Labor Code and Fixed-Period Employment

EN BANC
[G.R. No. 48494. February 5, 1990.]
BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners, vs. RONALDO
ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President, and
DOROTEO R. ALEGRE, respondents.
Quasha, Asperilla, Ancheta, Pen a & Nolasco for petitioners.
Mauricio G. Domogon for respondent Alegre.
DECISION
NARVASA, J p:
The question presented by the proceedings at bar 1 is whether or not the provisions of
the Labor Code, 2 as amended, 3 have anathematized "fixed period employment" or
employment for a term.
The root of the controversy at bar is an employment contract in virtue of which Doroteo
R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly
compensation of P20,000.00. 4 The contract fixed a specific term for its existence, five
(5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17,
1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and
September 14, 1974 reiterated the same terms and conditions, including the expiry
date, as those contained in the original contract of July 18, 1971. 5
Some three months before the expiration of the stipulated period, or more precisely on
April 20, 1976, Alegre was given a copy of the report filed by Brent School with the
Department of Labor advising of the termination of his services effective on July 16,
1976. The stated ground for the termination was "completion of contract, expiration of
the definite period of employment." And a month or so later, on May 26, 1976, Alegre
accepted the amount of P3,177.71, and signed a receipt therefor containing the phrase,
"in full payment of services for the period May 16, to July 17, 1976 as full payment of
contract." LLphil
However, at the investigation conducted by a Labor Conciliator of said report of

termination of his services, Alegre, protested the announced termination of his
employment. He argued that although his contract did stipulate that the same would
terminate on July 17, 1976, since his services were necessary and desirable in the usual
business of his employer, and his employment had lasted for five years, he had acquired
the status of a regular employee and could not be removed except for valid cause. 6 The
Regional Director considered Brent School's report as an application for clearance to
terminate employment (not a report of termination), and accepting the
recommendation of the Labor Conciliator, refused to give such clearance and instead
required the reinstatement of Alegre, as a "permanent employee," to his former position
without loss of seniority rights and with full back wages. The Director pronounced "the
ground relied upon by the respondent (Brent) in terminating the services of the
complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite oddly, as prohibited
by Circular No. 8, series of 1969, of the Bureau of Private Schools. 7
Brent School filed a motion for reconsideration. The Regional Director denied the
motion and forwarded the case to the Secretary of Labor for review. 8 The latter
sustained the Regional Director. 9 Brent appealed to the Office of the President. Again it
was rebuffed. That Office dismissed its appeal for lack of merit and affirmed the Labor
Secretary's decision, ruling that Alegre was a permanent employee who could not be
dismissed except for just cause, and expiration of the employment contract was not one
of the just causes provided in the Labor Code for termination of services. 10
The School is now before this Court in a last attempt at vindication. That it will get here.
The employment contract between Brent School and Alegre was executed on July 18,
1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet been
promulgated. Indeed, the Code did not come into effect until November 1, 1974, some
three years after the perfection of the employment contract, and rights and obligations
thereunder had arisen and been mutually observed and enforced.
At that time, i.e., before the advent of the Labor Code, there was no doubt whatever
about the validity of term employment. It was impliedly but nonetheless clearly
recognized by the Termination Pay Law, R.A. 1052, 11 as amended by R.A. 1787. 12
Basically, this statute provided that
In cases of employment, without a definite period, in a commercial, industrial, or

agricultural establishment or enterprise, the employer or the employee may terminate
at any time the employment with just cause; or without just cause in the case of an
employee by serving written notice on the employer at least one month in advance, or
in the case of an employer, by serving such notice to the employee at least one month in
advance or one-half month for every year of service of the employee, whichever is
longer, a fraction of at least six months being considered as one whole year.
The employer, upon whom no such notice was served in case of termination of
employment without just cause, may hold the employee liable for damages.
The employee, upon whom no such notice was served in case of termination of
employment without just cause, shall be entitled to compensation from the date of
termination of his employment in an amount equivalent to his salaries or wages
corresponding to the required period of notice.
There was, to repeat, clear albeit implied recognition of the licitness of term
employment. RA 1787 also enumerated what it considered to be just causes for
terminating an employment without a definite period, either by the employer or by the
employee without incurring any liability therefor.
Prior, thereto, it was the Code of Commerce which governed employment without a
fixed period, and also implicitly acknowledged the propriety of employment with a
fixed period. Its Article 302 provided that
In cases in which the contract of employment does not have a fixed period, any of the
parties may terminate it, notifying the other thereof one month in advance.
The factor or shop clerk shall have a right, in this case, to the salary corresponding to
said month.
The salary for the month directed to be given by the said Article 302 of the Code of
Commerce to the factor or shop clerk, was known as the mesada (from mes, Spanish for
"month"). When Article 302 (together with many other provisions of the Code of
Commerce) was repealed by the Civil Code of the Philippines, Republic Act No. 1052
was enacted avowedly for the precise purpose of reinstating the mesada.
Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and
became effective on August 30, 1950, itself deals with obligations with a period in
section 2, Chapter 3, Title I, Book IV; and with contracts of labor and for a piece of work,
in Sections 2 and 3, Chapter 3, Title VIII, respectively, of Book IV. No prohibition against
term- or fixed-period employment is contained in any of its articles or is otherwise
deducible therefrom.
It is plain then that when the employment contract was signed between Brent School
and Alegre on July 18, 1971, it was perfectly legitimate for them to include in it a
stipulation fixing the duration thereof. Stipulations for a term were explicitly
recognized as valid by this Court, for instance, in Biboso v. Victorias Milling Co., Inc.,
promulgated on March 31, 1977, 13 and J. Walter Thompson Co. (Phil.) v. NLRC,
promulgated on December 29, 1983. 14 The Thompson case involved an executive who
had been engaged for a fixed period of three (3) years. Biboso involved teachers in a
private school as regards whom, the following pronouncement was made:
"What is decisive is that petitioners (teachers) were well aware all the time that their
tenure was for a limited duration. Upon its termination, both parties to the employment
relationship were free to renew it or to let it lapse." (p. 254)
Under American law 15 the principle is the same. "Where a contract specifies the
period of its duration, it terminates on the expiration of such period." 16 "A contract of
employment for a definite period terminates by its own terms at the end of such
period." 17
The status of legitimacy continued to be enjoyed by fixed-period employment contracts

under the Labor Code (Presidential Decree No. 442), which went into effect on
November 1, 1974. The Code contained explicit references to fixed period employment,
or employment with a fixed or definite period. Nevertheless, obscuration of the
principle of licitness of term employment began to take place at about this time.
Article 320, entitled "Probationary and fixed period employment," originally stated that
the "termination of employment of probationary employees and those employed WITH
A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may
prescribe." The asserted objective was "to prevent the circumvention of the right of the
employee to be secured in their employment as provided . . . (in the Code)."
Article 321 prescribed the just causes for which an employer could terminate "an
employment without a definite period."
And Article 319 undertook to define "employment without a fixed period" in the
following manner: 18
An employment shall be deemed to be without a definite period for purposes of this

Chapter 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 question immediately provoked by a reading of Article 319 is whether or not a

voluntary agreement on a fixed term or period would be valid where the employee "has
been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer." The definition seems a non sequitur. From the
premise that the duties of an employee entail "activities which are usually necessary
or desirable in the usual business or trade of the employer "the conclusion does not
necessarily follow that the employer and employee should be forbidden to stipulate any
period of time for the performance of those activities. There is nothing essentially
contradictory between a definite period of an employment contract and the nature of
the employee's duties set down in that contract as being "usually necessary or desirable
in the usual business or trade of the employer." The concept of the employee's duties as
being "usually necessary or desirable in the usual business or trade of the employer" is
not synonymous with or identical to employment with a fixed term. Logically, the
decisive determinant in term employment should not be the activities that the
employee is called upon to perform, but the day certain agreed upon by the parties for
the commencement and termination of their employment relationship, a day certain
being understood to be "that which must necessarily come, although it may not be
known when." 19 Seasonal employment, and employment for a particular project are
merely instances of employment in which a period, where not expressly set down, is
necessarily implied.
Of course, the term period has a definite and settled signification. It means, "Length of
existence; duration. A point of time marking a termination as of a cause or an activity;
an end, a limit, a bound; conclusion; termination. A series of years, months or days in
which something is completed. A time of definite length. . . . the period from one fixed
date to another fixed date . . ." 20 It connotes a "space of time which has an influence
on an obligation as a result of a juridical act, and either suspends its demandableness or
produces its extinguishment." 21 It should be apparent that this settled and familiar
notion of a period, in the context of a contract of employment, takes no account at all of
the nature of the duties of the employee; it has absolutely no relevance to the character
of his duties as being "usually necessary or desirable to the usual business of the
employer," or not.
Subsequently, the foregoing articles regarding employment with "a definite period" and
"regular" employment were amended by Presidential Decree No. 850, effective
December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered by
eliminating the reference to persons "employed with a fixed period," and was
renumbered (becoming Article 271). The article 22 now reads:
. . . Probationary employment. Probationary employment shall not exceed six months

from the date the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been
engaged in 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.
Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period,"
supra) by (a) deleting mention of employment with a fixed or definite period, (b)
adding a general exclusion clause declaring irrelevant written or oral agreements "to
the contrary," and (c) making the provision treat exclusively of "regular" and "casual"
employment. As revised, said article, renumbered 270, 23 now reads:
. . . 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
employed 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 is identical to Article 319 except that, as just mentioned, a clause
has been added, to wit: "The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreements of the parties . . . " The clause
would appear to be addressed inter alia to agreements fixing a definite period for
employment. There is withal no clear indication of the intent to deny validity to
employment for a definite period. Indeed, not only is the concept of regular
employment not essentially inconsistent with employment for a fixed term, as above
pointed out, Article 272 of the Labor Code, as amended by said PD 850, still impliedly
acknowledged the propriety of term employment: it listed the "just causes" for which
"an employer may terminate employment without a definite period," thus giving rise to
the inference that if the employment be with a definite period, there need be no just
cause for termination thereof if the ground be precisely the expiration of the term
agreed upon by the parties for the duration of such employment.
Still later, however, said Article 272 (formerly Article 321) was further amended by
Batas Pambansa Bilang 130, 24 to eliminate altogether reference to employment
without a definite period. As lastly amended, the opening lines of the article
(renumbered 283), now pertinently read: "An employer may terminate an employment
for any of the following just causes: . . ." BP 130 thus completed the elimination of every
reference in the Labor Code, express or implied, to employment with a fixed or definite
period or term.
It is in the light of the foregoing description of the development of the provisions of the
Labor Code bearing on term or fixed-period employment that the question posed in the
opening paragraph of this opinion should now be addressed. Is it then the legislative
intention to outlaw stipulations in employment contracts laying down a definite period
therefor? Are such stipulations in essence contrary to public policy and should not on
this account be accorded legitimacy?
On the one hand, there is the gradual and progressive elimination of references to term
or fixed-period employment in the Labor Code, and the specific statement of the rule 25
that
. . Regular and Casual Employment. The provisions of a written agreement to the

contrary notwithstanding and regardless of the oral agreement of the parties, an
trade of the employer except where the employment has been fixed for a specific
employed is seasonal in nature and the employment is for the duration of the season.

while such actually exists.
There is, on the other hand, the Civil Code, which has always recognized, and continues
to recognize, the validity and propriety of contracts and obligations with a fixed or
definite period, and imposes no restraints on the freedom of the parties to fix the
duration of a contract, whatever its object, be it specie, goods or services, except the
general admonition against stipulations contrary to law, morals, good customs, public
order or public policy. 26 Under the Civil Code, therefore, and as a general proposition,
fixed-term employment contracts are not limited, as they are under the present Labor
Code, to those by nature seasonal or for specific projects with pre-determined dates of
completion; they also include those to which the parties by free choice have assigned a
specific date of termination.
Some familiar examples may be cited of employment contracts which may be neither
for seasonal work nor for specific projects, but to which a fixed term is an essential and
natural appurtenance: overseas employment contracts, for one, to which, whatever the
nature of the engagement, the concept of regular employment with all that it implies
does not appear ever to have been applied, Article 280 of the Labor Code
notwithstanding; also appointments to the positions of dean, assistant dean, college
secretary, principal, and other administrative offices in educational institutions, which
are by practice or tradition rotated among the faculty members, and where fixed terms
are a necessity without which no reasonable rotation would be possible. Similarly,
despite the provisions of Article 280, Policy Instructions No. 8 of the Minister of Labor
27 implicitly recognize that certain company officials may be elected for what would
amount to fixed periods, at the expiration of which they would have to stand down, in
providing that these officials," . . . may lose their jobs as president, executive vice-
president or vice-president, etc. because the stockholders or the board of directors for
one reason or another did not reelect them."
There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck down or disregarded as
contrary to public policy, morals, etc. But where no such intent to circumvent the law is
shown, or stated otherwise, where the reason for the law does not exist, e.g., where it is
indeed the employee himself who insists upon a period or where the nature of the
engagement is such that, without being seasonal or for a specific project, a definite date
of termination is a sine qua non, would an agreement fixing a period be essentially evil
or illicit, therefore anathema? Would such an agreement come within the scope of
Article 280 which admittedly was enacted "to prevent the circumvention of the right of
the employee to be secured in . . (his) employment?"
As it is evident from even only the three examples already given that Article 280 of the
Labor Code, under a narrow and literal interpretation, not only fails to exhaust the
gamut of employment contracts to which the lack of a fixed period would be an
anomaly, but would also appear to restrict, without reasonable distinctions, the right of
an employee to freely stipulate with his employer the duration of his engagement, it
logically follows that such a literal interpretation should be eschewed or avoided. The
law must be given a reasonable interpretation, to preclude absurdity in its application.
Outlawing the whole concept of term employment and subverting to boot the principle
of freedom of contract to remedy the evil of employers' using it as a means to prevent
their employees from obtaining security of tenure is like cutting off the nose to spite the
face or, more relevantly, curing a headache by lopping off the head.
"It is a salutary principle in statutory construction that there exists a valid presumption
that undesirable consequences were never intended by a legislative measure, and that a
construction of which the statute is fairly susceptible is favored, which will avoid all
objectionable, mischievous, undefensible, wrongful, evil, and injurious consequences."
28
"Nothing is better settled than that courts are not to give words a meaning which would
lead to absurd or unreasonable consequences. That is a principle that goes back to In re
Allen decided on October 27, 1903, where it was held that a literal interpretation is to
be rejected if it would be unjust or lead to absurd results. That is a strong argument
against its adoption. The words of Justice Laurel are particularly apt. Thus: "The fact
that the construction placed upon the statute by the appellants would lead to an
absurdity is another argument for rejecting it. . . " 29
" . . We have, here, then a case where the true intent of the law is clear that calls for the
application of the cardinal rule of statutory construction that such intent of spirit must
prevail over the letter thereof, for whatever is within the spirit of a statute is within the
statute, since adherence to the letter would result in absurdity, injustice and
contradictions and would defeat the plain and vital purpose of the statute." 30
Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor Code clearly appears to have been,
as already observed, to prevent circumvention of the employee's right to be secure in
his tenure, the clause in said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of regular employment as
defined therein should be construed to refer to the substantive evil that the Code itself
has singled out: agreements entered into precisely to circumvent security of tenure. It
should have no application to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the employer
and employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter. Unless thus limited
in its purview, the law would be made to apply to purposes other than those explicitly
stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and
apt to lead to absurd and unintended consequences. cdphil
Such interpretation puts the seal on Bibiso 31 upon the effect of the expiry of an
agreed period of employment as still good rule a rule reaffirmed in the recent case of
Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989) where, in the fairly
analogous case of a teacher being served by her school a notice of termination following
the expiration of the last of three successive fixed-term employment contracts, the
Court held:
"Reyes' (the teacher's) argument is not persuasive. It loses sight of the fact that her
employment was probationary, contractual in nature, and one with a definitive period.
At the expiration of the period stipulated in the contract, her appointment was deemed
terminated and the letter informing her of the non-renewal of her contract is not a
condition sine qua non before Reyes may be deemed to have ceased in the employ of
petitioner UST. The notice is a mere reminder that Reyes' contract of employment was
due to expire and that the contract would no longer be renewed. It is not a letter of
termination. The interpretation that the notice is only a reminder is consistent with the
court's finding in Labajo, supra. . . ." 32
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the

expiration of his last contract with Brent School on July 16, 1976 without the necessity
of any notice. The advance written advice given the Department of Labor with copy to
said petitioner was a mere reminder of the impending expiration of his contract, not a
letter of termination, nor an application for clearance to terminate which needed the
approval of the Department of Labor to make the termination of his services effective.
In any case, such clearance should properly have been given, not denied.
WHEREFORE, the public respondent's Decision complained of is REVERSED and SET

ASIDE. Respondent Alegre's contract of employment with Brent School having lawfully
terminated with and by reason of the expiration of the agreed term of period thereof, he
is declared not entitled to reinstatement and the other relief awarded and confirmed on
appeal in the proceedings below. No pronouncement as to costs.
SO ORDERED.
Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes,
Grin o-Aquino, Medialdea and Regalado, JJ., concur.
Fernan, C.J., No part, related to counsel for petitioners.

THIRD DIVISION
[G.R. No. 61594. September 28, 1990.]
PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner, vs. HON. BLAS F.

