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G.R. No. 148492 May 9, 2003 "2.

Ordering respondent Coca-Cola Bottlers


Phils., Inc. to reinstate petitioners to their former
positions with full backwages, inclusive of
BUENAVENTURA C. MAGSALIN & COCA-COLA BOTTLERS
allowances that petitioners had been receiving
PHILS., INC., petitioners,
during their employment and 13th month pay,
vs.
computed from the date of their termination up
NATIONAL ORGANIZATION OF WORKING MEN (N.O.W.M.),
to the time of their actual reinstatement
RODOLFO MELGAR, ARNEL DELOS SANTOS, SILVERIO
(Paramount Vinyl Product Corp. vs. NLRC, 190
MINDAJAO, RUBEN NAVALES, BOBBY AUSTERO, RAYMUNDO
SCRA 526)."2
GAUDICOS, CHRISTOPHER PERALTA, GIOVANI DELA CRUZ,
JOSELITO OCCIDENTAL, AMADO BODASAN, FREDERIK
MAGALINO, CHITO OCCIDENTAL, ALEXANDER DELOS Petitioner company's motion for reconsideration was denied in a
SANTOS, DEONIL MESA, OLIVER VILLAFLOR, ROBERTO resolution, dated 21 May 2001, of the appellate court.
TUMONBA, RODRIGO ANGELES, ROMMEL ABAD, FELIX
AVENIDO, ARMANDO AMOR, FREDERICK DE GUZMAN, CEA
The focal issues revolve around the matter of whether or not the
CARMELO, MARIANO CAÑETE, ALBERTO ANTONES, ROMEO
nature of work of respondents in the company is of such nature as to
BASQUINAS, ROGELIO MALINIS, EDMUNDO BAYOS, RAMIL
be deemed necessary and desirable in the usual business or trade
REVADO, JOEL PIATA, OSCAR MALINAY, ROBERT REYES,
of petitioner that could qualify them to be regular employees.
JIMMY REYES, RETCHEL HAUTEA, VICTORINO TORRALBA,
NOEL RUBAI, RENATO DE OCAMPO, JESUS NOZON, JOEL
MALINIS, REYNALDO GREGORY, MICHAEL RUBIA, JOSELITO The basic law on the case is Article 280 of the Labor Code. Its
VILLANUEVA, LEONARDO MONDINA, EDUARDO BELLA, pertinent provisions read:
WILFREDO BELLA, ALBERTO MAGTIBAY, MIGUEL CUESTA,
JOSE MARCOS RODRIGUEZ III, HERMINIO ROFLO, ERNIE
CHAVEZ, NELSON LOGRONIO, LEONILO GALAPIN, REY "Art. 280. Regular and Casual Employment. – The
PANGILINAN, LARRY JAVIER, MATIAS ARBUES, RONILO provisions of written agreement to the contrary
AUSTERO, ADEMAR ESTUITA, EDWIN DE LEON, RANDY DE notwithstanding and regardless of the oral agreement of
CHAVEZ, respondents. 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
VITUG, J.: 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
Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the
been determined at the time of the engagement of the
services of respondent workers as "sales route helpers" for a limited
employee or where the work or services to be performed
period of five months. After five months, respondent workers were
is seasonal in nature and the employment is for the
employed by petitioner company on a day-to-day basis. According to
duration of the season.
petitioner company, respondent workers were hired to substitute for
regular sales route helpers whenever the latter would be unavailable
or when there would be an unexpected shortage of manpower in "An employment shall be deemed to be casual if it is not
any of its work places or an unusually high volume of work. The covered by the preceding paragraph: Provided, That, any
practice was for the workers to wait every morning outside the gates employee who has rendered at least one year of service,
of the sales office of petitioner company. If thus hired, the workers whether such service is continuous or broken, shall be
would then be paid their wages at the end of the day. considered a regular employee with respect to the activity
in which he is employed and his employment shall
continue while such activity exists."
Ultimately, respondent workers asked petitioner company to extend
to them regular appointments. Petitioner company refused. On 07
November 1997, twenty-three (23) of the "temporary" workers Coca-Cola Bottlers Phils., Inc., is one of the leading and largest
(herein respondents) filed with the National Labor Relations manufacturers of softdrinks in the country. Respondent workers
Commission (NLRC) a complaint for the regularization of their have long been in the service of petitioner company. Respondent
employment with petitioner company. The complaint was amended workers, when hired, would go with route salesmen on board
a number of times to include other complainants that ultimately delivery trucks and undertake the laborious task of loading and
totaled fifty-eight (58) workers. Claiming that petitioner company unloading softdrink products of petitioner company to its various
meanwhile terminated their services, respondent workers filed a delivery points.
notice of strike and a complaint for illegal dismissal and unfair labor
practice with the NLRC.
Even while the language of law might have been more definitive, the
clarity of its spirit and intent, i.e., to ensure a "regular" worker's
On 01 April 1998, the parties agreed to submit the controversy, security of tenure, however, can hardly be doubted. In determining
including the issue raised in the complaint for regularization of whether an employment should be considered regular or non-
employment, for voluntary arbitration. On 18 May 1998, the regular, the applicable test is the reasonable connection between
voluntary arbitrator rendered a decision dismissing the complaint on the particular activity performed by the employee in relation to the
the thesis that respondents (then complainants) were not regular usual business or trade of the employer. The standard, supplied by
employees of petitioner company. the law itself, is whether the work undertaken is necessary or
desirable in the usual business or trade of the employer, a fact that
can be assessed by looking into the nature of the services rendered
Respondent workers filed with the Court of Appeals a petition for
and its relation to the general scheme under which the business or
review under Rule 43 of the Rules of Civil Procedure assailing the
trade is pursued in the usual course. It is distinguished from a
decision of the voluntary arbitrator, therein contending that -
specific undertaking that is divorced from the normal activities
required in carrying on the particular business or trade. But,
"1. The Voluntary Arbitrator committed errors in finding although the work to be performed is only for a specific project or
that petitioners voluntarily and knowingly agreed to be seasonal, where a person thus engaged has been performing the
employed on a day-to-day basis; and job for at least one year, even if the performance is not continuous
or is merely intermittent, the law deems the repeated and continuing
need for its performance as being sufficient to indicate the necessity
"2. The Voluntary Arbitrator committed errors in finding
or desirability of that activity to the business or trade of the
that petitioners' dismissal was valid."1
employer. The employment of such person is also then deemed to
be regular with respect to such activity and while such activity
In its decision of 11 August 2000, the Court of Appeals reversed and exists.3
set aside the ruling of the voluntary arbitrator, it concluded -
The argument of petitioner that its usual business or trade is
"WHEREFORE, the assailed decision of the Voluntary softdrink manufacturing and that the work assigned to respondent
Arbitrator is hereby REVERSED and SET ASIDE and workers as sales route helpers so involves merely "postproduction
anew one is entered: activities," one which is not indispensable in the manufacture of its
products, scarcely can be persuasive. If, as so argued by petitioner
company, only those whose work are directly involved in the
"1. Declaring petitioners as regular employees
production of softdrinks may be held performing functions necessary
of Coca-Cola Bottlers Phils., Inc. and their and desirable in its usual business or trade, there would have then
dismissal from employment as illegal; been no need for it to even maintain regular truck sales route
helpers. The nature of the work performed must be viewed from a

1
perspective of the business or trade in its entirety4 and not on a SO ORDERED.
confined scope.

The repeated rehiring of respondent workers and the continuing


need for their services clearly attest to the necessity or desirability of
their services in the regular conduct of the business or trade of G.R. No. 109902 August 2, 1994
petitioner company. The Court of Appeals has found each of
respondents to have worked for at least one year with petitioner ALU-TUCP, Representing Members: ALAN BARINQUE, with 13
company. While this Court, in Brent School, Inc. vs. Zamora,5 has others, namely: ENGR. ALAN G. BARINQUE, ENGR. DARRELL
upheld the legality of a fixed-term employment, it has done so, LEE ELTAGONDE, EDUARD H. FOOKSON, JR., ROMEO R.
however, with a stern admonition that where from the circumstances SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO
it is apparent that the period has been imposed to preclude the MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR
acquisition of tenurial security by the employee, then it should be S. BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B.
struck down as being contrary to law, morals, good customs, public DANDASAN, and GERRY I. FETALVERO, petitioners,
order and public policy. The pernicious practice of having vs.
employees, workers and laborers, engaged for a fixed period of few NATIONAL LABOR RELATIONS COMMISSION and NATIONAL
months, short of the normal six-month probationary period of STEEL CORPORATION (NSC), respondents.
employment, and, thereafter, to be hired on a day-to-day basis,
mocks the law. Any obvious circumvention of the law cannot be
countenanced. The fact that respondent workers have agreed to be Leonard U. Sawal for petitioners.
employed on such basis and to forego the protection given to them
on their security of tenure, demonstrate nothing more than the Saturnino Mejorada for private respondent.
serious problem of impoverishment of so many of our people and
the resulting unevenness between labor and capital. A contract of
employment is impressed with public interest. The provisions of
applicable statutes are deemed written into the contract, and "the
parties are not at liberty to insulate themselves and their FELICIANO, J.:
relationships from the impact of labor laws and regulations by simply
contracting with each other."6
In this Petition for Certiorari, petitioners assail the Resolution of the
National Labor Relations Commission ("NLRC") dated 8 January
With respect to the "Release, Waiver and Quitclaim" executed by 1993 which declared petitioners to be project employees of private
thirty-six (36) of the original complainants, namely, Rommel Abad, respondent National Steel Corporation ("NSC"), and the NLRC's
Armando Amor, Bobby Austero, Felix Avenido, Amado Badasan, subsequent Resolution of 15 February 1993, denying petitioners'
Edmundo Bayos, Eduardo Bella, Jr., Mariano Cañete, Carmelo Cea, motion for reconsideration.
Ernie Chavez, Randy Dechaves, Frederick De Guzman, Renato De
Ocampo, Ademar Estuita, Leonilo Galapin, Raymund Gaudicos,
Retchel Hautea, Larry Javier, Nelson Logrinio, Alberto Magtibay, Petitioners plead that they had been employed by respondent NSC
Frederick Magallano, Rogelio Malinis, Rodolfo Melgar, Silverio in connection with its Five Year Expansion Program (FAYEP I &
Mindajao, Leonardo Mondina, Ruben Navales, Rey Pangilinan, II) 1 for varying lengths of time when they were separated from
Christopher Peralta, Jimmy Reyes, Herminio Roflo, Michael Rubia, NSC's service:
Noel Rubia, Roberto Tumomba, Oliver Villaflor, and Joselito
Villanueva, this Court finds the execution of the same to be in order. Employee Date Nature of Separated
During the pendency of the appeal with the Court of Appeals, these
thirty-six (36) complainants individually executed voluntarily a
release, waiver and quitclaim and received from petitioner company Employed Employment
the amount of fifteen thousand (P15,000.00) pesos each. The
amount accords with the disposition of the case by the voluntary
1. Alan Barinque 5-14-82 Engineer 1 8-31-91
arbitrator thusly:
2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92
3. Edgar Bontuyan 11-03-82 Chairman to
"WHEREFORE, above premises considered, the herein present
complaint is hereby DISMISSED for lack of merit. 4. Osias Dandasan 9-21-82 Utilityman 1991
5. Leonido Echavez 6-16-82 Eng. Assistant 6-
30-92
"However, we cannot completely negate the fact that 6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-
complainants did and do actually render services to the 91
Company. It is with this in mind and considering the 7. Gerry Fetalvero 4-08-85 Mat. Expediter
difficulty the complainants may face in looking for another regularized
job in case they are no longer re-engaged that we direct 8. Eduard Fookson 9-20-84 Eng. Assistant 8-
the company to pay complainants Fifteen Thousand 31-91
Pesos each (P15,000.00) as financial assistance. It is 9. Russell Gacus 1-30-85 Engineer 1 6-30-92
however understood that the financial assistance 10. Jose Garguena 3-02-81 Warehouseman to
previously extended by the Company to some of the present
complainants shall be deducted from the financial 11. Eusebio Mejos 11-17-82 Survey Aide 8-31-
assistance herein awarded."7 91
12. Bonifacio Mejos 11-17-82 Surv. Party Head
The receipt of the amount awarded by the voluntary arbitrator, as 1992
well as the execution of a release, waiver and quitclaim, is, in effect, 13. Romeo Sarona 2-26-83 Machine Operator
an acceptance of said decision. There is nothing on record which 8-31-912
could indicate that the execution thereof by thirty-six (36) of the
respondent workers has been attended by fraud or deceit. While On 5 July 1990, petitioners filed separate complaints for unfair labor
quitclaims executed by employees are commonly frowned upon as practice, regularization and monetary benefits with the NLRC, Sub-
being contrary to public policy and are ineffective to bar claims for Regional Arbitration Branch XII, Iligan City.
the full measure of their legal rights, there are, however, legitimate
waivers that represent a voluntary and reasonable settlement of
laborers' claims which should be so respected by the Court as the The complaints were consolidated and after hearing, the Labor
law between the parties.8 Where the person making the waiver has Arbiter in a Decision dated 7 June 1991, declared petitioners
done so voluntarily, with a full understanding thereof, and the "regular project employees who shall continue their employment as
consideration for the quitclaim is credible and reasonable, the such for as long as such [project] activity exists," but entitled to the
transaction must be recognized as being a valid and binding salary of a regular employee pursuant to the provisions in the
undertaking. "Dire necessity" is not an acceptable ground for collective bargaining agreement. It also ordered payment of salary
annulling the release, when it is not shown that the employee has differentials. 3
been forced to execute it.9
Both parties appealed to the NLRC from that decision. Petitioners
WHEREFORE, the questioned decision of the Court of Appeals, in argued that they were regular, not project, employees. Private
CA-G.R. SP No. 47872 is hereby AFFIRMED with MODIFICATION respondent, on the other hand, claimed that petitioners are project
in that the "Release, Waiver and Quitclaim" executed by the thirty- employees as they were employed to undertake a specific project —
six (36) individual respondents are hereby declared VALID and NSC's Five Year Expansion Program (FAYEP I & II).
LEGAL.

