contract is one between a self-employed
contractor and the hiring party which is a standard practice in the broadcasting industry. It
also argued that the Labor Arbiter should not have made much of the provisions on
Ymbongs attendance and punctuality since such requirement is a dictate of the
programming of the station, the slating of shows at regular time slots, and availability of
recording studios not an attempt to exercise control over the manner of his performance
of the contracted anchor work within his scheduled spot on air. As for the pronouncement
that the company policy has already been superseded by the March 25, 1998 Memorandum
issued by Luzon, the latter already clarified that it was the very policy he sought to enforce.
This matter was relayed by Luzon to Patalinghug when the latter disclosed his plans to join
the 1998 elections while Ymbong only informed the company that he was campaigning for
the administration ticket and the company had no inkling that he will actually run until the
issue was already moot and academic. ABS-CBN further contended that Ymbong and
Patalinghugs "reinstatement" is legally and physically impossible as the talent positions
they vacated no longer exist. Neither is there basis for the award of back wages since they
were not earning a monthly salary but paid talent fees on a per production/per script basis.
Attached to the Supplemental Appeal is a Sworn Statement16 of Luzon.

On March 8, 2004, the NLRC rendered a decision17 modifying the labor arbiters decision.
The fallo of the NLRC decision reads:

WHEREFORE, premises considered, the decision of Labor Arbiter Nicasio C. Aninon dated 14
July 1999 is MODIFIED, to wit:

Ordering respondent ABS-CBN to reinstate complainant Ernesto G. Ymbong and to pay his
full backwages computed from 15 September 1998 up to the time of his actual
reinstatement.

SO ORDERED.18

I.

The NLRC dismissed ABS-CBNs Supplemental Appeal for being filed out of time. The NLRC
ruled that to entertain the same would be to allow the parties to submit their appeal on
piecemeal basis, which is contrary to the agencys duty to facilitate speedy disposition of
cases. The NLRC also held that ABS-CBN wielded the power of control over Ymbong and
Patalinghug, thereby proving the existence of an employer-employee relationship between
them.

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AND SERIOUSLY

MISAPPRECIATED THE FACTS IN NOT HOLDING THAT RESPONDENT YMBONG IS A
FREELANCE RADIO TALENT AND MEDIA PRACTITIONERNOT A "REGULAR EMPLOYEE" OF
PETITIONERTO WHOM CERTAIN PRODUCTION WORK HAD BEEN OUTSOURCED BY ABSCBN CEBU UNDER AN INDEPENDENT CONTRACTORSHIP SITUATION, THUS RENDERING THE
LABOR COURTS WITHOUT JURISDICTION OVER THE CASE IN THE ABSENCE OF EMPLOYMENT
RELATIONS BETWEEN THE PARTIES.

As to the issue of whether they were illegally dismissed, the NLRC treated their cases
differently. In the case of Patalinghug, it found that he voluntarily resigned from
employment on April 21, 1998 when he submitted his resignation letter. The NLRC noted
that although the tenor of the resignation letter is somewhat involuntary, he knew that it is
the policy of the company that every person connected therewith should resign from his
employment if he seeks an elected position in the government. As to Ymbong, however, the
NLRC ruled otherwise. It ruled that the March 25, 1998 Memorandum merely states that an
employee who seeks any elected position in the government will only merit the temporary
suspension of his services. It held that under the principle of social justice, the March 25,
1998 Memorandum shall prevail and ABS-CBN is estopped from enforcing the September
14, 1998 memorandum issued to Ymbong stating that his services had been automatically
terminated when he ran for an elective position.

ABS-CBN moved to reconsider the NLRC decision, but the same was denied in a Resolution
dated June 21, 2004.19

Imputing grave abuse of discretion on the NLRC, ABS-CBN filed a petition for certiorari20
before the CA alleging that:

II.

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION IN DECLARING

RESPONDENT YMBONG TO BE A REGULAR EMPLOYEE OF PETITIONER AS TO CREATE A
CONTRACTUAL EMPLOYMENT RELATION BETWEEN THEM WHEN NONE EXISTS OR HAD
BEEN AGREED UPON OR OTHERWISE INTENDED BY THE PARTIES.

III.

EVEN ASSUMING THE ALLEGED EMPLOYMENT RELATION TO EXIST FOR THE SAKE OF
ARGUMENT, RESPONDENT NLRC IN ANY CASE COMMITTED A GRAVE ABUSE OF DISCRETION
IN NOT SIMILARLY UPHOLDING AND APPLYING COMPANY POLICY NO. HR-ER-016 IN THE
CASE OF RESPONDENT YMBONG AND DEEMING HIM AS RESIGNED AND DISQUALIFIED
FROM FURTHER ENGAGEMENT AS A RADIO TALENT IN ABS-CBN CEBU AS A CONSEQUENCE
OF HIS CANDIDACY IN THE 1998 ELECTIONS, AS RESPONDENT NLRC HAD DONE IN THE CASE
OF PATALINGHUG.

IV.

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AND DENIED DUE

PROCESS TO PETITIONER IN REFUSING TO CONSIDER ITS SUPPLEMENTAL APPEAL, DATED
OCTOBER 18, 1999, "FOR BEING FILED OUT OF TIME" CONSIDERING THAT THE FILING OF
SUCH A PLEADING IS NOT IN ANY CASE PROSCRIBED AND RESPONDENT NLRC IS
AUTHORIZED TO CONSIDER ADDITIONAL EVIDENCE ON APPEAL; MOREOVER, TECHNICAL
RULES OF EVIDENCE DO NOT APPLY IN LABOR CASES.

V.

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION IN GRANTING THE RELIEF

OF REINSTATEMENT AND BACKWAGES TO RESPONDENT YMBONG SINCE HE NEVER
OCCUPIED ANY "REGULAR" POSITION IN PETITIONER FROM WHICH HE COULD HAVE BEEN
"ILLEGALLY DISMISSED," NOR ARE ANY OF THE RADIO PRODUCTIONS IN WHICH HE HAD
DONE TALENT WORK FOR PETITIONER STILL EXISTING. INDEED, THERE IS NO BASIS
WHATSOEVER FOR THE AWARD OF BACKWAGES TO RESPONDENT YMBONG IN THE
AMOUNT OF P200,000.00 CONSIDERING THAT, AS SHOWN BY THE UNCONTROVERTED
EVIDENCE, HE WAS NOT EARNING A MONTHLY "SALARY" OF "P20,000.00," AS HE FALSELY
CLAIMS, BUT WAS PAID TALENT FEES ON A "PER PRODUCTION/PER SCRIPT" BASIS WHICH
AVERAGED LESS THAN P10,000.00 PER MONTH IN TALENT FEES ALL IN ALL.21

The CA ruled that ABS-CBN is estopped from claiming that Ymbong was not its employee
after applying the provisions of Policy No. HR-ER-016 to him. It noted that said policy is
entitled "Policy on Employees Seeking Public Office" and the guidelines contained therein
specifically pertain to employees and did not even mention talents or independent
contractors. It held that it is a complete turnaround on ABS-CBNs part to later argue that
Ymbong is only a radio talent or independent contractor and not its employee. By applying
the subject company policy on Ymbong, ABS-CBN had explicitly recognized him to be an
employee and not merely an independent contractor.

The CA likewise held that the subject company policy is the controlling guideline and
therefore, Ymbong should be considered resigned from ABS-CBN. While Luzon has policymaking power as assistant radio manager, he had no authority to issue a memorandum that
had the effect of repealing or superseding a subsisting policy. Contrary to the findings of the
Labor Arbiter, the subject company policy was effective at that time and continues to be
valid and subsisting up to the present. The CA cited Patalinghugs resignation letter to
buttress this conclusion, noting that Patalinghug openly admitted in his letter that his
resignation was in line with the said company policy. Since ABS-CBN applied Policy No. HRER-016 to Patalinghug, there is no reason not to apply the same regulation to Ymbong who
was on a similar situation as the former. Thus, the CA found that the NLRC overstepped its
area of discretion to a point of grave abuse in declaring Ymbong to have been illegally
terminated. The CA concluded that there is no illegal dismissal to speak of in the instant case
as Ymbong is considered resigned when he ran for an elective post pursuant to the subject
company policy.

Hence, this petition.

On August 22, 2007, the CA rendered the assailed decision reversing and setting aside the
March 8, 2004 Decision and June 21, 2004 Resolution of the NLRC. The CA declared Ymbong
resigned from employment and not to have been illegally dismissed. The award of full back
wages in his favor was deleted accordingly.

Petitioner argues that the CA gravely erred: (1) in upholding Policy No. HR-ER-016; (2) in
upholding the validity of the termination of Ymbongs services; and (3) when it reversed the
decision of the NLRC 4th Division of Cebu City which affirmed the decision of Labor Arbiter
Nicasio C. Anion.22

Ymbong argues that the subject company policy is a clear interference and a gross violation
of an employees right to suffrage. He is surprised why it was easy for the CA to rule that
Luzons memorandum ran counter to an existing policy while on the other end, it did not see
that it was in conflict with the constitutional right to suffrage. He also points out that the
issuance of the March 25, 1998 Memorandum was precisely an exercise of the management
power to which an employee like him must respect; otherwise, he will be sanctioned for
disobedience or worse, even terminated. He was not in a position to know which between
the two issuances was correct and as far as he is concerned, the March 25, 1998
Memorandum superseded the subject company policy. Moreover, ABS-CBN cannot disown
acts of its officers most especially since it prejudiced his property rights.23

As to the validity of his dismissal, Ymbong contends that the ground relied upon by ABS-CBN
is not among the just and authorized causes provided in the Labor Code, as amended. And
even assuming the subject company policy passes the test of validity under the pretext of
the right of the management to discipline and terminate its employees, the exercise of such
right is not without bounds. Ymbong avers that his automatic termination was a blatant
disregard of his right to due process. He was never asked to explain why he did not tender
his resignation before he ran for public office as mandated by the subject company policy.24

Ymbong likewise asseverates that both the Labor Arbiter and the NLRC were consistent in
their findings that he was illegally dismissed. It is settled that factual findings of labor
administrative officials, if supported by substantial evidence, are accorded not only great
respect but even finality.25

ABS-CBN, for its part, counters that the validity of policies such as Policy No. HR-ER-016 has
long been upheld by this Court which has ruled that a media company has a right to impose
a policy providing that employees who file their certificates of candidacy in any election
shall be considered resigned.26 Moreover, case law has upheld the validity of the exercise
of management prerogatives even if they appear to limit the rights of employees as long as

there is no showing that management prerogatives were exercised in a manner contrary to

law.27 ABS-CBN contends that being the largest media and entertainment company in the
country, its reputation stems not only from its ability to deliver quality entertainment
programs but also because of neutrality and impartiality in delivering news.28

ABS-CBN further argues that nothing in the company policy prohibits its employees from
either accepting a public appointive position or from running for public office. Thus, it
cannot be considered as violative of the constitutional right of suffrage. Moreover, the
Supreme Court has recognized the employers right to enforce occupational qualifications as
long as the employer is able to show the existence of a reasonable business necessity in
imposing the questioned policy. Here, Policy No. HR-ER-016 itself states that it was issued
"to protect the company from any public misconceptions" and "[t]o preserve its objectivity,
neutrality and credibility." Thus, it cannot be denied that it is reasonable under the
circumstances.29

ABS-CBN likewise opposes Ymbongs claim that he was terminated. ABS-CBN argues that on
the contrary, Ymbongs unilateral act of filing his certificate of candidacy is an overt act
tantamount to voluntary resignation on his part by virtue of the clear mandate found in
Policy No. HR-ER-016. Ymbong, however, failed to file his resignation and in fact misled his
superiors by making them believe that he was going on leave to campaign for the
administration candidates but in fact, he actually ran for councilor. He also claims to have
fully apprised Luzon through a letter of his intention to run for public office, but he failed to
adduce a copy of the same.30

As to Ymbongs argument that the CA should not have reversed the findings of the Labor
Arbiter and the NLRC, ABS-CBN asseverates that the CA is not precluded from making its
own findings most especially if upon its own review of the case, it has been revealed that
the NLRC, in affirming the findings of the Labor Arbiter, committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it failed to apply the subject company
policy in Ymbongs case when it readily applied the same to Patalinghug.31

Essentially, the issues to be resolved in the instant petition are: (1) whether Policy No. HRER-016 is valid; (2) whether the March 25, 1998 Memorandum issued by Luzon superseded
Policy No. HR-ER-016; and (3) whether Ymbong, by seeking an elective post, is deemed to
have resigned and not dismissed by ABS-CBN.

In the event the employee loses in the election, the impartiality and cold neutrality of an
employee as broadcast personality is suspect, thus readily eroding and adversely affecting
the confidence and trust of the listening public to employers station.33

ABS-CBN, like Manila Broadcasting Company, also had a valid justification for Policy No. HRER-016. Its rationale is embodied in the policy itself, to wit:

Policy No. HR-ER-016 is valid.

Rationale:
This is not the first time that this Court has dealt with a policy similar to Policy No. HR-ER016. In the case of Manila Broadcasting Company v. NLRC,32 this Court ruled:

What is involved in this case is an unwritten company policy considering any employee who
files a certificate of candidacy for any elective or local office as resigned from the company.
Although 11(b) of R.A. No. 6646 does not require mass media commentators and
announcers such as private respondent to resign from their radio or TV stations but only to
go on leave for the duration of the campaign period, we think that the company may
nevertheless validly require them to resign as a matter of policy. In this case, the policy is
justified on the following grounds:

Working for the government and the company at the same time is clearly disadvantageous
and prejudicial to the rights and interest not only of the company but the public as well. In
the event an employee wins in an election, he cannot fully serve, as he is expected to do,
the interest of his employer. The employee has to serve two (2) employers, obviously
detrimental to the interest of both the government and the private employer.

ABS-CBN BROADCASTING CORPORATION strongly believes that it is to the best interest of

the company to continuously remain apolitical. While it encourages and supports its
employees to have greater political awareness and for them to exercise their right to
suffrage, the company, however, prefers to remain politically independent and unattached
to any political individual or entity.

Therefore, employees who [intend] to run for public office or accept political appointment
should resign from their positions, in order to protect the company from any public
misconceptions. To preserve its objectivity, neutrality and credibility, the company
reiterates the following policy guidelines for strict implementation.

x x x x34 [Emphasis supplied.]

We have consistently held that so long as a companys management prerogatives are

exercised in good faith for the advancement of the employers interest and not for the
purpose of defeating or circumventing the rights of the employees under special laws or
under valid agreements, this Court will uphold them.35 In the instant case, ABS-CBN validly
justified the implementation of Policy No. HR-ER-016. It is well within its rights to ensure

that it maintains its objectivity and credibility and freeing itself from any appearance of
impartiality so that the confidence of the viewing and listening public in it will not be in any
way eroded. Even as the law is solicitous of the welfare of the 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.361wphi1

It is worth noting that such exercise of management prerogative has earned a stamp of
approval from no less than our Congress itself when on February 12, 2001, it enacted
Republic Act No. 9006, otherwise known as the "Fair Election Act." Section 6.6 thereof
reads:

6.6. Any mass media columnist, commentator, announcer, reporter, on-air correspondent or
personality who is a candidate for any elective public office or is a campaign volunteer for or
employed or retained in any capacity by any candidate or political party shall be deemed
resigned, if so required by their employer, or shall take a leave of absence from his/her work
as such during the campaign period: Provided, That any media practitioner who is an official
of a political party or a member of the campaign staff of a candidate or political party shall
not use his/her time or space to favor any candidate or political party. [Emphasis and
underscoring supplied.]

Policy No. HR-ER-016 was not superseded by the March 25, 1998 Memorandum

The CA correctly ruled that though Luzon, as Assistant Station Manager for Radio of ABSCBN, has policy-making powers in relation to his principal task of administering the
networks radio station in the Cebu region, the exercise of such power should be in accord
with the general rules and regulations imposed by the ABS-CBN Head Office to its
employees. Clearly, the March 25, 1998 Memorandum issued by Luzon which only requires
employees to go on leave if they intend to run for any elective position is in absolute

contradiction with Policy No. HR-ER-016 issued by the ABS-CBN Head Office in Manila which
requires the resignation, not only the filing of a leave of absence, of any employee who
intends to run for public office. Having been issued beyond the scope of his authority, the
March 25, 1998 Memorandum is therefore void and did not supersede Policy No. HR-ER016.

Also worth noting is that Luzon in his Sworn Statement admitted the inaccuracy of his
recollection of the company policy when he issued the March 25, 1998 Memorandum and
stated therein that upon double-checking of the exact text of the policy statement and
subsequent confirmation with the ABS-CBN Head Office in Manila, he learned that the policy
required resignation for those who will actually run in elections because the company
wanted to maintain its independence. Since the officer who himself issued the subject
memorandum acknowledged that it is not in harmony with the Policy issued by the upper
management, there is no reason for it to be a source of right for Ymbong.

Ymbong is deemed resigned when he ran for councilor.

As Policy No. HR-ER-016 is the subsisting company policy and not Luzons March 25, 1998
Memorandum, Ymbong is deemed resigned when he ran for councilor.

We find no merit in Ymbongs argument that "[his] automatic termination x x x was a blatant
[disregard] of [his] right to due process" as he was "never asked to explain why he did not
tender his resignation before he ran for public office as mandated by [the subject company
policy]."37 Ymbongs overt act of running for councilor of Lapu-Lapu City is tantamount to
resignation on his part. He was separated from ABS-CBN not because he was dismissed but
because he resigned. Since there was no termination to speak of, the requirement of due
process in dismissal cases cannot be applied to Ymbong. Thus, ABS-CBN is not duty-bound to
ask him to explain why he did not tender his resignation before he ran for public office as
mandated by the subject company policy.

In addition, we do not subscribe to Ymbongs claim that he was not in a position to know
which of the two issuances was correct. Ymbong most likely than not, is fully aware that the
subsisting policy is Policy No. HR-ER-016 and not the March 25, 1998 Memorandum and it
was for this reason that, as stated by Luzon in his Sworn Statement, he only told the latter
that he will only campaign for the administration ticket and not actually run for an elective
post. Ymbong claims he had fully apprised Luzon by letter of his plan to run and even filed a
leave of absence but records are bereft of any proof of said claim. Ymbong claims that the
letter stating his intention to go on leave to run in the election is attached to his Position
Paper as Annex "A," a perusal of said pleading attached to his petition before this Court,
however, show that Annex "A" was not his letter to Luzon but the September 14, 1998
Memorandum informing Ymbong that his services had been automatically terminated when
he ran for a local government position.

Moreover, as pointed out by ABS-CBN, had Ymbong been truthful to his superiors, they
would have been able to clarify to him the prevailing company policy and inform him of the
consequences of his decision in case he decides to run, as Luzon did in Patalinghugs case.

WHEREFORE, the petition for review on certiorari is DENIED for lack of merit.

FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO

MERCADO, JR., ANTONIO MERCADO, JOSE CABRAL, LUCIA
MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA
MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO, BRIGIDA
ALCANTARA, EMERLITA MERCADO, ROMEO GUEVARA, ROMEO
MERCADO and LEON SANTILLAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD
DIVISION; LABOR ARBITER LUCIANO AQUINO, RAB-III; AURORA
L. CRUZ; SPOUSES FRANCISCO DE BORJA and LETICIA DE BORJA;
and STO. NIO REALTY, INCORPORATED, respondents.
Servillano S. Santillan for petitioners.

Luis R. Mauricio for private respondents.

With costs against petitioner.

SO ORDERED

G.R. No. 79869

PADILLA, J.:p

September 5, 1991

Assailed in this petition for certiorari is the decision * of the respondent national Labor
Relations Commission (NLRC) dated 8 August 1984 which affirmed the decision of
respondent Labor Arbiter Luciano P. Aquino with the slight modification of deleting the

award of financial assistance to petitioners, and the resolution of the respondent NLRC
dated 17 August 1987, denying petitioners' motion for reconsideration.

This petition originated from a complaint for illegal dismissal, underpayment of wages, nonpayment of overtime pay, holiday pay, service incentive leave benefits, emergency cost of
living allowances and 13th month pay, filed by above-named petitioners against private
respondents Aurora L. Cruz, Francisco Borja, Leticia C. Borja and Sto. Nio Realty
Incorporated, with Regional Arbitration Branch No. III, National Labor Relations Commission
in San Fernando, Pampanga. 1

Petitioners alleged in their complaint that they were agricultural workers utilized by private
respondents in all the agricultural phases of work on the 7 1/2 hectares of ace land and 10
hectares of sugar land owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan
worked in the farm of private respondents since 1949, Fortunato Mercado, Jr. and Antonio
Mercado since 1972 and the rest of the petitioners since 1960 up to April 1979, when they
were all allegedly dismissed from their employment; and that, during the period of their
employment, petitioners received the following daily wages:

From 1962-1963 P1.50

1963-1965 P2.00
1965-1967 P3.00
1967-1970 P4.00
1970-1973 P5.00
1973-1975 P5.00
1975-1978 P6.00
1978-1979 P7.00

Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said
petitioners were her regular employees and instead averred that she engaged their services,
through Spouses Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is,
persons who take charge in supplying the number of workers needed by owners of various
farms, but only to do a particular phase of agricultural work necessary in rice production
and/or sugar cane production, after which they would be free to render services to other
farm owners who need their services. 2

The other private respondents denied having any relationship whatsoever with the
petitioners and state that they were merely registered owners of the land in question
included as corespondents in this case. 3

The dispute in this case revolves around the issue of whether or not petitioners are regular
and permanent farm workers and therefore entitled to the benefits which they pray for.
And corollary to this, whether or not said petitioners were illegally dismissed by private
respondents.

Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents and held
that petitioners were not regular and permanent workers of the private respondents, for
the nature of the terms and conditions of their hiring reveal that they were required to
perform phases of agricultural work for a definite period of time after which their services
would be available to any other farm owner. 4 Respondent Labor Arbiter deemed
petitioners' contention of working twelve (12) hours a day the whole year round in the farm,
an exaggeration, for the reason that the planting of lice and sugar cane does not entail a
whole year as reported in the findings of the Chief of the NLRC Special Task Force. 5 Even
the sworn statement of one of the petitioners, Fortunato Mercado, Jr., the son of spouses
Fortunato Mercado, Sr. and Rosa Mercado, indubitably show that said petitioners were
hired only as casuals, on an "on and off" basis, thus, it was within the prerogative of private

respondent Aurora Cruz either to take in the petitioners to do further work or not after any
single phase of agricultural work had been completed by them. 6

Respondent Labor Arbiter was also of the opinion that the real cause which triggered the
filing of the complaint by the petitioners who are related to one another, either by
consanguinity or affinity, was the filing of a criminal complaint for theft against Reynaldo
Mercado, son of spouses Fortunate Mercado, Sr. and Rosa Mercado, for they even asked
the help of Jesus David, Zone Chairman of the locality to talk to private respondent, Aurora
Cruz regarding said criminal case. 7 In his affidavit, Jesus David stated under oath that
petitioners were never regularly employed by private respondent Aurora Cruz but were, onand-off hired to work and render services when needed, thus adding further support to the
conclusion that petitioners were not regular and permanent employees of private
respondent Aurora Cruz. 8

Respondent Labor Arbiter further held that only money claims from years 1976-1977, 19771978 and 1978-1979 may be properly considered since all the other money claims have
prescribed for having accrued beyond the three (3) year period prescribed by law. 9 On
grounds of equity, however, respondent Labor Arbiter awarded petitioners financial
assistance by private respondent Aurora Cruz, in the amount of Ten Thousand Pesos
(P10,000.00) to be equitably divided among an the petitioners except petitioner Fortunato
Mercado, Jr. who had manifested his disinterest in the further prosecution of his complaint
against private respondent. 10

Both parties filed their appeal with the National Labor Relations Commissions (NLRC).
Petitioners questioned respondent Labor Arbiter's finding that they were not regular and
permanent employees of private respondent Aurora Cruz while private respondents
questioned the award of financial assistance granted by respondent Labor Arbiter.

The NLRC ruled in favor of private respondents affirming the decision of the respondent
Labor Arbiter, with the modification of the deletion of the award for financial assistance to
petitioners. The dispositive portion of the decision of the NLRC reads:

WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino dated March 3, 1983 is hereby
modified in that the award of P10,000.00 financial assistance should be deleted. The said
Decision is affirmed in all other aspects.

SO ORDERED. 11

Petitioners filed a motion for reconsideration of the Decision of the Third Division of the
NLRC dated 8 August 1984; however, the NLRC denied tills motion in a resolution dated 17
August 1987. 12

In the present Petition for certiorari, petitioners seek the reversal of the above-mentioned
rulings. Petitioners contend that respondent Labor Arbiter and respondent NLRC erred
when both ruled that petitioners are not regular and permanent employees of private
respondents based on the terms and conditions of their hiring, for said findings are contrary
to the provisions of Article 280 of the Labor Code. 13 They submit that petitioners'
employment, even assuming said employment were seasonal, continued for so many years
such that, by express provision of Article 280 of the Labor Code as amended, petitioners
have become regular and permanent employees. 14

Moreover, they argue that Policy Instruction No. 12 15 of the Department of Labor and
Employment clearly lends support to this contention, when it states:

PD 830 has defined the concept of regular and casual employment. What determines
regularity or casualness is not the employment contract, written or otherwise, but the
nature of the job. If the job is usually necessary or desirable to the main business of the
employer, then employment is regular. If not, then the employment is casual. Employment
for a definite period which exceeds one (1) year shall be considered re for the duration of
the definite period.

This concept of re and casual employment is designed to put an end to casual employment
in regular jobs which has been abused by many employers to prevent so-called casuals from
enjoying the benefits of regular employees or to prevent casuals from joining unions.

This new concept should be strictly enforced to give meaning to the constitutional
guarantee of employment tenure. 16

Tested under the laws invoked, petitioners submit that it would be unjust, if not unlawful, to
consider them as casual workers since they have been doing all phases of agricultural work
for so many years, activities which are undeniably necessary, desirable and indispensable in
the rice and sugar cane production business of the private respondents. 17

Public respondent NLRC filed a separate comment prepared by the Solicitor General. It
submits that it has long been settled that findings of fact of administrative agencies if
supported by substantial evidence are entitled to great weight. 20 Moreover, it argues that
petitioners cannot be deemed to be permanent and regular employees since they fall under
the exception stated in Article 280 of the Labor Code, which reads:

The provisions of written agreements to the contrary notwithstanding and regardless of the
oral agreements 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.
21 (emphasis supplied)

The Court resolved to give due course to the petition and required the parties to submit
their respective memoranda after which the case was deemed submitted for decision.

The petition is not impressed with merit.

In the Comment filed by private respondents, they submit that the decision of the Labor
Arbiter, as aimed by respondent NLRC, that petitioners were only hired as casuals, is based
on solid evidence presented by the parties and also by the Chief of the Special Task Force of
the NLRC Regional Office and, therefore, in accordance with the rule on findings of fact of
administrative agencies, the decision should be given great weight. 18 Furthermore, they
contend that the arguments used by petitioners in questioning the decision of the Labor
Arbiter were based on matters which were not offered as evidence in the case heard before
the regional office of the then Ministry of Labor but rather in the case before the Social
Security Commission, also between the same parties. 19

The invariable rule set by the Court in reviewing administrative decisions of the Executive
Branch of the Government is that the findings of fact made therein are respected, so long as
they are supported by substantial evidence, even if not overwhelming or preponderant; 22
that it is not for the reviewing court to weigh the conflicting evidence, determine the
credibility of the witnesses or otherwise substitute its own judgment for that of the
administrative agency on the sufficiency of the evidence; 23 that the administrative decision
in matters within the executive's jurisdiction can only be set aside upon proof of gross abuse
of discretion, fraud, or error of law. 24

The questioned decision of the Labor Arbiter reads:

Focusing the spotlight of judicious scrutiny on the evidence on record and the arguments of
both parties, it is our well-discerned opinion that the petitioners are not regular and
permanent workers of the respondents. The very nature of the terms and conditions of their
hiring reveal that the petitioners were required to perform p of cultural work for a definite
period, after which their services are available to any farm owner. We cannot share the
arguments of the petitioners that they worked continuously the whole year round for
twelve hours a day. This, we feel, is an exaggeration which does not deserve any serious
consideration inasmuch as the plan of rice and sugar cane does not entail a whole year
operation, the area in question being comparatively small. It is noteworthy that the findings
of the Chief of the Special Task Force of the Regional Office are similar to this.

In fact, the sworn statement of one of the petitioners Fortunato Mercado, Jr., the son of
spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably shows that said petitioners
were only hired as casuals, on-and-off basis. With this kind of relationship between the
petitioners and the respondent Aurora Cruz, we feel that there is no basis in law upon which
the claims of the petitioners should be sustained, more specially their complaint for illegal
dismissal. It is within the prerogative of respondent Aurora Cruz either to take in the
petitioners to do further work or not after any single phase of agricultural work has been
completed by them. We are of the opinion that the real cause which triggered the filing of
this complaint by the petitioners who are related to one another, either by consanguinity or
affinity was due to the filing of a criminal complaint by the respondent Aurora Cruz against
Reynaldo Mercado, son of spouses Fortunato Mercado, Sr. and Rosa Mercado. In April 1979,
according to Jesus David, Zone Chairman of the locality where the petitioners and
respondent reside, petitioner Fortunato Mercado, Sr. asked for help regarding the case of
his son, Reynaldo, to talk with respondent Aurora Cruz and the said Zone Chairman also
stated under oath that the petitioners were never regularly employed by respondent Aurora
Cruz but were on-and-off hired to work to render services when needed. 25

A careful examination of the foregoing statements reveals that the findings of the Labor
Arbiter in the case are ably supported by evidence. There is, therefore, no circumstance that
would warrant a reversal of the questioned decision of the Labor Arbiter as affirmed by the
National Labor Relations Commission.

The contention of petitioners that the second paragraph of Article 280 of the Labor Code
should have been applied in their case presents an opportunity to clarify the aforementioned provision of law.

Article 280 of the Labor Code reads in full:

Article 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 actually exists.

The first paragraph answers the question of who are employees. It states that, regardless of
any written or oral agreement to the contrary, an employee is deemed regular where he is

engaged in necessary or desirable activities in the usual business or trade of the employer,
except for project employees.

A project employee has been defined to be one 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 service to
be performed is seasonal in nature and the employment is for the duration of the season 26
as in the present case.

The second paragraph of Art. 280 demarcates as "casual" employees, all other employees
who do not fan under the definition of the preceding paragraph. The proviso, in said second
paragraph, deems as regular employees those "casual" employees who have rendered at
least one year of service regardless of the fact that such service may be continuous or
broken.

Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is
applicable to their case and that the Labor Arbiter should have considered them regular by
virtue of said proviso. The contention is without merit.

The general rule is that the office of a proviso is to qualify or modify only the phrase
immediately preceding it or restrain or limit the generality of the clause that it immediately
follows. 27 Thus, it has been held that a proviso is to be construed with reference to the
immediately preceding part of the provision to which it is attached, and not to the statute
itself or to other sections thereof. 28 The only exception to this rule is where the clear
legislative intent is to restrain or qualify not only the phrase immediately preceding it (the
proviso) but also earlier provisions of the statute or even the statute itself as a whole. 29

Policy Instruction No. 12 of the Department of Labor and Employment discloses that the
concept of regular and casual employees was designed to put an end to casual employment
in regular jobs, which has been abused by many employers to prevent called casuals from
enjoying the benefits of regular employees or to prevent casuals from joining unions. The
same instructions show that the proviso in the second paragraph of Art. 280 was not
designed to stifle small-scale businesses nor to oppress agricultural land owners to further
the interests of laborers, whether agricultural or industrial. What it seeks to eliminate are
abuses of employers against their employees and not, as petitioners would have us believe,
to prevent small-scale businesses from engaging in legitimate methods to realize profit.
Hence, the proviso is applicable only to the employees who are deemed "casuals" but not to
the "project" employees nor the regular employees treated in paragraph one of Art. 280.

Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal
employees, their employment legally ends upon completion of the project or the season.
The termination of their employment cannot and should not constitute an illegal dismissal.
30

WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations
Commission affirming that of the Labor Arbiter, under review, is AFFIRMED. No
pronouncement as to costs.

SO ORDERED.

G.R. No. 186439

January 15, 2014

UNIVERSAL ROBINA SUGAR MILLING CORPORATION and RENE

CABATI, Petitioners,

The Factual Antecedents

vs.

URSUMCO is a domestic corporation engaged in the sugar cane milling business; Cabati is
URSUMCOs Business Unit General Manager.

FERDINAND ACIBO, ROBERTO AGUILAR, EDDIE BALDOZA, RENE

ABELLAR, DIOMEDES ALICOS, MIGUEL ALICOS, ROGELIO
AMAHIT, LARRY AMASCO, FELIPE BALANSAG, ROMEO
BALANSAG, MANUEL BANGOT, ANDY BANJAO, DIONISIO
BENDIJO, JR., JOVENTINO BROCE, ENRICO LITERAL, RODGER
RAMIREZ, BIENVENIDO RODRIGUEZ, DIOCITO PALAGTIW, ERNIE
SABLAN, RICHARD PANCHO, RODRIGO ESTRABELA, DANNY
KADUSALE and ALLYROBYL OLPUS, Respondents.

The complainants were employees of URSUMCO. They were hired on various dates
(between February 1988 and April 1996) and on different capacities,8 i.e., drivers, crane
operators, bucket hookers, welders, mechanics, laboratory attendants and aides, steel
workers, laborers, carpenters and masons, among others. At the start of their respective
engagements, the complainants signed contracts of employment for a period of one (1)
month or for a given season. URSUMCO repeatedly hired the complainants to perform the
same duties and, for every engagement, required the latter to sign new employment
contracts for the same duration of one month or a given season.

DECISION

On August 23, 2002,9 the complainants filed before the LA complaints for regularization,
entitlement to the benefits under the existing Collective Bargaining Agreement (CBA),and
attorneys fees.

BRION, J.:

We resolve in this petition for review on certiorari1 the challenge to the November 29, 2007
decision2 and the January 22, 2009 resolution3 of the Court of Appeals (CA) in CA-G.R. CEBSP No. 02028. This CA decision affirmed with modification the July 22, 2005 decision4 and
the April 28, 2006 resolution5 of the National Labor Relations Commission (NLRC) in NLRC
Case No. V-00006-03 which, in turn, reversed the October 9, 2002 decision6 of the Labor
Arbiter (LA). The LAs decision dismissed the complaint filed by complainants Ferdinand
Acibo, et al.7 against petitioners Universal Robina Sugar Milling Corporation (URSUMCO)
and Rene Cabati.

In the decision10 dated October 9, 2002, the LA dismissed the complaint for lack of merit.
The LA held that the complainants were seasonal or project workers and not regular
employees of URSUMCO. The LA pointed out that the complainants were required to
perform, for a definite period, phases of URSUMCOs several projects that were not at all
directly related to the latters main operations. As the complainants were project
employees, they could not be regularized since their respective employments were
coterminous with the phase of the work or special project to which they were assigned and
which employments end upon the completion of each project. Accordingly, the
complainants were not entitled to the benefits granted under the CBA that, as provided,
covered only the regular employees of URSUMCO.

Of the twenty-two original complainants before the LA, seven appealed the LAs ruling
before the NLRC, namely: respondents Ferdinand Acibo, Eddie Baldoza, Andy Banjao,
Dionisio Bendijo, Jr., Rodger Ramirez, Diocito Palagtiw, Danny Kadusale and Allyrobyl Olpus.

The Ruling of the NLRC

In its decision11 of July 22, 2005, the NLRC reversed the LAs ruling; it declared the
complainants as regular URSUMCO employees and granted their monetary claims under the
CBA. The NLRC pointed out that the complainants performed activities which were usually
necessary and desirable in the usual trade or business of URSUMCO, and had been
repeatedly hired for the same undertaking every season. Thus, pursuant to Article 280 of
the Labor Code, the NLRC declared that the complainants were regular employees. As
regular employees, the NLRC held that the complainants were entitled to the benefits
granted, under the CBA, to the regular URSUMCO employees.

The petitioners moved to reconsider this NLRC ruling which the NLRC denied in its April 28,
2006 resolution.12 The petitioners elevated the case to the CA via a petition for certiorari.13

The Ruling of the CA

In its November 29, 2007 decision,14 the CA granted in part the petition; it affirmed the
NLRCs ruling finding the complainants to be regular employees of URSUMCO, but deleted
the grant of monetary benefits under the CBA.

The CA pointed out that the primary standard for determining regular employment is the
reasonable connection between a particular activity performed by the employee vis--vis
the usual trade or business of the employer. This connection, in turn, can be determined by

considering the nature of the work performed and the relation of this work to the business
or trade of the employer in its entirety.

In this regard, the CA held that the various activities that the complainants were tasked to
do were necessary, if not indispensable, to the nature of URSUMCOs business. As the
complainants had been performing their respective tasks for at least one year, the CA held
that this repeated and continuing need for the complainants performance of these same
tasks, regardless of whether the performance was continuous or intermittent, constitutes
sufficient evidence of the necessity, if not indispensability, of the activity to URSUMCOs
business.

Further, the CA noted that the petitioners failed to prove that they gave the complainants
opportunity to work elsewhere during the off-season, which opportunity could have
qualified the latter as seasonal workers. Still, the CA pointed out that even during this offseason period, seasonal workers are not separated from the service but are simply
considered on leave until they are re-employed. Thus, the CA concluded that the
complainants were regular employees with respect to the activity that they had been
performing and while the activity continued.