OPLE, in his capacity as Minister of Labor; HON. VICENTE LEOGARDO, JR., in his
capacity as Deputy Minister; ETHELYNNE B. FARRALES and MARIA MOONYEEN
MAMASIG, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.
Ledesma, Saludo & Associates for private respondents.
DECISION
FELICIANO, J p:
On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a

foreign corporation licensed to do business in the Philippines, executed in Manila two
(2) separate contracts of employment, one with private respondent Ethelynne B.
Farrales and the other with private respondent Ma. M.C. Mamasig. 1 The contracts,
which became effective on 9 January 1979, provided in pertinent portion as follows:
"5. DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of three (3) years, but can be extended by the mutual
consent of the parties.
xxx xxx xxx
6. TERMINATION
xxx xxx xxx
Notwithstanding anything to contrary as herein provided, PIA reserves the right to

terminate this agreement at any time by giving the EMPLOYEE notice in writing in
advance one month before the intended termination or in lieu thereof, by paying the
EMPLOYEE wages equivalent to one month's salary.
xxx xxx xxx
10. APPLICABLE LAW:
This agreement shall be construed and governed under and by the laws of Pakistan, and
only the Courts of Karachi, Pakistan shall have the jurisdiction to consider any matter
arising out of or under this agreement."
Respondents then commenced training in Pakistan. After their training period, they
began discharging their job functions as flight attendants, with base station in Manila
and flying assignments to different parts of the Middle East and Europe.
On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of
the contracts of employment, PIA through Mr. Oscar Benares, counsel for and official of
the local branch of PIA, sent separate letters both dated 1 August 1980 to private
respondents Farrales and Mamasig advising both that their services as flight
stewardesses would be terminated "effective 1 September 1980, conformably to clause
6 (b) of the employment agreement [they had] executed with [PIA]." 2
On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a

complaint, docketed as NCR-STF-9-5151-80, for illegal dismissal and non-payment of
company benefits and bonuses, against PIA with the then Ministry of Labor and
Employment ("MOLE"). After several unfruitful attempts at conciliation, the MOLE
hearing officer Atty. Jose M. Pascual ordered the parties to submit their position papers
and evidence supporting their respective positions. The PIA submitted its position
paper, 3 out no evidence, and there claimed that both private respondents were
habitual absentees; that both were in the habit of bringing in from abroad sizeable
quantities of "personal effects"; and that PIA personnel at the Manila International
Airport had been discreetly warned by customs officials to advise private respondents
to discontinue that practice. PIA further claimed that the services of both private
respondents were terminated pursuant to the provisions of the employment contract.
In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered the
reinstatement of private respondents with full backwages or, in the alternative, the
payment to them of the amounts equivalent to their salaries for the remainder of the
fixed three-year period of their employment contracts; the payment to private
respondent Mamasig of an amount equivalent to the value of a round trip ticket Manila-
USA-Manila; and payment of a bonus to each of the private respondents equivalent to
their one-month salary. 4 The Order stated that private respondents had attained the
status of regular employees after they had rendered more than a year of continued
service; that the stipulation limiting the period of the employment contract to three (3)
years was null and void as violative of the provisions of the Labor Code and its
implementing rules and regulations on regular and casual employment; and that the
dismissal, having been carried out without the requisite clearance from the MOLE, was
illegal and entitled private respondents to reinstatement with full backwages.
On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy
Minister, MOLE, adopted the findings of fact and conclusions of the Regional Director
and affirmed the latter's award save for the portion thereof giving PIA the option, in lieu
of reinstatement, "to pay each of the complainants [private respondents] their salaries
corresponding to the unexpired portion of the contract[s] [of employment] . . ." 5
In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional
Director and the Order of the Deputy Minister as having been rendered without
jurisdiction; for having been rendered without support in the evidence of record since,
allegedly, no hearing was conducted by the hearing officer, Atty. Jose M. Pascual; and for
having been issued in disregard and in violation of petitioner's rights under the
employment contracts with private respondents.
1. Petitioner's first contention is that the Regional Director, MOLE, had no

jurisdiction over the subject matter of the complaint initiated by private respondents
for illegal dismissal, jurisdiction over the same being lodged in the Arbitration Branch
of the National Labor Relations Commission ("NLRC"). It appears to us beyond dispute,
however, that both at the time the complaint was initiated in September 1980 and at the
time the Orders assailed were rendered on January 1981 (by Regional Director
Francisco L. Estrella) and August 1982 (by Deputy Minister Vicente Leogardo, Jr.), the
Regional Director had jurisdiction over termination cases.
Article 278 of the Labor Code, as it then existed, forbade the termination of the services
of employees with at least one (1) year of service without prior clearance from the
Department of Labor and Employment:
"Art. 278. Miscellaneous Provisions . . .
(b) With or without a collective agreement, no employer may shut down his
establishment or dismiss or terminate the employment of employees with at least one
year of service during the last two (2) years, whether such service is continuous or
broken, without prior written authority issued in accordance with such rules and
regulations as the Secretary may promulgate . . ." (Emphasis supplied)
Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code, made
clear that in case of a termination without the necessary clearance, the Regional
Director was authorized to order the reinstatement of the employee concerned and the
payment of backwages; necessarily, therefore, the Regional Director must have been
given jurisdiction over such termination cases:
"Section 2. Shutdown or dismissal without clearance. Any shutdown or dismissal

without prior clearance shall be conclusively presumed to be termination of
employment without a just cause. The Regional Director shall, in such case order the
immediate reinstatement of the employee and the payment of his wages from the time
of the shutdown or dismissal until the time of reinstatement." (Emphasis supplied)
Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April 1976, was
similarly very explicit about the jurisdiction of the Regional Director over termination
of employment cases:
"Under PD 850, termination cases with or without CBA are now placed under the
original jurisdiction of the Regional Director. Preventive suspension cases, now made
cognizable for the first time, are also placed under the Regional Director. Before PD 850,
termination cases where there was a CBA were under the jurisdiction of the grievance
machinery and voluntary arbitration, while termination cases where there was no CBA
were under the jurisdiction of the Conciliation Section.
In more details, the major innovations introduced by PD 850 and its implementing rules
and regulations with respect to termination and preventive suspension cases are:
1. The Regional Director is now required to rule on every application for clearance,
whether there is opposition or not, within ten days from receipt thereof.
xxx xxx xxx"
(Emphasis supplied)
2. The second contention of petitioner PIA is that, even if the Regional Director had
jurisdiction, still his order was null and void because it had been issued in violation of
petitioner's right to procedural due process. 6 This claim, however, cannot be given
serious consideration. Petitioner was ordered by the Regional Director to submit not
only its position paper but also such evidence in its favor as it might have. Petitioner
opted to rely solely upon its position paper; we must assume it had no evidence to
sustain its assertions. Thus, even if no formal or oral hearing was conducted, petitioner
had ample opportunity to explain its side. Moreover, petitioner PIA was able to appeal
his case to the Ministry of Labor and Employment. 7
There is another reason why petitioner's claim of denial of due process must be
rejected. At the time the complaint was filed by private respondents on 21 September
1980 and at the time the Regional Director issued his questioned order on 22 January
1981, applicable regulation, as noted above, specified that a "dismissal without prior
clearance shall be conclusively presumed to be termination of employment without a
just cause", and the Regional Director was required in such case to "order the
immediate reinstatement of the employee and the payment of his wages from the time
of the shutdown or dismissal until . . . reinstatement." In other words, under the then
applicable rule, the Regional Director did not even have to require submission of
position papers by the parties in view of the conclusive ( juris et de jure) character of
the presumption created by such applicable law and regulation. In Cebu Institute of
Technology v. Minister of Labor and Employment, 8 the Court pointed out that "under
Rule 14, Section 2, of the Implementing Rules and Regulations, the termination of [an
employee] which was without previous clearance from the Ministry of Labor is
conclusively presumed to be without [just] cause . . . [a presumption which] cannot be
overturned by any contrary proof however strong."
3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract of
employment with private respondents Farrales and Mamasig, arguing that its
relationship with them was governed by the provisions of its contract rather than by
the general provisions of the Labor Code. 9
Paragraph 5 of that contract set a term of three (3) years for that relationship,
extendible by agreement between the parties; while paragraph 6 provided that,
notwithstanding any other provision in the contract, PIA had the right to terminate the
employment agreement at any time by giving one-month's notice to the employee or, in
lieu of such notice, one-month's salary.
A contract freely entered into should, of course, be respected, as PIA argues, since a
contract is the law between the parties. 10 The principle of party autonomy in contracts
is not, however, an absolute principle. The rule in Article 1306, of our Civil Code is that
the contracting parties may establish such stipulations as they may deem convenient, "
provided they are not contrary to law, morals, good customs, public order or public
policy." Thus, counter-balancing the principle of autonomy of contracting parties is the
equally general rule that provisions of applicable law, especially provisions relating to
matters affected with public policy, are deemed written into the contract. 11 Put a little
differently, the governing principle is that parties may not contract away applicable
provisions of law especially peremptory provisions dealing with matters heavily
impressed with public interest. The law relating to labor and employment is clearly
such an area and parties are not at liberty to insulate themselves and their relationships
from the impact of labor laws and regulations by simply contracting with each other. It
is thus necessary to appraise the contractual provisions invoked by petitioner PIA in
terms of their consistency with applicable Philippine law and regulations.
As noted earlier, both the Labor Arbiter and the Deputy Minister, MOLE, in effect held
that paragraph 5 of that employment contract was inconsistent with Articles 280 and
281 of the Labor Code as they existed at the time the contract of employment was
entered into, and hence refused to give effect to said paragraph 5. These Articles read as
follows:
"Art. 280. 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 to his backwages computed from the
time his compensation was withheld from him up to the time his reinstatement.
Article 281. Regular and Casual Employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreements of the parties, an
trade of the employer, except where the employment has been fixed for a specific
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.

whether such service is continuous or broken, shall be considered as regular employee
while such actually exists." (Emphasis supplied)
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., 12 the Court had occasion to
examine in detail the question of whether employment for a fixed term has been
outlawed under the above quoted provisions of the Labor Code. After an extensive
examination of the history and development of Articles 280 and 281, the Court reached
the conclusion that a contract providing for employment with a fixed period was not
necessarily unlawful:
"There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck down or disregarded as
contrary to public policy, morals, etc. But where no such intent to circumvent the law is
shown, or stated otherwise, where the reason for the law does not exist, e.g. where it is
indeed the employee himself who insists upon a period or where the nature of the
engagement is such that, without being seasonal or for a specific project, a definite date
of termination is a sine qua non, would an agreement fixing a period be essentially evil
or illicit, therefore anathema? Would such an agreement come within the scope of
Article 280 which admittedly was enacted `to prevent the circumvention of the right of
the employee to be secured in . . (his) employment?'
As it is evident from even only the three examples already given that Article 280 of the
Labor Code, under a narrow and literal interpretation, not only fails to exhaust the
gamut of employment contracts to which the lack of a fixed period would be an
anomaly, but would also appear to restrict, without reasonable distinctions, the right of
an employee to freely stipulate with his employer the duration of his engagement, it
logically follows that such a literal interpretation should be eschewed or avoided. The
law must be given reasonable interpretation, to preclude absurdity in its application.
Outlawing the whole concept of term employment and subverting to boot the principle
of freedom of contract to remedy the evil of employers' using it as a means to prevent
their employees from obtaining security of tenure is like cutting off the nose to spite the
face or, more relevantly, curing a headache by lopping off the head.
xxx xxx xxx
has singled out: agreements entered into precisely to circumvent security of tenure. It
should have no application to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the employer
and employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter. Unless thus limited
in its purview, the law would be made to apply to purposes other than those explicitly
stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and
apt to lead to absurd and unintended consequences."
(Emphasis supplied)
It is apparent from Brent School that the critical consideration is the presence or
absence of a substantial indication that the period specified in an employment
agreement was designed to circumvent the security of tenure of regular employees
which is provided for in Articles 280 and 281 of the Labor Code. This indication must
ordinarily rest upon some aspect of the agreement other than the mere specification of
a fixed term of the employment agreement, or upon evidence aliunde of the intent to
evade.
Examining the provisions of paragraphs 5 and 6 of the employment agreement between

petitioner PIA and private respondents, we consider that those provisions must be read
together and when so read, the fixed period of three (3) years specified in paragraph 5
will be seen to have been effectively neutralized by the provisions of paragraph 6 of that
agreement. Paragraph 6 in effect took back from the employee the fixed three (3)-year
period ostensibly granted by paragraph 5 by rendering such period in effect a
facultative one at the option of the employer PIA. For petitioner PIA claims to be
authorized to shorten that term, at any time and for any cause satisfactory to itself, to a
one-month period, or even less by simply paying the employee a month's salary.
Because the net effect of paragraphs 5 and 6 of the agreement here involved is to render
the employment of private respondents Farrales and Mamasig basically employment at
the pleasure of petitioner PIA, the Court considers that paragraphs 5 and 6 were
intended to prevent any security of tenure from accruing in favor of private
respondents even during the limited period of three (3) years, 13 and thus to escape
completely the thrust of Articles 280 and 281 of the Labor Code.
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which
specifies, firstly, the law of Pakistan as the applicable law of the agreement and,
secondly, lays the venue for settlement of any dispute arising out of or in connection
with the agreement "only [in] courts of Karachi, Pakistan". The first clause of paragraph
10 cannot be invoked to prevent the application of Philippine labor laws and
regulations to the subject matter of this case, i.e., the employer-employee relationship
between petitioner PIA and private respondents. We have already pointed out that
relationship is much affected with public interest and that the otherwise applicable
Philippine laws and regulations cannot be rendered illusory by the parties agreeing
upon some other law to govern their relationship. Neither may petitioner invoke the
second clause of paragraph 10, specifying the Karachi courts as the sole venue for the
settlement of disputes between the contracting parties. Even a cursory scrutiny of the
relevant circumstances of this case will show the multiple and substantive contacts
between Philippine law and Philippine courts, on the one hand, and the relationship
between the parties, upon the other: the contract was not only executed in the
Philippines, it was also performed here, at least partially; private respondents are
Philippine citizens and residents, while petitioner, although a foreign corporation, is
licensed to do business (and actually doing business) and hence resident in the
Philippines; lastly, private respondents were based in the Philippines in between their
assigned flights to the Middle East and Europe. All the above contacts point to the
Philippine courts and administrative agencies as a proper forum for the resolution of
contractual disputes between the parties. Under these circumstances, paragraph 10 of
the employment agreement cannot be given effect so as to oust Philippine agencies and
courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event,
the petitioner PIA did not undertake to plead and prove the contents of Pakistan law on
the matter; it must therefore be presumed that the applicable provisions of the law of
Pakistan are the same as the applicable provisions of Philippine law. 14
We conclude that private respondents Farrales and Mamasig were illegally dismissed
and that public respondent Deputy Minister, MOLE, had not committed any grave abuse
of discretion nor any act without or in excess of jurisdiction in ordering their
reinstatement with backwages. Private respondents are entitled to three (3) years
backwages without qualification or deduction. Should their reinstatement to their
former or other substantially equivalent positions not be feasible in view of the length
of time which has gone by since their services were unlawfully terminated, petitioner
should be required to pay separation pay to private respondents amounting to one (1)
month's salary for every year of service rendered by them, including the three (3) years
service putatively rendered.
ACCORDINGLY, the Petition for Certiorari is hereby DISMISSED for lack of merit, and the
Order dated 12 August 1982 of public respondent is hereby AFFIRMED, except that (1)
private respondents are entitled to three (3) years backwages, without deduction or
qualification; and (2) should reinstatement of private respondents to their former
positions or to substantially equivalent positions not be feasible, then petitioner shall,
in lieu thereof, pay to private respondents separation pay amounting to one (1)-month's
salary for every year of service actually rendered by them and for the three (3) years
putative service by private respondents. The Temporary Restraining Order issued on 13
September 1982 is hereby LIFTED. Costs against petitioner.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.

FIRST DIVISION
[G.R. No. 78693. January 28, 1991.]
ZOSIMO CIELO, petitioner, vs. THE HONORABLE NATIONAL LABOR RELATIONS

COMMISSION, HENRY LEI and/or HENRY LEI TRUCKING, respondents.
Francisco D. Alas for petitioner.
Mateo G. Delegencia for private respondent.
DECISION
CRUZ, J p:
The petitioner is a truck driver who claims he was illegally dismissed by the private
respondent, the Henry Lei Trucking Company. The Labor Arbiter found for him and
ordered his reinstatement with back wages. 1 On appeal, the decision was reversed by
the National Labor Relations Commission, which held that the petitioner's employment
had expired under a valid contract. 2 The petitioner then came to us on certiorari under
Rule 65 of the Rules of Court.
Required to submit a Comment (not to file a motion to dismiss), the private respondent
nevertheless moved to dismiss on the ground that the petition was filed sixty-eight days
after service of the challenged decision on the petitioner, hence late. The motion was
untenable, of course. Petitions for certiorari under Rule 65 may be instituted within a
reasonable period, which the Court has consistently reckoned at three months. *
In his own Comment, the Solicitor General defended the public respondent and agreed
that the contract between the petitioner and the private respondent was a binding
agreement not contrary to law, morals or public policy. The petitioner's services could
be legally terminated upon the expiration of the period agreed upon, which was only six
months. The petitioner could therefore not complain that he had been illegally
dismissed.
As an examination of the claimed agreement was necessary to the resolution of this

case, the Court required its production by the petitioner. But he could not comply
because he said he had not been given a copy by the private respondent. A similar
requirement proved fruitless when addressed to the private respondent, which
explained it could not locate the folder of the case despite diligent search. It was only on
October 15, 1990, that the records of the case, including the subject agreement, were
finally received by the Court from the NLRC, which had obtained them from its Cagayan
de Oro regional office. 3
The said agreement reads in full as follows:

AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Agreement made and executed by and between:
HENRY LEI, of legal age, Filipino citizen, married, and a resident of Digos, Davao del Sur,
now and hereinafter called the FIRST PARTY,
and
ZOSIMO CIELO, of legal age, married, Filipino citizen, and a resident of Agusan, Canyon,
Camp Philipps, now and hereinafter called the SECOND PARTY,
WITNESSETH
That the FIRST PARTY is an owner of some cargo trucks.
WHEREAS, the SECOND PARTY desires to operate one of the said cargo trucks which he
himself shall drive for income;
NOW, THEREFORE, for the foregoing premises, the FIRST PARTY does hereby assign
one cargo truck of his fleet to the SECOND PARTY under the following conditions and
stipulations:
1. That the term of this Agreement is six (6) months from and after the execution
hereof, unless otherwise earlier terminated at the option of either party;
2. That the net income of the said vehicle after fuel and oil shall be divided by and
between them on ninety/ten percent (90/10%) basis in favor of the FIRST PARTY; prLL
3. That there is no employer/employee relationship between the parties, the nature

of this Agreement being contractual;
4. In the event the SECOND PARTY needs a helper the personnel so employed by
him shall be to his personal account, who shall be considered his own employee;
5. That the loss of or damage to the said vehicle shall be to account of the SECOND
PARTY; he shall return the unit upon the expiration or termination of this contract in
the condition the same was received by him, fair wear and tear excepted.
IN WITNESS WHEREOF, the parties hereunto affixed their signature on this 30th day of
June, 1984, at Digos, Davao del Sur, Philippines.
(Sgd.) HENRY LEI (Sgd.) ZOSIMO CIELO
First Party Second Party
SIGNED IN THE PRESENCE OF:

(Sgd.) VICTOR CHAN (Sgd.) AMALFE M. NG
The agreement was supposed to have commenced on June 30, 1984, and to end on
December 31, 1984. On December 22, 1984, however, the petitioner was formally
notified by the private respondent of the termination of his services on the ground of
expiration of their contract. Soon thereafter, on January 22, 1986, the petitioner filed his
complaint with the Ministry of Labor and Employment.
In his position paper, the petitioner claimed he started working for the private
respondent on June 16, 1984, and having done so for more than six months had
acquired the status of a regular employee. As such, he could no longer be dismissed
except for lawful cause. He also contended that he had been removed because of his
refusal to sign, as required by the private respondent, an affidavit reading as follows:
AFFIDAVIT
That I, ZOSIMO CIELO, Filipino, of legal age, married single and a resident of Agusan
Canyon, Camp Philipps, after having been duly sworn to in accordance with law, hereby
depose and say:
That I am one of the drivers of the trucks of Mr. HENRY LEI whose hauling trucks are
under contract with the Philippine Packing Corporation;
That I have received my salary and allowances from Mr. HENRY LEI the sum of
P1,421.10 for the month of October 1984. That I have no more claim against the said Mr.
Henry Lei.
IN WITNESS WHEREOF, I have hereunto affixed my signature this 15th day of

November 1984.
____________
Driver
The private respondent rests its case on the agreement and maintains that the labor
laws are not applicable because the relations of the parties are governed by their
voluntary stipulations. The contract having expired, it was the prerogative of the
trucking company to renew it or not as it saw fit.
The writ will issue. Cdpr
While insisting that it is the agreement that regulates its relations with the petitioner,
the private respondent is ensnared by its own words. The agreement specifically
declared that there was no employer-employee relationship between the parties. Yet
the affidavit the private respondent prepared required the petitioner to acknowledge
that "I have received my salary and allowances from Mr. Henry Lei," suggesting an
employment relationship. According to its position paper, the petitioner's refusal to sign
the affidavit constituted disrespect or insubordination, which had "some bearing on the
renewal of his contract of employment with the respondent." Of this affidavit, the
private respondent had this to say:
. . . Since October 1984, respondent adopted a new policy to require all their employees
to sign an affidavit to the effect that they received their salaries. Copy of which is hereto
attached as Annex "C," covering the months of October and November 1984. All other
employees of the respondent signed the said affidavit, only herein complainant refused
to do so for reasons known only to him . . .
It appears from the records that all the drivers of the private respondent have been
hired on a fixed contract basis, as evidenced by the mimeographed form of the
agreement and of the affidavit. The private respondent merely filled in the blanks with
the corresponding data, such as the driver's name and address, the amount received by
him, and the date of the document. Each driver was paid through individual vouchers 4
rather than a common payroll, as is usual in companies with numerous employees.
The private respondent's intention is obvious. It is remarkable that neither the NLRC
nor the Solicitor General recognized it. There is no question that the purpose behind
these individual contracts was to evade the application of the labor laws by making it
appear that the drivers of the trucking company were not its regular employees.
Under these arrangements, the private respondent hoped to be able to terminate the
services of the drivers without the inhibitions of the Labor Code. All it had to do was
refuse to renew the agreements, which, significantly, were uniformly limited to a six-
month period. No cause had to be established because such renewal was subject to the
discretion of the parties. In fact, the private respondent did not even have to wait for the
expiration of the contract as it was there provided that it could be "earlier terminated at
the option of either party."
By this clever scheme, the private respondent could also prevent the drivers from
becoming regular employees and thus be entitled to security of tenure and other
benefits, such as a minimum wage, cost-of-living allowances, vacation and sick leaves,
holiday pay, and other statutory requirements. The private respondent argues that
there was nothing wrong with the affidavit because all the affiant acknowledged therein
was full payment of the amount due him under the agreement. Viewed in this light, such
acknowledgment was indeed not necessary at all because this was already embodied in
the vouchers signed by the payee-driver. But the affidavit, for all its seeming
innocuousness, imported more than that. What was insidious about the document was
the waiver the affiant was unwarily making of the statutory rights due him as an
employee of the trucking company.
And employee he was despite the innocent protestations of the private respondent. We
accept the factual finding of the Labor Arbiter that the petitioner was a regular
employee of the private respondent. The private respondent is engaged in the trucking
business as a hauler of cattle, crops and other cargo for the Philippine Packing
Corporation. This business requires the services of drivers, and continuously because
the work is not seasonal, nor is it limited to a single undertaking or operation. Even if
ostensibly hired for a fixed period, the petitioner should be considered a regular
employee of the private respondent, conformably to Article 280 of the Labor Code
providing 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
cdrep

paragraph; Provided, that, any employee who has rendered at least one year of service,
while such actually exists. (Emphasis supplied)
In Brent School, Inc. vs. Zamora, 5 the Court affirmed the general principle that "where
from the circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck down or
disregarded as contrary to public policy, morals, etc." Such circumstances have been
sufficiently established in the case at bar and justify application of the following
conclusions:
has singled out: agreements entered into precisely to circumvent security of tenure.
The agreement in question had such a purpose and so was null and void ab initio.
The private respondent's argument that the petitioner could at least be considered on
probation basis only and therefore separable at will is self-defeating. The Labor Code
clearly provides as follows:
Art. 281. Probationary employment. Probationary employment shall not exceed

six (6) months from the date the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The services of an employee who
has been engaged on a probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his engagement. An employee
who is allowed to work after a probationary period shall be considered a regular
employee.
There is no question that the petitioner was not engaged as an apprentice, being
already an experienced truck driver when he began working for the private respondent.
Neither has it been shown that he was informed at the time of his employment of the
reasonable standards under which he could qualify as a regular employee. It is plain
that the petitioner was hired at the outset as a regular employee. At any rate, even
assuming that the original employment was probationary, the Labor Arbiter found that
the petitioner had completed more than six month's service with the trucking company
and so had acquired the status of a regular employee at the time of his dismissal.
Even if it be assumed that the six-month period had not yet been completed, it is settled
that the probationary employee cannot be removed except also for cause as provided by
law. It is not alleged that the petitioner was separated for poor performance; in fact, it is
suggested by the private respondent that he was dismissed for disrespect and
insubordination, more specifically his refusal to sign the affidavit as required by
company policy. Hence, even as a probationer, or more so as a regular employee, the
petitioner could not be validly removed under Article 282 of the Labor Code, providing
as follows:
Art. 282. Termination of employer. An employer may terminate an employment

for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representative;
and
(e) Other causes analogous to the foregoing. LexLib
In refusing to sign the affidavit as required by the private respondent, the petitioner
was merely protecting his interests against an unguarded waiver of the benefits due
him under the Labor Code. Such willful disobedience should commend rather than
prejudice him for standing up to his rights, at great risk to his material security, against
the very source of his livelihood.
The Court looks with stern disapproval at the contract entered into by the private
respondent with the petitioner (and who knows with how many other drivers). The
agreement was a clear attempt to exploit the unwitting employee and deprive him of
the protection of the Labor Code by making it appear that the stipulations of the parties
were governed by the Civil Code as in ordinary private transactions. They were not, to
be sure. The agreement was in reality a contract of employment into which were read
the provisions of the Labor Code and the social justice policy mandated by the
Constitution. It was a deceitful agreement cloaked in the habiliments of legality to
conceal the selfish desire of the employer to reap undeserved profits at the expense of
its employees. The fact that the drivers are on the whole practically unlettered only
makes the imposition more censurable and the avarice more execrable.
WHEREFORE, the petition is GRANTED. The decision of the National Labor Relations
Commission is SET ASIDE and that of the Labor Arbiter REINSTATED, with costs against
the private respondents. cdrep
SO ORDERED.
Narvasa, Gancayco, Grin o-Aquino and Medialdea, JJ., concur.

SECOND DIVISION
[G.R. No. 105033. February 28, 1994.]
PHILIPPINE VILLAGE HOTEL, petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION (SECOND DIVISION) AND TUPAS LOCAL CHAPTER NO. 1362, JUANITO
ACUIN, MAMERTA MANGUBAT, RAUL SONON, ELGAR PEMIS, ORLANDO PARAGUISON,
FERDINAND VELASCO, MIKE ASTULERO, MAGNO DECALSO, NENITA OROSEA, JOSE
TIMING, ANTONIO MANALILI, RODELIO QUERIA and REYNALDO SANTOS,
respondents.
DECISION
NOCON, J p:
This is a petition for certiorari under Rule 65 of the Rules of Court with a prayer for the
issuance of a temporary restraining order to annul and set aside the decision 1
promulgated November 7, 1991 by the National Labor Relations Commission (NLRC) of
Manila reversing the decision dated December 19, 1989 of the Labor Arbiter Cornelio L.
Linsangan.
It appears on record that private respondents Juanito Acuin, Mamerta Mangubat, Raul
Sonon, Elgar Pemis, Orlando Paraguison, Ferdinand Velasco, Mike Astulero, Magno
Decalso, Nenita Orosea, Jose Timing, Antonio Manalili, Rodelio Queria and Reynaldo
Santos were employees of petitioner Philippine Village Hotel. However, on May 19,
1986, petitioner had to close and totally discontinue its operations due to serious
financial and business reverses resulting in the termination of the services of its
employees. Cdpr
Thereafter, the Philippine Village Hotel Employees and Workers Union filed against
petitioner a complaint for separation pay, unfair labor practice and illegal lock-out.
On May 27, 1987, the Labor Arbiter issued and Order finding the losses suffered by
petitioner to be actual, genuine and of such magnitude as to validly terminate the
services of private respondents but directed petitioner "to give priority to the
complainants (herein private respondents) in [the] hiring of personnel should they
resume their business operations in the future." 2
On appeal, the NLRC affirmed the validity of the closure of petitioner but ordered
petitioner to pay private respondents separation pay at the rate of month pay every
year of service. However, there is nothing in the records to show that private
respondents received their separation pay as the decision of the NLRC remained
unenforced as of this date. LLjur
On February 1, 1989, petitioner decided to have a one (1) month dry-run operation to
ascertain the feasibility of resuming its business operations. In order to carry out its
dry-run operation, petitioner hired casual workers, including private respondents, for a
one (1) month period, or from February 1, 1989 to March 1, 1989, as evidenced by the
latter's Contract of Employment. 3
After evaluating the individual performance of all the employees and upon the lapse of
the contractual one-month period or on March 2, 1989, petitioner terminated the
services of private respondents.
On April 6, 1989, private respondents and Tupas Local Chapter No. 1362 filed a
complaint against petitioner for illegal dismissal and unfair labor practice with the
NLRC-NCR Arbitration Branch in NLRC Case No. 00-04-01665-89.
On December 19, 1989, the Labor Arbiter rendered a decision, the dispositive portion of
which reads, as follows:
"WHEREFORE, finding the above-entitled complaint to be without factual and legal

basis, judgment is hereby rendered dismissing the same." 4
Thereafter, private respondents appealed to the public respondent NLRC. LibLex
On November 7, 1991, public NLRC reversed the decision of the Labor Arbiter, the
dispositive portion of which reads, as follows:
"WHEREFORE, under the premises, let the decision appealed from be, as it is hereby
reversed, and a new judgment rendered, hereby ordering the respondent Philippine
Village Hotel to reinstate the above-named complainants to their former or
substantially equivalent positions without loss of seniority rights plus full backwages
from the time they were actually dismissed on 02 March 1989 up to the time of their
actual reinstatement, but which period of time should not exceed three (3) years.
"The complaint for unfair labor practice is hereby dismissed for lack of adequate factual
basis." 5
On March 5, 1992, petitioner's Motion for Reconsideration was denied for lack of merit.
Hence, this petition alleging grave abuse of discretion on the part of the public
respondent NLRC in finding that private respondents are regular employees of
petitioner considering that the latter's services were already previously terminated in
1986 and that their employment contracts specifically provided only for a temporary
one-month period of employment.
The petition is impressed with merit.

An examination of the contents of the private respondents' contracts of employment
shows that indeed private respondents voluntarily and knowingly agreed to be
employed only for a period of one (1) month or from February 1, 1989 to March 1,
1989.
The fact that private respondents were required to render services usually necessary or
desirable in the operation of petitioner's business for the duration of the one (1) month
dry-run operation period does not in any way impair the validity of the contractual
nature of private respondents' contracts of employment which specifically stipulated
that the employment of the private respondents was only for one (1) month. cdll
In upholding the validity of a contract of employment with a fixed or specific period, we

have held that the decisive determinant in term employment should not be the
activities that the employee is called upon to perform, but the day certain agreed upon
by the parties for the commencement and termination of their employment
relationship, a day certain being understood to be that which must necessarily come,
although it may not be known when. The term period was further defined to be the
length of existence; duration. A point of time marking a termination as of a cause or an
activity; an end, a limit, a bound; conclusion; termination. A series of years, months or
days in which something is completed. A time of definite length or the period from one
fixed date to another fixed date. 6 This ruling is only in consonance with Article 280 of
the Labor Code which provides:
"ART. 280. Regular and Casual Employment. The provisions of written agreement to
"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,
while such actually exists." llcd
Inasmuch as private respondents' contracts of employment categorically provided a

fixed period and their termination had already been agreed upon at the time of their
engagement, private respondents' employment was one with a specific period or day
certain agreed upon by the parties. In Philippine National Oil Company-Energy
Development Corporation vs. NLRC, 7 we held that:
"As can be gleaned from the said case (Brent School, Inc. vs. Zamora, 181 SCRA 702), the
two guidelines by which fixed contracts of employments can be said NOT to circumvent
security of tenure, are either: cdrep
"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 employee dealt with each other on
more or less equal terms with no moral dominance whatever being exercised by the
former on the latter."
In the instant case, private respondents were validly terminated by the petitioner when
the latter had to close its business due to financial losses. Following the directives of the
NLRC to give priority in hiring private respondents should it resume its business,
petitioner hired private respondents during their one (1) month dry-run operation.
However, this does not mean that private respondents were deemed to have continued
their regular employment status, which they had enjoyed before their aforementioned
termination due to petitioner's financial losses. As stated by the Labor Arbiter in his
decision:
"It should be borne in mind that when complainants were first terminated as a result of
the company's cessation from operation in May, 1986 the employer-employee
relationship between the parties herein was totally and completely severed. Such being
the case, respondent acted well within its discretion when in rehiring the complainants
(herein private respondents) it made them casual and for a specific period. The
complainants are no better than the new employees of respondent (petitioner) for the
matter of what status or designation to be given them exclusively rests in the discretion
of management." 8
Besides, the previous decision of the public respondent NLRC in Case No. 8-3277-86
finding the termination of private respondents' employment to be valid has long
become final and executory. Public respondent NLRC cannot anymore argue that the
temporary cessation of the petitioner's operation due to financial reverses merely
suspended private respondents' employment. The employee-employer relationship had
come to an end when the employer had closed its business and ceased operations. The
hiring of new employees when it re-opened after three (3) years is valid and to be
expected. The prior employment which was terminated cannot be joined or tacked to
the new employment for purposes of security of tenure. LLpr
While it is true that security of tenure is a constitutionally guaranteed right of the

employees, it does not, however, mean perpetual employment for the employee because
our law, while affording protection to the employee, does not authorize oppression or
destruction of an employer. It is well settled that the employer has the right or is at
liberty to choose who will be hired and who will be denied employment. The right of a
laborer to sell his labor to such persons as he may choose is, in its essence, the same as
the right of an employer to purchase labor from any person whom it chooses. The
employer and the employee have an equality of right guaranteed by the Constitution. If
the employer can compel the employee to work against the latter's will, this is
servitude. If the employee can compel the employer to give him work against the
employer's will, this is oppression. 9
Thus, public respondent NLRC had indubitably committed grave abuse of discretion
when it modified the final decision of the NLRC Case No. 8-3277-86 which remain
unenforced as of this date. Private respondents' remedy is to file a motion for execution,
if it is still within the reglementary 5-year period, or to file an action to enforce said
decision. (Article 224(a), Labor Code) cdphil
WHEREFORE, this petition for certiorari is GRANTED and the questioned decision of
the public respondent NLRC is hereby SET ASIDE thereby dismissing the complaint
against petitioner.
SO ORDERED.
Narvasa, C .J ., Padilla, Regalado and Puno, JJ ., concur.

SECOND DIVISION
[G.R. No. 119523. October 10, 1997.]
ISABELO VIOLETA and JOVITO BALTAZAR, petitioners, vs. NATIONAL LABOR

RELATIONS COMMISSION, Fifth Division, and DASMARIN AS INDUSTRIAL AND
STEELWORKS CORPORATION, respondents.
Gregorio A. Pizzaro for petitioners.
Wilson C. Namocot for DISC.
SYNOPSIS
Petitioners Violeta and Baltazar were former employees of private respondent

Dasmarin as Industrial and Steelworks Corporation. Petitioner Violeta worked in
Construction and Development Corporation of the Philippines (CDCP), a sister
corporation of private respondent. Violeta worked at different project sites of CDCP
from December 15, 1980 up to March 15, 1992 when he was terminated due to the
completion of the particular item of work he was assigned to. Petitioner Baltazar
started in the employ of CDCP on June 23, 1980 up to December 20, 1991 when he was
terminated also as a result of completion of item of work. Contending that they are
already regular employees, petitioners filed two separate complaints for illegal
dismissal against private respondent. The labor arbiter dismissed the claims of the
petitioner for lack of merit but ordered private respondent to grant them separation
pay. Petitioners and private respondent duly appealed the Labor Arbiter's ruling to the
NLRC. The NLRC's Fifth Division reversed the decision of the labor arbiter and declared
petitioner's dismissal as illegal, and ordered their reinstatement and payment of
backwages. However, the same division of the NLRC reversed itself upon motion of
private respondent and set aside its earlier resolution. This time, it held that since the
termination of petitioners' employment was due to the completion of the project,
petitioners are therefore not entitled to separation pay. Hence, the present petition for
certiorari.
The Supreme Court ruled that petitioners are regular employees of private respondent.
The Court held that 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. The appointments of petitioners are
barren of any definite period or duration for the expiration of the assigned items of
work of petitioners at the time of their engagement. The respective employments of
petitioners are therefore not subject to a term but rather to a condition, that is,
"progress accomplishment."
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; REGULAR

AND CASUAL EMPLOYMENT; PETITIONER'S SERVICES ARE BOTH NECESSARY AND
VITAL TO THE OPERATION OF THE BUSINESS OF PRIVATE RESPONDENT. Article
280 was emplaced in our statute books to prevent the circumvention of the employee's
right to be secure in his tenure by indiscriminately and completely ruling out all written
and oral agreements inconsistent with the concept of regular employment defined
therein. Where an employee has been engaged to perform activities which are usually
necessary or desirable in the usual business of the employer, such employee is deemed
a regular employee and is entitled to security of tenure notwithstanding the contrary
provisions of his contract of employment. As Handyman and Erector II, respectively,
petitioner's services are both necessary and vital to the operation of the business of
private respondent. This is not at all traversed, but is even confirmed by the fact that
they were continually and successively assigned to the different projects of private
respondent and its sister company, CDCP. SaHTCE
2. ID.; ID.; ID.; ID.; PETITIONERS ARE REGULAR EMPLOYEES, NOT PROJECT
EMPLOYEES; TEST EMPLOYED BY THE COURT TO PROPERLY CHARACTERIZE
PETITIONERS' EMPLOYMENT. 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. As defined, project
employees are those workers hired (1) for a specific project or undertaking, and (2) the
completion or termination of such project or undertaking has been determined at the
time of engagement of the employee. Based on the above criteria, we find petitioners to
be regular employees of private respondent, and not project employees as postulated
by respondent NLRC. Petitioners' dismissal, therefore, could not be justified by the
completion of their items of work.
3. ID.; ID.; ID.; ID.; THE PREDETERMINATION OF THE DURATION OR PERIOD OF A