2
The NLRC in its questioned resolutions modified the Labor Arbiter's (and scope) of which were specified at the time the employees were
decision. It affirmed the Labor Arbiter's holding that petitioners engaged for that project.
were project employees since they were hired to perform work in a
specific undertaking — the Five Years Expansion Program, the
In the realm of business and industry, we note that "project" could
completion of which had been determined at the time of their
refer to one or the other of at least two (2) distinguishable types of
engagement and which operation was not directly related to the
activities. Firstly, a project could refer to a particular job or
business of steel manufacturing. The NLRC, however, set aside the
undertaking that is within the regular or usual business of the
award to petitioners of the same benefits enjoyed
employer company, but which is distinct and separate, and
by regular employees for lack of legal and factual basis.
identifiable as such, from the other undertakings of the company.
Such job or undertaking begins and ends at determined or
Deliberating on the present Petition for Certiorari, the Court determinable times. The typical example of this first type of project is
considers that petitioners have failed to show any grave abuse of a particular construction job or project of a construction company. A
discretion or any act without or in excess of jurisdiction on the part of construction company ordinarily carries out two or more discrete
the NLRC in rendering its questioned resolutions of 8 January 1993 identifiable construction projects: e.g., a twenty-five- storey hotel in
and 15 February 1993. 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
The law on the matter is Article 280 of the Labor Code which reads
duration of which has been determined and made known to the
in full:
employees at the time of employment, are properly treated as
"project employees," and their services may be lawfully terminated
Art. 280. Regular and Casual Employment — at completion of the project.
The provisions of the written agreement to the
contrary notwithstanding and regardless of the
The term "project" could also refer to, secondly, a particular job or
oral agreement of the parties, and employment
undertaking that is not within the regular business of the corporation.
shall be deemed to be regular where the
Such a job or undertaking must also be identifiably separate and
employee has been engaged to perform
distinct from the ordinary or regular business operations of the
activities which are usually necessary or
employer. The job or undertaking also begins and ends at
desirable in the usual business or trade of the
determined or determinable times. The case at bar presents what
employer, except where the employment has
appears to our mind as a typical example of this kind of "project."
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 NSC undertook the ambitious Five Year Expansion Program I and II
employee or where the work or services to be with the ultimate end in view of expanding the volume and
performed is seasonal in nature and the increasing the kinds of products that it may offer for sale to the
employment is for the duration of the season. 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
An employment shall be deemed to be casual if
Plant" (BSP); (c) the acquisition and installation of a "Five Stand
it is not covered by the preceding paragraph:
TDM"; and (d) the "Cold Mill Peripherals Project." 8 Instead of
Provided, That, any employee who has
contracting out to an outside or independent contractor the tasks
rendered at least one year service, whether
of constructing the buildings with related civil and electrical works
such service is continuous or broken, shall be
that would house the new machinery and equipment,
considered a regular employee with respect to
the installation of the newly acquired mill or plant machinery and
the activity in which he is employed and his
equipment and the commissioning of such machinery and
employment shall continue while such actually
equipment, NSC opted to execute and carry out its Five Yeear
exists. (Emphasis supplied)
Expansion Projects "in house," as it were, by administration. The
carrying out of the Five Year Expansion Program (or more precisely,
Petitioners argue that they are "regular" employees of NSC each of its component projects) constitutes a distinct undertaking
because: (i) their jobs are "necessary, desirable and work-related to identifiable from the ordinary business and activity of NSC. Each
private respondent's main business, steel-making"; and (ii) they component project, of course, begins and ends at specified times,
have rendered service for six (6) or more years to private which had already been determined by the time petitioners were
respondent NSC. 4 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
The basic issue is thus whether or not petitioners are properly machinery — only for itself. Private respondent NSC was not in the
characterized as "project employees" rather than "regular
business of constructing buildings and installing plant machinery for
employees" of NSC. This issue relates, of course, to an important the general business community, i.e., for unrelated, third party,
consequence: the services of project employees are co-terminous corporations. NSC did not hold itself out to the public as a
with the project and may be terminated upon the end or completion
construction company or as an engineering corporation.
of the project for which they were hired. 5 Regular employees, in
contract, are legally entitled to remain in the service of their
employer until that service is terminated by one or another of the Which ever type of project employment is found in a particular case,
recognized modes of termination of service under the Labor Code. 6 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
It is evidently important to become clear about the meaning and
merely as a means of evading otherwise applicable requirements of
scope of the term "project" in the present context. The "project" for labor laws.
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 Thus, the particular component projects embraced in the Five Year
ordinary or normal relationship to the usual business of the Expansion Program, to which petitioners were assigned, were
employer. In this latter case, the determination of the scope and distinguishable from the regular or ordinary business of NSC which,
parameeters of the "project" becomes fairly easy. It is unusual (but of course, is the production or making and marketing of steel
still conceivable) for a company to undertake a project which has products. During the time petitioners rendered services to NSC, their
absolutely no relationship to the usual business of the company; work was limited to one or another of the specific component
thus, for instance, it would be an unusual steel-making company projects which made up the FAYEP I and II. There is nothing in the
which would undertake the breeding and production of fish or the record to show that petitioners were hired for, or in fact assigned to,
cultivation of vegetables. From the viewpoint, however, of the legal other purposes, e.g., for operating or maintaining the old, or
characterization problem here presented to the Court, there should previously installed and commissioned, steel-making machinery and
be no difficulty in designating the employees who are retained or equipment, or for selling the finished steel products.
hired for the purpose of undertaking fish culture or the production of
vegetables as "project employees," as distinguished from ordinary or
We, therefore, agree with the basic finding of the NLRC (and the
"regular employees," so long as the duration and scope of the
Labor Arbiter) that the petitioners were indeed "project employees:"
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 It is well established by the facts and evidence
determining whether particular employees are properly on record that herein 13 complainants were
characterized as "project employees" as distinguished from "regular hired and engaged for specific activities or
employees," is whether or not the "project employees" were undertaking the period of which has been
assigned to carry out a "specific project or undertaking," the duration determined at time of hiring or engagement. It is
of public knowledge and which this Commission
3
can safely take judicial notice that the the Court of Appeals, reversing the Decision,2 promulgated by the
expansion program (FAYEP) of respondent National Labor Relations Commission (NLRC) on 7 May 2004. The
NSC consist of various phases [of] project Court of Appeals, in its assailed Decision, declared that respondents
components which are being executed or are regular employees who were illegally dismissed by petitioner
implemented independently or simultaneously Hanjin Heavy Industries and & Construction Company, Limited
from each other . . . (HANJIN).

In other words, the employment of each "project Petitioner HANJIN is a foreign company duly registered with the
worker" is dependent and co-terminous with the Securities and Exchange Commission to engage in the construction
completion or termination of the specific activity business in the Philippines. Petitioners Hak Kon Kim and Jhunie
or undertaking [for which] he was hired which Adajar were employed as Project Director and Supervisor,
has been pre-determined at the time of respectively, by HANJIN.
engagement. Since, there is no showing that
they (13 complainants) were engaged to
On 11 April 2002, respondents Felicito Ibañez, Aligwas Carolino,
perform work-related activities to the business
Elmer Gacula, Enrique Dagotdot, Ruel Calda, and four other co-
of respondent which is steel-making, there is no
workers filed a complaint before the NLRC, docketed as NLRC Case
logical and legal sense of applying to them the
No. RAB-IV-04-15515-02-RI, for illegal dismissal with prayer for
proviso under the second paragraph of Article
reinstatement and full backwages against petitioners. In their
280 of the Labor Code, as amended.
Position Paper dated 29 July 2002, respondents alleged that
HANJIN hired them for various positions on different dates,
xxx xxx xxx hereunder specified:

The present case therefore strictly falls under Position


the definition of "project employees" on Felicito Ibañez Tireman
paragraph one of Article 280 of the Labor Code, Elmer Gacula Crane Operator
as amended. Moreover, it has been held that
the length of service of a project employee is Enrique Dagotdot Welder
not the controlling test of employment tenure Aligwas Carolino Welder
but whether or not "the employment has been Ruel Calda Warehouseman
fixed for a specific project or undertaking the
completion or termination of which has been
Respondents stated that their tasks were usual and necessary or
determined at the time of the engagement of the
desirable in the usual business or trade of HANJIN. Respondents
employee". (See Hilario Rada v. NLRC, G.R.
additionally averred that they were employed as members of a work
No. 96078, January 9, 1992; and Sandoval
pool from which HANJIN draws the workers to be dispatched to its
Shipping, Inc. v. NLRC, 136 SCRA 674
various construction projects; with the exception of Ruel Calda, who
(1985). 9
as a warehouseman was required to work in HANJIN's main
office.4 Among the various construction projects to which they were
Petitioners next claim that their service to NSC of more than six (6) supposedly assigned, respondents named the North Harbor project
years should qualify them as regular employees. We believe this in 1992-1994; Manila International Port in 1994-1996; Batangas Port
claim is without legal basis. The simple fact that the employment of in 1996-1998; the Batangas Pier, and La Mesa Dam.5
petitioners as project employees had gone beyond one (1) year,
does not detract from, or legally dissolve, their status as project
On 15 April 2002, Hanjin dismissed respondents from employment.
employees. 10 The second paragraph of Article 280 of the Labor
Respondents claimed that at the time of their dismissal, HANJIN had
Code, quoted above, providing that an employee who has served for
several construction projects that were still in progress, such as
at least one (1) year, shall be considered a regular employee,
Metro Rail Transit (MRT) II and MRT III, and continued to hire
relates to casual employees, not to project employees.
employees to fill the positions vacated by the respondents.6

In the case of Mercado, Sr. vs. National Labor Relations


Petitioners denied the respondents' allegations. They maintained
Commission, 11 this Court ruled that the proviso in the second
that respondents were hired as project employees for the
paragraph of Article 280 relates only to casual employees and is not
construction of the LRT/MRT Line 2 Package 2 and 3 Project.
applicable to those who fall within the definition of said Article's first
HANJIN and respondents purportedly executed contracts of
paragraph, i.e., project employees. The familiar grammatical rule is
employment, in which it was clearly stipulated that the respondents
that a proviso is to be construed with reference to the immediately
were to be hired as project employees for a period of only three
preceding part of the provision to which it is attached, and not to
months, but that the contracts may be renewed, to wit:
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 Article II
whole. No such intent is observable in Article 280 of the Labor Code,
which has been quoted earlier.
TERM OF AGREEMENT

ACCORDINGLY, in view of the foregoing, the Petition


This Agreement takes effect xxx for the duration of three
for Certiorari is hereby DISMISSED for lack of merit. The
(3) months and shall be considered automatically renewed
Resolutions of the NLRC dated 8 January 1993 and 15 February
in the absence of any Notice of Termination by the
1993 are hereby AFFIRMED. No pronouncement as to costs.
EMPLOYER to the PROJECT EMPLOYEE.
This AGREEMENT automatically terminates at the
SO ORDERED. completion of the project or any particular phase
thereof, depending upon the progress of the project.7

However, petitioners failed to furnish the Labor Arbiter a copy of said


contracts of employment.
G.R. No. 170181 June 26, 2008

Petitioners asserted that respondents were duly informed of


HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD., HANJIN's policies, rules and regulations, as well as the terms of
HAK KON KIM and/or JHUNIE ADAJAR,petitioners, their contracts. Copies of the employees' rules and regulations were
vs. posted on the bulletin boards of all HANJIN campsite offices. 8
FELICITO IBAÑEZ, ALIGWAS CAROLINO, ELMER GACULA,
ENRIQUE DAGOTDOT AND RUEL CALDA,respondents.
Petitioners further emphasized that prior to 15 April 2002, Hak Kon
Kim, HANJIN's Project Director, notified respondents of the
DECISION company's intention to reduce its manpower due to the completion
of the LRT/MRT Line 2 Package 2 and 3 Project. Respondents were
CHICO-NAZARIO, J.: among the project employees who were thereafter laid off, as shown
in the Establishment Termination Report filed by HANJIN before the
Department of Labor and Employment (DOLE) Regional Office (IV)
This is a Petition for Review on Certiorari under Rule 45 of the Rules in Cainta, Rizal on 11 April 2002.9
of Court, assailing the Decision,1 dated 28 July 2005, rendered by

4
Finally, petitioners insist that in accordance with the usual practice of Petitioners filed an appeal before the NLRC. In their Notice of
the construction industry, a completion bonus was paid to the Appeal/Memorandum Appeal16 dated 5 July 2003, petitioners
respondents.10 To support this claim, they offered as evidence discarded their earlier claim that respondents signed employment
payroll records for the period 4 April 2002 to 20 April 2002, with the contracts, unequivocally informing them of their status as project
words "completion bonus" written at the lower left corner of each employees. Nonetheless, they still contended that the absence of
page.11 respondents' contracts of employment does not vest the latter with
regular status.
Petitioners attached copies of the Quitclaims,12 executed by the
respondents, which uniformly stated that the latter received all The NLRC reversed the Labor Arbiter's Decision dated 30 April
wages and benefits that were due them and released HANJIN and 2003, and pronounced that the respondents were project employees
its representatives from any claims in connection with their who were legally terminated from employment.17 The NLRC gave
employment. These Quitclaims also contained Clearance probative value to the Termination Report submitted by HANJIN to
Certificates which confirmed that the employees concerned were the DOLE, receipts signed by respondents for their completion
cleared of all accountabilities at the close of the working hours on 15 bonus upon phase completion, and the Quitclaims executed by the
April 2002. respondents in favor of HANJIN. The NLRC also observed that the
records were devoid of any proof to support respondents' allegation
that they were employed before 1997, the time when construction
In their Reply13 dated 27 August 2002, respondents vehemently
work on the MRT started. Lastly, it overruled the Labor Arbiter's
refuted having signed any written contract stating that they were
award of moral and exemplary damages.18 The dispositive part of
project employees.
the Decision dated 7 May 2004 of the NLCR states that:

The Labor Arbiter found merit in the respondents' complaint and


WHEREFORE, in view of the foregoing, the decision
declared that they were regular employees who had been dismissed
subject of appeal is hereby REVERSED and SET ASIDE
without just and valid causes and without due process. It ruled that
and a new one is entered DISMISSING complainants'
HANJIN's allegation that respondents were project employees was
complaint for lack of merit.19
negated by its failure to present proof thereof. It also noted that a
termination report should be presented after the completion of every
project or a phase thereof and not just the completion of one of On appeal, the Court of Appeals reversed the NLRC Decision, dated
these projects. The Labor Arbiter further construed the number of 7 May 2004. The appellate court looked with disfavor at the change
years that respondents rendered their services for HANJIN as an in HANJIN's initial position before the Labor Arbiter-from its initial
indication that respondents were regular, not project, argument that respondents executed employment contracts; to its
employees.14 The Labor Arbiter ordered in its Decision, dated 30 modified argument during its appeal before the NLRC-that
April 2003, that: respondents could still be categorized as project workers despite the
absence of contracts of employment. Additionally, it adjudged the
Termination Report as inconclusive proof that respondents were
WHEREFORE, premises considered, judgment is hereby
project employees. Emphasizing that the employer had the burden
rendered as follows;
of proving the legality of the dismissal, the appellate court ruled that
respondents were regular employees and upheld the Labor Arbiter's
1) Declaring respondent HANJIN HEAVY INDUSTRIES & finding that they were illegally dismissed. The Court of Appeals,
CONSTRUCTION CO. LTD. guilty of illegal dismissal however, adopted the NLRC's deletion of the award of
damages.20 The decretal portion of the Decision of the Court of
Appeals reads:
>2) Ordering respondent to reinstate all the complainants
to positions previously occupied by them with full
backwages from the time compensation was withheld UPON THE VIEW WE TAKE OF THIS CASE, THUS, the
from them up to date of actual reinstatement in the challenged decision and resolution of the NLRC must be,
following amount (as of date of this decision): as they hereby are, REVERSED and SET ASIDE. The
decision of the Labor Arbiter is
hereby REINSTATED relative to the award to petitioners
1. Felicito Ibañez P 88,020.83
of full backwages, separation pay in lieu of reinstatement,
2. Elmer A. Gacula and88,020.83
litigation expenses, but not with respect to the awards
3. Rizalino De Vera for88,020.83
moral damages or for exemplary damages, both of
4. Enrique Dagotdot which are hereby DELETED. Without costs in this
88,020.83
21
5. Carolino Aligwas instance.
88,020.83
6. Ruel Calda 88,020.83
7. Roldan Lanojan Hence, the present Petition, in which the following issues are raised:
88,020.83
8. Pascual Caranguian 88,020.83
9. Carmelito Dalumangcad 88,020.83 I
Total P792, 187.47
WHETHER OR NOT THE FINDINGS OF THE
3) In lieu of reinstatement, respondent is ordered to pay HONORABLE COURT OF APPEALS ARE MERE
complainants their separation pay in the following sum: CONCLUSIONS WITHOUT DELVING INTO THE
RECORDS OF THE CASE AND EXAMINE (sic) FOR
ITSELF THE QUESTIONED FINDINGS OF THE LABOR
Felicito Ibañez P 19,500.00
ARBITER AND THE NATIONAL LABOR RELATIONS
Elmer A. Gacula 71,500.00 CONTRARY TO THE RULING IN THE
COMMISSION
Rizaliano De Vera CASE OF AGABON VS. NLRC, ET. AL. 442 SCRA 573.
19,500.00
Enrique Dagotdot 52,000.00
Carolino Aligwas 58,500.00 II
Ruel Calda 45,500.00
Roldan Lanojan 19,500.00OR NOT THE HONORABLE COURT OF
WHETHER
Pascual Caranguian 26,000.00
APPEALS MANIFESTLY OVERLOOKED CERTAIN
Carmelito Dalumangcad RELEVANT
78,000.00 FACTS WHICH, IF PROPERLY
Total CONSIDERED, WOULD RESULT IN A DIFFERENT
P390,000.00
CONCLUSION.

4) Ordering respondent to pay each


complainant P50,000.00 for moral damages III
and P30,000.00 as exemplary damages, or the total sum
of P450,000.00 and P270,000.00, respectively; and WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN NOT APPLYING THE PERTINENT
5) Ordering respondent to pay complainants litigation PROVISIONS OF POLICY INSTRUCTIONS NO. 20, AS
expenses in the sum of P30,000.00 AMENDED BY DEPARTMENT ORDER NO. 19 SERIES
OF 1993 IN RELATION TO ARTICLE 280 OF THE
LABOR CODE IN CONSIDERING WHETHER OR NOT
All other claims are DISMISSED for lack of merit.15 RESPONDENTS ARE PROJECT EMPLOYEES.