On the claim for CBA benefits, the CA, however, ruled that the complainants were not
entitled to receive them. The CA pointed out that while the complainants were considered
regular, albeit seasonal, workers, the CBA-covered regular employees of URSUMCO were
performing tasks needed by the latter for the entire year with no regard to the changing
sugar milling season. Hence, the complainants did not belong to and could not be grouped
together with the regular employees of URSUMCO, for collective bargaining purposes; they
constitute a bargaining unit separate and distinct from the regular employees.
Consequently, the CA declared that the complainants could not be covered by the CBA.

The petitioners filed the present petition after the CA denied their motion for partial
reconsideration15 in the CAs January 22, 2009 resolution.16

particular phase of the companys business operations or sugar milling season. By the
nature of their engagement, the respondents employment legally ends upon the end of the
predetermined period; thus, URSUMCO was under no legal obligation to rehire the
respondents.

The Issues

The petition essentially presents the following issues for the Courts resolution: (1) whether
the respondents are regular employees of URSUMCO; and (2) whether affirmative relief can
be given to the fifteen (15) of the complainants who did not appeal the LAs decision.17

The Courts Ruling

In their comment,18 the respondents maintain that they are regular employees of
URSUMCO. Relying on the NLRC and the CA rulings, they point out that they have been
continuously working for URSUMCO for more than one year, performing tasks which were
necessary and desirable to URSUMCOs business. Hence, under the above-stated legal
parameters, they are regular employees.

We disagree with the petitioners position.1wphi1 We find the respondents to be regular

seasonal employees of URSUMCO.

We resolve to partially GRANT the petition.

On the issue of the status of the respondents employment

The petitioners maintain that the respondents are contractual or project/seasonal workers
and not regular employees of URSUMCO. They thus argue that the CA erred in applying the
legal parameters and guidelines for regular employment to the respondents case. They
contend that the legal standards length of the employees engagement and the desirability
or necessity of the employees work in the usual trade or business of the employer apply
only to regular employees under paragraph 1, Article 280 of the Labor Code, and, under
paragraph 2 of the same article, to casual employees who are deemed regular by their
length of service.

The respondents, the petitioners point out, were specifically engaged for a fixed and
predetermined duration of, on the average, one (1) month at a time that coincides with a

As the CA has explained in its challenged decision, Article 280 of the Labor Code provides for
three kinds of employment arrangements, namely: regular, project/seasonal and casual.
Regular employment refers to that arrangement whereby the employee "has been engaged
to perform activities which are usually necessary or desirable in the usual business or trade
of the employer[.]"19 Under the definition, the primary standard that determines regular
employment is the reasonable connection between the particular activity performed by the
employee and the usual business or trade of the employer;20 the emphasis is on the
necessity or desirability of the employees activity. Thus, when the employee performs
activities considered necessary and desirable to the overall business scheme of the
employer, the law regards the employee as regular.

By way of an exception, paragraph 2, Article 280 of the Labor Code also considers regular a
casual employment arrangement when the casual employees engagement has lasted for at
least one year, regardless of the engagements continuity. The controlling test in this
arrangement is the length of time during which the employee is engaged.

A project employment, on the other hand, contemplates on arrangement whereby "the

employment has been fixed for a specific project or undertaking whose completion or
termination has been determined at the time of the engagement of the employee[.]"21 Two
requirements, therefore, clearly need to be satisfied to remove the engagement from the
presumption of regularity of employment, namely: (1) designation of a specific project or
undertaking for which the employee is hired; and (2) clear determination of the completion
or termination of the project at the time of the employees engagement.22 The services of
the project employees are legally and automatically terminated upon the end or completion
of the project as the employees services are coterminous with the project.

Unlike in a regular employment under Article 280 of the Labor Code, however, the length of
time of the asserted "project" employees engagement is not controlling as the employment
may, in fact, last for more than a year, depending on the needs or circumstances of the
project. Nevertheless, this length of time (or the continuous rehiring of the employee even
after the cessation of the project) may serve as a badge of regular employment when the
activities performed by the purported "project" employee are necessary and indispensable
to the usual business or trade of the employer.23 In this latter case, the law will regard the
arrangement as regular employment.24

Seasonal employment operates much in the same way as project employment, albeit it
involves work or service that is seasonal in nature or lasting for the duration of the
season.25 As with project employment, although the seasonal employment arrangement
involves work that is seasonal or periodic in nature, the employment itself is not
automatically considered seasonal so as to prevent the employee from attaining regular
status. To exclude the asserted "seasonal" employee from those classified as regular
employees, the employer must show that: (1) the employee must be performing work or
services that are seasonal in nature; and (2) he had been employed for the duration of the
season.26 Hence, when the "seasonal" workers are continuously and repeatedly hired to
perform the same tasks or activities for several seasons or even after the cessation of the
season, this length of time may likewise serve as badge of regular employment.27 In fact,

even though denominated as "seasonal workers," if these workers are called to work from
time to time and are only temporarily laid off during the off-season, the law does not
consider them separated from the service during the off-season period. The law simply
considers these seasonal workers on leave until re-employed.28

Casual employment, the third kind of employment arrangement, refers to any other
employment arrangement that does not fall under any of the first two categories, i.e.,
regular or project/seasonal.

Interestingly, the Labor Code does not mention another employment arrangement
contractual or fixed term employment (or employment for a term) which, if not for the
fixed term, should fall under the category of regular employment in view of the nature of
the employees engagement, which is to perform an activity usually necessary or desirable
in the employers business.

In Brent School, Inc. v. Zamora,29 the Court, for the first time, recognized and resolved the
anomaly created by a narrow and literal interpretation of Article 280 of the Labor Code that
appears to restrict the employees right to freely stipulate with his employer on the duration
of his engagement. In this case, the Court upheld the validity of the fixed-term employment
agreed upon by the employer, Brent School, Inc., and the employee, Dorotio Alegre,
declaring that the restrictive clause in Article 280 "should be construed to refer to the
substantive evil that the Code itself x x x singled out: agreements entered into precisely to
circumvent security of tenure. It should have no application to instances where [the] fixed
period of employment was agreed upon knowingly and voluntarily by the parties x x x
absent any x x x circumstances vitiating [the employees] consent, or where [the facts
satisfactorily show] that the employer and [the] employee dealt with each other on more or
less equal terms[.]"30 The indispensability or desirability of the activity performed by the
employee will not preclude the parties from entering into an otherwise valid fixed term
employment agreement; a definite period of employment does not essentially contradict
the nature of the employees duties31 as necessary and desirable to the usual business or
trade of the employer.

Nevertheless, "where the circumstances evidently show that the employer imposed the
period precisely to preclude the employee from acquiring tenurial security, the law and this
Court will not hesitate to strike down or disregard the period as contrary to public policy,
morals, etc."32 In such a case, the general restrictive rule under Article 280 of the Labor
Code will apply and the employee shall be deemed regular.

Clearly, therefore, the nature of the employment does not depend solely on the will or word
of the employer or on the procedure for hiring and the manner of designating the
employee. Rather, the nature of the employment depends on the nature of the activities to
be performed by the employee, considering the nature of the employers business, the
duration and scope to be done,33 and, in some cases, even the length of time of the
performance and its continued existence.

In light of the above legal parameters laid down by the law and applicable jurisprudence, the
respondents are neither project, seasonal nor fixed-term employees, but regular seasonal
workers of URSUMCO. The following factual considerations from the records support this
conclusion:

First, the respondents were made to perform various tasks that did not at all pertain to any
specific phase of URSUMCOs strict milling operations that would ultimately cease upon
completion of a particular phase in the milling of sugar; rather, they were tasked to perform
duties regularly and habitually needed in URSUMCOs operations during the milling season.
The respondents duties as loader operators, hookers, crane operators and drivers were
necessary to haul and transport the sugarcane from the plantation to the mill; laboratory
attendants, workers and laborers to mill the sugar; and welders, carpenters and utility
workers to ensure the smooth and continuous operation of the mill for the duration of the
milling season, as distinguished from the production of the sugarcane which involves the
planting and raising of the sugarcane until it ripens for milling. The production of sugarcane,
it must be emphasized, requires a different set of workers who are experienced in farm or

agricultural work. Needless to say, they perform the activities that are necessary and
desirable in sugarcane production. As in the milling of sugarcane, the plantation workers
perform their duties only during the planting season.

Second, the respondents were regularly and repeatedly hired to perform the same tasks
year after year. This regular and repeated hiring of the same workers (two different sets) for
two separate seasons has put in place, principally through jurisprudence, the system of
regular seasonal employment in the sugar industry and other industries with a similar
nature of operations.

Under the system, the plantation workers or the mill employees do not work continuously
for one whole year but only for the duration of the growing of the sugarcane or the milling
season. Their seasonal work, however, does not detract from considering them in regular
employment since in a litany of cases, this Court has already settled that seasonal workers
who are called to work from time to time and are temporarily laid off during the off-season
are not separated from the service in said period, but are merely considered on leave until
re-employment.34 Be this as it may, regular seasonal employees, like the respondents in
this case, should not be confused with the regular employees of the sugar mill such as the
administrative or office personnel who perform their tasks for the entire year regardless of
the season. The NLRC, therefore, gravely erred when it declared the respondents regular
employees of URSUMCO without qualification and that they were entitled to the benefits
granted, under the CBA, to URSUMCOS regular employees.

Third, while the petitioners assert that the respondents were free to work elsewhere during
the off-season, the records do not support this assertion. There is no evidence on record
showing that after the completion of their tasks at URSUMCO, the respondents sought and
obtained employment elsewhere.

Contrary to the petitioners position, Mercado, Sr. v. NLRC, 3rd Div.35 is not applicable to
the respondents as this case was resolved based on different factual considerations. In
Mercado, the workers were hired to perform phases of the agricultural work in their
employers farm for a definite period of time; afterwards, they were free to offer their
services to any other farm owner. The workers were not hired regularly and repeatedly for
the same phase(s) of agricultural work, but only intermittently for any single phase. And,
more importantly, the employer in Mercado sufficiently proved these factual circumstances.
The Court reiterated these same observations in Hda. Fatima v. Natl Fed. of Sugarcane
Workers-Food and Gen. Trade36 and Hacienda Bino/Hortencia Starke, Inc. v. Cuenca.37

At this point, we reiterate the settled rule that in this jurisdiction, only questions of law are
allowed in a petition for review on certiorari.38 This Courts power of review in a Rule 45
petition is limited to resolving matters pertaining to any perceived legal errors, which the CA
may have committed in issuing the assailed decision.39 In reviewing the legal correctness of
the CAs Rule 65 decision in a labor case, we examine the CA decision in the context that it
determined, i.e., the presence or absence of grave abuse of discretion in the NLRC decision
before it and not on the basis of whether the NLRC decision on the merits of the case was
correct.40 In other words, we have to be keenly aware that the CA undertook a Rule 65
review, not a review on appeal, of the NLRC decision challenged before it.41

Viewed in this light, we find the need to place the CAs affirmation, albeit with modification,
of the NLRC decision of July 22, 2005 in perspective. To recall, the NLRC declared the
respondents as regular employees of URSUMCO.42 With such a declaration, the NLRC in
effect granted the respondents prayer for regularization and, concomitantly, their prayer
for the grant of monetary benefits under the CBA for URSUMCOs regular employees. In its
challenged ruling, the CA concurred with the NLRC finding, but with the respondents
characterized as regular seasonal employees of URSUMCO.

The CA misappreciated the real import of the NLRC ruling. The labor agency did not declare
the respondents as regular seasonal employees, but as regular employees. This is the only
conclusion that can be drawn from the NLRC decisions dispositive portion, thus:

WHEREFORE, premises considered, the appeal is hereby GRANTED. Complainants are

declared regular employees of respondent.1wphi1 As such, they are entitled to the
monetary benefits granted to regular employees of respondent company based on the CBA,
reckoned three (3) years back from the filing of the above-entitled case on 23 August 2002
up to the present or to their entire service with respondent after the date of filing of the
said complaint if they are no longer connected with respondent company.43

It is, therefore, clear that the issue brought to the CA for resolution is whether the NLRC
gravely abused its discretion in declaring the respondents regular employees of URSUMCO
and, as such, entitled to the benefits under the CBA for the regular employees.

Based on the established facts, we find that the CA grossly misread the NLRC ruling and
missed the implications of the respondents regularization. To reiterate, the respondents are
regular seasonal employees, as the CA itself opined when it declared that "private
respondents who are regular workers with respect to their seasonal tasks or activities and
while such activities exist, cannot automatically be governed by the CBA between petitioner
URSUMCO and the authorized bargaining representative of the regular and permanent
employees."44 Citing jurisprudential standards,45 it then proceeded to explain that the
respondents cannot be lumped with the regular employees due to the differences in the
nature of their duties and the duration of their work vis-a-vis the operations of the
company.

The NLRC was well aware of these distinctions as it acknowledged that the respondents
worked only during the milling season, yet it ignored the distinctions and declared them
regular employees, a marked departure from existing jurisprudence. This, to us, is grave
abuse of discretion, as it gave no reason for disturbing the system of regular seasonal
employment already in place in the sugar industry and other industries with similar seasonal
operations. For upholding the NLRCs flawed decision on the respondents employment
status, the CA committed a reversible error of judgment.

In sum, we find the complaint to be devoid of merit. The issue of granting affirmative relief
to the complainants who did not appeal the CA ruling has become academic.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. Except for the
denial of the respondents' claim for CBA benefits, the November 29, 2007 decision and the
January 22, 2009 resolution of the Court of Appeals are SET ASIDE. The complaint is
DISMISSED for lack of merit.

SO ORDERED.

G.R. No. 179640, March 18, 2015

HACIENDA CATAYWA/MANUEL VILLANUEVA, owner, JOEMARIE

VILLANUEVA, manager, MANCY AND SONS ENTERPRISES, INC.,
Petitioners, v. ROSARIO LOREZO, Respondent.
DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari dated September 28, 2007 of
petitioner Hacienda Cataywa, Manuel Villanueva, et al., (petitioners) seeking to reverse and
set aside the Resolutions, dated October 17, 20061 and August 10, 2007,2 respectively, of
the Court of Appeals (CA) and the Resolution and Order, dated October 12, 2005 and March

8, 2006, respectively, of the Social Security Commission, ordering petitioners to pay jointly
and severally all delinquent contributions, 3% penalty per month of delayed payment and
damages to respondent Rosario Lorezo.

The antecedent facts follow:

On October 22, 2002, respondent Rosario Lorezo received, upon inquiry, a letter from the
Social Security System (SSS) Western Visayas Group informing her that she cannot avail of
their retirement benefits since per their record she has only paid 16 months. Such is 104
months short of the minimum requirement of 120 months payment to be entitle to the
benefit. She was also informed that their investigation of her alleged employment under
employer Hda. Cataywa could not be confirmed because Manuel Villanueva was
permanently residing in Manila and Joemarie Villanueva denied having managed the farm.
She was also advised of her options: continue paying contributions as voluntary member;
request for refund; leave her contributions in-trust with the System, or file a petition before
the Social Security Commission (SSC) so that liabilities, if any, of her employer may be
determined.3cralawred

Aggrieved, respondent then filed her Amended Petition dated September 30, 2003, before
the SSC. She alleged that she was employed as laborer in Hda. Cataywa managed by Jose
Marie Villanueva in 1970 but was reported to the SSS only in 1978. She alleged that SSS
contributions were deducted from her wages from 1970 to 1995, but not all were remitted
to the SSS which, subsequently, caused the rejection of her claim. She also impleaded
Talisay Farms, Inc. by virtue of its Investment Agreement with Mancy and Sons Enterprises.
She also prayed that the veil of corporate fiction be pierced since she alleged that Mancy
and Sons Enterprises and Manuel and Jose Marie Villanueva are one and the
same.4cralawred

Petitioners Manuel and Jose Villanueva refuted in their answer, the allegation that not all
contributions of respondent were remitted. Petitioners alleged that all farm workers of Hda.
Cataywa were reported a^id their contributions were duly paid and remitted to SSS. It was
the late Domingo Lizares, Jr. who managed and administered the hacienda.5 While, Talisay
Farms, Inc. filed a motion to dismiss on the ground of lack of cause of action in the absence
of an allegation that there was an employer-employee relationship between Talisay Farms
and respondent.6cralawred

Consequently, the SSC rendered

thus:chanRoblesvirtualLawlibrary

its

Resolution

dated

October

12,

2005,

cralawlawlibrary

The SSC denied petitioners' Motion for Reconsideration. The petitioner, then, elevated the
case before the CA where the case was dismissed outrightly due to technicalities,
thus:chanRoblesvirtualLawlibrary

The Court Resolved to DISMISS the instant petition on the basis of the following
observations:
Signatory to the Verification failed to attach his authority to sign for and [in] behalf of the
other Petitioners.

WHEREFORE, PREMISES CONSIDERED, this Commission finds, and so holds, that Rosario M.
Lorezo was a regular employee subject to compulsory coverage of Hda. Cataywa/Manuel
Villanueva/ Mancy and Sons Enterprises, Inc. within the period of 1970 to February 25,
1990. In view thereof, the aforenamed respondents are hereby ordered to pay jointly and
severally, within thirty (30) days from receipt hereof, all delinquent contributions within the
proven employment period computed in accordance with the then prevailing minimum
wage (at 11 months per year) in the amount of P8,293.90, the 3% per month penalty on the
delayed payment of contributions in the amount of P59,786.10 (computed as of September
9, 2005), pursuant to Section 22 of the SS Law and the damages in the amount of
P32,356.21 for misrepresentation of the real date of employment, pursuant to Section 24
(b) of the said statute.

(Violation of Section 5, Rule 43 of the Rules of Court, in relation to Section 7, Rule 45 of the
Rules of Court)

Certified true copies of pleadings and documents relevant and pertinent to the petition are
incomplete, to wit:
-Petitioner failed to attach the following:
- Petition/Amended Petition filed before the SSS of Makati City
- Respondents' Answer filed before the SSS of Makati City
- Parties' respective position paper filed before the SSS of Makati City
- Parties' respective memorandum of appeal filed before the Commission

The SSS, on the other hand, is ordered to pay (subject to existing rules and regulations)
petitioner Rosario M. Lorezo her retirement benefit, upon the filing of the claim therefor,
and to inform this Commission of its compliance herewith.