PROJECT EMPLOYMENT IS IMPORTANT IN RESOLVING WHETHER ONE IS A PROJECT
EMPLOYEE OR NOT. The predetermination of the duration or period of a project
employment is important in resolving whether one is a project employee or not. On this
score, the term period has been defined to be "a length of existence; duration. A point of
time marking a termination as of a cause or an activity; an end, a limit, a bound;
conclusion; termination. A series of years, months or days in which something is
completed. A time of definite length or the period from one fixed date to another fixed
date."
4. ID.; ID.; ID.; ID.; THE RESPECTIVE EMPLOYMENTS OF THE TWO PETITIONERS
ARE NOT SUBJECT TO A TERM BUT RATHER TO A CONDITION, THAT IS, "PROGRESS
ACCOMPLISHMENT." Following the rule on precedents, we once again hold that the
respective employments of the present petitioners is not subject to a term but rather to
a condition, that is, "progress accomplishment." As we have stated in De Jesus, it cannot
be said that their employment had been pre-determined because, firstly, the duration of
their work is "contingent upon the progress accomplishment" and, secondly, the
contract gives private respondent the liberty to "determine the personnel and the
number as the work progresses." It is ineluctably not definite so as to exempt private
respondent from the strictures and effects of Article 280.
5. ID.; ID.; ID.; ID.; TO BE EXEMPTED FROM THE PRESUMPTION OF REGULARITY

OF EMPLOYMENT, THE AGREEMENT BETWEEN A PROJECT EMPLOYEE AND HIS
EMPLOYER MUST STRICTLY CONFORM WITH THE REQUIREMENTS AND CONDITIONS
PROVIDED IN ARTICLE 280. To be exempted from the presumption of regularity of
employment, therefore, the agreement between a project employee and his employer
must strictly conform with the requirements and conditions provided in Article 280. It
is not enough that an employee is hired for a specific project or phase of work. There
must also be a determination of or a clear agreement on the completion or termination
of the project at the time the employee is engaged if the objective of Article 280 is to be
achieved. Since this second requirement was not met in petitioners' case, they should
be considered as regular employees despite their admissions and declarations that they
are project employees made under circumstances unclear to us.
6. ID.; ID.; ID.; ID.; FAILURE OF AN EMPLOYER TO REPORT TO THE NEAREST

PUBLIC EMPLOYMENT OFFICE THE TERMINATION OF ITS WORKERS' SERVICE EVERY
TIME A PROJECT OR PHASE THEREOF IS COMPLETED INDICATES THAT SAID
WORKERS ARE NOT PROJECT EMPLOYEES. There is another reason why we should
rule in favor of petitioners. Nowhere in the records is there any showing that private
respondent reported the completion of its projects and the dismissal of petitioners in
its finished projects to the nearest Public Employment Office in compliance with Policy
Instruction No. 20 of then Labor Secretary Blas F. Ople. 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 every time a project or a
phase thereof is completed indicates that said workers are not project employees. In the
case at bar, only the last and final termination of petitioners was reported to the
aforementioned labor office. Private respondent should have filed as many reports of
termination as there were construction projects actually finished if petitioners were
indeed project employees, considering that petitioners were hired and again rehired for
various projects or the phases of work therein. Its failure to submit reports of
termination cannot but sufficiently convince us further that petitioners are truly regular
employees.
7. ID.; ID.; ID.; ID.; QUITCLAIMS EXECUTED BY LABORERS ARE FROWNED UPON AS
CONTRARY TO PUBLIC POLICY AND ARE INEFFECTIVE TO BAR CLAIMS FOR FULL
MEASURE OF THE WORKERS' LEGAL RIGHTS. The fact that petitioners signed
quitclaims will not bar them from pursuing their claims against private respondent
because quitclaims executed by laborers are frowned upon as contrary to public policy,
and are ineffective to bar claims for the full measure of the workers' legal rights. The so-
called quitclaims signed by petitioners were actually pro forma provisions printed in
the clearance certificate they had to get from the private respondent. These were not in
the nature of a compromise but a compulsory general release required from them, for
which consideration was either given or even stated. CHEIcS
DECISION
REGALADO, J p:
Petitioners Isabelo Violeta and Jovito Baltazar were former employees of private
respondent Dasmarin as Industrial Steelworks Corporation (DISC). Their records of
service and employment, insofar as the same are material to this case, are not in
dispute.
Petitioner Violeta worked in Construction and Development Corporation of the

Philippines (CDCP), a sister corporation of private respondent, at its project in CDCP
Mines, Basay, Negros Oriental from December 15, 1980 up to February 15, 1981. Private
respondent then hired him as Erector II at the former's project for Philphos in Isabel,
Leyte on November 10, 1982 until the termination of the project on December 3, 1984.
On January 21, 1985, he was reassigned as Erector II for Five Stand TCM Project, with
vacation and sick leaves, and was designated as a regular project employee at private
respondent's project for National Steel Corporation (NSC) in Iligan City. After receiving
a salary adjustment, he was again hired on June 6, 1989 as Handyman for the civil
works of a construction project for NSC. 1 On February 10, 1992, he was appointed for
project employment, again as Handyman, to NSC ETL #3 Civil Works by private
respondent. Due to the completion of the particular item of work he was assigned to,
private respondent terminated the services of petitioner Violeta on March 15, 1992. 2
Petitioner Baltazar started in the employ of CDCP on June 23, 1980. He was hired by
private respondent as Lead Carpenter for project Agua VII on October 1, 1981. Like
petitioner Violeta, he was transferred from one project to another as a regular project
employee. 3 On November 28, 1991, he was hired as Leadman II in ETL #3 Civil Works
by private respondent in its project for NSC, but he was separated from such
employment on December 20, 1991 as a result of the completion of said item of work. 4
Upon their separation, petitioners executed a quitclaim wherein they declared that they
have no claim against private respondent and supposedly discharged private
respondent from any liability arising from their employment. 5
Contending that they are already regular employees who cannot be dismissed on the
ground of completion of the particular project where they are engaged, petitioners filed
two separate complaints for illegal dismissal against private respondent, with a prayer
for reinstatement and back wages plus damages.
Private respondent admitted that it is engaged in the development and construction of

infrastructure projects and maintained that Violeta was hired on June 6, 1989 to March
15, 1992 as Handyman while Baltazar was employed on June 6, 1989 to December 20,
1991 as Leadman II. 6 It argued that both are project employees based on their
declaration in their Appointments for Project Employment that they are employed only
for the period and specific works stated in their respective appointments, in addition to
their admission that they are project employees who are subject to the provisions of
Policy Instruction No. 20. 7
Labor Arbiter Guardson A. Siao dismissed the claims of petitioners for lack of merit but
ordered private respondent to grant them separation pay. 8 The labor arbiter concluded
that petitioners are project employees based on their admission that they are regular
project employees. Thus, their employment was deemed coterminous with the project
for which their employer engaged them. Their separation was declared valid and their
claims for reinstatement and back wages were denied. The award of separation pay was
based on the findings of the labor arbiter that it is the policy of private respondent to
pay employees who have rendered at least one year of continuous service. cdphil
Petitioners and private respondent duly appealed the ruling of the labor arbiter to
respondent NLRC.
Finding petitioners to be non-project employees in its resolution dated August 17,

1994, 9 the Fifth Division of the NLRC reversed the decision of the labor arbiter and
declared petitioners' dismissal as illegal. Private respondent company was thereafter
ordered to reinstate petitioners to their former positions without loss of seniority
rights and to pay them back wages operative from the date of petitioners' dismissal. In
the event that reinstatement can no longer be made due to any lawful supervening
event, the labor tribunal directed private respondent to further give petitioners the
corresponding separation pay. Private respondent was also required to pay attorney's
fees to petitioners.
According to the NLRC, although the appointment contracts of petitioners specified

fixed terms or periods of employment, the fact that they were hired and transferred
from one project to another made both petitioners non-project employees who cannot
be terminated by reason alone of the completion of the project. They were hired not
only for one particular project but different projects, one after the other.
However, on November 15, 1994, 10 the same division of the NLRC reversed itself upon
motion of private respondent and set aside its earlier resolution. Reportedly, a
reexamination of the same evidence before it led the labor court to conclude that the
employment of petitioners in ETL #3 Civil Works was allegedly for a specific or fixed
period thus making petitioners project employees. This time, it held that since the
termination of petitioners' employment was due to the completion of the project,
petitioners are therefore not entitled to separation pay. It ruled that this would hold
true even if petitioners were categorized as regular project employees because their
employment was not permanent but coterminous with the projects to which they were
assigned. No other substantial reason was given for the adjudicative turnabout.
In this petition for certiorari, petitioners contend that public respondent (NLRC)
committed grave abuse of discretion amounting to lack of jurisdiction when it granted
the motion for reconsideration of private respondents in its November 15, 1994
resolution. Such novatory resolution, petitioners contend, was not only too abbreviated
but actually disregarded applicable laws and jurisprudence governing the
characterization of employees in the construction industry.
We have held that the services of project employees are coterminous with the project
and may be terminated upon the end or completion of that project for which they were
hired. Regular employees, in contrast, are legally entitled to remain in the service of
their employer until their services are terminated by one or another of the recognized
modes of termination of service under the Labor Code. 11
Foremost for our resolution then is the issue of whether petitioners are regular (non-
project) employees or project employees. Upon the resolution of this query rests the
validity of petitioners' dismissal.
The source of the definition of a regular employee vis-a-vis a project employee is found
in Article 280 of the Labor Code which provides:
Art. 280. Regular and casual employment. The provisions of written agreement to
An employee 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,
while such activity exists. (Emphases ours).
Article 280 was emplaced in our statute books to prevent the circumvention of the
employee's right to be secure in his tenure by indiscriminately and completely ruling
out all written and oral agreements inconsistent with the concept of regular
employment defined therein. 12 Where an employee has been engaged to perform
activities which are usually necessary or desirable in the usual business of the
employer, such employee is deemed a regular employee and is entitled to security of
tenure notwithstanding the contrary provisions of his contract of employment. 13
As Handyman and Erector II, respectively, petitioners' services are both necessary and
vital to the operation of the business of private respondent. This is not at all traversed,
but is even confirmed by the fact that they were continually and successively assigned
to the different projects of private respondent and its sister company, CDCP. cdphil
In order to properly characterize petitioners' employment, we now proceed to

ascertain whether or not their employment falls under the exceptions provided in
Article 280 of the Code.
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. 14 As defined, project employees are those
workers hired (1) for a specific project or undertaking, and (2) the completion or
termination of such project or undertaking has been determined at the time of
engagement of the employee. 15
Based on the above criteria, we find petitioners to be regular employees of private

respondent, and not project employees as postulated by respondent NLRC. Petitioners'
dismissal, therefore, could not be justified by the completion of their items of work.
The predetermination of the duration or period of a project employment is important in

resolving whether one is a project employee or not. On this score, the term period has
been defined to be "a length of existence; duration. A point of time marking a
termination as of a cause or an activity; an end, a limit, a bound; conclusion;
termination. A series of years, months or days in which something is completed. A time
of definite length or the period from one fixed date to another fixed date." 16
There is no debate that petitioners were hired for a specific project or undertaking.
Their Appointments for Project Employment clearly state that their employment is for
NSC ETL #3 Civil Works. The fact of the completion of said item of work is also
undisputed. However, the records are barren of any definite period or duration for the
expiration of the assigned items of work of petitioners at the time of their engagement.
An examination of said appointments reveal that the completion or termination of the
project for which petitioners were hired was not determined at the start of their
employment. There is no specific mention of the period or duration when the project
will be completed or terminated. In fact, the lines for "DATE OF COVERAGE" in the
appointments (referring to the particular items of work for which petitioners are
engaged) are left blank.
While the word "co-terminus" was adopted in the appointments of petitioners, it cannot
readily be concluded that their employment with private respondent is for a definite
duration, that is, until the completion of their items of work, because there are other
words used in the aforesaid appointments affecting their entitlement to stay in their
job. To be concrete, the pertinent terms of the Appointments For Project Employment of
petitioners are quoted below, thus:
Your herein Appointments will be co-terminus with the need of _________________ as it will
necessitate personnel in such number and
(State Item of Work)
duration contingent upon the progress accomplishment from time to time. The
company shall determine the personnel and the number as work progresses.
An interpretation of the above provisions is important for the correct labeling of

petitioners' employment with private respondent. Propitiously, this Court has already
been confronted with contracts of employment of the same and exact tenor as above in
De Jesus vs. Philippine National Construction Corp. and National Labor Relations
Commission, et al. 17 The contracts involved in said case also provided as follows:
Your herein Appointment Employment will be co-terminus with the need of Structures
[of North. Luzon Expressway (Stage) II] as it will necessitate personnel in such number
and duration contingent upon the progress accomplishment from time to time. The
company shall determine the personnel and the number as the work progresses.
On such premises, the Court declared:
Without question, the petitioner, a carpenter, performs work "necessary, or desirable"

in the construction business, the corporation's field of activity. The fact however that he
had been involved in project works will not alter his status because the law requires
"specific project or undertaking the completion or termination of which has been
determined at the time of engagement" in order to make a project employee a true
project employee. . . we can not say that the petitioner's engagement has been
predetermined because the duration of the work is "contingent upon the progress
accomplishment" and secondly, the company, under the contract, is free to "determine
the personnel and the number as the work progresses." Clearly, the employment is
subject to no term but rather, a condition, that is, "progress accomplishment." It can not
therefore be said to be definite that will therefore exempt the respondent company
from the effects of Article 280.
Following the rule on precedents, we once again hold that the respective employments
of the present petitioners is not subject to a term but rather to a condition, that is,
"progress accomplishment." As we have stated in De Jesus, it cannot be said that their
employment had been pre-determined because, firstly, the duration of their work is
"contingent upon the progress accomplishment" and, secondly, the contract gives
private respondent the liberty to "determine the personnel and the number as the work
progresses." It is ineluctably not definite so as to exempt private respondent from the
strictures and effects of Article 280.
To add our own observation, the appointments of petitioners herein were not
coterminous with NSC ETL #3 Civil Works but with the "need" for such particular items
of work as were assigned to them, as distinguished from the completion of the project.
With such ambiguous and obscure words and conditions, petitioners' employment was
not co-existent with the duration of their particular work assignments because their
employer could, at any stage of such work, determine whether their services were
needed or not. Their services could then be terminated even before the completion of
the phase of work assigned to them.
We find this explication necessary and in accord with the principle that in controversies
between a laborer and his master, doubts reasonably arising from the evidence, or in
the interpretation of agreements and writings should be resolved in the former's favor.
18
To be exempted from the presumption of regularity of employment, therefore, the

agreement between a project employee and his employer must strictly conform with
the requirements and conditions provided in Article 280. It is not enough that an
employee is hired for a specific project or phase of work. There must also be a
determination of or a clear agreement on the completion or termination of the project
at the time the employee is engaged if the objective of Article 280 is to be achieved.
Since this second requirement was not met in petitioners' case, they should be
considered as regular employees despite their admissions and declarations that they
are project employees made under circumstances unclear to us.
Parenthetically, it is relevant to observe that the similarities in the stipulations of the
employment/appointment contracts can be explained by the indirect relationship of the
Philippine National Construction Corporation (PNCC) and private respondent. CDCP
was the predecessor of PNCC which, in turn, is an existing sister company of private
respondent. Apparently, private respondent ignored the mistake committed by its said
sister company. Also, if only the NLRC had thoroughly read the De Jesus decision, it
would have discovered that the PNCC also raised as a defense the admission of therein
petitioner De Jesus that he was a project employee, but to no avail.
There is another reason why we should rule in favor of petitioners. Nowhere in the
records is there any showing that private respondent reported the completion of its
projects and the dismissal of petitioners in its finished projects to the nearest Public
Employment Office in compliance with Policy Instruction No. 20 of then Labor
Secretary Blas F. Ople.
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 every
time a project or a phase thereof is completed indicates that said workers are not
project employees. 19 In the case at bar, only the last and final termination of
petitioners was reported to the aforementioned labor office.
Private respondent should have filed as many reports of termination as there were
construction projects actually finished if petitioners were indeed project employees,
considering that petitioners were hired and again rehired for various projects or the
phases of work therein. Its failure to submit reports of termination cannot but
sufficiently convince us further that petitioners are truly regular employees. Just as
important, the fact that petitioners had rendered more than one year of service at the
time of their dismissal overturns private respondent's allegations that petitioners were
hired for a specific or a fixed undertaking for a limited period of time. 20
Even if we disregard the stints of petitioners with CDCP, it cannot be disclaimed that
they have rendered long years of service in private respondent's business affairs.
Beginning his service in 1982, petitioner Violeta served in the employ of private
respondent up to 1992. In the case of petitioner Baltazar, he worked for private
respondent from 1981 to 1991. Private respondent repeatedly appointed petitioners to
new projects after the completion of every project or item of work in which they were
previously employed, each over a span of about 10 years.
Public respondent contends that the gaps in the employment of petitioners, consisting
of the periods in between the completion of one project and the engagement of
petitioners in the next, show that they could not have been regular employees under
the control of private respondent, and that petitioners could have applied for or
accepted employment from other employers during those periods. This is puerile and
speculative.
In the first place, Article 280 of the Labor Code contemplates both continuous and
broken services. In the second place, there is absolutely no evidence of petitioners
having applied for or accepted such other or outside employment during the brief
interregna in the continuity of their work with private respondent. Their undertaking in
the "Employment Terms and Conditions" of their service to private respondent bound
them "to work in such place of work or project as DISC may assign or transfer" them,
with the further agreement that they would so "work during rest day, holidays, night
time and night shift or during emergencies." 21
These are self-evident refutations of private respondent' s theory and further bolster
petitioners' position that they were not mere employees engaged for a single or
particular project. They were thus removed from the scope of project employment and
considered as regular employees since their employment as so-called project
employees was extended long after the termination of different projects. 22
The fact that petitioners signed quitclaims will not bar them from pursuing their claims
against private respondent because quitclaims executed by laborers are frowned upon
as contrary to public policy, and are ineffective to bar claims for the full measure of the
workers' legal rights. 23 The so-called quitclaims signed by petitioners were actually
pro forma provisions printed in the clearance certificate they had to get from private
respondent. These were not in the nature of a compromise but a compulsory general
release required from them, for which no consideration was either given or even stated.
In answer to private respondent' s reliance on Department of Labor and Employment

(DOLE) Order No. 19, Series of 1993, which took effect on April 1, 1993, we have ruled
in Samson vs. National Labor Relations Commission, et al. 24 that said administrative
order does not have retroactive effect. Since the termination of petitioners' services and
the filing of their complaints took place long before the effectivity of the said regulation,
it cannot be applied in favor of private respondent. aisadc
Besides, as expounded earlier, contrary to private respondent's insistence, the following

badges of project employment are lacking in this particular case, viz.: (1) the duration
of the specific/identified undertaking for which the worker is engaged is reasonably
determinable, and (2) such duration, as well as the specific work/service to be
performed, is defined in an employment agreement and made clear to the employee at
the time of hiring. Hence, even assuming for the moment that DOLE Order No. 19 is
effectual in the case at bar, private respondent cannot successfully invoke the Order in
its favor because the absence of the above indicia persuades us all the more that
petitioners are really regular employees of private respondent.
WHEREFORE, the instant petition for certiorari is GRANTED. The challenged resolution
of the Fifth Division of respondent National Labor Relations Commission dated
November 15, 1994 in NLRC CA No. M-001233 is REVERSED and SET ASIDE, and its
earlier resolution therein dated August 17, 1994 is hereby REINSTATED.
SO ORDERED.
Puno, Mendoza and Torres, Jr., JJ ., concur.