5
IV In Caramol v. National Labor Relations Commission,28 and later
reiterated in Salinas, Jr. v. National Labor Relations
Commission,29 the Court markedly stressed the importance of the
THE HONORABLE COURT OF APPEALS ERRED IN
employees' knowing consent to being engaged as project
RULING THAT RESPONDENTS WERE ILLEGALLY
employees when it clarified that "there is no question that stipulation
DISMISSED.22
on employment contract providing for a fixed period of employment
such as `project-to-project' contract is valid provided the period
The Petition is without merit. 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
As a general rule, the factual findings of the Court of Appeals are vitiating his consent x x x."
binding upon the Supreme Court. One exception to this rule is when
the factual findings of the former are contrary to those of the trial
court or the lower administrative body, as the case may be. The During the proceedings before the Labor Arbiter, the petitioners'
main question that needs to be settled-whether respondents were failure to produce respondents' contracts of employment was
regular or project employees-is factual in nature. Nevertheless, this already noted, especially after they alleged in their pleadings the
Court is obliged to resolve it due to the incongruent findings of the existence of such contracts stipulating that respondents'
NLRC and those of the Labor Arbiter and the Court of Appeals. 23 employment would only be for the duration of three months,
automatically renewed in the absence of notice, and terminated at
the completion of the project. Respondents denied having executed
Article 280 of the Labor Code distinguishes a "project employee"
such contracts with HANJIN. In their appeal before the NLRC until
from a "regular employee" thus: the present, petitioners now claim that due to a lapse in
management procedure, no such employment contracts were
Article 280. Regular and Casual Employment-The executed; nonetheless, the absence of a written contract does not
provisions of written agreement to the contrary remove respondents from the ambit of being project employees.30
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular
While the absence of a written contract does not automatically
where the employee has been engaged to perform confer regular status, it has been construed by this Court as a red
activities which are usually necessary or desirable in the flag in cases involving the question of whether the workers
usual business or trade of the employer, except where the concerned are regular or project employees. In Grandspan
employment has been fixed for a specific project or Development Corporation v. Bernardo31 and Audion Electric Co.,
undertaking the completion or termination of which has Inc. v. National Labor Relations Commission,32 this Court took note
been determined at the time of the engagement of the of the fact that the employer was unable to present employment
employee or where the work or services to be performed contracts signed by the workers, which stated the duration of the
is seasonal in nature and the employment is for the
project. In another case, Raycor v. Aircontrol Systems, Inc. v.
duration of the season. National Labor Relations Commission,33 this Court refused to give
any weight to the employment contracts offered by the employers as
An employment shall be deemed to be casual if it is not evidence, which contained the signature of the president and
covered by the preceding paragraph: Provided, That, any general manager, but not the signatures of the employees. In cases
employee who has rendered at least one year service, where this Court ruled that construction workers repeatedly rehired
whether such service is continuous or broken, shall be retained their status as project employees, the employers were able
considered a regular employee with respect to the activity to produce employment contracts clearly stipulating that the workers'
in which he is employed and his employment shall employment was coterminous with the project to support their claims
continue while such activity exists. (Emphasis supplied.) that the employees were notified of the scope and duration of the
project.34
From the foregoing provision, the principal test for determining
whether particular employees are properly characterized as "project Hence, even though the absence of a written contract does not by
employees" as distinguished from "regular employees" is whether or itself grant regular status to respondents, such a contract is
not the project employees were assigned to carry out a "specific evidence that respondents were informed of the duration and scope
project or undertaking," the duration and scope of which were of their work and their status as project employees. In this case,
specified at the time the employees were engaged for that project.24 where no other evidence was offered, the absence of an
employment contract puts into serious question whether the
employees were properly informed at the onset of their employment
In a number of cases, 25 the Court has held that the length of service status as project employees. It is doctrinally entrenched that in
or the re-hiring of construction workers on a project-to-project basis illegal dismissal cases, the employer has the burden of proving with
does not confer upon them regular employment status, since their clear, accurate, consistent and convincing evidence that a dismissal
re-hiring is only a natural consequence of the fact that experienced was valid.35 Absent any other proof that the project employees were
construction workers are preferred. Employees who are hired for informed of their status as such, it will be presumed that they are
carrying out a separate job, distinct from the other undertakings of regular employees in accordance with Clause 3.3(a) of Department
the company, the scope and duration of which has been determined Order No. 19, Series of 1993, which states that:
and made known to the employees at the time of the employment,
are properly treated as project employees and their services may be
lawfully terminated upon the completion of a project.26 Should the a) Project employees whose aggregate period of
terms of their employment fail to comply with this standard, they continuous employment in a construction company is
cannot be considered project employees. at least one year shall be considered regular
employees, in the absence of a "day certain" agreed
upon by the parties for the termination of their
In Abesco Construction and Development Corporation v. relationship. Project employees who have become regular
Ramirez,27 which also involved a construction company and its shall be entitled to separation pay.
workers, this Court considered it crucial that the employees were
informed of their status as project employees:
A "day" as used herein, is understood to be that which
must necessarily come, although it may not be known
The principal test for determining whether employees are exactly when. This means that where the final completion
"project employees" or "regular employees" is whether of a project or phase thereof is in fact determinable and
they are assigned to carry out a specific project or the expected completion is made known to the employee,
undertaking, the duration and scope of which are specified such project employee may not be considered regular,
at the time they are engaged for that project. Such notwithstanding the one-year duration of employment in
duration, as well as the particular work/service to be the project or phase thereof or the one-year duration of
performed, is defined in an employment agreement and is two or more employments in the same project or phase of
made clear to the employees at the time of hiring. the project. (Emphasis provided.)

In this case, petitioners did not have that kind of Petitioners call attention to the fact that they complied with two of the
agreement with respondents. Neither did they inform indicators of project employment, as prescribed under Section 2.2(e)
respondents of the nature of the latters' work at the time of and (f) of Department Order No. 19, Series of 1993, entitled
hiring. Hence, for failure of petitioners to substantiate their Guidelines Governing the Employment of Workers in the
claim that respondents were project employees, we are Construction Industry, issued by the DOLE:
constrained to declare them as regular employees.

2.2 Indicators of project employment. - Either one or more


of the following circumstances, among others, may be
6
considered as indicators that an employee is a project Assuming that petitioners actually paid respondents a completion
employee. bonus, petitioners failed to present evidence showing that they
undertook to pay respondents such a bonus upon the completion of
the project, as provided under Section 2.2(f) of Department Order
(a) The duration of the specific/identified undertaking for
No. 19, Series of 1993.40 Petitioners did not even allege how the
which the worker is engaged is reasonably determinable.
"completion bonus" was to be computed or the conditions that must
be fulfilled before it was to be given. A completion bonus, if paid as a
(b) Such duration, as well as the specific work/service to mere afterthought, cannot be used to determine whether or not the
be performed, is defined in an employment agreement employment was regular or merely for a project. Otherwise, an
and is made clear to the employee at the time of hiring. employer may defeat the workers' security of tenure by paying them
a completion bonus at any time it is inclined to unjustly dismiss
them.
(c) The work/service performed by the employee is in
connection with the particular project/undertaking for
which he is engaged. Department Order No. 19, Series of 1993, provides that in the
absence of an undertaking that the completion bonus will be paid to
the employee, as in this case, the employee may be considered a
(d) The employee, while not employed and awaiting
non-project employee, to wit:
engagement, is free to offer his services to any other
employer.
3.4 Completion of the project. Project employees who
are separated from work as a result of the completion of
(e) The termination of his employment in the
the project or any phase thereof in which they are
particular project/undertaking is reported to the
employed are entitled to the pro-rata completion bonus if
Department of Labor and Employment (DOLE)
there is an undertaking by for the grant of such
Regional Office having jurisdiction over the workplace bonus. An undertaking by the employer to pay a
within 30 days following the date of his separation completion bonus shall be an indicator that an
from work, using the prescribed form on employees'
employee is a project employee. Where there is no
terminations/dismissals/suspensions. such undertaking, the employee may be considered a
non-project employee. The pro-rata completion bonus
(f) An undertaking in the employment contract by the may be based on the industry practice which is at least
employer to pay completion bonus to the project the employee's one-half (1/2) month salary for every 12
employee as practiced by most construction months of service and may be put into effect for any
companies. (Emphasis provided.) project bid (in case of bid projects) or tender submitted (in
case of negotiated projects) thirty (30) days from the date
of issuances of these Guidelines. (Emphasis supplied.)
Petitioners argue that the Termination Report filed before the DOLE
Regional Office (IV) in Cainta, Rizal on 11 April 2002 signifies that
respondents' services were engaged merely for the LRT/MRT Line 2 Furthermore, after examining the payroll documents submitted by
Package 2 and 3 Project. petitioners, this Court finds that the payments termed as "completion
bonus" are not the completion bonus paid in connection with the
termination of the project. First of all, the period from 4 April 2002 to
Given the particular facts established in this case, petitioners' 20 April 2002, as stated in the payrolls, bears no relevance to a
argument fails to persuade this Court. Petitioners were not able to completion bonus. A completion bonus is paid in connection with the
offer evidence to refute or controvert the respondents' claim that completion of the project, and is not based on a fifteen-day period.
they were assigned to various construction projects, particularly the Secondly, the amount paid to each employee as his completion
North Harbor Project in 1992-1994; Manila International Port in bonus was uniformly equivalent to his fifteen-day wages, without
1994-1996; Batangas Port in 1996-1998; the Batangas Pier; and La consideration of the number of years of service rendered. Section
Mesa Dam.36 Had respondents' allegations been false, petitioners 3.4 of Department Order No. 19, Series of 1993, provides that based
could simply present as evidence documents and records in their on industry practice, the completion bonus is at least the employee's
custody to disprove the same, i.e., payroll for such projects or one-half month salary for every twelve months of service.
termination reports, which do not bear respondents' names.
Petitioners, instead, chose to remain vague as to the circumstances
surrounding the hiring of the respondents. This Court finds it unusual Finally, the Quitclaims which the respondents signed cannot bar
that petitioners cannot even categorically state the exact year when them from demanding what is legally due them as regular
HANJIN employed respondents. employees. As a rule, quitclaims and waivers or releases are looked
upon with disfavor and frowned upon as contrary to public policy.
They are thus ineffective to bar claims for the full measure of a
It also bears to note that petitioners did not present other worker's legal rights, particularly when the following conditions are
Termination Reports apart from that filed on 11 April 2002. The applicable: 1) where there is clear proof that the waiver was wangled
failure of an employer to file a Termination Report with the DOLE from an unsuspecting or gullible person, or (2) where the terms of
every time a project or a phase thereof is completed indicates that settlement are unconscionable on their face.41 To determine whether
respondents were not project employees.37 Employers cannot the Quitclaims signed by respondents are valid, one important factor
mislead their employees, whose work is necessary and desirable in that must be taken into account is the consideration accepted by
the former's line of business, by treating them as though they are respondents; the amount must constitute a reasonable settlement
part of a work pool from which workers could be continually drawn equivalent to the full measure of their legal rights.42 In this case, the
and then assigned to various projects and thereafter denied regular Quitclaims signed by the respondents do not appear to have been
status at any time by the expedient act of filing a Termination made for valuable consideration. Respondents, who are regular
Report. This would constitute a practice in which an employee is employees, are entitled to backwages and separation pay and,
unjustly precluded from acquiring security of tenure, contrary to therefore, the Quitclaims which they signed cannot prevent them
public policy, morals, good customs and public order.38 from seeking claims to which they are entitled.43

In this case, only the last and final termination of petitioners was Due to petitioners' failure to adduce any evidence showing that
reported to the DOLE. If respondents were actually project petitioners were project employees who had been informed of the
employees, petitioners should have filed as many Termination duration and scope of their employment, they were unable to
Reports as there were construction projects actually finished and for discharge the burden of proof required to establish that respondents'
which respondents were employed. Thus, a lone Termination Report dismissal was legal and valid. Furthermore, it is a well-settled
filed by petitioners only upon the termination of the respondents' doctrine that if doubts exist between the evidence presented by the
final project, and after their previous continuous employment for employer and that by the employee, the scales of justice must be
other projects, is not only unconvincing, but even suspicious. tilted in favor of the latter.44 For these reasons, respondents are to
be considered regular employees of HANJIN.
Petitioners insist that the payment to the respondents of a
completion bonus indicates that respondents were project Finally, in the instant case, records failed to show that HANJIN
employees. To support their claim, petitioners presented payroll afforded respondents, as regular employees, due process prior to
records for the period 4 April 2002 to 20 April 2002, with the words their dismissal, through the twin requirements of notice and hearing.
"completion bonus" written at the lower left corner of each Respondents were not served notices informing them of the
page.39 The amount paid to each employee was equivalent to his particular acts for which their dismissal was sought. Nor were they
fifteen-day salary. Respondents, however, deny receiving any such required to give their side regarding the charges made against them.
amount. Certainly, the respondents' dismissal was not carried out in
accordance with law and was, therefore, illegal. 45

7
IN VIEW OF THE FOREGOING, the instant Petition is DENIED. On February 26, 2010, the CA Special Fourth Division rendered the
This Court AFFIRMS the assailed Decision of the Court of Appeals disputed decision10 reversing the compulsory arbitration rulings. It
in CA-G.R. SP No. 87474, promulgated on 28 July 2005, declaring held that Jamin was a regular employee. It based its conclusion on:
that the respondents are regular employees who have been illegally (1) Jamin’s repeated and successive rehiring in DMCI’s various
dismissed by Hanjin Heavy Industries & Construction Company, projects; and (2) the nature of his work in the projects — he was
Limited, and are, therefore, entitled to full backwages, separation performing activities necessary or desirable in DMCI’s construction
pay, and litigation expenses. Costs against the petitioners. business. Invoking the Court’s ruling in an earlier case,11 the CA
declared that the pattern of Jamin’s rehiring and the recurring need
for his services are sufficient evidence of the necessity and
SO ORDERED.
indispensability of such services to DMCI’s business or trade, a key
indicator of regular employment. It opined that although Jamin
started as a project employee, the circumstances of his employment
made it regular or, at the very least, has ripened into a regular
employment.
G.R. No. 192514 April 18, 2012

The CA considered the project employment contracts Jamin entered


D.M. CONSUNJI, INC. and/or DAVID M. CONSUNJI, Petitioners, into with DMCI for almost 31 years not definitive of his actual status
vs. in the company. It stressed that the existence of such contracts is
ESTELITO L. JAMIN, Respondent. not always conclusive of a worker’s employment status as this Court
explained in Liganza v. RBL Shipyard Corporation, et al.12It found
DECISION added support from Integrated Contractor and Plumbing Works, Inc.
v. NLRC,13 where the Court said that while there were several
employment contracts between the worker and the employer, in all
BRION, J.: of them, the worker performed tasks which were usually necessary
or desirable in the usual business or trade of the employer and, a
We resolve the present appeal1 from the decision2 dated February review of the worker’s assignments showed that he belonged to a
26, 2010 and the resolution3 dated June 3, 2010 of the Court of work pool, making his employment regular.
Appeals (CA) in CA-G.R. SP No. 100099.
Contrary to DMCI’s submission and the labor arbiter’s findings, the
The Antecedents CA noted that DMCI failed to submit a report to the DOLE Regional
Office everytime Jamin’s employment was terminated, as required
by DOLE Policy Instructions No. 20. The CA opined that DMCI’s
On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a failure to submit the reports to the DOLE is an indication that Jamin
construction company, hired respondent Estelito L. Jamin as a was not a project employee. It further noted that DOLE Department
laborer. Sometime in 1975, Jamin became a helper carpenter. Since Order No. 19, Series of 1993, which superseded DOLE Policy
his initial hiring, Jamin’s employment contract had been renewed a Instructions No. 20, provides that the termination report is one of the
number of times.4 On March 20, 1999, his work at DMCI was indicators of project employment.14
terminated due to the completion of the SM Manila project. This
termination marked the end of his employment with DMCI as he was
not rehired again. Having found Jamin to be a regular employee, the CA declared his
dismissal illegal as it was without a valid cause and without due
process. It found that DMCI failed to provide Jamin the required
On April 5, 1999, Jamin filed a complaint5 for illegal dismissal, with notice before he was dismissed. Accordingly, the CA ordered
several money claims (including attorney’s fees), against DMCI and Jamin’s immediate reinstatement with backwages, and without loss
its President/General Manager, David M. Consunji. Jamin alleged of seniority rights and other benefits.
that DMCI terminated his employment without a just and authorized
cause at a time when he was already 55 years old and had no
independent source of livelihood. He claimed that he rendered DMCI moved for reconsideration, but the CA denied the motion in its
service to DMCI continuously for almost 31 years. In addition to the resolution of June 3, 2010.15 DMCI is now before the Court through a
schedule of projects (where he was assigned) submitted by DMCI to petition for review on certiorari under Rule 45 of the Rules of
the labor arbiter,6 he alleged that he worked for three other DMCI Court.16
projects: Twin Towers, Ritz Towers, from July 29, 1980 to June 12,
1982; New Istana Project, B.S.B. Brunei, from June 23, 1982 to The Petition
February 16, 1984; and New Istana Project, B.S.B. Brunei, from
January 24, 1986 to May 25, 1986.
DMCI seeks a reversal of the CA rulings on the ground that the
appellate court committed a grave error in annulling the decisions of
DMCI denied liability. It argued that it hired Jamin on a project-to- the labor arbiter and the NLRC. It presents the following arguments:
project basis, from the start of his engagement in 1968 until the
completion of its SM Manila project on March 20, 1999 where Jamin
last worked. With the completion of the project, it terminated Jamin’s 1. The CA misapplied the phrase "usually necessary or
employment. It alleged that it submitted a report to the Department desirable in the usual business or trade of the employer"
of Labor and Employment (DOLE) everytime it terminated Jamin’s when it considered Jamin a regular employee. The
services. definition of a regular employee under Article 280 of the
Labor Code does not apply to project employment or
"employment which has been fixed for a specific project,"
The Compulsory Arbitration Rulings as interpreted by the Supreme Court in Fernandez v.
National Labor Relations Commission17and D.M.
In a decision dated May 27, 2002,7 Labor Arbiter Francisco A. Consunji, Inc. v. NLRC.18 It maintains the same project
Robles dismissed the complaint for lack of merit. He sustained employment methodology in its business operations and it
DMCI’s position that Jamin was a project employee whose services cannot understand why a different ruling or treatment
had been terminated due to the completion of the project where he would be handed down in the present case.
was assigned. The labor arbiter added that everytime DMCI rehired
Jamin, it entered into a contract of employment with him. Moreover, 2. There is no work pool in DMCI’s roster of project
upon completion of the phase of the project for which Jamin was employees. The CA erred in insinuating that Jamin
hired or upon completion of the project itself, the company served a belonged to a work pool when it cited Integrated
notice of termination to him and a termination report to the DOLE Contractor and Plumbing Works, Inc. ruling.19 At any rate,
Regional Office. The labor arbiter also noted that Jamin had to file Jamin presented no evidence to prove his membership in
an application if he wanted to be re-hired. any work pool at DMCI.