(Violation of Section 6, Rule 43 of the Rules of Court, in relation to Section 7, Rule 43 of the
Rules of Court)8cralawred
cralawlawlibrary

SO ORDERED.7cralawred

Following the denial of petitioners' Motion for Reconsideration of the CA, petitioner filed
with
this
Court
the
present
petition
stating
the
following
grounds:chanRoblesvirtualLawlibrary

1) THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN STRICTLY AND

RIGIDLY APPLYING THE TECHNICAL RULES OF PROCEDURE AND DISMISSING THE CASE ON
TECHNICALITY
WITHOUT
EVALUATING
THE
MERITS
OF
THE
CASE;ChanRoblesVirtualawlibrary

2) THE [SSC] COMMITTED REVERSIBLE ERROR IN MAKING CONCLUSIONS FOUNDED ON

SPECULATIONS AND SURMISES NOT CONFORMING TO EVIDENCE ON RECORD, MAKING
MANIFESTLY MISTAKEN INFERENCES, AND RENDERING JUDGMENT BASED ON
MISAPPREHENSION OF FACTS AND MISAPPLICATION OF THE LAW, RULING AND RENDERING
JUDGMENT THAT:

This Court has emphasized that procedural rules should be treated with utmost respect and
due regard, since they are designed to facilitate the adjudication of cases to remedy the
worsening problem of delay in the resolution of rival claims and in the administration of
justice. However, this Court has recognized exceptions to the Rules, but only for the most
compelling reasons where stubborn obedience to the Rules would defeat rather than serve
the ends of justice.10cralawred

As in the case of Obut v. Court of Appeals,11 this Court held that "judicial orders are issued
to be obeyed, nonetheless a non-compliance is to be dealt with as the circumstances
attending the case may warrant. What should guide judicial action is the principle that a
party-litigant is to be given the fullest opportunity to establish the merits of his complaint of
defense rather than for him to lose life, liberty, honor or property on
technicalities."12cralawred

a) RESPONDENT WORKED FROM 1970 TO FEBRUARY 25,1990

b) PETITIONERS ARE LIABLE FOR DELINQUENT CONTRIBUTIONS
c) PETITIONERS ARE LIABLE FOR 3% PER MONTH PENALTY
d) PETITIONERS ARE LIABLE FOR DAMAGES DUE TO MISREPRESENTATION
e) MANCY & SONS ENTERPRISES, INC. AND MANUEL VILLANUEVA ARE ONE AND THE
SAME.9

When the CA dismisses a petition outright and the petitioner files a motion for the
reconsideration of such dismissal, appending thereto the requisite pleadings, documents or
order/resolution, this would constitute substantial compliance with the Revised Rules of
Court.13 Thus, in the present case, there was substantial compliance when in their Motion
for Reconsideration, they attached a secretary certificate giving Joemarie's authority to sign
on behalf of the corporation. Petitioners also included the necessary
attachment.14cralawred

cralawlawlibrary

The petition is partially meritorious.

Petitioners argues that the CA has been too rigid in the application of the rules of procedure
in dismissing the appeal without evaluation of the merits.

At the outset, it is settled that this Court is not a trier of facts and will not weigh evidence all
over again.15 However, considering the issues raised which can be resolved on the basis of
the pleadings and documents filed, and the fact that respondent herself has asked this Court
for early resolution, this Court deems it more practical and in the greater interest of justice
not to remand the case to the CA but, instead, to resolve the controversy once and for all.

Petitioners are of the opinion that the SSC committed reversible error in making conclusions
founded on speculations and surmises that respondent worked from 1970 to February 25,
1990. Petitioners argue that the SSC did not give credence nor weight at all to the existing
SSS Form R-1A and farm bookkeeper Wilfredo Ibalobor. Petitioners insist that after thirty
long years, all the records of the farm were already destroyed by termites and elements,
thus, they relied on the SSS Form R-1A as the only remaining source of information
available. Petitioners also alleged that respondent was a very casual worker.

Jurisprudence has identified the three types of employees mentioned in the provision20 of
the Labor Code: (1) regular employees or those who have been engaged to perform
activities that are usually necessary or desirable in the usual business or trade 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 their engagement, or those whose work or service is seasonal in nature and is
performed for the duration of the season; and (3) casual employees or those who are
neither regular nor project employees.21cralawred

This Court disagrees.

It was settled that there is no particular form of evidence required to Drove the existence of
the employer-employee relationship. Any competent and relevant evidence to prove such
relationship may be admitted. This may entirely be testimonial.16 If only documentary
evidence would be required to demonstrate the relationship, no scheming employer would
be brought before the bar of justice.17 Petitioners erred in insisting that, due to passage of
time, SSS Form R-1A is the only remaining source of information available to prove when
respondent started working for them. However, such form merely reflected the time in
which the petitioners reported the respondent for coverage of the SSS benefit. They failed
to substantiate their claim that it was only in 1978 that respondent reported for work.

The records are bereft of any showing that Demetria Denaga and Susano Jugue harbored
any ill will against the petitioners prompting them to execute false affidavit. There lies no
reason for this Court not to afford full faith and credit to their testimonies. Denaga, in her
Joint Affidavit with Jugue, stated that she and respondent started working in Hda. Cataywa
in 1970 and like her, she was reported to the SSS on December 19, 1978.18 It was also
revealed in the records that the SSC found that Denaga was employed by Manuel Villanueva
at Hda. Cataywa from 1970 to December 1987.19cralawred

Farm workers generally fall under the definition of seasonal employees.22 It was also
consistently held that seasonal employees may be considered as regular employees when
they are called to work from time to time.23 They are in regular employment because of the
nature of the job, and not because of the length of time they have worked. However,
seasonal workers who have worked for one season only may not be considered regular
employees.24cralawred

The nature of the services performed and not the duration thereof, is determinative of
coverage under the law.25 To be exempted on the basis of casual employment, the services
must not merely be irregular, temporary or intermittent, but the same must not also be in
connection with the business or occupation of the employer.26 Thus, it is erroneous for the
petitioners to conclude that the respondent was a very casual worker simply because the
SSS form revealed that she had 16 months of contributions. It does not, in any way, prove
that the respondent performed a job which is not in connection with the business or
occupation of the employer to be considered as casual employee.

The test for regular employees to be considered as such has been thoroughly explained in
De Leon v. NLRC,27viz.:chanRoblesvirtualLawlibrary

The primary standard, therefore, of determining a regular employment is the reasonable

connection between the particular activity performed by the employee in relation to the
usual business or trade of the employer. The test is whether the former is usually necessary
or desirable in the usual 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. 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.
Hence, the employment is also considered regular, but only with respect to such activity and
while such activity exists.28cralawred

Based on the foregoing facts and evidence on record, petitioners are liable for delinquent
contributions. It being proven by sufficient evidence that respondent started working for the
hacienda in 1970, it follows that petitioners are liable for deficiency in the SSS contributions.

The imposition upon and payment by the delinquent employer of the three percent (3%)
penalty for the late remittance of premium contributions is mandatory and cannot be
waived by the System. The law merely gives to the Commission the power to prescribe the
manner of paying the premiums. Thus, the power to remit or condone the penalty for late
remittance of premium contributions is not embraced therein.32 Petitioners erred in
alleging that the imposition of penalty is not proper.

cralawlawlibrary

A reading of the records would reveal that petitioners failed to dispute the allegation that
the respondent performed hacienda work, such as planting sugarcane point, fertilizing,
weeding, replanting dead sugarcane fields and routine miscellaneous hacienda work.29
They merely alleged that respondent was a very casual worker because she only rendered
work for 16 months.30 Thus, respondent is considered a regular seasonal worker and not a
casual worker as the petitioners alleged.

Petitioners also assert that the sugarcane cultivation covers only a period of six months,
thus, disproving the allegation of the respondent that she worked for 11 months a year for
25 years. This Court has classified farm workers as regular seasonal employees who are
called to work from time to time and the nature of their relationship with the employer is
such that during the off season, they are temporarily laid off; but reemployed during the
summer season or when their services may be needed.31 Respondent, therefore, as a farm
worker is only a seasonal employee. Since petitioners provided that the cultivation of
sugarcane is only for six] months, respondent cannot be considered as regular employee
during the months when there is no cultivation.

Petitioners also insist that the award of damages for misrepresentation is without basis. This
Court disagrees.

The law provides that should the employer misrepresent the true date of the employment
of the employee member, such employer shall pay to the SSS damages equivalent to the
difference between the amount of benefit to which the employee member or his
beneficiary is entitled had the proper contributions been remitted to the SSS and the
amount payable on the basis of the contributions actually remitted. However, should the
employee member or his beneficiary is entitled to pension benefits, the damages shall be
equivalent to the accumulated pension due as of the date of settlement of the claim or to
the five years' pension, whichever is higher, including the dependent's pension.33cralawred

Lastly, petitioners aver that there is no legal basis to pierce the veil of corporation entity.

It was held in Rivera v. United Laboratories, Inc.34 that -

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, 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. To disregard the separate juridical personality of a
corporation, the wrongdoing must be established clearly and convincingly. It cannot be
presumed.35cralawlawlibrary

This Court has cautioned against the inordinate application of this doctrine, reiterating the
basic rule that "the corporate veil may be pierced only if it becomes a shield for fraud,
illegality or inequity committed against a third person.36cralawred

The Court has expressed the language of piercing doctrine when applied to alter ego cases,
as follows: Where the stock of a corporation is owned by one person whereby the
corporation functions only for the benefit of such individual owner, the corporation and the
individual should be deemed the same.37cralawred

This Court agrees with the petitioners that there is no need to pierce the corporate veil.
Respondent failed to substantiate her claim that Mancy and Sons Enterprises, Inc. and
Manuel and Jose Marie Villanueva are one and the same. She based her claim on the SSS
form wherein Manuel Villanueva appeared as employer. However, this does not prove, in
any way, that the corporation is used to defeat public convenience, justify wrong, protect
fraud, or defend crime, or when it is made as a shield to confuse the legitimate issues,
warranting that its separate and distinct personality be set aside. Also, it was not alleged nor
proven that Mancy and Sons Enterprises, Inc. functions only for the benefit of Manuel
Villanueva, thus, one cannot be an alter ego of the other.

WHEREFORE, the petition for review on certiorari dated September 28, 2007 of petitioners
Hda. Cataywa, Manuel Villanueva, et al. is hereby DENIED. Consequently, the resolution by
the Social Security Commission is hereby AFFIRMED with MODIFICATIONS that the
delinquent contributions should be computed as six months per year of service, and the
case against Manuel and Jose Marie Villanueva be DISMISSED.

SO ORDERED.cralawlawlibrary

G.R. No. 176419

November 27, 2013

GMA NETWORK, INC., Petitioner,

vs.
CARLOS P. PABRIGA, GEOFFREY F. ARIAS, KIRBY N. CAMPO,
ARNOLD L. LAGAHIT, and ARMANDO A. CATUBIG, Respondents.
DECISION

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari filed by petitioner GMA Network Inc. assailing the
Decision1 of the Court of Appeals dated September 8, 2006 and the subsequent Resolution2
dated January 22 2007 denying reconsideration in CA-G.R. SP No. 73652.

2) Acting as Transmitter/VTR men:

The Court of Appeals summarized the facts of the case as follows:
(a) Prepare tapes for local airing;
On July 19 1999 due to the miserable working conditions private respondents were forced
to file a complaint against petitioner before the National Labor Relations Commission
Regional Arbitration Branch No. VII Cebu City assailing their respective employment
circumstances as follows:

(b) Actual airing of commercials;

(c) Plugging of station promo;

NAME DATE HIRED

POSITION

Carlos Pabriga 2 May 1997

Television Technicians

Geoffrey Arias 2 May 1997

Television Technicians

Kirby Campo

Television Technicians

1 Dec. 1993

Arnold Laganit 11 Feb. 1996

Armand Catubig

(d) Logging of transmitter reading; and

(e) In case of power failure, start up generator set to resume program;

Television Technicians

2 March 1997 Television Technicians

3) Acting as Maintenance staff;

Private respondents were engaged by petitioner to perform the following activities, to wit:
(a) Checking of equipment;
1) Manning of Technical Operations Center:
(b) Warming up of generator;
(a) Responsible for the airing of local commercials; and
(c) Filling of oil, fuel, and water in radiator; and
(b) Logging/monitoring of national commercials (satellite)
4) Acting as Cameramen

On 4 August 1999, petitioner received a notice of hearing of the complaint. The following
day, petitioners Engineering Manager, Roy Villacastin, confronted the private respondents
about the said complaint.

On 9 August 1999, private respondents were summoned to the office of petitioners Area
Manager, Mrs. Susan Alio, and they were made to explain why they filed the complaint.
The next day, private respondents were barred from entering and reporting for work
without any notice stating the reasons therefor.

On 13 August 1999, private respondents, through their counsel, wrote a letter to Mrs. Susan
Alio requesting that they be recalled back to work.

On 23 August 1999, a reply letter from Mr. Bienvenido Bustria, petitioners head of
Personnel and Labor Relations Division, admitted the non-payment of benefits but did not
mention the request of private respondents to be allowed to return to work.

On 15 September 1999, private respondents sent another letter to Mr. Bustria reiterating
their request to work but the same was totally ignored. On 8 October 1999, private
respondents filed an amended complaint raising the following additional issues: 1) Unfair
Labor Practice; 2) Illegal dismissal; and 3) Damages and Attorneys fees.

On 10 November 1999, private respondents filed their position paper and on 2 March 2000,
they received a copy of petitioners position paper. The following day, the Labor Arbiter
issued an order considering the case submitted for decision.3

In his Decision dated August 24, 2000, the Labor Arbiter dismissed the complaint of
respondents for illegal dismissal and unfair labor practice, but held petitioner liable for 13th
month pay. The dispositive portion of the Labor Arbiters Decision reads:

WHEREFORE, the foregoing premises considered, judgment is hereby rendered dismissing

the complaints for illegal dismissal and unfair labor practice.

Respondents are, however, directed to pay the following complainants their proportionate
13th month pay, to wit:

1. Kirby Campo P 7,716.04

2. Arnold Lagahit

7,925.98

3. Armand Catubig

4,233.68

4. Carlos Pabriga

4,388.19

5. Geoffrey Arias

4,562.01

P28,826.14
On 23 September 1999, a mandatory conference was set to amicably settle the dispute
between the parties, however, the same proved to be futile. As a result, both of them were
directed to file their respective position papers.

10% Attorneys fees

2,882.61

GRAND TOTAL P31,708.75

All other claims are, hereby, dismissed for failure to substantiate the same.4

Respondents appealed to the National Labor Relations Commission (NLRC). The NLRC
reversed the Decision of the Labor Arbiter, and held thus:

Petitioner filed the present Petition for Review on Certiorari, based on the following
grounds:

WHEREFORE, we make the following findings:

I.

a) All complainants are regular employees with respect to the particular activity to which
they were assigned, until it ceased to exist. As such, they are entitled to payment of
separation pay computed at one (1) month salary for every year of service;

THE COURT OF APPEALS GRAVELY ERRED FINDING RESPONDENTS ARE REGULAR EMPLOYEES
OF THE PETITIONER AND ARE NOT PROJECT EMPLOYEES.

II.
b) They are not entitled to overtime pay and holiday pay; and

c) They are entitled to 13th month pay, night shift differential and service incentive leave
pay.

THE COURT OF APPEALS GRAVELY ERRED IN AWARDING SEPARATION PAY TO RESPONDENTS

ABSENT A FINDING THAT RESPONDENTS WERE ILLEGALLY DISMISSED.

III.
For purposes of accurate computation, the entire records are REMANDED to the Regional
Arbitration Branch of origin which is hereby directed to require from respondent the
production of additional documents where necessary.

THE COURT OF APPEALS GRAVELY ERRED IN AWARDING NIGHT SHIFT DIFFERENTIAL PAY
CONSIDERING THE ABSENCE OF EVIDENCE WHICH WOULD ENTITLE THEM TO SUCH AN
AWARD.

Respondent is also assessed the attorneys fees of ten percent (10%) of all the above
awards.5
IV.
Petitioner elevated the case to the Court of Appeals via a Petition for Certiorari. On
September 8, 2006, the appellate court rendered its Decision denying the petition for lack of
merit.

THE COURT OF APPEALS GRAVELY ERRED IN AWARDING ATTORNEYS FEES TO

RESPONDENTS.6

The parties having extensively elaborated on their positions in their respective memoranda,
we proceed to dispose of the issues raised.

Five Classifications of Employment

At the outset, we should note that the nature of the employment is determined by law,
regardless of any contract expressing otherwise. The supremacy of the law over the
nomenclature of the contract and the stipulations contained therein is to bring to life the
policy enshrined in the Constitution to afford full protection to labor. Labor contracts, being
imbued with public interest, are placed on a higher plane than ordinary contracts and are
subject to the police power of the State.7

Respondents claim that they are regular employees of petitioner GMA Network, Inc. The
latter, on the other hand, interchangeably characterize respondents employment as project
and fixed period/fixed term employment. There is thus the need to clarify the foregoing
terms.

The terms regular employment and project employment are taken from Article 280 of the
Labor Code, which also speaks of casual and seasonal employment:

ARTICLE 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 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 actually exist.

A fifth classification, that of a fixed term employment, is not expressly mentioned in the
Labor Code. Nevertheless, this Court ruled in Brent School, Inc. v. Zamora,8 that such a
contract, which specifies that employment will last only for a definite period, is not per se
illegal or against public policy.

Whether respondents are regular or project employees

Pursuant to the above-quoted Article 280 of the Labor Code, employees performing
activities which are usually necessary or desirable in the employers usual business or trade
can either be regular, project or seasonal employees, while, as a general rule, those
performing activities not usually necessary or desirable in the employers usual business or
trade are casual employees. The reason for this distinction may not be readily
comprehensible to those who have not carefully studied these provisions: only employers
who constantly need the specified tasks to be performed can be justifiably charged to
uphold the constitutionally protected security of tenure of the corresponding workers. The
consequence of the distinction is found in Article 279 of the Labor Code, which provides:

ARTICLE 279. Security of tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of

allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement.

On the other hand, the activities of project employees may or may not be usually necessary
or desirable in the usual business or trade of the employer, as we have discussed in ALUTUCP v. National Labor Relations Commission,9 and recently reiterated in Leyte Geothermal
Power Progressive Employees Union-ALU-TUCP v. Philippine National Oil Company-Energy
Development Corporation.10 In said cases, we clarified the term "project" in the test for
determining whether an employee is a regular or project employee:

It is evidently important to become clear about the meaning and scope of the term "project"
in the present context. The "project" for the carrying out of which "project employees" are
hired would ordinarily have some relationship to the usual business of the employer.
Exceptionally, the "project" undertaking might not have an ordinary or normal relationship
to the usual business of the employer. In this latter case, the determination of the scope and
parameters of the "project" becomes fairly easy. It is unusual (but still conceivable) for a
company to undertake a project which has absolutely no relationship to the usual business
of the company; thus, for instance, it would be an unusual steel-making company which
would undertake the breeding and production of fish or the cultivation of vegetables. From
the viewpoint, however, of the legal characterization problem here presented to the Court,
there should be no difficulty in designating the employees who are retained or hired for the
purpose of undertaking fish culture or the production of vegetables as "project employees,"
as distinguished from ordinary or "regular employees," so long as the duration and scope of
the project were determined or specified at the time of engagement of the "project
employees." For, as is evident from the provisions of Article 280 of the Labor Code, quoted
earlier, the principal test for determining whether particular employees are properly
characterized as "project employees" as distinguished from "regular employees," is whether
or not the "project employees" were 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.