SECOND DIVISION
[G.R. No. 125837. October 6, 2004.]
REYNALDO CANO CHUA, doing business under the name & style PRIME MOVER
CONSTRUCTION DEVELOPMENT, petitioner, vs. COURT OF APPEALS, SOCIAL SECURITY
COMMISSION, SOCIAL SECURITY SYSTEM, ANDRES PAGUIO, PABLO CANALE, RUEL
PANGAN, AURELIO PAGUIO, ROLANDO TRINIDAD, ROMEO TAPANG and CARLOS
MALIWAT, respondents.
Joselito L. Lim for petitioner.
Servillano Santillan for private respondents.
Amador M. Monteiro & Rodrigo R. Castillo for SSS.
SYNOPSIS
Private respondents were then employees of petitioner in his construction projects

although the period of their employment was allegedly co-terminus with their phase of
work. Whether they were entitled to compulsory Social Security System (SSS) coverage
as such project employees, the Court ruled in the positive. RA No. 1161, The Social
Security Act, was enacted for the protection of all laborers in the Philippines, and it
provided for compulsory coverage of all employees (not over 60 years of age) and their
employers. And although eight (8) years had already passed from the time petitioner's
delinquency was discovered or the proper assessment was made against him, the Court
ruled petitioner still liable under the law which provided twenty (20) years prescriptive
period within which employees can file a claim for non-remittance against employers.
As to petitioner's protestations of good faith, the same were irrelevant for purposes of
assessment and collection of penalty for delayed remittance of premiums. TcIAHS
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; SOCIAL SECURITY ACT; MANDATE. The

Social Security Act was enacted pursuant to the policy of the government "to develop,
establish gradually and perfect a social security system which shall be suitable to the
needs of the laborers throughout the Philippines, and shall provide protection against
the hazards of disability, sickness, old age and death. It provides for compulsory
coverage of all employees not over sixty years of age and their employers.
2. ID.; ID.; COVERAGE; WHERE EMPLOYER-EMPLOYEE RELATIONSHIP PRESENT;

ELEMENTS OF EMPLOYER-EMPLOYEE RELATIONSHIP. Well-settled is the rule that
the mandatory coverage of Republic Act No. 1161, as amended, is premised on the
existence of an employer-employee relationship, the essential elements of which are:
(a) selection and engagement of the employee; (b) payment of wages; (c) the power of
dismissal; and (d) the power of control with regard to the means and methods by which
the work is to be accomplished, with the power of control being the most determinative
factor.
3. ID.; ID.; ID.; ID.; NATURE OF EMPLOYMENT, NOT MATERIAL. There is no

dispute that private respondents were employees of petitioner. Petitioner himself
admitted that they worked in his construction projects, although the period of their
employment was allegedly co-terminus with their phase of work. Even without such
admission from petitioner, the existence of an employer-employee relationship between
the parties can easily be determined by the application of the "control test", the
elements of which are enumerated above. It is clear that private respondents are
employees of petitioner, the latter having control over the results of the work done, as
well as the means and methods by which the same were accomplished. Suffice it to say
that regardless of the nature of their employment, whether it is regular or project,
private respondents are subject of the compulsory coverage under the SSS Law, their
employment not falling under the exceptions provided by the law. This rule is in accord
with the Court's ruling in Luzon Stevedoring Corp. v. SSS to the effect that all employees,
regardless of tenure, would qualify for compulsory membership in the SSS, except those
classes of employees contemplated in Section 8(j) of the Social Security Act. aHIEcS
4. ID.; EMPLOYMENT; REGULAR EMPLOYEES; WHERE WORK PERFORMED IS

USUALLY NECESSARY AND DESIRABLE TO EMPLOYER'S BUSINESS AND EMPLOYEE
WAS CONTINUOUSLY REHIRED OVER A LONG SPAN OF TIME. This Court also finds
no reason to deviate from the finding of the Court of Appeals regarding the nature of
employment of private respondents. Despite the insistence of petitioner that they were
project employees, the facts show that as masons, carpenters and fine graders in
petitioner's various construction projects, they performed work which was usually
necessary and desirable to petitioner's business which involves construction of roads
and bridges. In Violeta v. NLRC, this Court ruled that to be exempted from the
presumption of regularity of employment, the agreement between a project employee
and his employer must strictly conform to the requirements and conditions under
Article 280 of the Labor Code. It is not enough that an employee is hired for a specific
project or phase of work. There must also be a determination of, or a clear agreement
on, the completion or termination of the project at the time the employee was engaged
if the objectives of Article 280 are to be achieved. This second requirement was not met
in this case. Moreover, while it may be true that private respondents were initially hired
for specific projects or undertakings, the repeated re-hiring and continuing need for
their services over a long span of time the shortest being two years and the longest
being eight have undeniably made them regular employees. This Court has held that
an employment ceases to be co-terminus with specific projects when the employee is
continuously rehired due to the demands of the employer's business and re-engaged for
many more projects without interruption. The Court likewise takes note of the fact that,
as cited by the SSC, even the National Labor Relations Commission in a labor case
involving the same parties, found that private respondents were regular employees of
the petitioner. SACTIH
5. ID.; SOCIAL SECURITY ACT; PRESCRIPTION OF CLAIM AGAINST EMPLOYER FOR

NON-REMITTANCE OF CONTRIBUTION. Anent the issue of prescription, this Court
rules that private respondents' right to file their claim had not yet prescribed at the
time of the filing of their petition, considering that a mere eight 8 years had passed from
the time delinquency was discovered or the proper assessment was made. Republic Act
No. 1161, as amended, prescribes a period of twenty (20) years, from the time the
delinquency is known or assessment is made by the SSS, within which to file a claim for
non-remittance against employers.
6. ID.; ID.; ID.; LACHES NOT APPRECIATED WHERE CLAIM FILED WITHIN
PRESCRIPTIVE PERIOD. The principle of laches or "stale demands" ordains that the
failure or neglect, for an unreasonable and unexplained length of time, to do that which
by exercising due diligence could or should have been done earlier, or the negligence or
omission to assert a right within a reasonable time, warrants a presumption that the
party entitled to assert it either has abandoned it or declined to assert it. In the instant
case, this Court finds no proof that private respondents had failed or neglected to assert
their right, considering that they filed their claim within the period prescribed by law.
7. ID.; ID.; EMPLOYER'S DELAYED REMITTANCE OF PREMIUMS; GOOD FAITH, NOT

RELEVANT. This Court finds no merit in petitioner's protestations of good faith. In
United Christian Missionary Society v. Social Security Commission, this Court ruled that
good faith or bad faith is irrelevant for purposes of assessment and collection of the
penalty for delayed remittance of premiums, since the law makes no distinction
between an employer who professes good reasons for delaying the remittance of
premiums and another who deliberately disregards the legal duty imposed upon him to
make such remittance. For the same reasons, petitioner cannot now invoke the defense
of good faith. cHATSI
DECISION
TINGA, J p:
This is a petition for review of the Decision 1 of the Court of Appeals in CA-G.R. CV No.
38269 dated 06 March 1996, and its Resolution dated 30 July 1996 denying petitioner's
Motion for Reconsideration, 2 affirming the Order of the Social Security Commission
(SSC) dated 1 February 1995 3 which held that private respondents were regular
employees of the petitioner and ordered petitioner to pay the Social Security System
(SSS) for its unpaid contributions, as well as penalty for the delayed remittance thereof.
cSCTEH
On 20 August 1985, private respondents Andres Paguio, Pablo Canale, Ruel Pangan,
Aurelio Paguio, Rolando Trinidad, Romeo Tapang and Carlos Maliwat (hereinafter
referred to as respondents) filed a Petition 4 with the SSC for SSS coverage and
contributions against petitioner Reynaldo Chua, owner of Prime Mover Construction
Development, claiming that they were all regular employees of the petitioner in his
construction business. 5
Private respondents claimed that they were assigned by petitioner in his various
construction projects continuously in the following capacity, since the period indicated,
and with the corresponding basic salaries, 6 to wit:
Andres Paguio Carpenter 1977 P42/day
Pablo Canale Mason 1977 42/day
Ruel Pangan Mason 1979 39/day
Aurelio Paguio Fine grading 1979 42/day
Romeo Tapang Fine grading 1979 42/day
Rolando Trinidad Carpenter 1983 (Jan.) 39/day
Carlos Maliwat Mason 1977 42/day
Private respondents alleged that petitioner dismissed all of them without justifiable
grounds and without notice to them and to the then Ministry of Labor and Employment.
They further alleged that petitioner did not report them to the SSS for compulsory
coverage in flagrant violation of the Social Security Act. 7
In his Answer, 8 petitioner claimed that private respondents had no cause of action
against him, and assuming there was any, the same was barred by prescription and
laches. In addition, he claimed that private respondents were not regular employees,
but project employees whose work had been fixed for a specific project or undertaking
the completion of which was determined at the time of their engagement. This being
the case, he concluded that said employees were not entitled to coverage under the
Social Security Act. 9
Meanwhile, the SSS filed a Petition in Intervention 10 alleging that it has an interest in
the petition filed by private respondents as it is charged with the implementation and
enforcement of the provisions of the Social Security Act. The SSS stated that it is the
mandatory obligation of every employer to report its employees to the SSS for coverage
and to remit the required contribution, including the penalty imposed for late premium
remittances. CSIDEc
On 01 February 1995, the SSC issued its Order 11 which ruled in favor of private
respondents. The SSC, relying on NLRC Case No. RAB-III-8-2373-85, 12 declared private
respondents to be petitioner's regular employees. 13 It ordered petitioner to pay the
SSS the unpaid SS/EC and Medicare contributions plus penalty for the delayed
remittance thereof, without prejudice to any other penalties which may have accrued.
14 The SSC denied the Motion for Reconsideration 15 of petitioner for lack of merit. 16
Petitioner elevated the matter to the Court of Appeals via a Petition for Review. 17 He
claimed that private respondents were project employees, whose periods of
employment were terminated upon completion of the project. Thus, he claimed, no
employer-employee relation existed between the parties. 18 There being no employer-
employee relationship, private respondents are not entitled to coverage under the
Social Security Act. 19 In addition, petitioner claimed that private respondents' length
of service did not change their status from project to regular employees. 20
Moreover, granting that private respondents were entitled to coverage under the Act,
petitioner claimed that the SSC erred in imposing penalties since his failure to include
private respondents under SSS coverage was neither willful nor deliberate, but due to
the honest belief that project employees are not regular employees. 21 Likewise, he
claimed that the SSC erred in ordering payment of contributions and penalties even for
long periods between projects when private respondents were not working. 22
Petitioner also questioned the failure to apply the rules on prescription of actions and
of laches, claiming that the case, being one for the injury to the rights of the private
respondents, should have been filed within four (4) years from the time their cause of
action accrued, or from the time they were hired as project employees. He added that
private respondents "went into a long swoon, folded their arms and closed their eyes"
23 and filed their claim only in 1985, or six (6) years or eight (8) years after they were
taken in by petitioner. 24
In resolving the petition, the Court of Appeals synthesized the issues in the petition, to
wit: (1) whether private respondents were regular employees of petitioner, and
whether their causes of action as such are barred by prescription or laches; (2) if so,
whether petitioner is now liable to pay the SSS contributions and penalties during the
period of employment. 25
The Court of Appeals, citing Article 280 of the Labor Code, 26 declared that private
respondents were all regular employees of the petitioner in relation to certain activities
since they all worked either as masons, carpenters and fine graders in petitioner's
various construction projects for at least one year, and that their work was necessary
and desirable to petitioner's business which involved the construction of roads and
bridges. 27 It cited the case of Mehitabel Furniture Company, Inc. v. NLRC, 28
particularly the ruling therein which states:
By petitioner's own admission, the private respondents have been hired to work on
certain special orders that as a matter of business policy it cannot decline. These
projects are necessary or desirable in its usual business or trade, otherwise they would
not have accepted . . . Significantly, such special orders are not really seasonal but more
or less regular, requiring the virtually continuous services of the "temporary workers."
The NLRC also correctly observed that "if we were to accept respondent's theory, it
would have no regular workers because all of its orders would be special undertakings
or projects." The petitioner could then hire all its workers on a contract basis only and
prevent them from attaining permanent status . . .
Furthermore, the NLRC has determined that the private respondents have worked for
more than one year in the so-called "special projects" of the petitioner and so fall under
the second condition specified in the above-quoted provision (Article 280, Labor Code).
29
The Court of Appeals rejected the claim of prescription, stating that the filing of private
respondents' claims was well within the twenty (20)-year period provided by the Social
Security Act. 30 It found that the principle of laches could not also apply to the instant
case since delay could not be attributed to private respondents, having filed the case
within the prescriptive period, and that there was no evidence that petitioner lacked
knowledge that private respondents would assert their rights. 31
Petitioner filed a Motion for Reconsideration, 32 claiming that the Court of Appeals
overlooked (1) the doctrine that length of service of a project employee is not the
controlling test of employment tenure, and (2) petitioner's failure to place private
respondents under SSS coverage was in good faith. The motion was denied for lack of
merit. 33
In the present Petition for Review, petitioner again insists that private respondents
were not regular, but project, employees and thus not subject to SSS coverage. In
addition, petitioner claims that assuming private respondents were subject to SSS
coverage, their petition was barred by prescription and laches. Moreover, petitioner
invokes the defense of good faith, or his honest belief that project employees are not
regular employees under Article 280 of the Labor Code. aHcACT
Petitioner's arguments are mere reiterations of his arguments submitted before the SSC
and the Court of Appeals. More importantly, petitioner wants this Court to review
factual questions already passed upon by the SSC and the Court of Appeals which are
not cognizable by a petition for review under Rule 45. Well-entrenched is the rule that
the Supreme Court's jurisdiction in a petition for review is limited to reviewing or
revising errors of law allegedly committed by the appellate court, the findings of fact
being generally conclusive on the Court and it is not for the Court to weigh evidence all
over again. 34
Stripped of the lengthy, if not repetitive, disquisition of the private parties in the case,
and also of the public respondents, on the nature of private respondents' employment,
the controversy boils down to one issue: the entitlement of private respondents to
compulsory SSS coverage.
The Social Security Act was enacted pursuant to the policy of the government "to
develop, establish gradually and perfect a social security system which shall be suitable
to the needs of the laborers throughout the Philippines, and shall provide protection
against the hazards of disability, sickness, old age and death." 35 It provides for
compulsory coverage of all employees not over sixty years of age and their employers.
36
Well-settled is the rule that the mandatory coverage of Republic Act No. 1161, as
amended, is premised on the existence of an employer-employee relationship, the
essential elements of which are: (a) selection and engagement of the employee; (b)
payment of wages; (c) the power of dismissal; and (d) the power of control with regard
to the means and methods by which the work is to be accomplished, with the power of
control being the most determinative factor. 37
There is no dispute that private respondents were employees of petitioner. Petitioner

himself admitted that they worked in his construction projects, 38 although the period
of their employment was allegedly co-terminus with their phase of work. 39 Even
without such admission from petitioner, the existence of an employer-employee
relationship between the parties can easily be determined by the application of the
"control test," 40 the elements of which are enumerated above. It is clear that private
respondents are employees of petitioner, the latter having control over the results of the
work done, as well as the means and methods by which the same were accomplished.
Suffice it to say that regardless of the nature of their employment, whether it is regular
or project, private respondents are subject of the compulsory coverage under the SSS
Law, their employment not falling under the exceptions provided by the law. 41 This
rule is in accord with the Court's ruling in Luzon Stevedoring Corp. v. SSS 42 to the
effect that all employees, regardless of tenure, would qualify for compulsory
membership in the SSS, except those classes of employees contemplated in Section 8(j)
of the Social Security Act. 43
This Court also finds no reason to deviate from the finding of the Court of Appeals
regarding the nature of employment of private respondents. Despite the insistence of
petitioner that they were project employees, the facts show that as masons, carpenters
and fine graders in petitioner's various construction projects, they performed work
which was usually necessary and desirable to petitioner's business which involves
construction of roads and bridges. In Violeta v. NLRC, 44 this Court ruled that to be
exempted from the presumption of regularity of employment, the agreement between a
project employee and his employer must strictly conform to the requirements and
conditions under Article 280 of the Labor Code. It is not enough that an employee is
hired for a specific project or phase of work. There must also be a determination of, or a
clear agreement on, the completion or termination of the project at the time the
employee was engaged if the objectives of Article 280 are to be achieved. 45 This
second requirement was not met in this case. SEDICa
Moreover, while it may be true that private respondents were initially hired for specific
projects or undertakings, the repeated re-hiring and continuing need for their services
over a long span of time the shortest being two years and the longest being eight
have undeniably made them regular employees. 46 This Court has held that an
employment ceases to be co-terminus with specific projects when the employee is
continuously rehired due to the demands of the employer's business and re-engaged for
many more projects without interruption. 47 The Court likewise takes note of the fact
that, as cited by the SSC, even the National Labor Relations Commission in a labor case
involving the same parties, found that private respondents were regular employees of
the petitioner. 48
Another cogent factor militates against the allegations of the petitioner. In the
proceedings before the SSC and the Court of Appeals, petitioner was unable to show
that private respondents were appraised of the project nature of their employment, the
specific projects themselves or any phase thereof undertaken by petitioner and for
which private respondents were hired. He failed to show any document such as private
respondents' employment contracts and employment records that would indicate the
dates of hiring and termination in relation to the particular construction project or
phases in which they were employed. 49 Moreover, it is peculiar that petitioner did not
show proof that he submitted reports of termination after the completion of his
construction projects, considering that he alleges that private respondents were hired
and rehired for various projects or phases of work therein.
Anent the issue of prescription, this Court rules that private respondents' right to file
their claim had not yet prescribed at the time of the filing of their petition, considering
that a mere eight (8) years had passed from the time delinquency was discovered or the
proper assessment was made. Republic Act No. 1161, as amended, prescribes a period
of twenty (20) years, from the time the delinquency is known or assessment is made by
the SSS, within which to file a claim for non-remittance against employers. 50
Likewise, this Court is in full accord with the findings of the Court of Appeals that
private respondents are not guilty of laches. The principle of laches or "stale demands"
ordains that the failure or neglect, for an unreasonable and unexplained length of time,
to do that which by exercising due diligence could or should have been done earlier, or
the negligence or omission to assert a right within a reasonable time, warrants a
presumption that the party entitled to assert it either has abandoned it or declined to
assert it. 51 In the instant case, this Court finds no proof that private respondents had
failed or neglected to assert their right, considering that they filed their claim within the
period prescribed by law. STHDAc
This Court finds no merit in petitioner's protestations of good faith. In United Christian
Missionary Society v. Social Security Commission, 52 this Court ruled that good faith or
bad faith is irrelevant for purposes of assessment and collection of the penalty for
delayed remittance of premiums, since the law makes no distinction between an
employer who professes good reasons for delaying the remittance of premiums and
another who deliberately disregards the legal duty imposed upon him to make such
remittance. 53 For the same reasons, petitioner cannot now invoke the defense of good
faith.
WHEREFORE, the Petition is DENIED. The Decision and Resolution of the Court of
Appeals promulgated on 6 March 1996 and 30 July 1996 respectively, are AFFIRMED.
Costs against petitioner.
SO ORDERED. cTDaEH
Puno and Austria-Martinez, JJ ., concur.
Callejo, Sr. and Chico-Nazario, JJ ., are on leave.