On appeal by Jamin, the National Labor Relations Commission 3. The CA misinterpreted the rules requiring the
(NLRC), in its decision of April 18, 2007,8 dismissed the appeal and submission of termination of employment reports to the
affirmed the labor arbiter’s finding that Jamin was a project DOLE. While the report is an indicator of project
employee. Jamin moved for reconsideration, but the NLRC denied employment, as noted by the CA, it is only one of several
the motion in a resolution dated May 30, 2007.9 Jamin sought relief indicators under the rules.20 In any event, the CA
from the CA through a petition for certiorari under Rule 65 of the penalized DMCI for a few lapses in its submission of
Rules of Court. reports to the DOLE with a "very rigid application of the
rule despite the almost unanimous proofs surrounding the
The CA Decision circumstances of private respondent being a project

8
employee as shown by petitioner’s documentary The procedural issue
evidence."21
Was DMCI’s appeal filed out of time, as Jamin claims, and should
4. The CA erred in holding that Jamin was dismissed have been dismissed outright? The records support Jamin’s
without due process for its failure to serve him notice prior submission on the issue.
to the termination of his employment. As Jamin was not
dismissed for cause, there was no need to furnish him a
DMCI received its copy of the February 26, 2010 CA decision on
written notice of the grounds for the dismissal and neither
March 4, 2010 (a Thursday), as indicated in its motion for
is there a need for a hearing. When there is no more job
reconsideration of the decision itself,31 not on March 5, 2010 (a
for Jamin because of the completion of the project, DMCI,
Friday), as stated in the present petition.32The deadline for the filing
under the law, has the right to terminate his employment
of the motion for reconsideration was on March 19, 2010 (15 days
without incurring any liability. Pursuant to the rules
from receipt of copy of the decision), but it was filed only on March
implementing the Labor Code,22if the termination is
22, 2010 or three days late. Clearly, the motion for reconsideration
brought about by the completion of the contract or phase
was filed out of time, thereby rendering the CA decision final and
thereof, no prior notice is required.
executory.

Finally, DMCI objects to the CA’s reversal of the findings of the labor
Necessarily, DMCI’s petition for review on certiorari is also late as it
arbiter and the NLRC in the absence of a showing that the labor
had only fifteen (15) days from notice of the CA decision to file the
authorities committed a grave abuse of discretion or that evidence
petition or the denial of its motion for reconsideration filed in due
had been disregarded or that their rulings had been arrived at
time.33 The reckoning date is March 4, 2010, since DMCI’s motion
arbitrarily.
for reconsideration was not filed in due time. We see no point in
exercising liberality and disregarding the late filing as we did in
The Case for Jamin Orozco v. Fifth Division of the Court of Appeals,34 where we ruled
that "[t]echnicality should not be allowed to stand in the way of
equitably and completely resolving the rights and obligations of the
In his Comment (to the Petition),23 Jamin prays that the petition be
parties." The petition lacks merit for its failure to show that the CA
denied for having been filed out of time and for lack of merit.
committed any reversible error or grave abuse of discretion when it
reversed the findings of the labor arbiter and the NLRC.
He claims, in support of his plea for the petition’s outright dismissal,
that DMCI received a copy of the CA decision (dated February 26,
As earlier mentioned, Jamin worked for DMCI for almost 31 years,
2010) on March 4, 2010, as stated by DMCI itself in its motion for
initially as a laborer and, for the most part, as a carpenter. Through
reconsideration of the decision.24 Since DMCI filed the motion with
all those years, DMCI treated him as a project employee, so that he
the CA on March 22, 2010, it is obvious, Jamin stresses, that the
never obtained tenure. On the surface and at first glance, DMCI
motion was filed three days beyond the 15-day reglementary period,
appears to be correct. Jamin entered into a contract of employment
the last day of which fell on March 19, 2010. He maintains that for
(actually an appointment paper to which he signified his conformity)
this reason, the CA’s February 26, 2010 decision had become final
with DMCI either as a field worker, a temporary worker, a casual
and executory, as he argued before the CA in his Comment and
employee, or a project employee everytime DMCI needed his
Opposition (to DMCI’s Motion for Reconsideration). 25
services and a termination of employment paper was served on him
upon completion of every project or phase of the project where he
On the merits of the case, Jamin submits that the CA committed no worked.35 DMCI would then submit termination of employment
error in nullifying the rulings of the labor arbiter and the NLRC. He reports to the DOLE, containing the names of a number of
contends that DMCI misread this Court’s rulings in Fernandez v. employees including Jamin.36 The NLRC and the CA would later on
National Labor Relations Commission, et al.26 and D.M. Consunji, say, however, that DMCI failed to submit termination reports to the
Inc. v. NLRC,27 cited to support its position that Jamin was a project DOLE.
employee.
The CA pierced the cover of Jamin’s project employment contract
Jamin argues that in Fernandez, the Court explained that the and declared him a regular employee who had been dismissed
proviso in the second paragraph of Article 280 of the Labor Code without cause and without notice. To reiterate, the CA’s findings
relates only to casual employees who shall be considered regular were based on: (1) Jamin’s repeated and successive engagements
employees if they have rendered at least one year of service, in DMCI’s construction projects, and (2) Jamin’s performance of
whether such service is continuous or broken. He further argues that activities necessary or desirable in DMCI’s usual trade or business.
in Fernandez, the Court held that inasmuch as the documentary
evidence clearly showed gaps of a month or months between the
We agree with the CA. In Liganza v. RBL Shipyard
hiring of Ricardo Fernandez in the numerous projects where he was
Corporation,37 the Court held that "[a]ssuming, without granting[,]
assigned, it was the Court’s conclusion that Fernandez had not
that [the] petitioner was initially hired for specific projects or
continuously worked for the company but only intermittently as he
undertakings, the repeated re-hiring and continuing need for his
was hired solely for specific projects.28 Also, in Fernandez, the Court
services for over eight (8) years have undeniably made him a
affirmed its rulings in earlier cases that "the failure of the employer to
regular employee." We find the Liganza ruling squarely applicable to
report to the [nearest] employment office the termination of workers
this case, considering that for almost 31 years, DMCI had
everytime a project is completed proves that the employees are not
repeatedly, continuously and successively engaged Jamin’s
project employees."29
services since he was hired on December 17, 1968 or for a total of
38 times — 35 as shown by the schedule of projects submitted by
Jamin further explains that in the D.M. Consunji, Inc. case, the DMCI to the labor arbiter38 and three more projects or engagements
company deliberately omitted portions of the Court’s ruling stating added by Jamin, which he claimed DMCI intentionally did not
that the complainants were not claiming that they were regular include in its schedule so as to make it appear that there were wide
employees; rather, they were questioning the termination of their gaps in his engagements. One of the three projects was local, the
employment before the completion of the project at the Cebu Super Ritz Towers,39 from July 29, 1980 to June 12, 1982, while the other
Block, without just cause and due process.30 two were overseas — the New Istana Project in Brunei, Darussalam,
from June 23, 1982 to February 16, 1984;40 and again, the New
Istana Project, from January 24, 1986 to May 25, 1986.41
In the matter of termination reports to the DOLE, Jamin disputes
DMCI’s submission that it committed only few lapses in the
reportorial requirement. He maintains that even the NLRC noted that We reviewed Jamin’s employment contracts as the CA did and we
there were no termination reports with the DOLE Regional Office noted that while the contracts indeed show that Jamin had been
after every completion of a phase of work, although the NLRC engaged as a project employee, there was an almost unbroken
considered that the report is required only for statistical purposes. string of Jamin’s rehiring from December 17, 1968 up to the
He, therefore, contends that the CA committed no error in holding termination of his employment on March 20, 1999. While the history
that DMCI’s failure to submit reports to the DOLE was an indication of Jamin’s employment (schedule of projects)42 relied upon by DMCI
that he was not a project employee. shows a gap of almost four years in his employment for the period
between July 28, 1980 (the supposed completion date of the
Midtown Plaza project) and June 13, 1984 (the start of the IRRI
Finally, Jamin argues that as a regular employee of DMCI for almost Dorm IV project), the gap was caused by the company’s omission of
31 years, the termination of his employment was without just cause
the three projects above mentioned.
and due process.

For not disclosing that there had been other projects where DMCI
The Court’s Ruling
engaged his services, Jamin accuses the company of suppressing
vital evidence that supports his contention that he rendered service

9
in the company’s construction projects continuously and repeatedly Mr. Consunji’s involvement in Jamin’s dismissal, we deem it proper
for more than three decades. The non-disclosure might not have to absolve him of liability in this case.
constituted suppression of evidence — it could just have been
overlooked by the company — but the oversight is unfair to Jamin as
As a final point, it is well to reiterate a cautionary statement we
the non-inclusion of the three projects gives the impression that
made in Maraguinot,51 thus:
there were substantial gaps not only of several months but years in
his employment with DMCI.
At this time, we wish to allay any fears that this decision unduly
burdens an employer by imposing a duty to re-hire a project
Thus, as Jamin explains, the Ritz Tower Project (July 29, 1980 to
employee even after completion of the project for which he was
June 12, 1982) and the New Istana Project (June 23, 1982 to
hired. The import of this decision is not to impose a positive and
February 16, 1984) would explain the gap between the Midtown
sweeping obligation upon the employer to re-hire project employees.
Plaza project (September 3, 1979 to July 28, 1980) and the IRRI
What this decision merely accomplishes is a judicial recognition of
Dorm IV project (June 13, 1984 to March 12, 1985) and the other
the employment status of a project or work pool employee in
New Istana Project (January 24, 1986 to May 25, 1986) would
accordance with what is fait accompli, i.e., the continuous re-hiring
explain the gap between P. 516 Hanger (September 13, 1985 to
by the employer of project or work pool employees who perform
January 23, 1986) and P. 516 Maint (May 26, 1986 to November 18,
tasks necessary or desirable to the employer’s usual business or
1987).
trade.

To reiterate, Jamin’s employment history with DMCI stands out for


In sum, we deny the present appeal for having been filed late and
his continuous, repeated and successive rehiring in the company’s
for lack of any reversible error.1âwphi1 We see no point in
construction projects. In all the 38 projects where DMCI engaged
extending any liberality by disregarding the late filing as the petition
Jamin’s services, the tasks he performed as a carpenter were
lacks merit.
indisputably necessary and desirable in DMCI’s construction
business. He might not have been a member of a work pool as
DMCI insisted that it does not maintain a work pool, but his WHEREFORE, premises considered, the petition is hereby DENIED
continuous rehiring and the nature of his work unmistakably made for late filing and for lack of merit. The decision dated February 26,
him a regular employee. In Maraguinot, Jr. v. NLRC,43 the Court held 2010 and the resolution dated June 3, 2010 of the Court of Appeals
that once a project or work pool employee has been: (1) are AFFIRMED. Petitioner David M. Consunji is absolved of liability
continuously, as opposed to intermittently, rehired by the same in this case.
employer for the same tasks or nature of tasks; and (2) these tasks
are vital, necessary and indispensable to the usual business or trade
of the employer, then the employee must be deemed a regular SO ORDERED.
employee.

Further, as we stressed in Liganza,44 "[r]espondent capitalizes on


our ruling in D.M. Consunji, Inc. v. NLRC which reiterates the rule G.R. No. 61594 September 28, 1990
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 project or undertaking the completion or PAKISTAN INTERNATIONAL AIRLINES
termination of which has been determined at the time of the CORPORATION, petitioner,
engagement of the employee.’" vs
HON. BLAS F. OPLE, in his capacity as Minister of Labor; HON.
VICENTE LEOGARDO, JR., in his capacity as Deputy Minister;
"Surely, length of time is not the controlling test for project ETHELYNNE B. FARRALES and MARIA MOONYEEN
employment. Nevertheless, it is vital in determining if the employee MAMASIG, respondents.
was hired for a specific undertaking or tasked to perform functions
vital, necessary and indispensable to the usual business or trade of
the employer. Here, [private] respondent had been a project Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for
employee several times over. His employment ceased to be petitioner.
coterminous with specific projects when he was repeatedly re-hired
due to the demands of petitioner’s business."45 Without doubt, Ledesma, Saludo & Associates for private respondents.
Jamin’s case fits squarely into the employment situation just quoted.

The termination reports

FELICIANO, J.:
With our ruling that Jamin had been a regular employee, the issue of
whether DMCI submitted termination of employment reports,
pursuant to Policy Instructions No. 20 (Undated46 ), as superseded On 2 December 1978, petitioner Pakistan International Airlines
by DOLE Department Order No. 19 (series of 1993), has become Corporation ("PIA"), a foreign corporation licensed to do business in
academic. DOLE Policy Instructions No. 20 provides in part: 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. 1The
Project employees are not entitled to termination pay if they are contracts, which became effective on 9 January 1979, provided in
terminated as a result of the completion of the project or any phase pertinent portion as follows:
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 5. DURATION OF EMPLOYMENT AND
obtain a clearance from the Secretary of Labor in connection with PENALTY
such termination. What is required of the company is a report to the
nearest Public Employment Office for statistical purposes. 47 This agreement is for a period of three (3)
years, but can be extended by the mutual
To set the records straight, DMCI indeed submitted reports to the consent of the parties.
DOLE but as pointed out by Jamin, the submissions started only in
1992.48 DMCI explained that it submitted the earlier reports (1982), xxx xxx xxx
but it lost and never recovered the reports. It reconstituted the lost
reports and submitted them to the DOLE in October 1992; thus, the
dates appearing in the reports.49 6. TERMINATION

Is David M. Consunji, DMCI’s xxx xxx xxx


President/General Manager, liable
for Jamin’s dismissal? Notwithstanding anything to contrary as herein
provided, PIA reserves the right to terminate
While there is no question that the company is liable for Jamin’s this agreement at any time by giving the
dismissal, we note that the CA made no pronouncement on whether EMPLOYEE notice in writing in advance one
DMCI’s President/General Manager, a co-petitioner with the month before the intended termination or in lieu
company, is also liable.50Neither had the parties brought the matter thereof, by paying the EMPLOYEE wages
up to the CA nor with this Court. As there is no express finding of equivalent to one month's salary.