In the realm of business and industry, we note that "project" could refer to one or the other
of at least two (2) distinguishable types of activities. Firstly, a project could refer to a
particular job or undertaking that is within the regular or usual business of the employer
company, but which is distinct and separate, and identifiable as such, from the other
undertakings of the company. Such job or undertaking begins and ends at determined or
determinable times. The typical example of this first type of project is a particular
construction job or project of a construction company. A construction company ordinarily
carries out two or more [distinct] identifiable construction projects: e.g., a twenty-fivestorey hotel in Makati; a residential condominium building in Baguio City; and a domestic air
terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate
projects, the scope and duration of which has been determined and made known to the
employees at the time of employment, are properly treated as "project employees," and
their services may be lawfully terminated at completion of the project.

The term "project" could also refer to, secondly, a particular job or undertaking that is not
within the regular business of the corporation. Such a job or undertaking must also be
identifiably separate and distinct from the ordinary or regular business operations of the
employer. The job or undertaking also begins and ends at determined or determinable
times. x x x.11 (Emphases supplied, citation omitted.)

Thus, in order to safeguard the rights of workers against the arbitrary use of the word
"project" to prevent employees from attaining the status of regular employees, employers
claiming that their workers are project employees should not only prove that the duration
and scope of the employment was specified at the time they were engaged, but also that
there was indeed a project. As discussed above, the project could either be (1) a particular
job or undertaking that is within the regular or usual business of the employer company, but
which is distinct and separate, and identifiable as such, from the other undertakings of the
company; or (2) a particular job or undertaking that is not within the regular business of the
corporation. As it was with regard to the distinction between a regular and casual employee,
the purpose of this requirement is to delineate whether or not the employer is in constant
need of the services of the specified employee. If the particular job or undertaking is within
the regular or usual business of the employer company and it is not identifiably distinct or

separate from the other undertakings of the company, there is clearly a constant necessity
for the performance of the task in question, and therefore said job or undertaking should
not be considered a project.

2) Acting as Transmitter/VTR men:

Brief examples of what may or may not be considered identifiably distinct from the business
of the employer are in order. In Philippine Long Distance Telephone Company v. Ylagan,12
this Court held that accounting duties were not shown as distinct, separate and identifiable
from the usual undertakings of therein petitioner PLDT. Although essentially a telephone
company, PLDT maintains its own accounting department to which respondent was
assigned. This was one of the reasons why the Court held that respondent in said case was
not a project employee. On the other hand, in San Miguel Corporation v. National Labor
Relations Commission,13 respondent was hired to repair furnaces, which are needed by San
Miguel Corporation to manufacture glass, an integral component of its packaging and
manufacturing business. The Court, finding that respondent is a project employee, explained
that San Miguel Corporation is not engaged in the business of repairing furnaces. Although
the activity was necessary to enable petitioner to continue manufacturing glass, the
necessity for such repairs arose only when a particular furnace reached the end of its life or
operating cycle. Respondent therein was therefore considered a project employee.

(a) Prepare tapes for local airing;

In the case at bar, as discussed in the statement of facts, respondents were assigned to the
following tasks:

3) Acting as Maintenance staff;

(b) Actual airing of commercials;

(c) Plugging of station promo;

(d) Logging of transmitter reading; and

(e) In case of power failure, start up generator set to resume program;

(a) Checking of equipment;

1) Manning of Technical Operations Center:
(b) Warming up of generator;
(a) Responsible for the airing of local commercials; and
(c) Filling of oil, fuel, and water in radiator; and
(b) Logging/monitoring of national commercials (satellite)

4) Acting as Cameramen14

These jobs and undertakings are clearly within the regular or usual business of the employer
company and are not identifiably distinct or separate from the other undertakings of the
company. There is no denying that the manning of the operations center to air commercials,
acting as transmitter/VTR men, maintaining the equipment, and acting as cameramen are
not undertakings separate or distinct from the business of a broadcasting company.

Petitioners allegation that respondents were merely substitutes or what they call pinchhitters (which means that they were employed to take the place of regular employees of
petitioner who were absent or on leave) does not change the fact that their jobs cannot be
considered projects within the purview of the law. Every industry, even public offices, has to
deal with securing substitutes for employees who are absent or on leave. Such tasks,
whether performed by the usual employee or by a substitute, cannot be considered
separate and distinct from the other undertakings of the company. While it is
managements prerogative to device a method to deal with this issue, such prerogative is
not absolute and is limited to systems wherein employees are not ingeniously and
methodically deprived of their constitutionally protected right to security of tenure. We are
not convinced that a big corporation such as petitioner cannot device a system wherein a
sufficient number of technicians can be hired with a regular status who can take over when
their colleagues are absent or on leave, especially when it appears from the records that
petitioner hires so-called pinch-hitters regularly every month.

In affirming the Decision of the NLRC, the Court of Appeals furthermore noted that if
respondents were indeed project employees, petitioner should have reported the
completion of its projects and the dismissal of respondents in its finished projects:

There is another reason why we should rule in favor of private respondents. Nowhere in the
records is there any showing that petitioner reported the completion of its projects and the

dismissal of private respondents in its finished projects to the nearest Public Employment
Office as per Policy Instruction No. 2015 of the Department of Labor and Employment
[DOLE]. Jurisprudence abounds with the consistent rule that the failure of an employer to
report to the nearest Public Employment Office the termination of its workers services
everytime a project or a phase thereof is completed indicates that said workers are not
project employees.

In the extant case, petitioner should have filed as many reports of termination as there were
projects actually finished if private respondents were indeed project employees, considering
that the latter were hired and again rehired from 1996 up to 1999. Its failure to submit
reports of termination cannot but sufficiently convince us further that private respondents
are truly regular employees. Important to note is the fact that private respondents had
rendered more than one (1) year of service at the time of their dismissal which overturns
petitioners allegations that private respondents were hired for a specific or fixed
undertaking for a limited period of time.16 (Citations omitted.)

We are not unaware of the decisions of the Court in Philippine Long Distance Telephone
Company v. Ylagan17 and ABS-CBN Broadcasting Corporation v. Nazareno18 which held that
the employers failure to report the termination of employees upon project completion to
the DOLE Regional Office having jurisdiction over the workplace within the period
prescribed militates against the employers claim of project employment, even outside the
construction industry. We have also previously stated in another case that the Court should
not allow circumvention of labor laws in industries not falling within the ambit of Policy
Instruction No. 20/Department Order No. 19, thereby allowing the prevention of acquisition
of tenurial security by project employees who have already gained the status of regular
employees by the employers conduct.19

While it may not be proper to revisit such past pronouncements in this case, we nonetheless
find that petitioners theory of project employment fails the principal test of demonstrating
that the alleged project employee was assigned to carry out a specific project or

undertaking, the duration and scope of which were specified at the time the employee is
engaged for the project.20

The Court of Appeals also ruled that even if it is assumed that respondents are project
employees, they would nevertheless have attained regular employment status because of
their continuous rehiring:

Be that as it may, a project employee may also attain the status of a regular employee if
there is a continuous rehiring of project employees after the stoppage of a project; and the
activities performed are usual [and] customary to the business or trade of the employer. The
Supreme Court ruled that a project employee or a member of a work pool may acquire the
status of a regular employee when the following concur:

1) There is a continuous rehiring of project employees even after cessation of a project; and

2) The tasks performed by the alleged project employee are vital, necessary and
indispensable to the usual business or trade of the employer.

The circumstances set forth by law and the jurisprudence is present in this case. In fine,
even if private respondents are to be considered as project employees, they attained
regular employment status, just the same.21 (Citation omitted.)

Anent this issue of attainment of regular status due to continuous rehiring, petitioner advert
to the fixed period allegedly designated in employment contracts and reflected in vouchers.
Petitioner cites our pronouncements in Brent, St. Theresas School of Novaliches Foundation
v. National Labor Relations Commission,22 and Fabela v. San Miguel Corporation,23 and
argues that respondents were fully aware and freely entered into agreements to undertake

a particular activity for a specific length of time.24 Petitioner apparently confuses project
employment from fixed term employment. The discussions cited by petitioner in Brent, St.
Theresas and Fabela all refer to fixed term employment, which is subject to a different set
of requirements.

Whether the requisites of a valid fixed term employment are met

As stated above, petitioner interchangeably characterizes respondents service as project

and fixed term employment. These types of employment, however, are not the same. While
the former requires a project as restrictively defined above, the duration of a fixed-term
employment agreed upon by the parties may be any day certain, which is understood to be
"that which must necessarily come although it may not be known when."25 The decisive
determinant in fixed-term employment is not the activity that the employee is called upon
to perform but the day certain agreed upon by the parties for the commencement and
termination of the employment relationship.26

Cognizant of the possibility of abuse in the utilization of fixed-term employment contracts,

we emphasized in Brent that where from the circumstances it is apparent that the periods
have been imposed to preclude acquisition of tenurial security by the employee, they
should be struck down as contrary to public policy or morals.27 We thus laid down
indications or criteria under which "term employment" cannot be said to be in
circumvention of the law on security of tenure, namely:

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.28
(Citation omitted.)

These indications, which must be read together, make the Brent doctrine applicable only in
a few special cases wherein the employer and employee are on more or less in equal footing
in entering into the contract. The reason for this is evident: when a prospective employee,
on account of special skills or market forces, is in a position to make demands upon the
prospective employer, such prospective employee needs less protection than the ordinary
worker. Lesser limitations on the parties freedom of contract are thus required for the
protection of the employee. These indications were applied in Pure Foods Corporation v.
National Labor Relations Commission,29 where we discussed the patent inequality between
the employer and employees therein:

[I]t could not be supposed that private respondents and all other so-called "casual" workers
of [the petitioner] KNOWINGLY and VOLUNTARILY agreed to the 5-month employment
contract. Cannery workers are never on equal terms with their employers. Almost always,
they agree to any terms of an employment contract just to get employed considering that it
is difficult to find work given their ordinary qualifications. Their freedom to contract is
empty and hollow because theirs is the freedom to starve if they refuse to work as casual or
contractual workers. Indeed, to the unemployed, security of tenure has no value. It could
not then be said that petitioner and private respondents "dealt with each other on more or
less equal terms with no moral dominance whatever being exercised by the former over the
latter.

To recall, it is doctrinally entrenched that in illegal dismissal cases, the employer has the
burden of proving with clear, accurate, consistent, and convincing evidence that the
dismissal was valid.30 It is therefore the employer which must satisfactorily show that it was
not in a dominant position of advantage in dealing with its prospective employee. Thus, in
Philips Semiconductors (Phils.), Inc. v. Fadriquela,31 this Court rejected the employers

insistence on the application of the Brent doctrine when the sole justification of the fixed
terms is to respond to temporary albeit frequent need of such workers:

We reject the petitioners submission that it resorted to hiring employees for fixed terms to
augment or supplement its regular employment "for the duration of peak loads" during
short-term surges to respond to cyclical demands; hence, it may hire and retire workers on
fixed terms, ad infinitum, depending upon the needs of its customers, domestic and
international. Under the petitioner's submission, any worker hired by it for fixed terms of
months or years can never attain regular employment status. x x x.

Similarly, in the case at bar, we find it unjustifiable to allow petitioner to hire and rehire
workers on fixed terms, ad infinitum, depending upon its needs, never attaining regular
employment status. To recall, respondents were repeatedly rehired in several fixed term
contracts from 1996 to 1999. To prove the alleged contracts, petitioner presented cash
disbursement vouchers signed by respondents, stating that they were merely hired as pinchhitters. It is apparent that respondents were in no position to refuse to sign these vouchers,
as such refusal would entail not getting paid for their services. Plainly, respondents as
"pinch-hitters" cannot be considered to be in equal footing as petitioner corporation in the
negotiation of their employment contract.

In sum, we affirm the findings of the NLRC and the Court of Appeals that respondents are
regular employees of petitioner.1wphi1 As regular employees, they are entitled to security
of tenure and therefore their services may be terminated only for just or authorized causes.
Since petitioner failed to prove any just or authorized cause for their termination, we are
constrained to affirm the findings of the NLRC and the Court of Appeals that they were
illegally dismissed.

Separation Pay, Night Shift Differential and Attorneys Fees

Petitioner admits that respondents were not given separation pay and night shift
differential. Petitioner, however, claims that respondents were not illegally dismissed and
were therefore not entitled to separation pay. As regards night shift differential, petitioner
claims that its admission in its August 23, 1999 letter as to the nonpayment thereof is
qualified by its allegation that respondents are not entitled thereto. Petitioner points out
that respondents failed to specify the period when such benefits are due, and did not
present additional evidence before the NLRC and the Court of Appeals.32

In light, however, of our ruling that respondents were illegally dismissed, we affirm the
findings of the NLRC and the Court of Appeals that respondents are entitled to separation
pay in lieu of reinstatement. We quote with approval the discussion of the Court of Appeals:

However, since petitioner refused to accept private respondents back to work,

reinstatement is no longer practicable. Allowing private respondents to return to their work
might only subject them to further embarrassment, humiliation, or even harassment.

Thus, in lieu of reinstatement, the grant of separation pay equivalent to one (1) month pay
for every year of service is proper which public respondent actually did. Where the
relationship between private respondents and petitioner has been severely strained by
reason of their respective imputations of accusations against each other, to order
reinstatement would no longer serve any purpose. In such situation, payment of separation
pay instead of reinstatement is in order.33 (Citations omitted.)

As regards night shift differential, the Labor Code provides that every employee shall be
paid not less than ten percent (10%) of his regular wage for each hour of work performed
between ten oclock in the evening and six oclock in the morning.34 As employees of
petitioner, respondents are entitled to the payment of this benefit in accordance with the
number of hours they worked from 10:00 p.m. to 6:00 a.m., if any. In the Decision of the
NLRC affirmed by the Court of Appeals, the records were remanded to the Regional

Arbitration Branch of origin for the computation of the night shift differential and the
separation pay. The Regional Arbitration Branch of origin was likewise directed to require
herein petitioner to produce additional documents where necessary. Therefore, while we
are affirming that respondents are entitled to night shift differential in accordance with the
number of hours they worked from 10:00 p.m. to 6:00 a.m., it is the Regional Arbitration
Branch of origin which should determine the computation thereof for each of the
respondents, and award no night shift differential to those of them who never worked from
10:00 p.m. to 6:00 a.m.

It is also worthwhile to note that in the NLRC Decision, it was herein petitioner GMA
Network, Inc. (respondent therein) which was tasked to produce additional documents
necessary for the computation of the night shift differential. This is in accordance with our
ruling in Dansart Security Force & Allied Services Company v. Bagoy,35 where we held that it
is entirely within the employer's power to present such employment records that should
necessarily be in their possession, and that failure to present such evidence must be taken
against them.

Petitioner, however, is correct that the award of attorney's fees is contrary to jurisprudence.
In De las Santos v. Jebsen Maritime Inc.,36 we held:

Likewise legally correct is the deletion of the award of attorney's fees, the NLRC having
failed to explain petitioner's entitlement thereto. As a matter of sound policy, an award of
attorney's fees remains the exception rather than the rule. It must be stressed, as aptly
observed by the appellate court, that it is necessary for the trial court, the NLRC in this case,
to make express findings of facts and law that would bring the case within the exception. In
fine, the factual, legal or equitable justification for the award must be set forth in the text of
the decision. The matter of attorney's fees cannot be touched once and only in the fallo of
the decision, else, the award should be thrown out for being speculative and conjectural. In
the absence of a stipulation, attorney's fees are ordinarily not recoverable; otherwise a
premium shall be placed on the right to litigate. They are not awarded every time a party
wins a suit. (Citations omitted.)

In the case at bar, the factual basis for the award of attorney's fees was not discussed in the
text of NLRC Decision. We are therefore constrained to delete the same.

WHEREFORE the Decision of the Court of Appeals dated September 8, 2006 and the
subsequent Resolution denying reconsideration dated January 22, 2007 in CA-G.R. SP No.
73652, are hereby AFFIRMED with the MODIFICATION that the award of attorney's fees in
the affirmed Decision of the National Labor Relations Commission is hereby DELETED.

SO ORDERED.

G.R. No. 199166

April 20, 2015

NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN

AND MA. CRISTINA SUMAYAO, Petitioners,
vs.
ABS-CBN CORPORATION (FORMERLY, ABS-CBN BROADCASTING
CORPORATION) AND AMALIA VILLAFUERTE, Respondents.
DECISION

PEREZ, J.:

The existence of an employer-employee relationship is at the heart of this Petition for

Review on Certiorari filed pursuant to Rule 45 of the Rules of Court, primarily assailing the
29 June 2011 Decision1 rendered by the Fourth Division of the Court of Appeals (CA) in CAG.R. SP No. 116928 which ruled out said relationship between the parties.