FIRST DIVISION
[G.R. No. 82973. September 15, 1989.]
MARIO CARTAGENAS, JESUS N. MIRABALLES, VICTOR C. MONSOD and VICENTE

BARROA, petitioners, vs. ROMAGO ELECTRIC COMPANY, INC., NATIONAL LABOR
RELATIONS COMMISSION (Fifth Division), respondents.
Isidro G. Pasana for petitioners.
Constantino B. de Jesus & Associates for private respondent.
SYLLABUS
1. LABOR LAW; LABOR CODE; PROJECT EMPLOYMENT; DURATION OF

EMPLOYMENT CO-TERMINUS WITH PROJECT ASSIGNMENT. As an electrical
contractor, the private respondent depends for its business on the contracts it is able to
obtain from real estate developers and builders of buildings. Since its work depends on
the availability of such contracts or "projects," necessarily the duration of the
employment of its work force is not permanent but co-terminus with the projects to
which they are assigned and from whose payrolls they are paid. It would be extremely
burdensome for their employer who, like them, depends on the availability of projects,
if it would have to carry them as permanent employees and pay them wages even if
there are no projects for them to work on. We hold, therefore, that the NLRC did not
abuse its discretion in finding, based on substantial evidence in the records, that the
petitioners are only project workers of the private respondent.
2. CIVIL PROCEDURE; FACTUAL FINDINGS OF ADMINISTRATIVE AGENCIES,

SUPPORTED BY SUBSTANTIAL EVIDENCE, BINDING UPON THE SUPREME COURT.
The well-settled rule that findings of fact of labor officials are generally conclusive and
binding upon this Court when supported by substantial evidence, as in this case (Edi-
Staff Builders International, Inc. vs. Leogardo, Jr., 152 SCRA 453).
DECISION
GRIN O-AQUINO, J p:
The issue in this case is whether the petitioners are project employees of the private
respondent Romago Electric Company, Inc., as found by the National Labor Relations
Commission, or regular employees as found by the Labor Arbiter.
The facts are recited in the decision of the NLRC as follows:
"Respondent Romago is a general contractor engaged in contracting and sub-

contracting of specific building construction projects or undertaking such as electrical,
mechanical and civil engineering aspects in the repair of buildings and from other
kindred services.
"Individual complainants are employed by the respondent in connection with particular

construction projects and they are as follows:
1. Jesus N. Miraballes
Project Assigned Period Covered.
L. Towers 4/23/79-2/26/80
Nat'l Bookstore 2/26/80-8/28/80
PNRC-MHQ Bldg. 8/29/80-9/09/80
A. Payumo's Res. 9/10/80
State Center 3/05/81-7/13/81
FEBTC Bldg. 7/14/81-9/21/81
SMC Complex 9/22/81-9/10/84
PNB Finance Complex 9/11/84-7/12/86
(Annexes 1 to 25, respondent's Position Paper)
2. Victor C. Monsod
Project Assigned Period Covered
MMRH Project 4/13/76-2/02/80
Manila Hotel 2/03/80-7/19/81
PNB Project7/20/81-7/16/84
Manila Hotel 7/17/84-10/02/84
PNB Finance Center 10/3/84-7/12/86
(Annexes 30 to 41, ibid)
3. Vicente Barroa
SMC Hoc. Project 7/5/82-1/21/85

4. Mario Cartagenas
"Effective July 12, 1986, individual complainants and Lawrence Deguit were
temporarily laid-off by virtue of a memorandum issued by the respondent. In said
memorandum they were also informed that a meeting regarding the resumption of
operation will be held on July 16, 1986 and that they will be notified as to when they
will resume work.
"On July 28, 1986, complainants filed the instant case for illegal dismissal but before the
respondent could receive a copy of the complaint and the notification and summons
issued by the NLRC National Capital Region (actually received only on August 22, 1986,
page 4, records) individual complainants re-applied with the respondent and were
assigned to work with its project at Robinson EDSA, specifically on the following
dates, to wit:
1. Miraballes and Monsod August 2/86
2. Barroa August 11/86
3. Cartagenas August 4/86
(Annexes 26 to 29-B; '39-41'; 48 to 51-B; '55 to 58-A', ibid)
"In hiring the herein complainants to be assigned to a particular project they have to fill
up an employment application form and are subjected to a pre-hiring examination. If
evaluated to be qualified they sign at the end portion of their employment application
form that:
"AGREEMENT
" 'I hereby agree to the foregoing conditions and accept my employment for a fixed
period and from the above mentioned Project Assignment only.'
The conditions of employment to which the complainant agreed are mentioned in the
right upper portion of the same page of said application form, an example of which
reads:
'Assigned to FEBTC G.P FORMOSO
Project
Position Electrician
Effectivity 7-14-81
Salary P18.50/day & allowance
Conditions Hired for above project only
Approved: Signed
Personnel Manager
7/14/81
Date'
(Employment Application Form of MIRABALLES JESUS NIEVA dated July 14, 1981,
Annex 16; 16-A and 16-B, ibid)
"Thereafter the hired employee is given by the respondent an assignment slip, an

example of which reads:
"ASSIGNMENT SLIP
DATE: July 14, 1981
Engr. C. A. Castro
Project In-Charge
FEFTC
Name of Project
The bearer, Mr. Jesus N. Miraballes will work under you as electrician effective 14 July
81. His employment will terminate upon completion stoppage of the project or
terminated earlier for cause.
Signed
GUDIOSO PLATA
Chief Engineer
CONFORME:
SGD. JESUS N. MIRABALLES'
(Assignment slip of Jesus N. Miraballes, Annex 17, ibid.)
xxx xxx xxx

". . . Respondent introduced documentary exhibits that the complainant have invariably
been issued appointment from project to projects and were issued notice of temporary
lay-off when the PNB Finance Center project was suspended due to lack of funds and
that when work was available particularly respondent's project at Robinson EDSA
they were rehired and assigned to this project." (pp. 16-19; 21-22, Rollo.)
The NLRC held that the complainants were project employees because their
appointments were "co-terminus with the phase or item of work assigned to them in
said project." It held further: LexLib
"The fact that the complainants worked for the respondent under different project
employment contracts for so many years could not be made a basis to consider them as
regular employees for they remain project employees regardless of the number of
projects in which they have worked. (p. 22, Rollo.)
Article 280 of the Labor Code provides:
"ART. 280. Regular and Casual Employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreements of the parties, an

while such actually exists (Emphasis supplied)." (p. 46, Rollo.)
As an electrical contractor, the private respondent depends for its business on the
contracts it is able to obtain from real estate developers and builders of buildings. Since
its work depends on the availability of such contracts or "projects," necessarily the
duration of the employment of its work force is not permanent but co-terminus with
the projects to which they are assigned and from whose payrolls they are paid. It would
be extremely burdensome for their employer who, like them, depends on the
availability of projects, if it would have to carry them as permanent employees and pay
them wages even if there are no projects for them to work on. We hold, therefore, that
the NLRC did not abuse its discretion in finding, based on substantial evidence in the
records, that the petitioners are only project workers of the private respondent.
This case is similar to Sandoval Shipyards, Inc. vs. NLRC, 136 SCRA 675 (1985), where
we held: prLL
"We feel that there is merit in the contention of the applicant corporation. To our mind,
the employment of the employees concerned were fixed for a specific project or
undertaking. For the nature of the business the corporation is engaged into is one
which will not allow it to employ workers for an indefinite period.
"It is significant to note that the corporation does not construct vessels for sale or
otherwise which will demand continuous productions of ships and will need
permanent or regular workers. It merely accepts contracts for shipbuilding or for repair
of vessels from third parties and, only, on occasion when it has work contract of this
nature that it hires workers to do the job which, needless to say, lasts only for less than
a year or longer.
"The completion of their work or project automatically terminates their employment, in

which case, the employer is, under the law, only obliged to render a report on the
termination of the employment." (p. 48, Rollo.)
Petitioners' invocation of the resolution of this Court in Romago Electric Company, Inc.
vs. Romago Electric United Workers Union-Christian Labor Organization, (REWU-
CLOP), et al., G.R. No. 79774, February 1, 1988, where this Court dismissed the petition,
is not well taken. As pointed out by the public respondent, the issue in that case was
whether the members of the union may properly participate in the holding of a
certification election. Since the petitioners in their complaint for illegal dismissal dated
July 28, 1986 (Annex A of petition) averred that they do not belong to any union, the
ruling in Romago vs. REWU-CLOP may not apply to them. In their Reply to the public
respondents' Comment in this case, they disclosed that they are members and officers
of a new union which they organized on March 13, 1988 (pp. 62-63, Rollo). That
supervening fact, however, has no relevance to this case.
We find no reason to depart from the well-settled rule that findings of fact of labor
officials are generally conclusive and binding upon this Court when supported by
substantial evidence, as in this case (Edi-Staff Builders International, Inc. vs. Leogardo,
Jr., 152 SCRA 453; Asiaworld Publishing House, Inc. vs. Ople, 152 SCRA 219; National
Federation of Labor Union vs. Ople, 143 SCRA 124; Dangan vs. NLRC, 127 SCRA 706;
Special Events & Central Shipping Office Workers Union vs. San Miguel Corp., 122 SCRA
557; Mamerto vs. Inciong, 118 SCRA 265; Phil. Labor Alliance Council vs. Bureau of
Labor Relations, 75 SCRA 162).
WHEREFORE, the petition for certiorari is dismissed for lack of merit. No costs.
SO ORDERED.
Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.
SECOND DIVISION
[G.R. No. 106090. February 28, 1994.]
RICARDO FERNANDEZ, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and

D. M. CONSUNJI, INC., respondents.
DECISION
NOCON, J p:
Forming the crux of the matter in this petition for certiorari is the question of whether
or not the National Labor Relations Commission acted with grave abuse of discretion in
reversing the Labor Arbiter's decision by dismissing the complaints for illegal dismissal,
one of which is petitioner's, on the finding that they were project employees.
Petitioner was hired as a laborer at the D.M. Consunji, Inc., a construction firm, on
November 5, 1974. He became a skilled welder and worked for private respondent until
March 23, 1986 when his employment was terminated on the ground that the project
petitioner had been assigned to was already completed and there was no more work for
him to do. prLL
Skeptic of private respondent's reason, petitioner brought his plight before the Labor
Arbiter who consolidated the same with three (3) other separate complaints for illegal
dismissal and various money claims against private respondent. After filing their
respective position papers and other documents pertinent to their causes/defenses, the
parties agreed to submit the case for decision based on record.
On May 12, 1988, Labor Arbiter Fernando V. Cinco rendered a decision, finding that
complainants worked continuously in various projects ranging from five (5) to twenty
(20) years and belonged to a work pool, the dispositive portion of which states as
follows:
"WHEREFORE, premises considered, the terminations by respondent of herein

complainants are hereby declared illegal. Consequently, respondent is ordered to
reinstate the complainants, who have not yet reached the retirement age, to their
former positions plus backwages of one (1) year. LLjur
"Anent complainants who have already reached the retirement age of sixty (60) years as
of the date of this decision, respondent is thereby ordered to pay said complainants
their retirement/separation benefits equivalent to one half (1/2) month salary for
every year of service, a fraction of at least six (6) months being considered as one (1)
whole year.
"Moreover, respondent is ordered to pay all complainants their service incentive leave
for the past three (3) years; and to pay complainants Ricardo Fernandez, Gaudencio
Merhan and Rolando Serona their 13th month pay likewise for the past three (3) years.
"The complaints of Amador Borromeo, Jesus Espiritu and Ramon Celestial are hereby
dismissed in view of their receipt of Separation pay and their execution of quitclaims in
favor of herein respondent.
"The other claims are likewise dismissed for lack of merit.
"SO ORDERED.
"Metro Manila, Philippines. 12 May 1988." 1
Private respondent questioned on appeal the aforesaid decision of the Labor Arbiter on
the ground that the complainants were all project employees who were hired on a
project-to-project basis, depending on the availability of projects that the former was
able to close with its clients. Respondent pointed to the gaps in complainants'
respective employment histories to show that they were indeed hired on an "off-and-
on" basis. prLL
In view of the lack of evidence on record to prove the continuous employment of

complainants-appellees, and that on the contrary, what was proven was the
intermittent nature of their work as shown by the different project contracts, the
respondent Commission concluded that complainants-appellees were project
employees. The dispositive portion of the decision dated September 29, 1989 of
respondent Commission reads:
"WHEREFORE, the decision of the Labor Arbiter is hereby set aside and a new one
entered dismissing the complaints filed by complainants-appellees for lack of merit." 2
From said decision, the complainants-appellees interposed a motion for

reconsideration which was denied for lack of merit on July 19, 1991. Respondent
Commission affirmed its finding that complainants-appellees were project employees.
As such, the nature of their employment did not change by the number of projects in
which they have rendered service. Respondent Commission also noted that the motion
for reconsideration was filed only on January 29, 1990 which was beyond the ten-day
reglementary period from date of receipt of the decision on November 13, 1989. Cdpr
Without any mention of the denial of said motion for reconsideration, petitioner alone
comes before this Court on a petition filed on July 21, 1992 and assails the decision
dated September 29, 1989 of respondent Commission contending that it is more in
keeping with the intent and spirit of the law to consider him and the thirteen (13) other
complainants in the consolidated cases as regular employees.
At the outset, it is obvious that the petition was not filed within a reasonable time from
receipt of the questioned decision on November 13, 1989 as the petition was filed only
on July 21, 1992. Neither does the filing of the petition appear to be reasonable from the
date of receipt of the denial of the motion for reconsideration on August 2, 1991.
Reckoned from this later date, petitioner waited for almost one year before he availed of
this extraordinary remedy of certiorari. We have consistently stated that "the yardstick
to measure the timeliness of a petition for certiorari is the reasonableness of the
duration of time that had expired from the commission of the acts complained of up to
the institution of the proceedings to annul the same." 3 Without doubt, petitioner's
negligence or indifference for such a long period of time has in the meantime rendered
the questioned decision final and no longer assailable. LLjur
Even if we were to dispense with the requirement that the petition should be filed
within a reasonable time, the petition would still have to be dismissed on the merits.
Private respondent presented material documents showing that petitioner was hired as
a project employee with the specific dates of hiring, the duration of hiring, the dates of
his lay-offs, including the lay-off reports and the termination reports submitted to the
then Ministry of Labor and Employment. Such data covered the period from November
5, 1974 to March 23, 1986.
Inasmuch as the documentary evidence clearly showed gaps of a month or months

between the hiring of petitioner in the numerous projects wherein he was assigned, the
ineluctable conclusion is that petitioner has not continuously worked with private
respondent but only intermittently as he was hired solely for specific projects. As such,
he is governed by Policy Instruction No. 20, the pertinent portions of which read as
follows:
"Generally, there are two types of employees in the construction industry, namely 1)
Project Employees and 2) Non-project Employees.
"Project employees are those employed in connection with a particular construction

project. Non-project employees are those employed by a construction company without
reference to a particular project.
"Project employees are not entitled to termination pay if they are terminated as a result
of the completion of the project or any phase thereof in which they are employed,
regardless of the number of projects in which they have been employed by a particular
construction company." LLpr
Petitioner cites Article 280 of the Labor Code as legal basis for the decision of the Labor
Arbiter in his favor. The text of Article 280 states as follows:
"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.