10
xxx xxx xxx Art. 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
10. APPLICABLE LAW:
Employment:

This agreement shall be construed and


Art. 278. Miscellaneous Provisions — . . .
governed under and by the laws of Pakistan,
and only the Courts of Karachi, Pakistan shall
have the jurisdiction to consider any matter (b) With or without a collective agreement, no
arising out of or under this agreement. employer may shut down his establishment or
dismiss or terminate the employment of
employees with at least one year of service
Respondents then commenced training in Pakistan. After their
during the last two (2) years, whether such
training period, they began discharging their job functions as flight
service is continuous or broken, without prior
attendants, with base station in Manila and flying assignments to
written authority issued in accordance with such
different parts of the Middle East and Europe.
rules and regulations as the Secretary may
promulgate . . . (emphasis supplied)
On 2 August 1980, roughly one (1) year and four (4) months prior to
the expiration of the contracts of employment, PIA through Mr.
Rule XIV, Book No. 5 of the Rules and Regulations
Oscar Benares, counsel for and official of the local branch of PIA,
Implementing the Labor Code, made clear that in case of
sent separate letters both dated 1 August 1980 to private
a termination without the necessary clearance, the
respondents Farrales and Mamasig advising both that their services
Regional Director was authorized to order the
as flight stewardesses would be terminated "effective 1 September
reinstatement of the employee concerned and the
1980, conformably to clause 6 (b) of the employment agreement
payment of backwages; necessarily, therefore, the
[they had) executed with [PIA]."2
Regional Director must have been given jurisdiction over
such termination cases:
On 9 September 1980, private respondents Farrales and Mamasig
jointly instituted a complaint, docketed as NCR-STF-95151-80, for
Sec. 2. Shutdown or dismissal without
illegal dismissal and non-payment of company benefits and
clearance. — Any shutdown or dismissal
bonuses, against PIA with the then Ministry of Labor and
without prior clearance shall be conclusively
Employment ("MOLE"). After several unfruitful attempts at
presumed to be termination of employment
conciliation, the MOLE hearing officer Atty. Jose M. Pascual ordered
without a just cause. The Regional Director
the parties to submit their position papers and evidence supporting
shall, in such case order the immediate
their respective positions. The PIA submitted its position paper, 3 but
reinstatement of the employee and the payment
no evidence, and there claimed that both private respondents were
of his wages from the time of the shutdown or
habitual absentees; that both were in the habit of bringing in from
dismissal until the time of reinstatement.
abroad sizeable quantities of "personal effects"; and that PIA
(emphasis supplied)
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 Policy Instruction No. 14 issued by the Secretary of Labor,
both private respondents were terminated pursuant to the provisions dated 23 April 1976, was similarly very explicit about the
of the employment contract. jurisdiction of the Regional Director over termination of
employment cases:
In his Order dated 22 January 1981, Regional Director Francisco L.
Estrella ordered the reinstatement of private respondents with full Under PD 850, termination cases — with or
backwages or, in the alternative, the payment to them of the without CBA — are now placed under the
amounts equivalent to their salaries for the remainder of the fixed original jurisdiction of the Regional Director.
three-year period of their employment contracts; the payment to Preventive suspension cases, now made
private respondent Mamasig of an amount equivalent to the value of cognizable for the first time, are also placed
a round trip ticket Manila-USA Manila; and payment of a bonus to under the Regional Director. Before PD 850,
each of the private respondents equivalent to their one-month termination cases where there was a CBA were
salary. 4 The Order stated that private respondents had attained the under the jurisdiction of the grievance
status of regular employees after they had rendered more than a machinery and voluntary arbitration, while
year of continued service; that the stipulation limiting the period of termination cases where there was no CBA
the employment contract to three (3) years was null and void as were under the jurisdiction of the Conciliation
violative of the provisions of the Labor Code and its implementing Section.
rules and regulations on regular and casual employment; and that
the dismissal, having been carried out without the requisite
In more details, the major innovations
clearance from the MOLE, was illegal and entitled private
introduced by PD 850 and its implementing
respondents to reinstatement with full backwages.
rules and regulations with respect to termination
and preventive suspension cases are:
On appeal, in an Order dated 12 August 1982, Hon. Vicente
Leogardo, Jr., Deputy Minister, MOLE, adopted the findings of fact
1. The Regional Director is now required to rule
and conclusions of the Regional Director and affirmed the latter's
on every application for clearance, whether
award save for the portion thereof giving PIA the option, in lieu of
there is opposition or not, within ten days from
reinstatement, "to pay each of the complainants [private
receipt thereof.
respondents] their salaries corresponding to the unexpired portion of
the contract[s] [of employment] . . .". 5
xxx xxx xxx
In the instant Petition for Certiorari, petitioner PIA assails the award
of the Regional Director and the Order of the Deputy Minister as (Emphasis supplied)
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; 2. The second contention of petitioner PIA is that, even if the
Regional Director had jurisdiction, still his order was null and void
and for having been issued in disregard and in violation of
petitioner's rights under the employment contracts with private because it had been issued in violation of petitioner's right to
respondents. 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
1. Petitioner's first contention is that the Regional Director, MOLE, in its favor as it might have. Petitioner opted to rely solely upon its
had no jurisdiction over the subject matter of the complaint initiated position paper; we must assume it had no evidence to sustain its
by private respondents for illegal dismissal, jurisdiction over the assertions. Thus, even if no formal or oral hearing was conducted,
same being lodged in the Arbitration Branch of the National Labor petitioner had ample opportunity to explain its side. Moreover,
Relations Commission ("NLRC") It appears to us beyond dispute, petitioner PIA was able to appeal his case to the Ministry of Labor
however, that both at the time the complaint was initiated in and Employment. 7
September 1980 and at the time the Orders assailed were rendered
on January 1981 (by Regional Director Francisco L. Estrella) and
There is another reason why petitioner's claim of denial of due
August 1982 (by Deputy Minister Vicente Leogardo, Jr.), the
Regional Director had jurisdiction over termination cases. process must be rejected. At the time the complaint was filed by

11
private respondents on 21 September 1980 and at the time the An employment shall be deemed to be casual if
Regional Director issued his questioned order on 22 January 1981, it is not covered by the preceding paragraph:
applicable regulation, as noted above, specified that a "dismissal provided, that, any employee who has rendered
without prior clearance shall be conclusively presumed to be at least one year of service, whether such
termination of employment without a cause", and the Regional service is continuous or broken, shall be
Director was required in such case to" order the immediate considered as regular employee with respect to
reinstatement of the employee and the payment of his wages from the activity in which he is employed and his
the time of the shutdown or dismiss until . . . reinstatement." In other employment shall continue while such actually
words, under the then applicable rule, the Regional Director did not exists. (Emphasis supplied)
even have to require submission of position papers by the parties in
view of the conclusive (juris et de jure) character of the presumption
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., 12 the
created by such applicable law and regulation. In Cebu Institute of
Court had occasion to examine in detail the question of whether
Technology v. Minister of Labor and Employment, 8 the Court
employment for a fixed term has been outlawed under the above
pointed out that "under Rule 14, Section 2, of the Implementing
quoted provisions of the Labor Code. After an extensive examination
Rules and Regulations, the termination of [an employee] which was
of the history and development of Articles 280 and 281, the Court
without previous clearance from the Ministry of Labor is conclusively
reached the conclusion that a contract providing for employment
presumed to be without [just] cause . . . [a presumption which]
with a fixed period was not necessarily unlawful:
cannot be overturned by any contrary proof however strong."

There can of course be no quarrel with the


3. In its third contention, petitioner PIA invokes paragraphs 5 and 6
proposition that where from the circumstances it
of its contract of employment with private respondents Farrales and
is apparent that periods have been imposed to
Mamasig, arguing that its relationship with them was governed by
preclude acquisition of tenurial security by the
the provisions of its contract rather than by the general provisions of
employee, they should be struck down or
the Labor Code. 9
disregarded as contrary to public policy, morals,
etc. But where no such intent to circumvent the
Paragraph 5 of that contract set a term of three (3) years for that law is shown, or stated otherwise, where the
relationship, extendible by agreement between the parties; while reason for the law does not exist e.g. where it is
paragraph 6 provided that, notwithstanding any other provision in indeed the employee himself who insists upon a
the Contract, PIA had the right to terminate the employment period or where the nature of the engagement is
agreement at any time by giving one-month's notice to the employee such that, without being seasonal or for a
or, in lieu of such notice, one-months salary. specific project, a definite date of termination is
a sine qua non would an agreement fixing a
period be essentially evil or illicit, therefore
A contract freely entered into should, of course, be respected, as
anathema Would such an agreement come
PIA argues, since a contract is the law between the parties. 10 The
within the scope of Article 280 which admittedly
principle of party autonomy in contracts is not, however, an absolute
was enacted "to prevent the circumvention of
principle. The rule in Article 1306, of our Civil Code is that the
the right of the employee to be secured in . . .
contracting parties may establish such stipulations as they may
(his) employment?"
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 As it is evident from even only the three
equally general rule that provisions of applicable law, especially examples already given that Article 280 of the
provisions relating to matters affected with public policy, are deemed Labor Code, under a narrow and literal
written into the contract. 11 Put a little differently, the governing interpretation, not only fails to exhaust the
principle is that parties may not contract away applicable provisions gamut of employment contracts to which the
of law especially peremptory provisions dealing with matters heavily lack of a fixed period would be an anomaly, but
impressed with public interest. The law relating to labor and would also appear to restrict, without
employment is clearly such an area and parties are not at liberty to reasonable distinctions, the right of an
insulate themselves and their relationships from the impact of labor employee to freely stipulate with his employer
laws and regulations by simply contracting with each other. It is thus the duration of his engagement, it logically
necessary to appraise the contractual provisions invoked by follows that such a literal interpretation should
petitioner PIA in terms of their consistency with applicable Philippine be eschewed or avoided. The law must be
law and regulations. given reasonable interpretation, to preclude
absurdity in its application. Outlawing the whole
concept of term employment and subverting to
As noted earlier, both the Labor Arbiter and the Deputy Minister,
boot the principle of freedom of contract to
MOLE, in effect held that paragraph 5 of that employment contract
remedy the evil of employers" using it as a
was inconsistent with Articles 280 and 281 of the Labor Code as
means to prevent their employees from
they existed at the time the contract of employment was entered
obtaining security of tenure is like cutting off the
into, and hence refused to give effect to said paragraph 5. These
nose to spite the face or, more relevantly, curing
Articles read as follows:
a headache by lopping off the head.

Art. 280. Security of Tenure. — In cases of


xxx xxx xxx
regular employment, the employer shall not
terminate the services of an employee except
for a just cause or when authorized by this Title Accordingly, and since the entire purpose
An employee who is unjustly dismissed from behind the development of legislation
work shall be entitled to reinstatement without culminating in the present Article 280 of the
loss of seniority rights and to his backwages Labor Code clearly appears to have been, as
computed from the time his compensation was already observed, to prevent circumvention of
withheld from him up to the time his the employee's right to be secure in his tenure,
reinstatement. the clause in said article indiscriminately and
completely ruling out all written or oral
agreements conflicting with the concept of
Art. 281. Regular and Casual Employment. The
regular employment as defined therein should
provisions of written agreement to the contrary
be construed to refer to the substantive evil that
notwithstanding and regardless of the oral
the Code itself has singled out: agreements
agreements of the parties, an employment shall
entered into precisely to circumvent security of
be deemed to be regular where the employee
tenure. It should have no application to
has been engaged to perform activities which
instances where a fixed period of employment
are usually necessary or desirable in the usual
was agreed upon knowingly and voluntarily by
business or trade of the employer, except where
the parties, without any force, duress or
the employment has been fixed for a specific
improper pressure being brought to bear upon
project or undertaking the completion or
the employee and absent any other
termination of which has been determined at the
circumstances vitiating his consent, or where it
time of the engagement of the employee or
satisfactorily appears that the employer and
where the work or services to be performed is
employee dealt with each other on more or less
seasonal in nature and the employment is for
equal terms with no moral dominance whatever
the duration of the season.
being exercised by the former over the
latter. Unless thus limited in its purview, the law
12
would be made to apply to purposes other than respondent is hereby AFFIRMED, except that (1) private
those explicitly stated by its framers; it thus respondents are entitled to three (3) years backwages, without
becomes pointless and arbitrary, unjust in its deduction or qualification; and (2) should reinstatement of private
effects and apt to lead to absurd and respondents to their former positions or to substantially equivalent
unintended consequences. (emphasis supplied) 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
It is apparent from Brent School that the critical
the three (3) years putative service by private respondents. The
consideration is the presence or absence of a substantial
Temporary Restraining Order issued on 13 September 1982 is
indication that the period specified in an employment
hereby LIFTED. Costs against petitioner.
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 SO ORDERED.
must ordinarily rest upon some aspect of the agreement
other than the mere specification of a fixed term of the
ernployment 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 G.R. No. 122653 December 12, 1997
consider that those provisions must be read together and when so
read, the fixed period of three (3) years specified in paragraph 5 will
PURE FOODS CORPORATION, petitioner,
be seen to have been effectively neutralized by the provisions of
paragraph 6 of that agreement. Paragraph 6 in effect took back from vs.
NATIONAL LABOR RELATIONS COMMISSION, RODOLFO
the employee the fixed three (3)-year period ostensibly granted by
CORDOVA, VIOLETA CRUSIS, ET AL., *respondents.
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 DAVIDE, JR., J.:
employment of private respondents Farrales and Mamasig basically
employment at the pleasure of petitioner PIA, the Court considers The crux of this petition for certiorari is the issue of whether
that paragraphs 5 and 6 were intended to prevent any security of employees hired for a definite period and whose services are
tenure from accruing in favor of private respondents even during the necessary and desirable in the usual business or trade of the
limited period of three (3) years,13 and thus to escape completely the employer are regular employees.
thrust of Articles 280 and 281 of the Labor Code.
The private respondents (numbering 906) were hired by petitioner
Petitioner PIA cannot take refuge in paragraph 10 of its employment Pure Foods Corporation to work for a fixed period of five months at
agreement which specifies, firstly, the law of Pakistan as the its tuna cannery plant in Tambler, General Santos City. After the
applicable law of the agreement and, secondly, lays the venue for expiration of their respective contracts of employment in June and
settlement of any dispute arising out of or in connection with the July 1991, their services were terminated. They forthwith executed a
agreement "only [in] courts of Karachi Pakistan". The first clause of "Release and Quitclaim" stating that they had no claim whatsoever
paragraph 10 cannot be invoked to prevent the application of against the petitioner.
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 the On 29 July 1991, the private respondents filed before the National
relationship is much affected with public interest and that the Labor Relations Commission (NLRC) Sub-Regional Arbitration
otherwise applicable Philippine laws and regulations cannot be Branch No. XI, General Santos City, a complaint for illegal dismissal
rendered illusory by the parties agreeing upon some other law to against the petitioner and its plant manager, Marciano
govern their relationship. Neither may petitioner invoke the second Aganon. 1 This case was docketed as RAB-11-08-50284-91.
clause of paragraph 10, specifying the Karachi courts as the sole
venue for the settlement of dispute; between the contracting parties. On 23 December 1992, Labor Arbiter Arturo P. Aponesto handed
Even a cursory scrutiny of the relevant circumstances of this case down a decision 2 dismissing the complaint on the ground that the
will show the multiple and substantive contacts between Philippine private respondents were mere contractual workers, and not regular
law and Philippine courts, on the one hand, and the relationship employees; hence, they could not avail of the law on security of
between the parties, upon the other: the contract was not only tenure. The termination of their services by reason of the expiration
executed in the Philippines, it was also performed here, at least of their contracts of employment was, therefore, justified. He pointed
partially; private respondents are Philippine citizens and out that earlier he had dismissed a case entitled "Lakas ng Anak-
respondents, while petitioner, although a foreign corporation, is Pawis-NOWM v. Pure Foods Corp." (Case No. RAB-11-02-00088-
licensed to do business (and actually doing business) and hence 88) because the complainants therein were not regular employees
resident in the Philippines; lastly, private respondents were based in of Pure Foods, as their contracts of employment were for a fixed
the Philippines in between their assigned flights to the Middle East period of five months. Moreover, in another case involving the same
and Europe. All the above contacts point to the Philippine courts and contractual workers of Pure Foods (Case No. R-196-ROXI-MED-
administrative agencies as a proper forum for the resolution of UR-55-89), then Secretary of Labor Ruben Torres held, in a
contractual disputes between the parties. Under these Resolution dated 30 April 1990, that the said contractual workers
circumstances, paragraph 10 of the employment agreement cannot were not regular employees.
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 The Labor Arbiter also observed that an order for private
contents of Pakistan law on the matter; it must therefore be respondents' reinstatement would result in the reemployment of
presumed that the applicable provisions of the law of Pakistan are more than 10,000 former contractual employees of the petitioner.
the same as the applicable provisions of Philippine law.14 Beside, by executing a "Release and Quitclaim," the private
respondents had waived and relinquished whatever right they might
have against the petitioner.
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 The private respondents appealed from the decision to the National
without or in excess of jurisdiction in ordering their reinstatement Labor Relations Commission (NLRC), Fifth Division, in Cagayan de
with backwages. Private respondents are entitled to three (3) years Oro City, which docketed the case as NLRC CA No. M-001323-93.
backwages without qualification or deduction. Should their
reinstatement to their former or other substantially equivalent On 28 October 1994, the NLRC affirmed the Labor Arbiter's
positions not be feasible in view of the length of time which has gone decision. 3 However, on private respondents' motion for
by since their services were unlawfully terminated, petitioner should reconsideration, the NLRC rendered another decision on 30 January
be required to pay separation pay to private respondents amounting 1995 4 vacating and setting aside its decision of 28 October 1994
to one (1) month's salary for every year of service rendered by them, and holding that the private respondent and their co-complainants
including the three (3) years service putatively rendered. were regular employees. It declared that the contract of employment
for five months was a "clandestine scheme employed by [the
ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for petitioner] to stifle [private respondents'] right to security of tenure"
lack of merit, and the Order dated 12 August 1982 of public and should therefore be struck down and disregarded for being