The Facts

Respondent ABS-CBN Corporation (formerly ABS-CBN Broadcasting Corporation) is a

television and radio broadcasting corporation which, for its Regional Network Group in Naga
City, employed respondent Amalia Villafuerte (Villafuerte) as Manager. There is no dispute
regarding the fact that, thru Villafuerte, ABS-CBN engaged the services of petitioners Nelson
Begino (Begino) and Gener Del Valle (Del Valle) sometime in 1996 as Cameramen/Editors for
TV Broadcasting. Petitioners Ma. Cristina Sumayao (Sumayao) and Monina Avila-Llorin
(Llorin) were likewise similarly engaged as reporters sometime in 1996 and 2002,
respectively. With their services engaged by respondents thru Talent Contracts which,
though regularly renewed over the years, provided terms ranging from three (3) months to
one (1) year, petitioners were given Project Assignment Forms which detailed, among other
matters, the duration of a particular project as well as the budget and the daily technical
requirements thereof. In the aforesaid capacities, petitioners were tasked with coverage of
news items for subsequent daily airings in respondents TV Patrol Bicol Program.2

While specifically providing that nothing therein shall be deemed or construed to establish
an employer-employee relationship between the parties, the aforesaid Talent Contracts
included, among other matters, provisions on the following matters: (a) the Talents
creation and performance of work in accordance with the ABS-CBNs professional standards
and compliance with its policies and guidelines covering intellectual property creators,
industry codes as well as the rules and regulations of the Kapisanan ng mga Broadcasters sa
Pilipinas (KBP) and other regulatory agencies; (b) the Talents non-engagement in similar
work for a person or entity directly or indirectly in competition with or adverse to the

interests of ABS-CBN and non-promotion of any product or service without prior written
consent; and (c) the results-oriented nature of the talents work which did not require them
to observe normal or fixed working hours.3 Subjected to contractors tax, petitioners
remunerations were denominated as Talent Fees which, as of last renewal, were admitted
to be pegged per airing day at P273.35 for Begino, P 302.92 for Del Valle, P 323.08 for
Sumayao and P 315.39 for Llorin.4

Claiming that they were regular employees of ABS-CBN, petitioners filed against
respondents the complaint5 docketed as Sub-RAB 05-04- 00041-07 before the National
Labor Relations Commissions (NLRC) Sub-Regional Arbitration Branch No. 5, Naga City. In
support of their claims for regularization, underpayment of overtime pay, holiday pay, 13th
month pay, service incentive leave pay, damages and attorney's fees, petitioners alleged
that they performed functions necessary and desirable in ABS-CBN's business. Mandated to
wear company IDs and provided all the equipment they needed, petitioners averred that
they worked under the direct control and supervision of Villafuerte and, at the end of each
day, were informed about the news to be covered the following day, the routes they were
to take and, whenever the subject of their news coverage is quite distant, even the start of
their workday. Due to the importance of the news items they covered and the necessity of
their completion for the success of the program, petitioners claimed that, under pain of
immediate termination, they were bound by the companys policy on, among others,
attendance and punctuality.6

Aside from the constant evaluation of their actions, petitioners were reportedly subjected to
an annual competency assessment alongside other ABS-CBN employees, as condition for
their continued employment. Although their work involved dealing with emergency
situations at any time of the day or night, petitioners claimed that they were not paid the
labor standard benefits the law extends to regular employees. To avoid paying what is due
them, however, respondents purportedly resorted to the simple expedient of using said
Talent Contracts and/or Project Assignment Forms which denominated petitioners as
talents, despite the fact that they are not actors or TV hosts of special skills. As a result of
this iniquitous situation, petitioners asseverated that they merely earned an average of
P7,000.00 to P8,000.00 per month, or decidedly lower than the P21,773.00 monthly salary

ABS-CBN paid its regular rank-and-file employees. Considering their repeated re-hiring by
respondents for ostensible fixed periods, this situation had gone on for years since TV Patrol
Bicol has continuously aired from 1996 onwards.7

In refutation of the foregoing assertions, on the other hand, respondents argued that,
although it occasionally engages in production and generates programs thru various means,
ABS-CBN is primarily engaged in the business of broadcasting television and radio content.
Not having the full manpower complement to produce its own program, the company had
allegedly resorted to engaging independent contractors like actors, directors, artists,
anchormen, reporters, scriptwriters and various production and technical staff, who offered
their services in relation to a particular program. Known in the industry as talents, such
independent contractors inform ABSCBN of their availability and were required to
accomplish Talent Information Forms to facilitate their engagement for and appearance on
designated project days. Given the unpredictability of viewer preferences, respondents
argued that the company cannot afford to provide regular work for talents with whom it
negotiates specific or determinable professional fees on a per project, weekly or daily basis,
usually depending on the budget allocation for a project.8

Respondents insisted that, pursuant to their Talent Contracts and/or Project Assignment
Forms, petitioners were hired as talents, to act as reporters and/or cameramen for TV Patrol
Bicol for designated periods and rates. Fully aware that they were not considered or to
consider themselves as employees of a particular production or film outfit, petitioners were
supposedly engaged on the basis of the skills, knowledge or expertise they already
possessed and, for said reason, required no further training from ABS-CBN. Although
petitioners were inevitably subjected to some degree of control, the same was allegedly
limited to the imposition of general guidelines on conduct and performance, simply for the
purpose of upholding the standards of the company and the strictures of the industry. Never
subjected to any control or restrictions over the means and methods by which they
performed or discharged the tasks for which their services were engaged, petitioners were,
at most, briefed whenever necessary regarding the general requirements of the project to
be executed.9

Having been terminated during the pendency of the case, Petitioners filed on 10 July 2007 a
second complaint against respondents, for regularization, payment of labor standard
benefits, illegal dismissal and unfair labor practice, which was docketed as Sub-RAB 05-0800107-07. Upon respondents motion, this complaint was dismissed for violation of the rules
against forum shopping in view of the fact that the determination of the issues in the
second case hinged on the resolution of those raised in the first.10 On 19 December 2007,
however, Labor Arbiter Jesus Orlando Quiones (Labor Arbiter Quiones) resolved Sub-RAB
05-04-00041-07 in favor of petitioners who, having rendered services necessary and related
to ABS-CBNs business for more than a year, were determined to be its regular employees.
With said conclusion found to be buttressed by, among others, the exclusivity clause and
prohibitions under petitioners Talent Contracts and/or Project Assignment Forms which
evinced respondents control over them,11 Labor Arbiter Quiones disposed of the case in
the following wise:

WHEREFORE, finding merit in the causes of action set forth by the complainants, judgment
is hereby rendered declaring complainants MONINA AVILA-LLORIN, GENER L. DEL VALLE,
NELSON V. BEGINO and MA. CRISTINA V. SUMAYAO, as regular employees of respondent
company, ABS-CBN BROADCASTING CORPORATION.

Accordingly, respondent ABS-CBN Broadcasting Corporation is hereby ORDERED to pay

complainants, subject to the prescriptive period provided under Article 291 of the Labor
Code, however applicable, the total amount of Php2,440,908.36, representing salaries/wage
differentials, holiday pay, service incentive leave pay and 13th month pay, to include 10% of
the judgment award as attorneys fees of the judgment award (computation of the
monetary awards are attached hereto as integral part of this decision).

Moreover, respondents are directed to admit back complainants to work under the same
terms and conditions prevailing prior to their separation or, at respondents' option, merely
reinstated in the payroll.

Other than the above, all other claims and charges are ordered DISMISSED for lack of
merit.12

Aggrieved by the foregoing decision, respondents elevated the case on appeal before the
NLRC, during the pendency of which petitioners filed a third complaint against the former,
for illegal dismissal, regularization, nonpayment of salaries and 13th month pay, unfair labor
practice, damages and attorneys fees. In turn docketed as NLRC Case No. Sub-RAB-V-05-0300039-08, the complaint was raffled to Labor Arbiter Quiones who issued an Order dated
30 April 2008, inhibiting himself from the case and denying respondents motion to dismiss
on the grounds of res judicata and forum shopping.13 Finding that respondents control
over petitioners was indeed manifest from the exclusivity clause and prohibitions in the
Talent Contracts and/or Project Assignment Forms, on the other hand, the NLRC rendered a
Decision dated 31 March 2010, affirming said Labor Arbiters appealed decision.14
Undeterred by the NLRCs 31 August 2010 denial of their motion for reconsideration,15
respondents filed the Rule 65 petition for certiorari docketed before the CA as CA-G.R. SP
No. 116928 which, in addition to taking exceptions to the findings of the assailed decision,
faulted petitioners for violating the rule against forum shopping.16

On 29 June 2011, the CA rendered the herein assailed decision, reversing the findings of the
Labor Arbiter and the NLRC. Ruling out the existence of forum shopping on the ground that
petitioners' second and third complaints were primarily anchored on their termination from
employment after the filing of their first complaint, the CA nevertheless discounted the
existence of an employer-employee relation between the parties upon the following
findings and conclusions: (a) petitioners, were engaged by respondents as talents for
periods, work and the program specified in the Talent Contracts and/or Project Assignment
Forms concluded between them; (b) instead of fixed salaries, petitioners were paid talent
fees depending on the budget allocated for the program to which they were assigned; (c)
being mainly concerned with the result, respondents did not exercise control over the
manner and method by which petitioner accomplished their work and, at most, ensured
that they complied with the standards of the company, the KBP and the industry; and, (d)

the existence of an employer-employee relationship is not necessarily established by the

exclusivity clause and prohibitions which are but terms and conditions on which the parties
are allowed to freely stipulate.17

Petitioners motion for reconsideration of the foregoing decision was denied in the CA's 3
October 2011 Resolution,18 hence, this petition.

The Issues

Petitioners seek the reversal of the CAs assailed Decision and Resolution on the affirmative
of the following issues:

1. Whether or not the CA seriously and reversibly erred in not dismissing respondents
petition for certiorari in view of the fact that they did file a Notice of Appeal at the NLRC
level and did not, by themselves or through their duly authorized representative, verify and
certify the Memorandum of Appeal they filed thereat, in accordance with the NLRC Rules of
Procedure; and 2. Whether or not the CA seriously and reversibly erred in brushing aside the
determination made by both the Labor Arbiter and the NLRC of the existence of an
employer-employee relationship between the parties, despite established jurisprudence
supporting the same.

The Court's Ruling

The Court finds the petition impressed with merit.

Petitioners preliminarily fault the CA for not dismissing respondents Rule 65 petition for
certiorari in view of the fact that the latter failed to file a Notice of Appeal from the Labor
Arbiters decision and to verify and certify the Memorandum of Appeal they filed before the
NLRC. While concededly required under the NLRC Rules of Procedure, however, these
matters should have been properly raised during and addressed at the appellate stage
before the NLRC. Instead, the record shows that the NLRC took cognizance of respondents
appeal and proceeded to resolve the same in favor of petitioners by affirming the Labor
Arbiters decision. Not having filed their own petition for certiorari to take exception to the
liberal attitude the NLRC appears to have adopted towards its own rules of procedure,
petitioners were hardly in the proper position to raise the same before the CA or, for that
matter, before this Court at this late stage. Aside from the settled rule that a party who has
not appealed is not entitled to affirmative relief other than the ones granted in the
decision19 rendered, liberal interpretation of procedural rules on appeal had, on occasion,
been favored in the interest of substantive justice.20

Although the existence of an employer-employee relationship is, on the other hand, a

question of fact21 which is ordinarily not the proper subject of a Rule 45 petition for review
on certiorari like the one at bar, the conflicting findings between the labor tribunals and the
CA justify a further consideration of the matter.22 To determine the existence of said
relation, case law has consistently applied the four-fold test, to wit: (a) the selection and
engagement of the employee; (b) the payment of wages;(c) the power of dismissal; and (d)
the employer's power to control the employee on the means and methods by which the
work is accomplished.23 Of these criteria, the so-called "control test" is generally regarded
as the most crucial and determinative indicator of the presence or absence of an employeremployee relationship. Under this test, an employer-employee relationship is said to exist
where the person for whom the services are performed reserves the right to control not
only the end result but also the manner and means utilized to achieve the same.24

In discounting the existence of said relationship between the parties, the CA ruled that
Petitioners' services were, first and foremost, engaged thru their Talent Contracts and/or
Project Assignment Forms which specified the work to be performed by them, the project to
which they were assigned, the duration thereof and their rates of pay according to the

budget therefor allocated. Because they are imbued with public interest, it cannot be
gainsaid, however, that labor contracts are subject to the police power of the state and are
placed on a higher plane than ordinary contracts. The recognized supremacy of the law over
the nomenclature of the contract and the stipulations contained therein is aimed at bringing
life to the policy enshrined in the Constitution to afford protection to labor.25 Insofar as the
nature of ones employment is concerned, Article 280 of the Labor Code of the Philippines
also provides as follows:

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 service to be performed is seasonal in
nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while
such actually exists.

It has been ruled that the foregoing provision contemplates four kinds of employees,
namely: (a) regular employees or those who have been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer; (b) 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; (c) seasonal employees or those who work or perform
services which are seasonal in nature, and the employment is for the duration of the season;
and (d) casual employees or those who are not regular, project, or seasonal employees.26

To the foregoing classification of employee, jurisprudence has added that of contractual or

fixed term employee which, if not for the fixed term, would fall under the category of
regular employment in view of the nature of the employees engagement, which is to
perform activity usually necessary or desirable in the employers business.27

The Court finds that, notwithstanding the nomenclature of their Talent Contracts and/or
Project Assignment Forms and the terms and condition embodied therein, petitioners are
regular employees of ABS-CBN. Time and again, it has been ruled that the test to determine
whether employment is regular or not is the reasonable connection between the activity
performed by the employee in relation to the business or trade of the employer.28 As
cameramen/editors and reporters, petitioners were undoubtedly performing functions
necessary and essential to ABS-CBNs business of broadcasting television and radio content.
It matters little that petitioners services were engaged for specified periods for TV Patrol
Bicol and that they were paid according to the budget allocated therefor. Aside from the
fact that said program is a regular weekday fare of the ABS-CBNs Regional Network Group
in Naga City, the record shows that, from their initial engagement in the aforesaid
capacities, petitioners were continuously re-hired by respondents over the years. To the
mind of the Court, respondents repeated hiring of petitioners for its long-running news
program positively indicates that the latter were ABS-CBNs regular employees.

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 or continuing
performance as sufficient evidence of the necessity, if not indispensability of that activity in
the business.29 Indeed, an employment stops being co-terminous with specific projects
where the employee is continuously re-hired due to the demands of the employers
business.30 When circumstances show, moreover, that contractually stipulated periods of
employment have been imposed to preclude the acquisition of tenurial security by the
employee, this Court has not hesitated in striking down such arrangements as contrary to
public policy, morals, good customs or public order.31 The nature of the employment
depends, after all, on the nature of the activities to be performed by the employee,
considering the nature of the employers business, the duration and scope to be done, and,
in some cases, even the length of time of the performance and its continued existence.32 In

the same manner that the practice of having fixed-term contracts in the industry does not
automatically make all talent contracts valid and compliant with labor law, it has,
consequently, been ruled that the assertion that a talent contract exists does not necessarily
prevent a regular employment status.33

As cameramen/editors and reporters, it also appears that petitioners were subject to the
control and supervision of respondents which, first and foremost, provided them with the
equipments essential for the discharge of their functions. Prepared at the instance of
respondents, petitioners Talent Contracts tellingly provided that ABS-CBN retained "all
creative, administrative, financial and legal control" of the program to which they were
assigned. Aside from having the right to require petitioners "to attend and participate in all
promotional or merchandising campaigns, activities or events for the Program," ABS-CBN
required the former to perform their functions "at such locations and
Performance/Exhibition Schedules" it provided or, subject to prior notice, as it chose
determine, modify or change. Even if they were unable to comply with said schedule,
petitioners were required to give advance notice, subject to respondents approval.34
However obliquely worded, the Court finds the foregoing terms and conditions
demonstrative of the control respondents exercised not only over the results of petitioners
work but also the means employed to achieve the same.

In finding that petitioners were regular employees, the NLRC further ruled that the
exclusivity clause and prohibitions in their Talent Contracts and/or Project Assignment
Forms were likewise indicative of respondents control over them. Brushing aside said
finding, however, the CA applied the ruling in Sonza v. ABS-CBN Broadcasting Corporation35
where similar restrictions were considered not necessarily determinative of the existence of
an employer-employee relationship. Recognizing that independent contractors can validly
provide his exclusive services to the hiring party, said case enunciated that guidelines for the
achievement of mutually desired results are not tantamount to control. As correctly pointed
out by petitioners, however, parallels cannot be expediently drawn between this case and
that of Sonza case which involved a well-known television and radio personality who was
legitimately considered a talent and amply compensated as such. While possessed of skills
for which they were modestly recompensed by respondents, petitioners lay no claim to

fame and/or unique talents for which talents like actors and personalities are hired and
generally compensated in the broadcast industry.

Later echoed in Dumpit-Murillo v. Court of Appeals,36 this Court has rejected the
application of the ruling in the Sonza case to employees similarly situated as petitioners in
ABS-CBN Broadcasting Corporation v. Nazareno.37 The following distinctions were
significantly observed between employees like petitioners and television or radio
personalities like Sonza, to wit:

First. In the selection and engagement of respondents, no peculiar or unique skill, talent or
celebrity status was required from them because they were merely hired through
petitioners personnel department just like any ordinary employee.

Second. The so-called "talent fees" of respondents correspond to wages given as a result of
an employer-employee relationship.1wphi1 Respondents did not have the power to
bargain for huge talent fees, a circumstance negating independent contractual relationship.

Third. Petitioner could always discharge respondents should it find their work
unsatisfactory, and respondents are highly dependent on the petitioner for continued work.

Fourth. The degree of control and supervision exercised by petitioner over respondents
through its supervisors negates the allegation that respondents are independent
contractors.

The presumption is that when the work done is an integral part of the regular business of
the employer and when the worker, relative to the employer, does not furnish an
independent business or professional service, such work is a regular employment of such

employee and not an independent contractor. The Court will peruse beyond any such
agreement to examine the facts that typify the parties actual relationship.38 (Emphasis
omitted)

COLEGIO DEL SANTISIMO ROSARIO AND SR. ZENAIDA S.

MOFADA, OP, PETITIONERS,
vs.

Rather than the project and/or independent contractors respondents claim them to be, it is
evident from the foregoing disquisition that petitioners are regular employees of ABS-CBN.
This conclusion is borne out by the ineluctable showing that petitioners perform functions
necessary and essential to the business of ABS-CBN which repeatedly employed them for a
long-running news program of its Regional Network Group in Naga City. In the course of said
employment, petitioners were provided the equipments they needed, were required to
comply with the Company's policies which entailed prior approval and evaluation of their
performance. Viewed from the prism of these considerations, we find and so hold that the
CA reversibly erred when it overturned the NLRC's affirmance of the Labor Arbiter's finding
that an employer-employee relationship existed between the parties. Given the fact,
however, that Sub-RAB-V-05-03-00039-08 had not been consolidated with this case and
appears, for all intents and purposes, to be pending still, the Court finds that the
reinstatement of petitioners ordered by said labor officer and tribunal should, as a relief
provided in case of illegal dismissal, be left for determination in said case.

WHEREFORE, the Court of Appeals' assailed Decision dated 29 June 2011 and Resolution
dated 3 October 2011 in CA-G.R. SP No. 116928 are REVERSED and SET ASIDE. Except for the
reinstatement of Nelson V. Begino, Gener Del Valle, Monina Avila-Llorin and Ma. Cristina
Sumayao, the National Labor and Relations Commission's 31 March 2010 Decision is,
accordingly, REINSTATED.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the August 31, 2005 Decision2 and the
November 10, 2005 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 85188, which
affirmed the July 31, 2003 Decision4 of the National Labor Relations Commission (NLRC).
Said NLRC Decision affirmed with modification the October 7, 2002 Decision5 of the Labor
Arbiter (LA) which, in turn, granted respondent Emmanuel Rojos (respondent) Complaint6
for illegal dismissal.

Factual Antecedents

Petitioner Colegio del Santisimo Rosario (CSR) hired respondent as a high school teacher on
probationary basis for the school years 1992-1993, 1993-19947 and 1994-1995.8

SO ORDERED.

G.R. No. 170388

EMMANUEL ROJO,* RESPONDENT.

September 4, 2013
On April 5, 1995, CSR, through petitioner Sr. Zenaida S. Mofada, OP (Mofada), decided not
to renew respondents services.9

Thus, on July 13, 1995, respondent filed a Complaint10 for illegal dismissal. He alleged that
since he had served three consecutive school years which is the maximum number of terms
allowed for probationary employment, he should be extended permanent employment.
Citing paragraph 75 of the 1970 Manual of Regulations for Private Schools (1970 Manual),
respondent asserted that "full- time teachers who have rendered three (3) consecutive
years of satisfactory services shall be considered permanent."11

On the other hand, petitioners argued that respondent knew that his Teachers Contract for
school year 1994-1995 with CSR would expire on March 31, 1995.12 Accordingly,
respondent was not dismissed but his probationary contract merely expired and was not
renewed.13 Petitioners also claimed that the "three years" mentioned in paragraph 75 of
the 1970 Manual refer to "36 months," not three school years.14 And since respondent
served for only three school years of 10 months each or 30 months, then he had not yet
served the "three years" or 36 months mentioned in paragraph 75 of the 1970 Manual.15

The dispositive portion of the LAs Decision19 reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the [petitioners]:

1. To pay [respondent] the total amount of P39,252.00 corresponding to his severance

compensation and 13th month pay, moral and exemplary damages.