paragraph: Provided, That, any employee who has rendered at least one year of service
while such actually exists." prLL
Petitioner claims that the above-quoted proviso in Article 280 of the Labor Code
supports his claim that he should be regarded as a regular employee.
We disagree. The proviso in the second paragraph of Article 280 of the Labor Code has
recently been explained in Mercado v. NLRC , 4 where it was held that said proviso
deems as regular employees only those "casual" employees who have rendered at least
one year of service regardless of the fact that such service may be continuous or broken.
It is not applicable to "project" employees, who are specifically excepted therefrom.
Thus, the Court therein said:
"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. (Statutory Construction by Ruben Agpalo, 1986 ed., p. 173). 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. (Chinese Flour Importers Association v. Price Stabilization
Board, 89 Phil. 469 (1951); Arenas v. City of San Carlos, G.R. No. 24024, April 5, 1978,
82 SCRA 318 (1978). The only exception to the 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.
(Commissioner of Internal Revenue v. Filipinas Compania de Seguros, 107 Phil. 1055
(1960)" Cdpr
Indeed, a careful reading of the proviso readily discloses that the same relates to
employment where the employee is engaged to perform activities that are usually
necessary or desirable in the usual business or trade of the employer but hastens to
qualify that project employment is specifically exempted therefrom.
Finally, petitioner relies on Policy Instruction No. 20 which was issued by then
Secretary Blas F. Ople to stabilize employer-employee relations in the construction
industry to support his contention that workers in the construction industry may now
be considered regular employees after their long years of service with private
respondent. The pertinent provision of Policy Instruction No. 20 reads:
"Members of a work pool from which a construction company draws its project
employees, if considered employees of the construction company while in the work
pool, are non-project employees or employees for an indefinite period. If they are
employed in a particular project, the completion of the project or of any phase thereof
will not mean severance of employer-employee relationship." cdll
Respondent Commission correctly observed in its decision that complainants, one of

whom petitioner, failed to consider the requirement in Policy Instruction No. 20 that to
qualify as member of a work pool, the worker must still be considered an employee of
the construction company while in the work pool. In other words, there must be proof
to the effect that petitioner was under an obligation to be always available on call of
private respondent and that he was not free to offer his services to other employers.
Unfortunately, petitioner miserably failed to introduce any evidence of such nature
during the times when there were no project.
Noteworthy in this case is the fact that herein private respondent's lay-off reports and
the termination reports were duly submitted to the then Ministry of Labor and
Employment everytime a project was completed in accordance with Policy Instruction
No. 20, which provides:
"Project employees are not entitled to termination pay if they are terminated as a result
of the completion of the project or any phase thereof in which they are employed,
regardless of the number of projects in which they have been employed by a particular
construction company. Moreover, the company is not required to obtain a clearance
from the Secretary of Labor in connection with such termination. What is required of
the company is a report to the nearest Public Employment Office for statistical
purposes." LexLib
The presence of this factor makes this case different from the cases decided by the
Court where the employees were deemed regular employees. The cases of Ochoco v.
National Labor Relations Commission, 5 Philippine National Construction Corporation
v. National Labor Relations Commission, 6 Magante v. National Labor Relations
Commission, 7 and Philippine National Construction Corporation v. National Labor
Relations, et al., 8 uniformly held that the failure of the employer to report to the
nearest employment office the termination of workers everytime a project is completed
proves that the employees are not project employees. Contrariwise, the faithful and
regular effort of private respondent in reporting every completion of its project and
submitting the lay-off list of its employees proves the nature of employment of the
workers involved therein as project employees. Given this added circumstance behind
petitioner's employment, it is clear that he does not belong to the work pool from which
the private respondent would draw workers for assignment to other projects at its
discretion. cdll
WHEREFORE, the instant petition for certiorari is hereby DISMISSED in view of the
foregoing reasons.
SO ORDERED.
Narvasa, C .J ., Padilla, Regalado and Puno, JJ ., concur.

EN BANC
[G.R. No. 109902. August 2, 1994.]
ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others, namely: ENGR.

ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE, EDUARD H. FOOKSON, JR.,
ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO MARIN, JR., LEONIDO
ECHAVEZ, BONIFACIO MEJOS, EDGAR S. BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B.
DANDASAN, and GERRY I. FETALVERO, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION and NATIONAL STEEL CORPORATION (NSC), respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; PROJECT

EMPLOYEES; DISTINGUISHED FROM REGULAR EMPLOYEES; CASE AT BAR.
Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are
"necessary, desirable and work-related to private respondent's main business, steel-
making"; and (ii) they have rendered service for six (6) or more years to private
respondent NSC, the Supreme Court held that the basic issue is thus whether or not
petitioners are properly characterized as "project employees" rather than "regular
employees" of NSC. This issue relates, of course, to an important consequence: the
services of project employees are co-terminous with the project and may be terminated
upon the end or completion of the project for which they were hired. Regular
employees, in contrast, are legally entitled to remain in the service of their employer
until that service is terminated by one or another of the recognized modes of
termination of service under the Labor Code. 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.
2. ID.; ID.; ID.; MEANING AND SCOPE OF TERM "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 discrete identifiable construction projects: e.g., a
twenty-five-storey 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. . . . 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."
3. ID.; ID.; ID.; ID.; APPLICABILITY TO CASE AT BAR. .The case at bar presents
what appears to our mind as a typical example of this kind of "project." NSC undertook
the ambitious Five Year Expansion Program I and II with the ultimate end in view of
expanding the volume and increasing the kinds of products that it may offer for sale to
the public. The Five Year Expansion Program had a number of component projects: e.g.,
(a) the setting up of a "Cold Rolling Mill Expansion Project"; (b) the establishment of a
"Billet Steel-Making Plant" (BSP); (c) the acquisition and installation of a "Five Stand
TDM"; and (d) the "Cold Mill Peripherals Project." Instead of contracting out to an
outside or independent contractor the tasks of constructing the buildings with related
civil and electrical works that would house the new machinery and equipment, the
installation of the newly acquired mill or plant machinery and equipment and the
commissioning of such machinery and equipment, NSC opted to execute and carry out
its Five Year Expansion Projects "in house," as it were, by administration. The carrying
out of the Five Year Expansion Program (or more precisely, each of its component
projects) constitutes a distinct undertaking identifiable from the ordinary business and
activity of NSC. Each component project, of course, begins and ends at specified times,
which had already been determined by the time petitioners were engaged. We also note
that NSC did the work here involved the construction of buildings and civil and
electrical works, installation of machinery and equipment and the commissioning of
such machinery only for itself . Private respondent NSC was not in the business of
constructing buildings and installing plant machinery for the general business
community, i.e., for unrelated, third party, corporations. NSC did not hold itself out to
the public as a construction company or as an engineering corporation. . . . There is
nothing in the record to show that petitioners were hired for, or in fact assigned to,
other purposes, e.g., for operating or maintaining the old, or previously installed and
commissioned, steel-making machinery and equipment, or for selling the finished steel
products. We, therefore, agree with the basic finding of the NLRC (and the Labor
Arbiter) that the petitioners were indeed "project employees:"
4. ID.; ID.; ID.; ID.; GOOD FAITH, A PRE-REQUISITE THEREFOR. Whichever type of
project employment is found in a particular case, a common basic requisite is that the
designation of named employees as "project employees" and their assignment to a
specific project, are effected and implemented in good faith, and not merely as a means
of evading otherwise applicable requirements of labor laws.
5. ID.; ID.; ID.; STATUS AS SUCH SUBSISTS WHEN BEYOND ONE YEAR
EMPLOYMENT; CASE AT BAR. Petitioners next claim that their service to NSC of
more than six (6) years should qualify them as regular employees. We believe this claim
is without legal basis. The simple fact that the employment of petitioners as project
employees had gone beyond one (1) year, does not detract from, or legally dissolve,
their status as project employees. The second paragraph of Article 280 of the Labor
Code, quoted above, providing that an employee who has served for at least one (1)
year, shall be considered a regular employee, relates to casual employees, not to project
employees.
6. STATUTORY CONSTRUCTION; REFERENCE OF A PROVISO ONLY TO THE

IMMEDIATELY PRECEDING PART; EXCEPTION; CASE A BAR. The familiar
grammatical rule is 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 other sections thereof,
unless the clear legislative intent is to restrict or qualify not only the phrase
immediately preceding the proviso but also earlier provisions of the statute or even the
statute itself as a whole. No such intent is observable in Article 280 of the Labor Code,
which has been quoted earlier.
DECISION
FELICIANO, J p:
In this Petition for Certiorari, petitioners assail the Resolution of the National Labor
Relations Commission ("NLRC") dated 8 January 1993 which declared petitioners to be
project employees of private respondent National Steel Corporation ("NSC"), and the
NLRC's subsequent Resolution of 15 February 1993, denying petitioners' motion for
reconsideration.
Petitioners plead that they had been employed by respondent NSC in connection with
its Five Year Expansion Program (FAYEP I & II) 1 for varying lengths of time when they
were separated from NSC's service: LLpr
Employee Date Nature of Separated

Employed Employment
1. Alan Barinque 5-14-82 Engineer 18-31-91
2. Jerry Bontilao 8-05-85 Engineer 16-30-92
3. Edgar Bontuyan 11-03-82 Chairman to present
4. Osias Dandasan 9-21-82 Utilityman 1991
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92
6. Darrell Eltagonde 5-20-85 Engineer 18-31-91
7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
9. Russell Gacus 1-30-85 Engineer 16-30-92
10. Jose Garguena 3-02-81 Warehouseman to present
11. Eusebio Marin, Jr. 7-07-83 Survey Aide8-31-91
12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992
13. Romeo Sarona 2-26-83 Machine Operator8-31-91 2
On 5 July 1990, petitioners filed separate complaints for unfair labor practice,
regularization and monetary benefits with the NLRC, Sub-Regional Arbitration Branch
XII, Iligan City.
The complaints were consolidated and after hearing, the Labor Arbiter in a Decision
dated 7 June 1991, declared petitioners "regular project employees who shall continue
their employment as such for as long as such [project] activity exists," but entitled to the
salary of a regular employee pursuant to the provisions in the collective bargaining
agreement. It also ordered payment of salary differentials. 3
Both parties appealed to the NLRC from that decision. Petitioners argued that they were
regular, not project, employees. Private respondent, on the other hand, claimed that
petitioners are project employees as they were employed to undertake a specific project
NSC's Five Year Expansion Program (FAYEP I & II). LLphil
The NLRC in its questioned resolutions modified the Labor Arbiter's decision. It
affirmed the Labor Arbiter's holding that petitioners were project employees since they
were hired to perform work in a specific undertaking the Five Year Expansion
Program, the completion of which had been determined at the time of their engagement
and which operation was not directly related to the business of steel manufacturing.
The NLRC, however, set aside the award to petitioners of the same benefits enjoyed by
regular employees for lack of legal and factual basis.
Deliberating on the present Petition for Certiorari, the Court considers that petitioners
have failed to show any grave abuse of discretion or any act without or in excess of
jurisdiction on the part of the NLRC in rendering its questioned resolutions of 8 January
1993 and 15 February 1993.
The law on the matter is Article 280 of the Labor Code which reads in full:
"ARTICLE 280. Regular and Casual Employment. The provisions of the written
of the season. cdll

paragraph: Provided, That, any employee who has rendered at least one year service,
while such actually exists." (Emphases supplied).
Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are
"necessary, desirable and work-related to private respondent's main business, steel-
making"; and (ii) they have rendered service for six (6) or more years to private
respondent NSC. 4
The basic issue is thus whether or not petitioners are properly characterized as "project
employees" rather than "regular employees" of NSC. This issue relates, of course, to an
important consequence: the services of project employees are co-terminous with the
project and may be terminated upon the end or completion of the project for which
they were hired. 5 Regular employees, in contrast, are legally entitled to remain in the
service of their employer until that service is terminated by one or another of the
recognized modes of termination of service under the Labor Code. 6
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." 7 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. Cdpr
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 discrete identifiable construction projects:
e.g., a twenty-five-storey 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. LexLib
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. The case at bar presents what appears to our mind as a typical
example of this kind of "project."
NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate
end in view of expanding the volume and increasing the kinds of products that it may
offer for sale to the public. The Five Year Expansion Program had a number of
component projects: e.g., (a) the setting up of a "Cold Rolling Mill Expansion Project";
(b) the establishment of a "Billet Steel-Making Plant" (BSP); (c) the acquisition and
installation of a "Five Stand TDM"; and (d) the "Cold Mill Peripherals Project." 8 Instead
of contracting out to an outside or independent contractor the tasks of constructing the
buildings with related civil and electrical works that would house the new machinery
and equipment, the installation of the newly acquired mill or plant machinery and
equipment and the commissioning of such machinery and equipment, NSC opted to
execute and carry out its Five Year Expansion Projects "in house," as it were, by
administration. The carrying out of the Five Year Expansion Program (or more
precisely, each of its component projects) constitutes a distinct undertaking identifiable
from the ordinary business and activity of NSC. Each component project, of course,
begins and ends at specified times, which had already been determined by the time
petitioners were engaged. We also note that NSC did the work here involved the
construction of buildings and civil and electrical works, installation of machinery and
equipment and the commissioning of such machinery only for itself . Private
respondent NSC was not in the business of constructing buildings and installing plant
machinery for the general business community, i.e., for unrelated, third party,
corporations. NSC did not hold itself out to the public as a construction company or as
an engineering corporation. LibLex
Whichever type of project employment is found in a particular case, a common basic

requisite is that the designation of named employees as "project employees" and their
assignment to a specific project, are effected and implemented in good faith, and not
merely as a means of evading otherwise applicable requirements of labor laws.
Thus, the particular component projects embraced in the Five Year Expansion Program,
to which petitioners were assigned, were distinguishable from the regular or ordinary
business of NSC which, of course, is the production or making and marketing of steel
products. During the time petitioners rendered services to NSC, their work was limited
to one or another of the specific component projects which made up the FAYEP I and II.
There is nothing in the record to show that petitioners were hired for, or in fact
assigned to, other purposes, e.g., for operating or maintaining the old, or previously
installed and commissioned, steel-making machinery and equipment, or for selling the
finished steel products.
We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the
petitioners were indeed "project employees:" prcd
"It is well established by the facts and evidence on record that herein 13 complainants
were hired and engaged for specific activities or undertaking the period of which has
been determined at time of hiring or engagement. It is of public knowledge and which
this Commission can safely take judicial notice that the expansion program (FAYEP) of
respondent NSC consist of various phases [of] project components which are being
executed or implemented independently or simultaneously from each other . . .
In other words, the employment of each 'project worker' is dependent and co-
terminous with the completion or termination of the specific activity or undertaking
[for which] he was hired which has been pre-determined at the time of engagement.
Since, there is no showing that they (13 complainants) were engaged to perform work-
related activities to the business of respondent which is steel-making, there is no logical
and legal sense of applying to them the proviso under the second paragraph of Article
280 of the Labor Code, as amended.
xxx xxx xxx
The present case therefore strictly falls under definition of 'project employees' on
paragraph one of Article 280 of the Labor Code, as amended. Moreover, it has been held
that the length of service of a project employee is not the controlling test of
employment tenure but whether or not 'the employment has been fixed for a specific
the time of the engagement of the employee'. (See Hilario Rada v. NLRC, G.R. No. 96078,
January 9, 1992; and Sandoval Shipping, Inc. v. NLRC, 136 SCRA 674 (1985)." 9
Petitioners next claim that their service to NSC of more than six (6) years should qualify
them as regular employees. We believe this claim is without legal basis. The simple fact
that the employment of petitioners as project employees had gone beyond one (1) year,
does not detract from, or legally dissolve, their status as project employees. 10 The
second paragraph of Article 280 of the Labor Code, quoted above, providing that an
employee who has served for at least one (1) year, shall be considered a regular
employee, relates to casual employees, not to project employees. LibLex
In the case of Mercado, Sr. vs. National Labor Relations Commission, 11 this Court ruled
that the proviso in the second paragraph of Article 280 relates only to casual employees
and is not applicable to those who fall within the definition of said Article's first
paragraph, i.e., project employees. The familiar grammatical rule is 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 other sections thereof, unless the clear legislative intent
is to restrict or qualify not only the phrase immediately preceding the proviso but also
earlier provisions of the statute or even the statute itself as a whole. No such intent is
observable in Article 280 of the Labor Code, which has been quoted earlier.
ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby DISMISSED
for lack of merit. The Resolutions of the NLRC dated 8 January 1993 and 15 February
1993 are hereby AFFIRMED. No pronouncement as to costs. Cdpr
SO ORDERED.
Narvasa, C.J., Cruz, Padilla, Bidin, Regalado, Davide, Jr., Romero, Melo, Quiason, Puno,
Vitug, Kapunan and Mendoza, JJ., concur.
Bellosillo, J., is on leave.

SECOND DIVISION
[G.R. No. 79869. September 5, 1991.]
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. NIN O REALTY, INCORPORATED,
respondents.
Servillano S. Santillan for petitioners.
Luis R. Mauricio for private respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE EXECUTIVE BRANCH

OF GOVERNMENT; RULE AND EXCEPTION. 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; 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; 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.
2. LABOR AND SOCIAL LEGISLATION; STATUS OF EMPLOYMENT; REGULAR AND

CASUAL EMPLOYEES; DISTINGUISHED. The first paragraph answers the question of
who are regular 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. The second paragraph of Art. 280 demarcates as "casual" employees, all
other employees who do not fall 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.
3. ID.; ID.; PURPOSE OF THE PROVISO IN THE SECOND PARAGRAPH OF ARTICLE

280 OF THE LABOR CODE. 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 so-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.
4. ID.; ID.; PROJECT EMPLOYEES; DEFINED. 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. (Philippine National Construction
Corporation vs. National Labor Relations Commission, G.R. No. 85323, 20 June 1989,
174 SCRA 191.
5. STATUTORY CONSTRUCTION; "PROVISO"; RULE AND EXCEPTION. 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.
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 section thereof. 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.
DECISION
PADILLA, J p:
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. cdrep
This petition originated from a complaint for illegal dismissal, underpayment of wages,
non-payment 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. Nin o
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 rice
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. prLL
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 rice 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 Fortunato 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, on-and-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,
1977-1978 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 all 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 this 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: LLpr
"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
regular for the duration of the definite period.
This concept of regular 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
In the Comment filed by private respondents, they submit that the decision of the Labor
Arbiter, as affirmed 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
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.
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 phases of
agricultural 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
planting 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. cdphil
"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
afore-mentioned provision of law.
Article 280 of the Labor Code reads in full:
"Article 280. Regular and Casual Employment. The provisions of written

of the season.

paragraph: Provided, That, any employee who has rendered at least one year of service
while such actually exists."
The first paragraph answers the question of who are regular 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. LexLib
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 fall 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 so-
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. cdrep
SO ORDERED.
Melencio-Herrera, Paras and Regalado, JJ., concur.
Sarmiento, J., is on leave.