13
contrary to law, public policy, and morals. Hence, their dismissal on An employment shall be deemed to be casual if
account of the expiration of their respective contracts was illegal. it is not covered by the preceding
paragraph; Provided, That, any employee who
has rendered at least one year of service,
Accordingly, the NLRC ordered the petitioner to reinstate the private
whether such service is continuous or broken,
respondents to their former position without loss of seniority rights
shall be considered a regular employee with
and other privileges, with full back wages; and in case their
respect to the activity in which he is employed
reinstatement would no longer be feasible, the petitioner should pay
and his employment shall continue while such
them separation pay equivalent to one-month pay or one-half-month
activity exists.
pay for every year of service, whichever is higher, with back wages
and 10% of the monetary award as attorney's fees.
Thus, the two kinds of regular employees are (1) those who are
engaged to perform activities which are necessary or desirable in
Its motion for reconsideration having been denied, 5 the petitioner
the usual business or trade of the employer; and (2) those casual
came to this Court contending that respondent NLRC committed
employees who have rendered at least one year of service, whether
grave abuse of discretion amounting to lack of jurisdiction in
continuous or broken, with respect to the activity in which they are
reversing the decision of the Labor Arbiter.
employed.6

The petitioner submits that the private respondents are now


In the instant case, the private respondents' activities consisted in
estopped from questioning their separation from petitioner's employ
the receiving, skinning, loining, packing, and casing-up of tuna fish
in view of their express conformity with the five-month duration of
which were then exported by the petitioner. Indisputably, they were
their employment contracts. Besides, they fell within the exception
performing activities which were necessary and desirable in
provided in Article 280 of the Labor Code which reads: "[E]xcept
petitioner's business or trade.
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." Contrary to petitioner's submission, the private respondents could
Moreover, the first paragraph of the said article must be read and not be regarded as having been hired for a specific project or
interpreted in conjunction with the proviso in the second paragraph, undertaking. The term "specific project or undertaking" under Article
which reads: "Provided that any employee who has rendered at 280 of the Labor Code contemplates an activity which is not
least one year of service, whether such service is continuous or commonly or habitually performed or such type of work which is not
broken, shall be considered a regular employee with respect to the done on a daily basis but only for a specific duration of time or until
activity in which he is employed . . ." In the instant case, the private completion; the services employed are then necessary and
respondents were employed for a period of five months only. In any desirable in the employer's usual business only for the period of time
event, private respondents' prayer for reinstatement is well within the it takes to complete the project.7
purview of the "Release and Quitclaim" they had executed wherein
they unconditionally released the petitioner from any and all other
The fact that the petitioner repeatedly and continuously hired
claims which might have arisen from their past employment with the
workers to do the same kind of work as that performed by those
petitioner.
whose contracts had expired negates petitioner's contention that
those workers were hired for a specific project or undertaking only.
In its Comment, the Office of the Solicitor General (OSG) advances
the argument that the private respondents were regular employees,
Now on the validity of private respondents' five-month contracts of
since they performed activities necessary and desirable in the
employment. In the leading case of Brent School,
business or trade of the petitioner. The period of employment
Inc. v. Zamora, 8 which was reaffirmed in numerous subsequent
stipulated in the contracts of employment was null and void for being
cases, 9 this Court has upheld the legality of fixed-term employment.
contrary to law and public policy, as its purpose was to circumvent
It ruled that the decisive determinant in term employment should not
the law on security of tenure. The expiration of the contract did not,
be the activities that the employee is called upon to perform but the
therefore, justify the termination of their employment.
day certain agreed upon by the parties for the commencement and
termination of their employment relationship. But, this Court went on
The OSG further maintains that the ruling of the then Secretary of to say that where from the circumstances it is apparent that the
Labor and Employment in LAP-NOWM v. Pure Foods Corporation is periods have been imposed to preclude acquisition of tenurial
not binding on this Court; neither is that ruling controlling, as the said security by the employee, they should be struck down or
case involved certification election and not the issue of the nature of disregarded as contrary to public policy and morals.
private respondents' employment. It also considers private
respondents' quitclaim as ineffective to bar the enforcement for the
Brent also laid down the criteria under which term employment
full measure of their legal rights.
cannot be said to be in circumvention of the law on security of
tenure:
The private respondents, on the other hand, argue that contracts
with a specific period of employment may be given legal effect
1) The fixed period of employment was knowingly and voluntarily
provided, however, that they are not intended to circumvent the
agreed upon by the parties without any force, duress, or improper
constitutional guarantee on security of tenure. They submit that the
pressure being brought to bear upon the employee and absent any
practice of the petitioner in hiring workers to work for a fixed duration
other circumstances vitiating his consent; or
of five months only to replace them with other workers of the same
employment duration was apparently to prevent the regularization of
these so-called "casuals," which is a clear circumvention of the law 2) It satisfactorily appears that the employer and the employee dealt
on security of tenure. with each other on more or less equal terms with no moral
dominance exercised by the former over the latter. 10
We find the petition devoid of merit.
None of these criteria had been met in the present case. As pointed
out by the private respondents:
Article 280 of the Labor Code defines regular and casual
employment as follows:
[I]t could not be supposed that private
respondents and all other so-called "casual"
Art. 280. Regular and Casual Employment. —
workers of [the petitioner] KNOWINGLY and
The provisions of written agreement to the
VOLUNTARILY agreed to the 5-month
contrary notwithstanding and regardless of the
employment contract. Cannery workers are
oral argument of the parties, an employment
never on equal terms with their employers.
shall be deemed to be regular where the
Almost always, they agree to any terms of an
employee has been engaged to perform
employment contract just to get employed
activities which are usually necessary or
considering that it is difficult to find work given
desirable in the usual business or trade of the
their ordinary qualifications. Their freedom to
employer, except where the employment has
contract is empty and hollow because theirs is
been fixed for a specific project or undertaking
the freedom to starve if they refuse to work as
the completion or termination of which has been
casual or contractual workers. Indeed, to the
determined at the time of the engagement of the
unemployed, security of tenure has no value. It
employee or where the work or services to be
could not then be said that petitioner and private
performed is seasonal in nature and the
respondents "dealt with each other on more or
employment is for the duration of the season.
less equal terms with no moral dominance

14
whatever being exercised by the former over G.R. No. 181974 February 1, 2012
the latter. 10
LYNVIL FISHING ENTERPRISES, INC. and/or ROSENDO S. DE
The petitioner does not deny or rebut private respondents' BORJA, Petitioners,
averments (1) that the main bulk of its workforce consisted of its so- vs.
called "casual" employees; (2) that as of July 1991, "casual" workers ANDRES G. ARIOLA, JESSIE D. ALCOVENDAS, JIMMY B.
numbered 1,835; and regular employee, 263; (3) that the company CALINAO AND LEOPOLDO G. SEBULLEN,Respondents.
hired "casual" every month for the duration of five months, after
which their services were terminated and they were replaced by
DECISION
other "casual" employees on the same five-month duration; and (4)
that these "casual" employees were actually doing work that were
necessary and desirable in petitioner's usual business. PEREZ, J.:

As a matter of fact, the petitioner even stated in its position paper Before the Court is a Petition for Review on Certiorari1 of the
submitted to the Labor Arbiter that, according to its records, the Decision2 of the Fourteenth Division of the Court of Appeals in CA-
previous employees of the company hired on a five-month basis G.R. SP No. 95094 dated 10 September 2007, granting the Writ of
numbered about 10,000 as of July 1990. This confirms private Certiorari prayed for under Rule 65 of the 1997 Revised Rules of
respondents' allegation that it was really the practice of the company Civil Procedure by herein respondents Andres G. Ariola, Jessie D.
to hire workers on a uniformly fixed contract basis and replace them Alcovendas, Jimmy B. Calinao and Leopoldo Sebullen thereby
upon the expiration of their contracts with other workers on the same reversing the Resolution of the National Labor Relations
employment duration. Commission (NLRC). The dispositive portion of the assailed
decision reads:
This scheme of the petitioner was apparently designed to prevent
the private respondents and the other "casual" employees from WHEREFORE, premises considered, the Decision dated March 31,
attaining the status of a regular employee. It was a clear 2004 rendered by the National Labor Relations Commission is
circumvention of the employees' right to security of tenure and to hereby REVERSED and SET ASIDE. In lieu thereof, the Decision of
other benefits like minimum wage, cost-of-living allowance, sick the Labor Arbiter is hereby REINSTATED, except as to the award of
leave, holiday pay, and 13th month pay. 11 Indeed, the petitioner attorney’s fees, which is ordered DELETED.3
succeeded in evading the application of labor laws. Also, it saved
itself from the trouble or burden of establishing a just cause for
terminating employees by the simple expedient of refusing to renew The version of the petitioners follows:
the employment contracts.
1. Lynvil Fishing Enterprises, Inc. (Lynvil) is a company
The five-month period specified in private respondents' employment engaged in deep-sea fishing, operating along the shores
contracts having been imposed precisely to circumvent the of Palawan and other outlying islands of the Philippines.4 It
constitutional guarantee on security of tenure should, therefore, be is operated and managed by Rosendo S. de Borja.
struck down or disregarded as contrary to public policy or
morals. 12 To uphold the contractual arrangement between the 2. On 1 August 1998, Lynvil received a report from
petitioner and the private respondents would, in effect, permit the Romanito Clarido, one of its employees, that on 31 July
former to avoid hiring permanent or regular employees by simply 1998, he witnessed that while on board the company
hiring them on a temporary or casual basis, thereby violating the vessel Analyn VIII, Lynvil employees, namely: Andres G.
employees' security of tenure in their jobs. 13 Ariola (Ariola), the captain; Jessie D. Alcovendas
(Alcovendas), Chief Mate; Jimmy B. Calinao (Calinao),
The execution by the private respondents of a "Release and Chief Engineer; Ismael G. Nubla (Nubla), cook; Elorde
Quitclaim" did not preclude them from questioning the termination of Bañez (Bañez), oiler; and Leopoldo D. Sebullen
(Sebullen), bodegero, conspired with one another and
their services. Generally, quitclaims by laborers are frowned upon as
contrary to public policy and are held to be ineffective to bar stole eight (8) tubs of "pampano" and "tangigue" fish and
recovery for the full measure of the workers' rights. 14 The reason for delivered them to another vessel, to the prejudice of
Lynvil.5
the rule is that the employer and the employee do not stand on the
same footing. 15
3. The said employees were engaged on a per trip basis
or "por viaje" which terminates at the end of each trip.
Notably, the private respondents lost not time in filing a complaint for
illegal dismissal. This act is hardly expected from employees who Ariola, Alcovendas and Calinao were managerial field
voluntarily and freely consented to their dismissal. 16 personnel while the rest of the crew were field personnel. 6

The NLRC was, thus, correct in finding that the private respondents 4. By reason of the report and after initial investigation,
were regular employees and that they were illegally dismissed from Lynvil’s General Manager Rosendo S. De Borja (De Borja)
summoned respondents to explain within five (5) days
their jobs. Under Article 279 of the Labor Code and the recent
jurisprudence, 17 the legal consequence of illegal dismissal is why they should not be dismissed from service. However,
reinstatement without loss of seniority rights and other privileges, except for Alcovendas and Bañez,7 the respondents
refused to sign the receipt of the notice.
with full back wages computed from the time of dismissal up to the
time of actual reinstatement, without deducting the earnings derived
elsewhere pending the resolution of the case. 5. Failing to explain as required, respondents’
employment was terminated.
However, since reinstatement is no longer possible because the
petitioner's tuna cannery plant had, admittedly, been close in 6. Lynvil, through De Borja, filed a criminal complaint
November 1994, 18 the proper award is separation pay equivalent to against the dismissed employees for violation of P.D. 532,
one month pay or one-half month pay for every year of service, or the Anti-Piracy and Anti-Highway Robbery Law of 1974
whichever is higher, to be computed from the commencement of before the Office of the City Prosecutor of Malabon City. 8
their employment up to the closure of the tuna cannery plant. The
amount of back wages must be computed from the time the private
respondents were dismissed until the time petitioner's cannery plant 7. On 12 November 1998, First Assistant City Prosecutor
ceased operation. 19 Rosauro Silverio found probable cause for the indictment
of the dismissed employees for the crime of qualified
theft9 under the Revised Penal Code.
WHEREFORE, for lack of merit, the instant petition is DISMISSED
and the challenged decision of 30 January 1995 of the National
Labor Relations Commission in NLRC CA No. N-001323-93 is On the other hand, the story of the defense is:
hereby AFFIRMED subject to the above modification on the
computation of the separation pay and back wages. 1. The private respondents were crew members of Lynvil’s
vessel named Analyn VIII.10
SO ORDERED.
2. On 31 July 1998, they arrived at the Navotas Fishport
on board Analyn VIII loaded with 1,241 bañeras of
different kinds of fishes. These bañeras were delivered to
a consignee named SAS and Royale.11

15
The following day, the private respondents reported back
Separation Pay – P58,149.00
to Lynvil office to inquire about their new job assignment
but were told to wait for further advice. They were not
13th Month Pay – 2,473.12
allowed to board any vessel.12
Salary Differential – P5,538.00
3. On 5 August 1998, only Alcovendas and Bañez
received a memorandum from De Borja ordering them to P265, 28.12
explain the incident that happened on 31 July 1998. Upon
being informed about this, Ariola, Calinao, Nubla and
Sebullen went to the Lynvil office. However, they were told TOTAL P 1, 341, 650.76
that their employments were already terminated.13

All other claims are dismissed for lack of merit."17


Aggrieved, the employees filed with the Arbitration Branch of the
National Labor Relations Commission-National Capital Region on 25
August 1998 a complaint for illegal dismissal with claims for The Labor Arbiter found that there was no evidence showing that the
backwages, salary differential reinstatement, service incentive leave, private respondents received the 41 bañeras of "pampano" as
holiday pay and its premium and 13th month pay from 1996 to1998. alleged by De Borja in his reply-affidavit; and that no proof was
They also claimed for moral, exemplary damages and attorney’s presented that the 8 bañeras of pampano [and tangigue] were
fees for their dismissal with bad faith.14 missing at the place of destination.18

They added that the unwarranted accusation of theft stemmed from The Labor Arbiter disregarded the Resolution of Assistant City
their oral demand of increase of salaries three months earlier and Prosecutor Rosauro Silverio on the theft case. He reasoned out that
their request that they should not be required to sign a blank payroll the Labor Office is governed by different rules for the determination
and vouchers.15 of the validity of the dismissal of employees.19