2. To pay 10% of the total amount due to [respondent] as attorneys fees.

All other claims are dismissed for lack of merit.

Ruling of the Labor Arbiter

SO ORDERED.20

The LA ruled that "three school years" means three years of 10 months, not 12 months.16
Considering that respondent had already served for three consecutive school years, then he
has already attained regular employment status. Thus, the non-renewal of his contract for
school year 1995-1996 constitutes illegal dismissal.17

Ruling of the National Labor Relations Commission

The LA also found petitioners guilty of bad faith when they treated respondents
termination merely as the expiration of the third employment contract and when they
insisted that the school board actually deliberated on the non-renewal of respondents
employment without submitting admissible proof of his alleged regular performance
evaluation.18

On appeal, the NLRC affirmed the LAs Decision with modification. It held that after serving
three school years, respondent had attained the status of regular employment21 especially
because CSR did not make known to respondent the reasonable standards he should
meet.22 The NLRC also agreed with the LA that respondents termination was done in bad
faith. It held that respondent is entitled to reinstatement, if viable; or separation pay, if
reinstatement was no longer feasible, and backwages, viz:

WHEREFORE, premises considered, the appealed Decision is hereby, AFFIRMED with

MODIFICATION only insofar as the award of separation pay is concerned. Since [respondent]
had been illegally dismissed, [petitioner] Colegio Del Santisimo Rosario is hereby ordered to
reinstate him to his former position without loss of seniority rights with full backwages until
he is actually reinstated. However, if reinstatement is no longer feasible, the respondent
shall pay separation pay, in [addition] to the payment of his full backwages.

The Computation Division is hereby directed to compute [respondents] full backwages to

be attached and to form part of this Decision.

has satisfied all the requirements necessary to acquire permanent employment and security
of tenure viz:

1. The teacher is a full-time teacher;

2. The teacher must have rendered three (3) consecutive years of service; and

3. Such service must be satisfactory.28

The rest of the appealed Decision stands.

SO ORDERED.23

Petitioners moved for reconsideration which the NLRC denied in its April 28, 2004
Resolution24 for lack of merit.

Ruling of the Court of Appeals

Petitioners filed a Petition for Certiorari25 before the CA alleging grave abuse of discretion
on the part of the NLRC in finding that respondent had attained the status of a regular
employee and was illegally dismissed from employment.

In a Decision26 dated August 31, 2005, the CA denied the Petition for lack of merit. Citing
Cagayan Capitol College v. National Labor Relations Commission,27 it held that respondent

According to the CA, respondent has attained the status of a regular employee after he was
employed for three consecutive school years as a full-time teacher and had served CSR
satisfactorily. Aside from being a high school teacher, he was also the Prefect of Discipline, a
task entailing much responsibility. The only reason given by Mofada for not renewing
respondents contract was the alleged expiration of the contract, not any unsatisfactory
service. Also, there was no showing that CSR set performance standards for the
employment of respondent, which could be the basis of his satisfactory or unsatisfactory
performance. Hence, there being no reasonable standards made known to him at the time
of his engagement, respondent was deemed a regular employee and was, thus, declared
illegally dismissed when his contract was not renewed.

Petitioners moved for reconsideration. However, the CA denied the motion for lack of merit
in its November 10, 2005 Resolution.29

Hence, the instant Petition. Incidentally, on May 23, 2007, we issued a Resolution30
directing the parties to maintain the status quo pending the resolution of the present
Petition.

Issue

WHETHER THE COURT OF APPEALS [AS WELL AS THE NATIONAL LABOR RELATIONS
COMMISSION] COMMITTED GRIEVOUS AND REVERSIBLE ERROR WHEN IT RULED THAT A
BASIC EDUCATION (ELEMENTARY) TEACHER HIRED FOR THREE (3) CONSECUTIVE SCHOOL
YEARS AS A PROBATIONARY EMPLOYEE AUTOMATICALLY AND/OR BY LAW BECOMES A
PERMANENT EMPLOYEE UPON COMPLETION OF HIS THIRD YEAR OF PROBATION
NOTWITHSTANDING [A] THE PRONOUNCEMENT OF THIS HONORABLE COURT IN COLEGIO
SAN AGUSTIN V. NLRC, 201 SCRA 398 1991 THAT A PROBATIONARY TEACHER ACQUIRES
PERMANENT STATUS "ONLY WHEN HE IS ALLOWED TO WORK AFTER THE PROBATIONARY
PERIOD" AND [B] DOLE-DECS-CHED-TESDA ORDER NO. 01, S. 1996 WHICH PROVIDE THAT
TEACHERS WHO HAVE SERVED THE PROBATIONARY PERIOD "SHALL BE MADE REGULAR OR
PERMANENT IF ALLOWED TO WORK AFTER SUCH PROBATIONARY PERIOD."31

Petitioners maintain that upon the expiration of the probationary period, both the school
and the respondent were free to renew the contract or let it lapse. Petitioners insist that a
teacher hired for three consecutive years as a probationary employee does not
automatically become a regular employee upon completion of his third year of probation. It
is the positive act of the school the hiring of the teacher who has just completed three
consecutive years of employment on probation for the next school year that makes the
teacher a regular employee of the school.

Our Ruling

We deny the Petition.

In Mercado v. AMA Computer College-Paraaque City, Inc.,32 we had occasion to rule that
cases dealing with employment on probationary status of teaching personnel are not
governed solely by the Labor Code as the law is supplemented, with respect to the period of
probation, by special rules found in the Manual of Regulations for Private Schools (the
Manual). With regard to the probationary period, Section 92 of the 1992 Manual33
provides:

Section 92. Probationary Period. Subject in all instances to compliance with the
Department and school requirements, the probationary period for academic personnel shall
not be more than three (3) consecutive years of satisfactory service for those in the
elementary and secondary levels, six (6) consecutive regular semesters of satisfactory
service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory
service for those in the tertiary level where collegiate courses are offered on a trimester
basis. (Emphasis supplied)

In this case, petitioners teachers who were on probationary employment were made to
enter into a contract effective for one school year. Thereafter, it may be renewed for
another school year, and the probationary employment continues. At the end of the second
fixed period of probationary employment, the contract may again be renewed for the last
time.

Such employment for fixed terms during the teachers probationary period is an accepted
practice in the teaching profession. In Magis Young Achievers Learning Center v. Manalo,34
we noted that:

The common practice is for the employer and the teacher to enter into a contract, effective
for one school year. At the end of the school year, the employer has the option not to renew
the contract, particularly considering the teachers performance. If the contract is not
renewed, the employment relationship terminates. If the contract is renewed, usually for

another school year, the probationary employment continues. Again, at the end of that
period, the parties may opt to renew or not to renew the contract. If renewed, this second
renewal of the contract for another school year would then be the last year since it would
be the third school year of probationary employment. At the end of this third year, the
employer may now decide whether to extend a permanent appointment to the employee,
primarily on the basis of the employee having met the reasonable standards of competence
and efficiency set by the employer. For the entire duration of this three-year period, the
teacher remains under probation. Upon the expiration of his contract of employment, being
simply on probation, he cannot automatically claim security of tenure and compel the
employer to renew his employment contract. It is when the yearly contract is renewed for
the third time that Section 93 of the Manual becomes operative, and the teacher then is
entitled to regular or permanent employment status. (Emphases supplied)

However, this scheme "of fixed-term contract is a system that operates during the
probationary period and for this reason is subject to Article 281 of the Labor Code,"35 which
provides:

x x x 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. [Emphasis supplied]

In Mercado, we held that "[u]nless this reconciliation is made, the requirements of [Article
281 on probationary status would be fully negated as the school may freely choose not to
renew contracts simply because their terms have expired."36 This will have an unsettling
effect in the equilibrium vis-a-vis the relations between labor and management that the
Constitution and Labor Code have worked hard to establish.

That teachers on probationary employment also enjoy the protection afforded by Article
281 of the Labor Code is supported by Section 93 of the 1992 Manual which provides:

Sec. 93. Regular or Permanent Status. - Those who have served the probationary period
shall be made regular or permanent. Full-time teachers who have satisfactorily completed
their probationary period shall be considered regular or permanent. (Emphasis supplied)

The above provision clearly provides that full-time teachers become regular or permanent
employees once they have satisfactorily completed the probationary period of three school
years.37 The use of the term satisfactorily necessarily connotes the requirement for schools
to set reasonable standards to be followed by teachers on probationary employment. For
how else can one determine if probationary teachers have satisfactorily completed the
probationary period if standards therefor are not provided?

As such, "no vested right to a permanent appointment shall accrue until the employee has
completed the prerequisite three-year period necessary for the acquisition of a permanent
status. [However, it must be emphasized that] mere rendition of service for three
consecutive years does not automatically ripen into a permanent appointment. It is also
necessary that the employee be a full-time teacher, and that the services he rendered are
satisfactory."38

In Mercado, this Court, speaking through J. Brion, held that:

The provision on employment on probationary status under the Labor Code is a primary
example of the fine balancing of interests between labor and management that the Code
has institutionalized pursuant to the underlying intent of the Constitution.

On the one hand, employment on probationary status affords management the chance to
fully scrutinize the true worth of hired personnel before the full force of the security of
tenure guarantee of the Constitution comes into play. Based on the standards set at the
start of the probationary period, management is given the widest opportunity during the
probationary period to reject hirees who fail to meet its own adopted but reasonable
standards. These standards, together with the just and authorized causes for termination of
employment [which] the Labor Code expressly provides, are the grounds available to
terminate the employment of a teacher on probationary status. x x x

The fixed-term character of employment essentially refers to the period agreed upon
between the employer and the employee; employment exists only for the duration of the
term and ends on its own when the term expires. In a sense, employment on probationary
status also refers to a period because of the technical meaning "probation" carries in
Philippine labor law a maximum period of six months, or in the academe, a period of three
years for those engaged in teaching jobs. Their similarity ends there, however, because of
the overriding meaning that being "on probation" connotes, i.e., a process of testing and
observing the character or abilities of a person who is new to a role or job.

Labor, for its part, is given the protection during the probationary period of knowing the
company standards the new hires have to meet during the probationary period, and to be
judged on the basis of these standards, aside from the usual standards applicable to
employees after they achieve permanent status. Under the terms of the Labor Code, these
standards should be made known to the teachers on probationary status at the start of their
probationary period, or at the very least under the circumstances of the present case, at the
start of the semester or the trimester during which the probationary standards are to be
applied. Of critical importance in invoking a failure to meet the probationary standards, is
that the school should show as a matter of due process how these standards have been
applied. This is effectively the second notice in a dismissal situation that the law requires as
a due process guarantee supporting the security of tenure provision, and is in furtherance,
too, of the basic rule in employee dismissal that the employer carries the burden of
justifying a dismissal. These rules ensure compliance with the limited security of tenure
guarantee the law extends to probationary employees.

Understood in the above sense, the essentially protective character of probationary status
for management can readily be appreciated. But this same protective character gives rise to
the countervailing but equally protective rule that the probationary period can only last for
a specific maximum period and under reasonable, well-laid and properly communicated
standards. Otherwise stated, within the period of the probation, any employer move based
on the probationary standards and affecting the continuity of the employment must strictly
conform to the probationary rules.

When fixed-term employment is brought into play under the above probationary period
rules, the situation as in the present case may at first blush look muddled as fixed-term
employment is in itself a valid employment mode under Philippine law and jurisprudence.
The conflict, however, is more apparent than real when the respective nature of fixed-term
employment and of employment on probationary status are closely examined.

x x x If we pierce the veil, so to speak, of the parties so-called fixed-term employment

contracts, what undeniably comes out at the core is a fixed-term contract conveniently used
by the school to define and regulate its relations with its teachers during their probationary
period.39 (Emphasis supplied; italics in the original)

In the same case, this Court has definitively pronounced that "in a situation where the
probationary status overlaps with a fixed-term contract not specifically used for the fixed
term it offers, Article 281 should assume primacy and the fixed-period character of the
contract must give way."40

An example given of a fixed-term contract specifically used for the fixed term it offers is a
replacement teacher or a reliever contracted for a period of one year to temporarily take

the place of a permanent teacher who is on leave. The expiration of the relievers fixed-term
contract does not have probationary status implications as he or she was never employed
on probationary basis. This is because his or her employment is for a specific purpose with
particular focus on the term. There exists an intent to end his or her employment with the
school upon expiration of this term.41

However, for teachers on probationary employment, in which case a fixed term contract is
not specifically used for the fixed term it offers, it is incumbent upon the school to have not
only set reasonable standards to be followed by said teachers in determining qualification
for regular employment, the same must have also been communicated to the teachers at
the start of the probationary period, or at the very least, at the start of the period when
they were to be applied. These terms, in addition to those expressly provided by the Labor
Code, would serve as the just cause for the termination of the probationary
contract.1wphi1 The specific details of this finding of just cause must be communicated to
the affected teachers as a matter of due process.42 Corollarily, should the teachers not have
been apprised of such reasonable standards at the time specified above, they shall be
deemed regular employees.

In Tamsons Enterprises, Inc. v. Court of Appeals,43 we held that "[t]he law is clear that in all
cases of probationary employment, the employer shall [convey] to the employee the
standards under which he will qualify as a regular employee at the time of his engagement.
Where no standards are made known to the employee at that time, he shall be deemed a
regular employee.

In this case, glaringly absent from petitioners evidence are the reasonable standards that
respondent was expected to meet that could have served as proper guidelines for purposes
of evaluating his performance. Nowhere in the Teachers Contract44 could such standards
be found.45 Neither was it mentioned that the same were ever conveyed to respondent.
Even assuming that respondent failed to meet the standards set forth by CSR and made
known to the former at the time he was engaged as a teacher on probationary status, still,

the termination was flawed for failure to give the required notice to respondent.46 This is
because Book VI, Rule I, Section 2 of the IRR of the Labor Code provides:

Section 2. Security of Tenure. (a) In cases of regular employment, the employer shall not
terminate the services of an employee except for just or authorized causes as provided by
law, and subject to the requirements of due process.

(b) The foregoing shall also apply in cases of probationary employment; provided, however,
that in such cases, termination of employment due to failure of the employee to qualify in
accordance with the standards of the employer made known to the former at the time of
engagement may also be a ground for termination of employment.

xxxx

(d) In all cases of termination of employment, the following standards of due process shall
be substantially observed:

xxxx

If the termination is brought about by the completion of a contract or phase thereof, or by

failure of an employee to meet the standards of the employer in the case of probationary
employment, it shall be sufficient that a written notice is served the employee, within a
reasonable time from the effective date of termination. (Emphasis supplied)

Curiously, despite the absence of standards, Mofada mentioned the existence of alleged
performance evaluations47 in respondents case. We are, however, in a quandary as to

what could have been the basis of such evaluation, as no evidence were adduced to show
the reasonable standards with which respondents performance was to be assessed or that
he was informed thereof. Notably too, none of the supposed performance evaluations were
presented. These flaws violated respondents right to due process. As such, his dismissal is,
for all intents and purposes, illegal.

WHEREFORE, the Petition is hereby DENIED. The August 31, 2005 Decision and the
November 10, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 85188 are
AFFIRMED. The status quo order of this Court is LIFTED.

SO ORDERED.
As a matter of due process, teachers on probationary employment, just like all probationary
employees, have the right to know whether they have met the standards against which their
performance was evaluated. Should they fail, they also have the right to know the reasons
therefor.

It should be pointed out that absent any showing of unsatisfactory performance on the part
of respondent, it can be presumed that his performance was satisfactory, especially taking
into consideration the fact that even while he was still more than a year into his
probationary employment, he was already designated Prefect of Discipline. In such capacity,
he was able to uncover the existence of a drug syndicate within the school and lessen the
incidence of drug use therein. Yet despite respondents substantial contribution to the
school, petitioners chose to disregard the same and instead terminated his services; while
most of those who were involved in drug activities within the school were punished with a
slap on the wrist as they were merely made to write letters promising that the incident will
not happen again.48

G.R. No. 205453

February 5, 2014

UNITED TOURIST PROMOTIONS (UTP) and ARIEL D. JERSEY,

Petitioners,
vs.
HARLAND B. KEMPLIN, Respondents.
DECISION

REYES, J.:
Mofada would also have us believe that respondent chose to resign as he feared for his life,
thus, the schools decision not to renew his contract. However, no resignation letter was
presented. Besides, this is contrary to respondents act of immediately filing the instant case
against petitioners.

United Tourist Promotions (UTP), a sole proprietorship business entity engaged in the
printing and distribution of promotional brochures and maps for tourists, and its registered
owner, Ariel D. Jersey (Jersey), are now before us with a Petition for Review on Certiorari1
filed under Rule 45 of the Rules of Court to assail the Decision2 rendered by the Court of
Appeals (CA) on June 29, 2012 and the Resolution3 thereafter issued on January 16, 2013 in
CA-G.R. SP No. 118971. The assailed decision and resolution affirmed in toto the rulings of
the Sixth Division of the National Labor Relations Commission (NLRC) and Labor Arbiter

Leandro M. Jose (LA Jose) finding that Harland B. Kemplin (Kemplin) was illegally dismissed
as President of UTP.

Antecedents

In 1995, Jersey, with the help of two American expatriates, Kemplin and the late Mike
Dunne, formed UTP.

In 2002, UTP employed Kemplin to be its President for a period of five years, to commence
on March 1, 2002 and to end on March 1, 2007, "renewable for the same period, subject to
new terms and conditions".4

Kemplin continued to render his services to UTP even after his fixed term contract of
employment expired. Records show that on May 12, 2009, Kemplin, signing as President of
UTP, entered into advertisement agreements with Pizza Hut and M. Lhuillier.5

On July 30, 2009, UTPs legal counsel sent Kemplin a letter,6 which, in part, reads:

We would like to inform you that your Employment Contract had been expired since March
1, 2007 and never been renewed. So[,] it is clear [that] you are no longer [an] employee as
President of [UTP] considering the expiration of your employment contract. However,
because of your past services to our clients company despite [the fact that] your service is
no longer needed by his company[,] as token[,] he tolerated you to come in the office [and]
as such[,] you were given monthly commissions with allowances.

But because of your inhuman treatment x x x [of] the rank and file employees[,] which
caused great damage and prejudices to the company as evidenced [by] those cases filed
against you[,] specifically[:] (1) x x x for Grave Oral [T]hreat pending for Preliminary
Investigation, Pasay City Prosecutors Office x x x[;] (2) x x x for Summary Deportation[,] BID,
Pasay City Prosecutors Office; and (3) x x x for Grave Coercion and Grave Threats, we had
no other recourse but to give you this notice to cease and desist from entering the premises
of the main office[,] as well as the branch offices of [UTP] from receipt hereof for the
protection and safety of the company[,] as well as to the employees and to avoid further
great damages that you may cause to the company x x x.7

On August 10, 2009, Kemplin filed before Regional Arbitration Branch No. 111 of the NLRC a
Complaint8 against UTP and its officers, namely, Jersey, Lorena Lindo9 and Larry Jersey,10
for: (a) illegal dismissal; (b) non-payment of salaries, 13th month and separation pay, and
retirement benefits; (c) payment of actual, moral and exemplary damages and monthly
commission of P200,0000.00; and (d) recovery of the company car, which was forcibly taken
from him, personal laptop, office paraphernalia and personal books.