THIRD DIVISION
[G.R. No. 149440. January 28, 2003.]
HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE

SEGURA, petitioners, vs. NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD
AND GENERAL TRADE, respondents.
Teodoro V. Cortes for petitioners.
Yap Law Offices for respondent.
SYNOPSIS
Respondents worked as sugarcane workers for petitioners and had organized

themselves into a union. When the union was certified as the collective bargaining
representative in the certification elections, petitioners refused to sit down with the
union for the purpose of entering into a collective bargaining agreement. Moreover, the
petitioners did not any more give work assignments to respondents. Respondents
staged a strike for petitioners' failure to comply with their commitment and filed the
present complaint. The National Labor Relations Commission (NLRC) set aside the
decision of the Labor Arbiter and declared respondents to have been illegally dismissed.
The Court of Appeals (CA) upheld the decision of the NLRC, ruling that while the work
of respondents was seasonal in nature, they were considered to be merely on leave
during the off-season and were, therefore, still employed by petitioners. Moreover, the
workers enjoyed security of tenure. Any infringement upon this right is deemed
tantamount to illegal dismissal. The CA likewise concurred with the NLRC'S finding that
petitioners were guilty of unfair labor practice. Hence, this petition. ADcEST
The Supreme Court ruled that the CA did not err when it held that respondents were
regular employees. For respondents to be excluded from those classified as regular
employees, it is not enough that they perform work or services that are seasonal in
nature. They must have also been employed only for the duration of one season. The
evidence proved the existence of the first, but not of the second, condition. The fact that
respondents with the exception of some repeatedly worked as sugarcane workers
for petitioners for several years is not denied by the latter. Evidently, petitioners
employed respondents for more than one season. Therefore, the general rule of regular
employment is applicable. Petitioners' eventual refusal to use their services even if
they were ready, able and willing to perform their usual duties whenever these were
available and hiring of other workers to perform the tasks originally assigned to
respondents, amounted to illegal dismissal of the latter.
The Court further ruled that where there is no showing of clear, valid and legal cause for
the termination of employment, the law considers the matter a case of illegal dismissal
and the burden is on the employer to prove that the termination was for a valid and
authorized cause. In the case at bar, petitioners failed to prove any such cause for the
dismissal of respondents who are regular employees. Consequently, the finding of
unfair labor practice done in bad faith carries with it the sanction of moral and
exemplary damages.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; APPEALS; PETITIONS FOR REVIEW ON

CERTIORARI; ONLY ERRORS OF LAW ARE GENERALLY REVIEWED THEREIN. [O]nly
errors of law are generally reviewed by this Court in petitions for review on certiorari
of CA decisions. Questions of fact are not entertained. The Court is not a trier of facts
and, in labor cases, this doctrine applies with greater force. Factual questions are for
labor tribunals to resolve. In the present case, these have already been threshed out by
the NLRC. Its findings were affirmed by the appellate court.
2. ID.; EVIDENCE; CREDIBILITY; FACTUAL FINDINGS OF LABOR OFFICIALS WHO

ARE DEEMED TO HAVE ACQUIRED EXPERTISE IN MATTERS WITHIN THEIR
RESPECTIVE JURISDICTIONS, GENERALLY ACCORDED GREAT WEIGHT ON APPEAL.
[F]actual findings of labor officials, who are deemed to have acquired expertise in
matters within their respective jurisdictions, are generally accorded not only respect
but even finality. Their findings are binding on the Supreme Court. Verily, their
conclusions are accorded great weight upon appeal, especially when supported by
substantial evidence. Consequently, the Court is not duty-bound to delve into the
accuracy of their factual findings; in the absence of a clear showing that these were
arbitrary and bereft of any rational basis."
3. LABOR AND SOCIAL LEGISLATION; LABOR RELATIONS; WORK OR SERVICES

THAT ARE SEASONAL IN NATURE; CONDITIONS; NOT PRESENT IN CASE AT BAR.
For respondents to be excluded from those classified as regular employees, it is not
enough that they perform work or services that are seasonal in nature. They must have
also been employed only for the duration of one season. The evidence proves the
existence of the first, but not of the second, condition. The fact that respondents with
the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva
repeatedly worked as sugarcane workers for petitioners for several years is not denied
by the latter. Evidently, petitioners employed respondents for more than one season.
Therefore, the general rule of regular employment is applicable. DCScaT
4. CIVIL LAW; DAMAGES; MORAL AND EXEMPLARY DAMAGES; AWARDED IN CASE

OF A FINDING OF UNFAIR LABOR PRACTICE. The finding of unfair labor practice
done in bad faith carries with it the sanction of moral and exemplary damages.
5. LABOR AND SOCIAL LEGISLATION; LABOR RELATIONS; ILLEGAL DISMISSAL;
COMMITTED WHERE THERE IS NO SHOWING OF CLEAR, VALID AND LEGAL CAUSE
FOR THE TERMINATION OF EMPLOYMENT; CASE AT BAR. The sudden changes in
work assignments reeked of bad faith. These changes were implemented immediately
after respondents had organized themselves into a union and started demanding
collective bargaining. Those who were union members were effectively deprived of
their jobs. Petitioners' move actually amounted to unjustified dismissal of respondents,
in violation of the Labor Code. "Where there is no showing of clear, valid and legal cause
for the termination of employment, the law considers the matter a case of illegal
dismissal and the burden is on the employer to prove that the termination was for a
valid and authorized cause."
DECISION
PANGANIBAN, J p:
Although the employers have shown that respondents performed work that was
seasonal in nature, they failed to prove that the latter worked only for the duration of
one particular season. In fact, petitioners do not deny that these workers have served
them for several years already. Hence, they are regular not seasonal employees.
cDIHES
The Case
Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to
set aside the February 20, 2001 Decision of the Court of Appeals 1 (CA) in CA-GR SP No.
51033. The dispositive part of the Decision reads:
"WHEREFORE, premises considered, the instant special civil action for certiorari is
hereby DENIED." 2
On the other hand, the National Labor Relations Commission (NLRC) Decision, 3 upheld
by the CA, disposed in this wise:
"WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET
ASIDE and VACATED and a new one entered declaring complainants to have been
illegally dismissed. Respondents are hereby ORDERED to reinstate complainants except
Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva to their previous
position and to pay full backwages from September 1991 until reinstated. Respondents
being guilty of unfair labor practice are further ordered to pay complainant union the
sum of P10,000.00 as moral damages and P5,000.00 as exemplary damages." 4
The Facts
The facts are summarized in the NLRC Decision as follows:

"Contrary to the findings of the Labor Arbiter that complainants [herein respondents]
refused to work and/or were choosy in the kind of jobs they wanted to perform, the
records is replete with complainants' persistence and dogged determination in going
back to work.
"Indeed, it would appear that respondents did not look with favor workers' having
organized themselves into a union. Thus, when complainant union was certified as the
collective bargaining representative in the certification elections, respondents under
the pretext that the result was on appeal, refused to sit down with the union for the
purpose of entering into a collective bargaining agreement. Moreover, the workers
including complainants herein were not given work for more than one month. In
protest, complainants staged a strike which was however settled upon the signing of a
Memorandum of Agreement which stipulated among others that:
'a) The parties will initially meet for CBA negotiations on the 11th day of January
1991 and will endeavor to conclude the same within thirty (30) days.
'b) The management will give priority to the women workers who are members of
the union in case work relative . . . or amount[ing] to gahit and [dipol] arises.
'c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in
a week.
'd) The management will provide fifteen (15) wagons for the workers and that
existing workforce prior to the actual strike will be given priority. However, in case the
said workforce would not be enough, the management can hire additional workers to
supplement them.
'e) The management will not anymore allow the scabs, numbering about eighteen
(18) workers[,] to work in the hacienda; and
'f) The union will immediately lift the picket upon signing of this agreement.'
"However, alleging that complainants failed to load the fifteen wagons, respondents
reneged on its commitment to sit down and bargain collectively. Instead, respondent
employed all means including the use of private armed guards to prevent the organizers
from entering the premises.
"Moreover, starting September 1991, respondents did not any more give work
assignments to the complainants forcing the union to stage a strike on January 2, 1992.
But due to the conciliation efforts by the DOLE, another Memorandum of Agreement
was signed by the complainants and respondents which provides:
'Whereas the union staged a strike against management on January 2, 1992 grounded
on the dismissal of the union officials and members;
'Whereas parties to the present dispute agree to settle the case amicably once and for
all;
'Now therefore, in the interest of both labor and management, parties herein agree as
follows:
'1. That the list of the names of affected union members hereto attached and made
part of this agreement shall be referred to the Hacienda payroll of 1990 and determine
whether or not this concerned Union members are hacienda workers;
'2. That in addition to the payroll of 1990 as reference, herein parties will use as
guide the subjects of a Memorandum of Agreement entered into by and between the
parties last January 4, 1990;
'3. That herein parties can use other employment references in support of their
respective claims whether or not any or all of the listed 36 union members are
employees or hacienda workers or not as the case may be;
'4. That in case conflict or disagreement arises in the determination of the status of
the particular hacienda workers subject of this agreement herein parties further agree
to submit the same to voluntary arbitration;
'5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby

created to be composed of three representatives each and is given five working days
starting Jan. 23, 1992 to resolve the status of the subject 36 hacienda workers. (Union
representatives: Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.)" IHTASa
"Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation
Meeting showed as follows:
'The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko
based on who received their 13th month pay. The following are deemed not considered
employees:
1. Luisa Rombo
2. Ramona Rombo
3. Bobong Abrega
4. Boboy Silva
'The name Orencio Rombo shall be verified in the 1990 payroll.
'The following employees shall be reinstated immediately upon availability of work:
1. Jose Dagle 7. Alejandro Tejares

2. Rico Dagle 8. Gaudioso Rombo
3. Ricardo Dagle 9. Martin Alas-as Jr.
4. Jesus Silva 10. Cresensio Abrega
5. Fernando Silva 11. Ariston Eruela Sr.
6. Ernesto Tejares 12. Ariston Eruela Jr.'
"When respondents again reneged on its commitment; complainants filed the present
complaint.
"But for all their persistence, the risk they had to undergo in conducting a strike in the
face of overwhelming odds, complainants in an ironic twist of fate now find themselves
being accused of 'refusing to work and being choosy in the kind of work they have to
perform'." 5 (Citations omitted)
Ruling of the Court of Appeals
The CA affirmed that while the work of respondents was seasonal in nature, they were
considered to be merely on leave during the off-season and were therefore still
employed by petitioners. Moreover, the workers enjoyed security of tenure. Any
infringement upon this right was deemed by the CA to be tantamount to illegal
dismissal.
The appellate court found neither "rhyme nor reason in petitioner's argument that it
was the workers themselves who refused to or were choosy in their work." As found by
the NLRC, the record of this case is "replete with complainants' persistence and dogged
determination in going back to work." 6
The CA likewise concurred with the NLRC's finding that petitioners were guilty of unfair
labor practice. HTAEIS
Hence this Petition. 7
Issues
Petitioners raise the following issues for the Court's consideration:
"A. Whether or not the Court of Appeals erred in holding that respondents,
admittedly seasonal workers, were regular employees, contrary to the clear provisions
of Article 280 of the Labor Code, which categorically state that seasonal employees are
not covered by the definition of regular employees under paragraph 1, nor covered
under paragraph 2 which refers exclusively to casual employees who have served for at
least one year.
"B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, . . .
and relying instead on rulings which are not directly applicable to the case at bench, viz,
Philippine Tobacco, Bacolod-Murcia, and Gaco, . . ..
"C Whether or not the Court of Appeals committed grave abuse of discretion in
upholding the NLRC's conclusion that private respondents were illegally dismissed, that
petitioner[s were] guilty of unfair labor practice, and that the union be awarded moral
and exemplary damages." 8
Consistent with the discussion in petitioners' Memorandum, we shall take up Items A

and B as the first issue and Item C as the second.
The Court's Ruling
The Petition has no merit.
First Issue:
Regular Employment
At the outset, we must stress that only errors of law are generally reviewed by this
Court in petitions for review on certiorari of CA decisions. 9 Questions of fact are not
entertained. 10 The Court is not a trier of facts and, in labor cases, this doctrine applies
with greater force. 11 Factual questions are for labor tribunals to resolve. 12 In the
present case, these have already been threshed out by the NLRC. Its findings were
affirmed by the appellate court.
Contrary to petitioners' contention, the CA did not err when it held that respondents
were regular employees.
Article 280 of the Labor Code, as amended, states:
"Art. 280. Regular and Casual Employment. The provisions of written agreement to

while such activity exist." (Italics supplied)
For respondents to be excluded from those classified as regular employees, it is not
enough that they perform work or services that are seasonal in nature. They must have
also been employed only for the duration of one season. The evidence proves the
existence of the first, but not of the second, condition. The fact that respondents with
the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva
repeatedly worked as sugarcane workers for petitioners for several years is not denied
by the latter. Evidently, petitioners employed respondents for more than one season.
Therefore, the general rule of regular employment is applicable.
In Abasolo v. National Labor Relations Commission, 13 the Court issued this

clarification:
"[T]he test of whether or not an employee is a regular employee has been laid down in
De Leon v. NLRC, in which this Court held:
"The primary standard, therefore, of determining regular employment is the reasonable

connection between the particular activity performed by the employee in relation to the
usual trade or business of the employer. The test is whether the former is usually
necessary or desirable in the usual trade or business 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 a year, even if the performance is not continuous
and merely intermittent, the law deems 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 considered regular, but only with
respect to such activity and while such activity exists.
xxx xxx xxx
". . . [T]he fact that [respondents] do not work continuously for one whole year but only
for the duration of the . . . season 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
off-season are not separated from service in said period, but merely considered on
leave until re-employed." 14
The CA did not err when it ruled that Mercado v. NLRC 15 was not applicable to the case
at bar. In the earlier case, the workers 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. They were not hired regularly and repeatedly for the same phase/s
of agricultural work, but on and off for any single phase thereof. On the other hand,
herein respondents, having performed the same tasks for petitioners every season for
several years, are considered the latter's regular employees for their respective tasks.
Petitioners' eventual refusal to use their services even if they were ready, able and
willing to perform their usual duties whenever these were available and hiring of
other workers to perform the tasks originally assigned to respondents amounted to
illegal dismissal of the latter. CcAIDa
The Court finds no reason to disturb the CA's dismissal of what petitioners claim was
their valid exercise of a management prerogative. The sudden changes in work
assignments reeked of bad faith. These changes were implemented immediately after
respondents had organized themselves into a union and started demanding collective
bargaining. Those who were union members were effectively deprived of their jobs.
Petitioners' move actually amounted to unjustified dismissal of respondents, in
violation of the Labor Code.
"Where there is no showing of clear, valid and legal cause for the termination of
employment, the law considers the matter a case of illegal dismissal and the burden is
on the employer to prove that the termination was for a valid and authorized cause." 16
In the case at bar, petitioners failed to prove any such cause for the dismissal of
respondents who, as discussed above, are regular employees.
Second Issue:
Unfair Labor Practice
The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as
follows:
"Indeed, from respondents' refusal to bargain, to their acts of economic inducements

resulting in the promotion of those who withdrew from the union, the use of armed
guards to prevent the organizers to come in, and the dismissal of union officials and
members, one cannot but conclude that respondents did not want a union in their
haciendaa clear interference in the right of the workers to self-organization." 17
We uphold the CA's affirmation of the above findings. Indeed, factual findings of labor
officials, who are deemed to have acquired expertise in matters within their respective
jurisdictions, are generally accorded not only respect but even finality. Their findings
are binding on the Supreme Court. 18 Verily, their conclusions are accorded great
weight upon appeal, especially when supported by substantial evidence. 19
Consequently, the Court is not duty-bound to delve into the accuracy of their factual
findings, in the absence of a clear showing that these were arbitrary and bereft of any
rational basis." 20
The finding of unfair labor practice done in bad faith carries with it the sanction of
moral and exemplary damages." 21
WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED.
Costs against petitioners. EHSTcC
SO ORDERED.
Puno, Sandoval-Gutierrez and Corona, JJ., concur.

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Labor Code and Fixed-Period Employment

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EN BANC

[G.R. No. 48494. February 5, 1990.]

Quasha, Asperilla, Ancheta, Pen a & Nolasco for petitioners.

Mauricio G. Domogon for respondent Alegre.

However, at the investigation conducted by a Labor Conciliator of said report of

In cases of employment, without a definite period, in a commercial, industrial, or

The status of legitimacy continued to be enjoyed by fixed-period employment contracts

An employment shall be deemed to be without a definite period for purposes of this

The question immediately provoked by a reading of Article 319 is whether or not a

. . . Probationary employment. Probationary employment shall not exceed six months

. . . Regular and Casual Employment. The provisions of written agreement to the

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

. . Regular and Casual Employment. The provisions of a written agreement to the

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

Paraphrasing Escudero, respondent Alegre's employment was terminated upon the

WHEREFORE, the public respondent's Decision complained of is REVERSED and SET

Fernan, C.J., No part, related to counsel for petitioners.

[G.R. No. 61594. September 28, 1990.]

PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner, vs. HON. BLAS F.

Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.

Ledesma, Saludo & Associates for private respondents.

On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a

"5. DURATION OF EMPLOYMENT AND PENALTY

xxx xxx xxx

xxx xxx xxx

Notwithstanding anything to contrary as herein provided, PIA reserves the right to

xxx xxx xxx

10. APPLICABLE LAW:

On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a

1. Petitioner's first contention is that the Regional Director, MOLE, had no

"Art. 278. Miscellaneous Provisions . . .

"Section 2. Shutdown or dismissal without clearance. Any shutdown or dismissal

xxx xxx xxx"

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

xxx xxx xxx

Examining the provisions of paragraphs 5 and 6 of the employment agreement between

Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.

[G.R. No. 78693. January 28, 1991.]

ZOSIMO CIELO, petitioner, vs. THE HONORABLE NATIONAL LABOR RELATIONS

Francisco D. Alas for petitioner.

Mateo G. Delegencia for private respondent.

As an examination of the claimed agreement was necessary to the resolution of this

The said agreement reads in full as follows:

KNOW ALL MEN BY THESE PRESENTS:

This Agreement made and executed by and between:

That the FIRST PARTY is an owner of some cargo trucks.

3. That there is no employer/employee relationship between the parties, the nature

(Sgd.) HENRY LEI (Sgd.) ZOSIMO CIELO

First Party Second Party

SIGNED IN THE PRESENCE OF:

IN WITNESS WHEREOF, I have hereunto affixed my signature this 15th day of

The writ will issue. Cdpr

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

Art. 281. Probationary employment. Probationary employment shall not exceed

Art. 282. Termination of employer. An employer may terminate an employment

(b) Gross and habitual neglect by the employee of his duties;

(e) Other causes analogous to the foregoing. LexLib

Narvasa, Gancayco, Grin o-Aquino and Medialdea, JJ., concur.

[G.R. No. 105033. February 28, 1994.]

PHILIPPINE VILLAGE HOTEL, petitioner, vs. NATIONAL LABOR RELATIONS

"WHEREFORE, finding the above-entitled complaint to be without factual and legal

Thereafter, private respondents appealed to the public respondent NLRC. LibLex