On 5 June 2002, Labor Arbiter Ramon Valentin C. Reyes found The Labor Arbiter also ruled that the contractual provision that the
merit in complainants’ charge of illegal dismissal.16The dispositive employment terminates upon the end of each trip does not make the
portion reads: respondents’ dismissal legal. He pointed out that respondents and
Lynvil did not negotiate on equal terms because of the moral
dominance of the employer.20
WHEREFORE, premises considered, judgment is hereby rendered
finding that complainants were illegally dismissed, ordering
respondents to jointly and severally pay complainants (a) separation The Labor Arbiter found that the procedural due process was not
pay at one half month pay for every year of service; (b) backwages; complied with and that the mere notice given to the private
(c) salary differential; (d) 13th month pay; and (e) attorney’s fees, as respondents fell short of the requirement of "ample opportunity" to
follows: present the employees’ side.21

On appeal before the National Labor Relations Commission,


"1) Andres Ariola petitioners asserted that private respondents were only contractual
Backwages P234,000.00 employees; that they were not illegally dismissed but were accorded
procedural due process and that De Borja did not commit bad faith
(P6,500.00 x 36 = P234,000.00)
in dismissing the employees so as to warrant his joint liability with
Lynvil.22
Separation Pay – P74,650.00

13th Month Pay – P6,500.00 On 31 March 2004, the NLRC reversed and set aside the Decision
of the Labor Arbiter. The dispositive portion reads:
P325,250.00
WHEREFORE, judgment is hereby rendered REVERSING AND
"2) Jessie Alcovendas
SETTING ASIDE the Decision of the Labor Arbiter a quo and a new
Backwages P195,328.00
one entered DISMISSING the present complaints for utter lack of
(P5,148.00 x 36 = P195,328.00) merit;

Separation Pay – P44,304.00 However as above discussed, an administrative fine of PhP5,000.00


for each complainant, Andres Ariola, Jessie Alcovendas, Jimmy
13th Month Pay – 5,538.00 Canilao, Leopoldo Sebullen and Ismael Nobla or a total of
PhP25,000.00 is hereby awarded.23
Salary Differential – 1,547.52

P246,717.52 The private respondents except Elorde Bañez filed a Petition for
Certiorari24 before the Court of Appeals alleging grave abuse of
"3) Jimmy Calinao discretion on the part of NLRC.
Backwages P234,000.00
The Court of Appeals found merit in the petition and reinstated the
(P6,500.00 x 36 = P234,000.00) Decision of the Labor Arbiter except as to the award of attorney’s
fees. The appellate court held that the allegation of theft did not
Separation Pay – 55,250.00 warrant the dismissal of the employees since there was no evidence
to prove the actual quantities of the missing kinds of fish loaded to
13th Month Pay – P6,500.00 Analyn VIII.25 It also reversed the finding of the NLRC that the
dismissed employees were merely contractual employees and
P295,700.00 added that they were regular ones performing activities which are
usually necessary or desirable in the business and trade of Lynvil.
"4) Leopoldo Sebullen Finally, it ruled that the two-notice rule provided by law and
jurisprudence is mandatory and non-compliance therewith rendered
Backwages P154,440.00 the dismissal of the employees illegal.
(P4, 290.00 x 36 = P154,440.00)
The following are the assignment of errors presented before this
Separation Pay – P44,073.00 Court by Lynvil:

13th Month Pay – 2,473.12


I
Salary Differential – 4,472.00
THE HONORABLE COURT OF APPEALS ERRED IN
P208,455.12 FAILING TO CONSIDER THE ESTABLISHED
DOCTRINE LAID DOWN IN NASIPIT LUMBER
"5) Ismael Nubla COMPANY V. NLRC HOLDING THAT THE FILING OF A
Backwages P199,640.12 CRIMINAL CASE BEFORE THE PROSECUTOR’S

16
OFFICE CONSTITUTES SUFFICIENT BASIS FOR A (10) When the findings of fact of the Court of Appeals are
VALID TERMINATION OF EMPLOYMENT ON THE premised on the supposed absence of evidence and
GROUNDS OF SERIOUS MISCONDUCT AND/OR LOSS contradicted by the evidence on record. (Emphasis
OF TRUST AND CONFIDENCE. supplied)28

II The contrariety of the findings of the Labor Arbiter and the NLRC
prevents reliance on the principle of special administrative expertise
and provides the reason for judicial review, at first instance by the
THE HONORABLE COURT OF APPEALS ERRED IN
appellate court, and on final study through the present petition.
RULING THAT THE TERMINATION OF
RESPONDENTS’ EMPLOYMENT WAS NOT
SUPPORTED BY SUBSTANTIAL EVIDENCE. In the first assignment of error, Lynvil contends that the filing of a
criminal case before the Office of the Prosecutor is sufficient basis
for a valid termination of employment based on serious misconduct
III
and/or loss of trust and confidence relying on Nasipit Lumber
Company v. NLRC.29
THE HONORABLE COURT OF APPEALS ERRED IN
FAILING TO CONSIDER THAT THE RESPONDENTS’
Nasipit is about a security guard who was charged with qualified
EMPLOYMENT, IN ANY EVENT, WERE CONTRACTUAL
theft which charge was dismissed by the Office of the Prosecutor.
IN NATURE BEING ON A PER VOYAGE BASIS. THUS,
However, despite the dismissal of the complaint, he was still
THEIR RESPECTIVE EMPLOYMENT TERMINATED
terminated from his employment on the ground of loss of
AFTER THE END OF EACH VOYAGE
confidence. We ruled that proof beyond reasonable doubt of an
employee's misconduct is not required when loss of confidence is
IV the ground for dismissal. It is sufficient if the employer has "some
basis" to lose confidence or that the employer has reasonable
ground to believe or to entertain the moral conviction that the
THE HONORABLE COURT OF APPEALS ERRED IN
employee concerned is responsible for the misconduct and that the
RULING THAT THE RESPONDENTS WERE NOT nature of his participation therein rendered him absolutely unworthy
ACCORDED PROCEDURAL DUE PROCESS. of the trust and confidence demanded by his position.30 It added that
the dropping of the qualified theft charges against the respondent is
V not binding upon a labor tribunal.31

THE HONORABLE COURT OF APPEALS ERRED IN In Nicolas v. National Labor Relations Commission,32 we held that a
RULING THAT THE RESPONDENTS ARE ENTITLED criminal conviction is not necessary to find just cause for
TO THE PAYMENT OF THEIR MONEY CLAIMS. employment termination. Otherwise stated, an employee’s acquittal
in a criminal case, especially one that is grounded on the existence
of reasonable doubt, will not preclude a determination in a labor
VI case that he is guilty of acts inimical to the employer’s interests.33 In
the reverse, the finding of probable cause is not followed by
THE HONORABLE COURT OF APPEALS ERRED IN automatic adoption of such finding by the labor tribunals.
FAILING TO CONSIDER THAT PETITIONER ROSENDO
S. DE BORJA IS NOT JOINTLY AND SEVERALLY In other words, whichever way the public prosecutor disposes of a
LIABLE FOR THE JUDGMENT WHEN THERE WAS NO complaint, the finding does not bind the labor tribunal.
FINDING OF BAD FAITH.26

Thus, Lynvil cannot argue that since the Office of the Prosecutor
The Court’s Ruling found probable cause for theft the Labor Arbiter must follow the
finding as a valid reason for the termination of respondents’
The Supreme Court is not a trier of facts. Under Rule 45, 27 parties employment. The proof required for purposes that differ from one
may raise only questions of law. We are not duty-bound to analyze and the other are likewise different.
again and weigh the evidence introduced in and considered by the
tribunals below. Generally when supported by substantial evidence, Nonetheless, even without reliance on the prosecutor’s finding, we
the findings of fact of the CA are conclusive and binding on the find that there was valid cause for respondents’ dismissal.
parties and are not reviewable by this Court, unless the case falls
under any of the following recognized exceptions:
In illegal dismissal cases, the employer bears the burden of proving
that the termination was for a valid or authorized cause. 34
(1) When the conclusion is a finding grounded entirely on
speculation, surmises and conjectures;
Just cause is required for a valid dismissal. The Labor
Code35 provides that an employer may terminate an employment
(2) When the inference made is manifestly mistaken, based on fraud or willful breach of the trust reposed on the
absurd or impossible; employee. Such breach is considered willful if it is done intentionally,
knowingly, and purposely, without justifiable excuse, as
(3) Where there is a grave abuse of discretion; distinguished from an act done carelessly, thoughtlessly, heedlessly
or inadvertently. It must also be based on substantial evidence and
not on the employer’s whims or caprices or suspicions otherwise,
(4) When the judgment is based on a misapprehension of the employee would eternally remain at the mercy of the employer.
facts; Loss of confidence must not be indiscriminately used as a shield by
the employer against a claim that the dismissal of an employee was
(5) When the findings of fact are conflicting; arbitrary. And, in order to constitute a just cause for dismissal, the
act complained of must be work-related and shows that the
employee concerned is unfit to continue working for the employer. In
(6) When the Court of Appeals, in making its findings, addition, loss of confidence as a just cause for termination of
went beyond the issues of the case and the same is employment is premised on the fact that the employee concerned
contrary to the admissions of both appellant and appellee; holds a position of responsibility, trust and confidence or that the
employee concerned is entrusted with confidence with respect to
(7) When the findings are contrary to those of the trial delicate matters, such as the handling or care and protection of the
court; property and assets of the employer. The betrayal of this trust is the
essence of the offense for which an employee is penalized. 36
(8) When the findings of fact are conclusions without
citation of specific evidence on which they are based; Breach of trust is present in this case.

(9) When the facts set forth in the petition as well as in the We agree with the ruling of the Labor Arbiter and Court of Appeals
petitioners' main and reply briefs are not disputed by the that the quantity of tubs expected to be received was the same as
respondents; and that which was loaded. However, what is material is the kind of fish
loaded and then unloaded. Sameness is likewise needed.

17
We cannot close our eyes to the positive and clear narration of facts thus becomes pointless and arbitrary, unjust in its effects and apt to
of the three witnesses to the commission of qualified theft. Jonathan lead to absurd and unintended consequences.
Distajo, a crew member of the Analyn VIII, stated in his letter
addressed to De Borja37 dated 8 August 1998, that while the vessel
Contrarily, the private respondents contend that they became
was traversing San Nicolas, Cavite, he saw a small boat approach
regular employees by reason of their continuous hiring and
them. When the boat was next to their vessel, Alcovendas went
performance of tasks necessary and desirable in the usual trade and
inside the stockroom while Sebullen pushed an estimated four tubs
business of Lynvil.
of fish away from it. Ariola, on the other hand, served as the lookout
and negotiator of the transaction. Finally, Bañez and Calinao helped
in putting the tubs in the small boat. He further added that he Jurisprudence,42 laid two conditions for the validity of a fixed-contract
received ₱800.00 as his share for the transaction. Romanito Clarido, agreement between the employer and employee:
who was also on board the vessel, corroborated the narration of
Distajo on all accounts in his 25 August 1998 affidavit.38 He added
First, the fixed period of employment was knowingly and voluntarily
that Alcovendas told him to keep silent about what happened on that
day. Sealing tight the credibility of the narration of theft is the agreed upon by the parties without any force, duress, or improper
affidavit39 executed by Elorde Bañez dated 3 May 1999. Bañez was pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; or
one of the dismissed employees who actively participated in the
taking of the tubs. He clarified in the affidavit that the four tubs taken
out of the stockroom in fact contained fish taken from the eight tubs. Second, it satisfactorily appears that the employer and the employee
He further stated that Ariola told everyone in the vessel not to say dealt with each other on more or less equal terms with no moral
anything and instead file a labor case against the management. dominance exercised by the former or the latter.43
Clearly, we cannot fault Lynvil and De Borja when it dismissed the
employees.
Textually, the provision that: "NA ako ay sumasang-ayon na
maglingkod at gumawa ng mga gawain sang-ayon sa patakarang
The second to the fifth assignment of errors interconnect. "por viaje" na magmumula sa pagalis sa Navotas papunta sa
pangisdaan at pagbabalik sa pondohan ng lantsa sa Navotas, Metro
The nature of employment is defined in the Labor Code, thus: Manila" is for a fixed period of employment. In the context, however,
of the facts that: (1) the respondents were doing tasks necessarily to
Lynvil’s fishing business with positions ranging from captain of the
Art. 280. Regular and casual employment. The provisions of vessel to bodegero; (2) after the end of a trip, they will again be
written agreement to the contrary notwithstanding and regardless of hired for another trip with new contracts; and (3) this arrangement
the oral agreement of the parties, an employment shall be deemed continued for more than ten years, the clear intention is to go around
to be regular where the employee has been engaged to perform the security of tenure of the respondents as regular employees. And
activities which are usually necessary or desirable in the usual respondents are so by the express provisions of the second
business or trade of the employer, except where the employment paragraph of Article 280, thus:
has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the
xxx Provided, That any employee who has rendered at least one
engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the year of service, whether such service is continuous or broken, shall
duration of the season. be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such
activity exists.
An employment shall be deemed to be casual if it is not covered by
the preceding paragraph: Provided, That any employee who has
The same set of circumstances indicate clearly enough that it was
rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with the need for a continued source of income that forced the
respect to the activity in which he is employed and his employment employees’ acceptance of the "por viaje" provision.
shall continue while such activity exists.
Having found that respondents are regular employees who may be,
Lynvil contends that it cannot be guilty of illegal dismissal because however, dismissed for cause as we have so found in this case,
there is a need to look into the procedural requirement of due
the private respondents were employed under a fixed-term contract
which expired at the end of the voyage. The pertinent provisions of process in Section 2, Rule XXIII, Book V of the Rules Implementing
the contract are: the Labor Code. It is required that the employer furnish the
employee with two written notices: (1) a written notice served on the
employee specifying the ground or grounds for termination, and
xxxx giving to said employee reasonable opportunity within which to
explain his side; and (2) a written notice of termination served on the
employee indicating that upon due consideration of all the
1. NA ako ay sumasang-ayon na maglingkod at gumawa ng mga
circumstances, grounds have been established to justify his
gawain sang-ayon sa patakarang "por viaje" na magmumula sa
termination.
pagalis sa Navotas papunta sa pangisdaan at pagbabalik sa
pondohan ng lantsa sa Navotas, Metro Manila;
From the records, there was only one written notice which required
respondents to explain within five (5) days why they should not be
xxxx
dismissed from the service. Alcovendas was the only one who
signed the receipt of the notice. The others, as claimed by Lynvil,
1. NA ako ay nakipagkasundo na babayaran ang aking paglilingkod refused to sign. The other employees argue that no notice was given
sa paraang "por viaje" sa halagang P__________ isang biyahe ng to them. Despite the inconsistencies, what is clear is that no final
kabuuang araw xxxx.40 written notice or notices of termination were sent to the employees.