In Kemplins Position Paper,11 which he filed before LA Jose, he claimed that even after the
expiration of his employment contract on March 1, 2007, he rendered his services as
President and General Manager of UTP. In December of 2008, he began examining the
companys finances, with the end in mind of collecting from delinquent accounts of UTPs
distributors. After having noted some accounting discrepancies, he sent e-mail messages to
the other officers but he did not receive direct replies to his queries. Subsequently, on July
30, 2009, he received a notice from UTPs counsel ordering him to cease and desist from
entering the premises of UTP offices.

UTP, on its part, argued that the termination letter sent to Kemplin on July 30, 2009 was
based on (a) the expiration of the fixed term employment contract they had entered into,
and (b) an employers prerogative to terminate an employee, who commits criminal and
illegal acts prejudicial to business. UTP alleged that Kemplin bad-mouthed, treated his coworkers as third class citizens, and called them "brown monkeys". Kemplins presence in the

premises of UTP was merely tolerated and he was given allowances due to humanitarian
considerations.12

The LAs Decision

On June 25, 2010, LA Jose rendered a Decision,13 the dispositive portion of which reads:

WHEREFORE, premises considered, the following findings are made:

1. [Kemplin] is found to be a regular employee;

2. [Kemplin] is adjudged to have been illegally dismissed even as [UTP and Jersey] are held
liable therefor;

3. Consequently, [UTP and Jersey] are ordered to reinstate [Kemplin] to his former position
without loss of seniority rights and other privileges, with backwages initially computed at
this time at [P]219,200.00;

4. The reinstatement aspect of this decision is immediately executory even as [UTP and
Jersey] are enjoined to submit a report of compliance therewith within ten (10) days from
receipt hereof;

5. [UTP and Jersey] are further ordered to pay [Kemplin] his salary for July 2009 of
[P]20,000.00 and 13th month pay for the year 2009 in the sum of [P]20,000.00;

6. [UTP and Jersey] are assessed 10% attorneys fee of [P]25,920.00 in favor of [Kemplin].

All other claims are dismissed for lack of merit.

SO ORDERED.14

LA Joses ratiocinations are:

[Kemplin] was able to show that he was still officially connected with [UTP] as he signed in
his capacity as President of [UTP] an (sic) advertisement agreement[s] with Pizza Hut and M.
Lhuillier Phils. as late as May 12, 2009. This only goes to show that [UTP and Jerseys] theory
of toleration has no basis in fact.

It would appear now, per record, that [Kemplin] was allowed to continue performing and
suffered to work much beyond the expiration of his contract. Such being the case,
[Kemplins] fixed term employment contract was converted to a regular one under Art. 280
of the Labor Code, as amended (Viernes vs. NLRC, et al., G.R. No. 108405, April 4, 2003).

[Kemplins] tenure having now been converted to regular employment, he now enjoys
security of tenure under Art. 279 of the Labor Code, as amended. Simply put, [Kemplin] may
only be dismissed for cause and after affording him the procedural requirement of notice
and hearing. Otherwise, his dismissal will be illegal.

Be that as it may, [UTP and Jersey] proceeded to argue that [Kemplin] was not illegally
terminated, for his termination was according to Art. 282 of the Labor Code, as amended,
i.e., loss of trust and confidence allegedly for various and serious offenses x x x.

However, upon closer scrutiny, in trying to justify [Kemplins] dismissal on the ground of loss
of trust and confidence, [UTP and Jersey] failed to observe the procedural requirements of
notice and hearing, or more particularly, the two-notice rule. It would appear that [UTP and
Jerseys] x x x cease and desist letter compressed the two notices in one. Besides, the
various and serious offenses alluded thereto were not legally established before [Kemplins]
separation. Ostensibly, [Kemplin] was not confronted with these offenses and given the
opportunity to explain himself.

x x x [R]espondents miserably failed to discharge their onus probandi. Hence, illegal

dismissal lies.

xxxx

The Decision of the NLRC

On January 21, 2011, the NLRC affirmed LA Joses Decision.16 However, Lorena Lindo and
Larry Jersey were expressly excluded from assuming liability for lack of proof of their
involvement in Kemplins dismissal. The NLRC declared:

[A]fter the expiration of [Kemplins] fixed term employment, his employment from March 2,
2007 until his separation therefrom on July 30, 2009 is classified as regular pursuant to the
provisions of Article 280 of the Labor Code, to wit:

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 service to be performed is seasonal in
nature and the employment is for the duration of the season.

The claim for non-payment of salary for July 2009 appears to be meritorious for failure of
[UTP and Jersey] to prove payment thereof when they have the burden of proof to do so.

The same ruling applies to the claim for 13th month pay.

However, the claims for commissions, company car, laptop, office paraphernalia and
personal books may not be given due course for failure of [Kemplin] to provide the specifics
of his claims and/or sufficient basis thereof when the burden of proof is reposed in him.15

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.

The aforesaid Article 280 of the Labor Code, as amended, classifies employees into three (3)
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 [are] 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. (Rowell Industrial Corporation vs. Court of Appeals, G.R. No.
167714, March 7, 2007)

Considering that he continued working as President for UTP for about one (1) year and five
(5) months and since [his] employment is not covered by another fixed term employment
contract, [Kemplins] employment after the expiration of his fixed term employment is
already regular. Therefore, he is guaranteed security of tenure and can only be removed
from service for cause and after compliance with due process. This is notwithstanding [UTP
and Jerseys] insistence that they merely tolerated [Kemplins] "consultancy" for
humanitarian reasons.

fact, he was merely told to cease and desist from entering the premises. He was never
afforded due process as he was not notified of the charges against him and given the
opportunity to be heard. Thus, there was never any proven just cause for [Kemplins]
termination, which makes it, therefore, illegal. x x x.17 (Underscoring supplied)

The CAs Decision

On June 29, 2012, the CA rendered the herein assailed Decision18 affirming the disquisitions
of the LA and NLRC. The CA stated that:

[Kemplins] presence for humanitarian reasons is purely self-serving and belied by the
evidence on record. In fact, [UTP and Jerseys] alleged document denominated as
Revocation of Power of Attorney (executed on November 24, 2008 or MORE THAN one year
from the expiration of [Kemplins] employment contract) will only confirm that [Kemplin]
continued rendering work x x x beyond March 1, 2007. x x x.

xxxx
In termination cases, the employer bears the burden of proving that the dismissal of the
employee is for a just or an authorized cause. Failure to dispose of the burden would imply
that the dismissal is not lawful, and that the employee is entitled to reinstatement, back
wages and accruing benefits. Moreover, dismissed employees are not required to prove
their innocence of the employers accusations against them. (San Miguel Corporation vs.
National Labor Relations Commission and William L. Friend, Jr., G.R. No. 153983, May 26,
2009).

In this case, [UTP and Jersey] failed to prove the existence of just cause for his termination.
Their allegation of loss of trust and confidence was raised only in their position paper and
was never posed before [Kemplin] in order that he may be able to answer to the charge. In

Moreover, if indeed [Kemplins] relationship with UTP after the expiration of the formers
employment contract was based on [UTP and Jerseys] mere tolerance, why then did [they]
have to "dismiss" [Kemplin] based on alleged loss of trust and confidence? Clearly, [UTPs
and Jerseys] allegation in their Position Paper (before LA Jose) that [Kemplin] was "formally
given notice of his termination as in [sic] indicated on the Notice of Termination Letter
dated July 20, 2009," is already an indication, if not an admission, that [Kemplin] was,
indeed, still in the employ of UTP albeit without a new or renewed contract of employment.

xxxx

The validity of an employers dismissal from service hinges on the satisfaction of the two
substantive requirements for a lawful termination. x x x [T]he procedural aspect. And x x x
the substantive aspect.

(a) ruled that the termination of [Kemplin] was invalid or unjust;

(b) invalidated the termination of [Kemplin] for [UTP and Jerseys] failure to afford him due
process of law;
Records are bereft of any evidence that [Kemplin] was notified of the alleged causes for his
possible dismissal. Neither was there any notice sent to him to afford him an opportunity to
air his side and defenses. The alleged Notice of Termination Letter sent by [UTP and Jersey]
miserably failed to comply with the twin-notice requirement under the law. x x x

(c) stated that the issue [of] "loss of trust and confidence" cannot be raised for the first time
on appeal; and

xxxx

(d) failed to apply the doctrine of strained relations in lieu of reinstatement.22

We likewise sustain the finding of the [NLRC] that [UTP and Jersey] failed to prove the
existence of just cause for [Kemplins] termination. [UTP and Jerseys] allegation of loss of
trust and confidence was raised only in their Position Paper and was never posed before
[Kemplin] in order that he may be able to answer to the charge. It is a basic principle that in
illegal dismissal cases, the burden of proof rests upon the employer to show that the
dismissal of the employee is for a just cause and failure to do so would necessarily mean
that the dismissal is not justified.19 (Citations omitted)

UTP and Jerseys Allegations

On January 16, 2013, the CA issued the herein assailed Resolution20 denying UTP and
Jerseys Motion for Reconsideration.21

In support of the instant petition, UTP and Jersey reiterate their averments in the
proceedings below. They likewise emphasize that Kemplin is a fugitive from justice since
warrants of arrest for grave oral defamation and grave coercion23 had been issued against
him by the Metropolitan Trial Court (MTC) of Pasay City, and for qualified theft by the
Regional Trial Court (RTC) of Angeles City. Kemplins co-workers likewise complained about
his alleged improprieties, lack of proper decorum, immorality and grave misconduct.
Kemplin also blocked UTPs website and diverted all links towards his own site.
Consequently, UTP lost both its customers and revenues. UTP, then, as an employer, has the
right to exercise its management prerogative of terminating Kemplin, who has been
committing acts inimical to business.24

Hence, the instant petition anchored on the following issues:

Whether or not the CA erred when it:

Further, citing Wenphil Corporation v. National Labor Relations Commission,25 UTP and
Jersey argue that even if it were to be assumed that procedural due process was not

observed in terminating Kemplin, still, the dismissal due to just cause should not be
invalidated. Instead, a fine should just be imposed as indemnity.26

UTP and Jersey also challenge the CAs holding that the court need not resolve the issue of
loss of trust and confidence since it was only belatedly raised in the Position Paper filed
before the LA. It is argued that the issue was timely raised before the proper forum and
Kemplin had all the opportunity to contradict the charges against him, but he chose not to
do so.27

UTP and Jersey likewise posit that a strained relationship between them and Kemplin had
arisen due to the several criminal and civil cases they had filed and which are now pending
against the latter. Hence, even if the CA were correct in holding that there was illegal
dismissal, Kemplins reinstatement is not advisable, practical and viable. A separation pay
should just be paid instead.28

Kemplins Comment

Kemplin further emphasizes that "the doctrine of strained relations should not be applied
indiscriminately,"31 especially where "the differences of the employer with the employee
are neither personal nor physical[,] much less serious in nature[.]"32

This Courts Ruling

The instant petition is partially meritorious.

The first two issues raised are factual in nature, hence, beyond the ambit of a petition filed
under Rule 45 of the Rules of Court.

It is settled that Rule 45 limits us merely to the review of questions of law raised against the
assailed CA decision.33 The Court is generally bound by the CAs factual findings, except only
in some instances, among which is, when the said findings are contrary to those of the trial
court or administrative body exercising quasi-judicial functions from which the action
originated.34

In Kemplins Comment,29 he sought the dismissal of the instant petition.

He insists that both procedural and substantive due process were absent when he was
dismissed from service. Kemplin alleges that Jersey merely want to wrest the business away
after the former initiated new checking and collection procedures relative to UTPs finances.
Kemplin also laments that Jersey caused him to answer for baseless criminal offenses, for
which no bail can be posted. Specifically, the indictment for qualified theft before the RTC of
Angeles City involves a car registered in UTPs name, but which was actually purchased using
Kemplins money.30

In the case before us now, the LA, NLRC and CA uniformly ruled that Kemplin was dismissed
sans substantive and procedural due process. While we need not belabor the first two
factual issues presented herein, it bears stressing that we find the rulings of the appellate
court and the labor tribunals as amply supported by substantial evidence.

Specifically, we note the advertisement agreements35 with Pizza Hut and M. Lhuillier
entered into by Kemplin, who signed the documents as President of UTP on May 12, 2009,
or more than two years after the supposed expiration of his employment contract. They
validate Kemplins claim that he, indeed, continued to render his services as President of
UTP well beyond March 2, 2007.

Moreover, in the letter36 dated July 30, 2009, Kemplin was ordered to cease and desist
from entering the premises of UTP.

(3) After determining that termination of employment is justified, the employers shall serve
the employees a written notice of termination indicating that: (1) all circumstances involving
the charge against the employees have been considered; and (2) grounds have been
established to justify the severance of their employment. (Underlining ours)38

In Unilever Philippines, Inc. v. Maria Ruby M. Rivera,37 the Court laid down in detail the
steps on how to comply with procedural due process in terminating an employee, viz:

(1) The first written notice to be served on the employees should contain the specific causes
or grounds for termination against them, and a directive that the employees are given the
opportunity to submit their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance that management
must accord to the employees to enable them to prepare adequately for their defense. This
should be construed as a period of at least five (5) calendar days from receipt of the notice
to give the employees an opportunity to study the accusation against them, consult a union
official or lawyer, gather data and evidence, and decide on the defenses they will raise
against the complaint. Moreover, in order to enable the employees to intelligently prepare
their explanation and defenses, the notice should contain a detailed narration of the facts
and circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art. 282 is being
charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify
their defenses to the charge against them; (2) present evidence in support of their defenses;
and (3) rebut the evidence presented against them by the management. During the hearing
or conference, the employees are given the chance to defend themselves personally, with
the assistance of a representative or counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to come to an amicable settlement.

Prescinding from the above, UTPs letter sent to Kemplin on July 30, 2009 is a lame attempt
to comply with the twin notice requirement provided for in Section 2, Rule XXIII, Book V of
the Rules Implementing the Labor Code.39

The charges against Kemplin were not clearly specified. While the letter stated that
Kemplins employment contract had expired, it likewise made general references to alleged
criminal suits filed against him.40 One who reads the letter is inevitably bound to ask if
Kemplin is being terminated due to the expiration of his contract, or by reason of the
pendency of suits filed against him. Anent the pendency of criminal suits, the statement is
substantially bare. Besides, an employees guilt or innocence in a criminal case is not
determinative of the existence of a just or authorized cause for his dismissal.41 The
pendency of a criminal suit against an employee, does not, by itself, sufficiently establish a
ground for an employer to terminate the former.

It also bears stressing that the letter failed to categorically indicate which of the policies of
UTP did Kemplin violate to warrant his dismissal from service. Further, Kemplin was never
given the chance to refute the charges against him as no hearing and investigation were
conducted.

Corollarily, in the absence of a hearing and investigation, the existence of just cause to
terminate Kemplin could not have been sufficiently established.

Kemplin should have been promptly apprised of the issue of loss of trust and confidence in
him before and not after he was already dismissed.

UTP and Jersey challenge the CAs disquisition that it need not resolve the issue of loss of
trust and confidence considering that the same was only raised in the Position Paper which
they filed before LA Jose.

UTP and Jerseys stance is untenable.

In Lawrence v. National Labor Relations Commission,42 the Court is emphatic that:

Considering that Lawrence has already been fired, the belated act of LEP in attempting to
show a just cause in lieu of a nebulous one cannot be given a semblance of legality. The
legal requirements of notice and hearing cannot be supplanted by the notice and hearing in
labor proceedings. The due process requirement in the dismissal process is different from
the due process requirement in labor proceedings and both requirements must be
separately observed x x x. Thus, LEPs method of "Fire the employee and let him explain
later" is obviously not in accord with the mandates of law. x x x.43

Clearly then, UTP was not exempted from notifying Kemplin of the charges against
him.1wphi1 The fact that Kemplin was apprised of his supposed offenses, through the
Position Paper filed by UTP and Jersey before LA Jose, did not cure the defects attending his
dismissal from employment.

While we agree with the LA, NLRC and CAs findings that Kemplin was illegally dismissed,
grounds exist compelling us to modify the order of reinstatement and payment of 13th
month benefit.

UTP and Jersey lament that the CA failed to apply the doctrine of strained relations to justify
the award of separation pay in lieu of reinstatement.

APO Chemical Manufacturing Corporation v. Bides44 is instructive anent the instances when
separation pay and not reinstatement shall be ordered. Thus:

The Court is well aware that reinstatement is the rule and, for the exception of "strained
relations" to apply, it should be proved that it is likely that, if reinstated, an atmosphere of
antipathy and antagonism would be generated as to adversely affect the efficiency and
productivity of the employee concerned.

Under the doctrine of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee from what could be a highly
oppressive work environment. On the other hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it could no longer trust.
Moreover, the doctrine of strained relations has been made applicable to cases where the
employee decides not to be reinstated and demands for separation pay.45 (Citations
omitted)

Considering that Kemplins dismissal occurred in 2009, there is much room to doubt the
viability, desirability and practicability of his reinstatement as UTPs President. Besides, as a
consequence of the unsavory accusations hurled by the contending parties against each
other, Kemplins reinstatement is not likely to create an efficient and productive work
environment, hence, prejudicial to business and all the persons concerned.

We likewise find the award of 13th month benefit to Kemplin as improper.

SO ORDERED.
In Torres v. Rural Bank of San Juan, Inc.,46 we stated that:

Being a managerial employee, the petitioner is not entitled to 13th month pay. Pursuant to
Memorandum Order No. 28, as implemented by the Revised Guidelines on the
Implementation of the 13th Month Pay Law dated November 16, 1987, managerial
employees are exempt from receiving such benefit without prejudice to the granting of
other bonuses, in lieu of the 13th month pay, to managerial employees upon the employer's
discretion.47 (Citation omitted)

Hence, Kemplin, who had rendered his services as UTP's President, a managerial position, is
clearly not entitled to be paid the 13th month benefit.

WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision on June 29, 2012 and
the Resolution thereafter issued on January 16, 2013 rendered by the Court of Appeals in
CA-G.R. SP No. 118971 finding that Harland B. Kemplin was illegally dismissed are AFFIRMED
with MODIFICATIONS. The award to Harland B. Kemplin of a 13th month benefit is hereby
DELETED. In lieu of his reinstatement, he is AWARDED SEPARATION PAY to be computed at
the rate of one ( 1) month pay for every year of service, with a fraction of at least six ( 6)
months considered as one whole year to be reckoned from the time of his employment on
March 1, 2002 until the finality of this Decision.48 United Tourist Promotions and Ariel D.
Jersey are further ORDERED TO PAY Harland B. Kemplin legal interest of six percent (6%)per
annum of the total monetary awards computed from the finality of this Decision until full
satisfaction thereof.49

The Labor Arbiter is hereby DIRECTED to re-compute the awards according to the above.