Lynvil insists on the applicability of the case of Brent School, 41 to wit: The twin requirements of notice and hearing constitute the elements
of [due] process in cases of employee's dismissal. The requirement
of notice is intended to inform the employee concerned of the
Accordingly, and since the entire purpose behind the development
employer's intent to dismiss and the reason for the proposed
of legislation culminating in the present Article 280 of the Labor
dismissal. Upon the other hand, the requirement of hearing affords
Code clearly appears to have been, as already observed, to prevent
the employee an opportunity to answer his employer's charges
circumvention of the employee's right to be secure in his tenure, the
against him and accordingly, to defend himself therefrom before
clause in said article indiscriminately and completely ruling out all
dismissal is effected.44 Obviously, the second written notice, as
written or oral agreements conflicting with the concept of regular
indispensable as the first, is intended to ensure the observance of
employment as defined therein should be construed to refer to the
due process.
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 Applying the rule to the facts at hand, we grant a monetary award of
was agreed upon knowingly and voluntarily by the parties, without ₱50,000.00 as nominal damages, this, pursuant to the fresh ruling of
any force, duress or improper pressure being brought to bear upon this Court in Culili v. Eastern Communication Philippines, Inc.45 Due
the employee and absent any other circumstances vitiating his to the failure of Lynvil to follow the procedural requirement of two-
consent, or where it satisfactorily appears that the employer and notice rule, nominal damages are due to respondents despite their
employee dealt with each other on more or less equal terms with no dismissal for just cause.
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
18
Given the fact that their dismissal was for just cause, we cannot encoding and data conversion business. It employed encoders,
grant backwages and separation pay to respondents. However, indexers, formatters, programmers, quality/quantity staff, and others,
following the findings of the Labor Arbiter who with the expertise to maintain its business and accomplish the job orders of its clients.
presided over the proceedings below, which findings were affirmed Respondent Leo Rabang was its Human Resources and
by the Court of Appeals, we grant the 13th month pay and salary Development (HRAD) Manager, while respondent Jane Navarette
differential of the dismissed employees. was its Project Manager. INNODATA had since ceased operations
due to business losses in June 2002.
Whether De Borja is jointly and severally liable with Lynvil
Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita
Arbilera were employed as formatters by INNODATA. The parties
As to the last issue, this Court has ruled that in labor cases, the
executed an employment contract denominated as a "Contract of
corporate directors and officers are solidarily liable with the
Employment for a Fixed Period," stipulating that the contract shall be
corporation for the termination of employment of employees done
for a period of one year,3 to wit:
with malice or in bad faith.46 Indeed, moral damages are recoverable
when the dismissal of an employee is attended by bad faith or fraud
or constitutes an act oppressive to labor, or is done in a manner CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD
contrary to good morals, good customs or public policy.
xxxx
It has also been discussed in MAM Realty Development Corporation
v. NLRC47 that:
WITNESSETH: That

x x x A corporation being a juridical entity, may act only through its


WHEREAS, the EMPLOYEE has applied for the position of
directors, officers and employees. Obligations incurred by them,
FORMATTER and in the course thereof and represented
acting as such corporate agents, are not theirs but the direct
himself/herself to be fully qualified and skilled for the said position;
accountabilities of the corporation they represent. True, solidary
liabilities may at times be incurred but only when exceptional
circumstances warrant such as, generally, in the following cases: WHEREAS, the EMPLOYER, by reason of the aforesaid
representations, is desirous of engaging that the (sic) services of the
EMPLOYEE for a fixed period;
1. When directors and trustees or, in appropriate cases, the officers
of a corporation:
NOW, THEREFORE, for and in consideration of the foregoing
premises, the parties have mutually agreed as follows:
xxx

TERM/DURATION
(b) act in bad faith or with gross negligence in directing the corporate
affairs;
The EMPLOYER hereby employs, engages and hires the
EMPLOYEE and the EMPLOYEE hereby accepts such appointment
x x x 48
as FORMATTER effective FEB. 16, 1999 to FEB. 16, 2000 a period
of ONE YEAR.
The term "bad faith" contemplates a "state of mind affirmatively
operating with furtive design or with some motive of self-interest or
xxxx
will or for ulterior purpose."49 1âwphi1

TERMINATION
We agree with the ruling of both the NLRC and the Court of Appeals
when they pronounced that there was no evidence on record that
indicates commission of bad faith on the part of De Borja. He is the 6.1 In the event that EMPLOYER shall discontinue operating its
general manager of Lynvil, the one tasked with the supervision by business, this CONTRACT shall also ipso facto terminate on the last
the employees and the operation of the business. However, there is day of the month on which the EMPLOYER ceases operations with
no proof that he imposed on the respondents the "por viaje" the same force and effect as is such last day of the month were
provision for purpose of effecting their summary dismissal. originally set as the termination date of this Contract. Further should
the Company have no more need for the EMPLOYEE’s services on
account of completion of the project, lack of work (sic) business
WHEREFORE, the petition is partially GRANTED. The 10
losses, introduction of new production processes and techniques,
September 2007 Decision of the Court of Appeals in CA-G.R. SP
which will negate the need for personnel, and/or overstaffing, this
No. 95094 reversing the Resolution dated 31 March 2004 of the
contract maybe pre-terminated by the EMPLOYER upon giving of
National Labor Relations Commission is hereby MODIFIED. The
three (3) days notice to the employee.
Court hereby rules that the employees were dismissed for just cause
by Lynvil Fishing Enterprises, Inc. and Rosendo S. De Borja, hence,
the reversal of the award for backwages and separation pay. 6.2 In the event period stipulated in item 1.2 occurs first vis-à-vis the
However, we affirm the award for 13th month pay, salary differential completion of the project, this contract shall automatically terminate.
and grant an additional ₱50,000.00 in favor of the employees
representing nominal damages for petitioners’ non-compliance with
statutory due process. No cost. 6.3 COMPANY’s Policy on monthly productivity shall also apply to
the EMPLOYEE.

SO ORDERED.
6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this
CONTRACT, with or without cause, by giving at least Fifteen – (15)
CHERRY J. PRICE vs. INNODATA PHILS. INC. notice to that effect. Provided, that such pre-termination shall be
effective only upon issuance of the appropriate clearance in favor of
the said EMPLOYEE.
G.R. No. 178505 September 30, 2008

6.5 Either of the parties may terminate this Contract by reason of the
CHICO-NAZARIO, J.:
breach or violation of the terms and conditions hereof by giving at
least Fifteen (15) days written notice. Termination with cause under
This Petition for Review on Certiorari under Rule 45 of the Rules of this paragraph shall be effective without need of judicial action or
Court assails the Decision1 dated 25 September 2006 and approval.4
Resolution2 dated 15 June 2007 of the Court of Appeals in CA-G.R.
SP No. 72795, which affirmed the Decision dated 14 December
During their employment as formatters, petitioners were assigned to
2001 of the National Labor Relations Commission (NLRC) in NLRC
handle jobs for various clients of INNODATA, among which were
NCR Case No. 30-03-01274-2000 finding that petitioners were not
CAS, Retro, Meridian, Adobe, Netlib, PSM, and Earthweb. Once
illegally dismissed by respondents.
they finished the job for one client, they were immediately assigned
to do a new job for another client.
The factual antecedents of the case are as follows:
On 16 February 2000, the HRAD Manager of INNODATA wrote
Respondent Innodata Philippines, Inc./Innodata Corporation petitioners informing them of their last day of work. The letter reads:
(INNODATA) was a domestic corporation engaged in the data

19
RE: End of Contract Total Backwages P139,464.00

Date: February 16, 2000 B. Attorney’s fees (10% of total award)


13,946.40
Please be informed that your employment ceases effective at the
end of the close of business hours on February 16, 2000.5 Total Award P153,410.40

According to INNODATA, petitioners’ employment already ceased Respondent INNODATA appealed the Labor Arbiter’s Decision to
due to the end of their contract. the NLRC. The NLRC, in its Decision dated 14 December 2001,
reversed the Labor Arbiter’s Decision dated 17 October 2000, and
absolved INNODATA of the charge of illegal dismissal.
On 22 May 2000, petitioners filed a Complaint6 for illegal dismissal
and damages against respondents. Petitioners claimed that they
should be considered regular employees since their positions as The NLRC found that petitioners were not regular employees, but
formatters were necessary and desirable to the usual business of were fixed-term employees as stipulated in their respective contracts
INNODATA as an encoding, conversion and data processing of employment. The NLRC applied Brent School, Inc. v.
company. Petitioners also averred that the decisions in Villanueva v. Zamora13 and St. Theresa’s School of Novaliches Foundation v.
National Labor Relations Commission7 and Servidad v. National National Labor Relations Commission,14 in which this Court upheld
Labor Relations Commission,8 in which the Court already the validity of fixed-term contracts. The determining factor of such
purportedly ruled "that the nature of employment at Innodata Phils., contracts is not the duty of the employee but the day certain agreed
Inc. is regular,"9 constituted stare decisis to the present case. upon by the parties for the commencement and termination of the
Petitioners finally argued that they could not be considered project employment relationship. The NLRC observed that the petitioners
employees considering that their employment was not coterminous freely and voluntarily entered into the fixed-term employment
with any project or undertaking, the termination of which was contracts with INNODATA. Hence, INNODATA was not guilty of
predetermined. illegal dismissal when it terminated petitioners’ employment upon
the expiration of their contracts on 16 February 2000.
On the other hand, respondents explained that INNODATA was
engaged in the business of data processing, typesetting, indexing, The dispositive portion of the NLRC Decision thus reads:
and abstracting for its foreign clients. The bulk of the work was data
processing, which involved data encoding. Data encoding, or the
WHEREFORE, premises considered, the decision appealed from is
typing of data into the computer, included pre-encoding, encoding 1
hereby REVERSED and SET ASIDE and a new one entered
and 2, editing, proofreading, and scanning. Almost half of the
DISMISSING the instant complaint for lack of merit.15
employees of INNODATA did data encoding work, while the other
half monitored quality control. Due to the wide range of services
rendered to its clients, INNODATA was constrained to hire new The NLRC denied petitioners’ Motion for Reconsideration in a
employees for a fixed period of not more than one year. Resolution dated 28 June 2002.16
Respondents asserted that petitioners were not illegally dismissed,
for their employment was terminated due to the expiration of their
terms of employment. Petitioners’ contracts of employment with In a Petition for Certiorari under Rule 65 of the Rules of Court filed
INNODATA were for a limited period only, commencing on 6 before the Court of Appeals, petitioners prayed for the annulment,
reversal, modification, or setting aside of the Decision dated 14
September 1999 and ending on 16 February 2000.10 Respondents
further argued that petitioners were estopped from asserting a December 2001 and Resolution dated 28 June 2002 of the
position contrary to the contracts which they had knowingly, NLRC.lawphil.net
voluntarily, and willfully agreed to or entered into. There being no
illegal dismissal, respondents likewise maintained that petitioners On 25 September 2006, the Court of Appeals promulgated its
were not entitled to reinstatement and backwages. Decision sustaining the ruling of the NLRC that petitioners were not
illegally dismissed.
On 17 October 2000, the Labor Arbiter11 issued its Decision12 finding
petitioners’ complaint for illegal dismissal and damages meritorious. The Court of Appeals ratiocinated that although this Court declared
The Labor Arbiter held that as formatters, petitioners occupied jobs in Villanueva and Servidad that the employees of INNODATA
that were necessary, desirable, and indispensable to the data working as data encoders and abstractors were regular, and not
processing and encoding business of INNODATA. By the very contractual, petitioners admitted entering into contracts of
nature of their work as formatters, petitioners should be considered employment with INNODATA for a term of only one year and for a
regular employees of INNODATA, who were entitled to security of project called Earthweb. According to the Court of Appeals, there
tenure. Thus, their termination for no just or authorized cause was was no showing that petitioners entered into the fixed-term contracts
illegal. In the end, the Labor Arbiter decreed: unknowingly and involuntarily, or because INNODATA applied force,
duress or improper pressure on them. The appellate court also
FOREGOING PREMISES CONSIDERED, judgment is hereby observed that INNODATA and petitioners dealt with each other on
more or less equal terms, with no moral dominance exercised by the
rendered declaring complainants’ dismissal illegal and ordering
respondent INNODATA PHILS. INC./INNODATA CORPORATION former on latter. Petitioners were therefore bound by the stipulations
to reinstate them to their former or equivalent position without loss of in their contracts terminating their employment after the lapse of the
fixed term.
seniority rights and benefits. Respondent company is further ordered
to pay complainants their full backwages plus ten percent (10%) of
the totality thereof as attorney’s fees. The monetary awards due the The Court of Appeals further expounded that in fixed-term contracts,
complainants as of the date of this decision are as follows: the stipulated period of employment is governing and not the nature
thereof. Consequently, even though petitioners were performing
A. Backwages functions that are necessary or desirable in the usual business or
trade of the employer, petitioners did not become regular employees
because their employment was for a fixed term, which began on 16
1. Cherry J. Price February 1999 and was predetermined to end on 16 February 2000.

2/17/2000 – 10/17/2000 at The appellate court concluded that the periods in petitioners’
223.50/day contracts of employment were not imposed to preclude petitioners
from acquiring security of tenure; and, applying the ruling of this
Court in Brent, declared that petitioners’ fixed-term employment
P5,811.00/mo/ x 8 mos. P46,488.00
contracts were valid. INNODATA did not commit illegal dismissal for
terminating petitioners’ employment upon the expiration of their
2. Stephanie Domingo 46,488.00 contracts.

(same computation) The Court of Appeals adjudged:

3. Lolita Arbilera 46,488.00 WHEREFORE, the instant petition is hereby DENIED and the
Resolution dated December 14, 2001 of the National Labor
Relations Commission declaring petitioners were not illegally
(same computation)
dismissed is AFFIRMED.17

20
The petitioners filed a Motion for Reconsideration of the afore- rendered at least one year of service, whether continuous or broken,
mentioned Decision of the Court of Appeals, which was denied by with respect to the activity in which they are employed.
the same court in a Resolution dated 15 June 2007.
Undoubtedly, petitioners belong to the first type of regular
Petitioners are now before this Court via the present Petition for employees.
Review on Certiorari, based on the following assignment of errors:
Under Article 280 of the Labor Code, the applicable test to
I. determine whether an employment should be considered regular or
non-regular is the reasonable connection between the particular
activity performed by the employee in relation to the usual business
THE HONORABLE COURT OF APPEALS COMMITTED
or trade of the employer.22
SERIOUS ERROR OF LAW AND GRAVE ABUSE OF
DISCRETION WHEN IT DID NOT APPLY THE
SUPREME COURT RULING IN THE CASE OF In the case at bar, petitioners were employed by INNODATA on 17
NATIVIDAD & QUEJADA THAT THE NATURE OF February 1999 as formatters. The primary business of INNODATA is
EMPLOYMENT OF RESPONDENTS IS REGULAR NOT data encoding, and the formatting of the data entered into the
FIXED, AND AS SO RULED IN AT LEAST TWO OTHER computers is an essential part of the process of data encoding.
CASES AGAINST INNODATA PHILS. INC. Formatting organizes the data encoded, making it easier to
understand for the clients and/or the intended end users thereof.
Undeniably, the work performed by petitioners was necessary or
II.
desirable in the business or trade of INNODATA.

THE HONORABLE COURT OF APPEALS COMMITTED


However, it is also true that while certain forms of employment
SERIOUS ERROR OF LAW IN RULING THAT THE
require the performance of usual or desirable functions and exceed
STIPULATION OF CONTRACT IS GOVERNING AND
one year, these do not necessarily result in regular employment
NOT THE NATURE OF EMPLOYMENT AS DEFINED BY
under Article 280 of the Labor Code.23 Under the Civil Code, fixed-
LAW.
term employment contracts are not limited, as they are under the
present Labor Code, to those by nature seasonal or for specific
III. projects with predetermined dates of completion; they also include
those to which the parties by free choice have assigned a specific
date of termination.24
THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION WHEN IT DID NOT The decisive determinant in term employment is the day certain
CONSIDER THE EVIDENCE ON RECORD SHOWING agreed upon by the parties for the commencement and termination
THAT THERE IS CLEAR CIRCUMVENTION OF THE of their employment relationship, a day certain being understood to
LAW ON SECURITY OF TENURE THROUGH be that which must necessarily come, although it may not be known
CONTRACT MANIPULATION.18 when. Seasonal employment and employment for a particular
project are instances of employment in which a period, where not
expressly set down, is necessarily implied.25
The issue of whether petitioners were illegally dismissed by
respondents is ultimately dependent on the question of whether
petitioners were hired by INNODATA under valid fixed-term Respondents maintain that the contracts of employment entered into
employment contracts. by petitioners with INNDOATA were valid fixed-term employment
contracts which were automatically terminated at the expiry of the
period stipulated therein, i.e., 16 February 2000.
After a painstaking review of the arguments and evidences of the
parties, the Court finds merit in the present Petition. There were no
valid fixed-term contracts and petitioners were regular employees of The Court disagrees.
the INNODATA who could not be dismissed except for just or
authorized cause.
While this Court has recognized the validity of fixed-term
employment contracts, it has consistently held that this is the
The employment status of a person is defined and prescribed by law exception rather than the general rule. More importantly, a fixed-
and not by what the parties say it should be.19 Equally important to term employment is valid only under certain circumstances. In Brent,
consider is that a contract of employment is impressed with public the very same case invoked by respondents, the Court identified
interest such that labor contracts must yield to the common several circumstances wherein a fixed-term is anessential and
good.20 Thus, provisions of applicable statutes are deemed written natural appurtenance, to wit:
into the contract, and the parties are not at liberty to insulate
themselves and their relationships from the impact of labor laws and
Some familiar examples may be cited of employment contracts
regulations by simply contracting with each other.21
which may be neither for seasonal work nor for specific projects, but
to which a fixed term is an essential and natural appurtenance:
Regular employment has been defined by Article 280 of the Labor overseas employment contracts, for one, to which, whatever the
Code, as amended, which reads: 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
Art. 280. Regular and Casual Employment. The provisions of written positions of dean, assistant dean, college secretary, principal, and
agreement to the contrary notwithstanding and regardless of the oral other administrative offices in educational institutions, which are by
agreement of the parties, an employment shall be deemed to be
practice or tradition rotated among the faculty members, and where
regular where the employee has been engaged to perform activities fixed terms are a necessity without which no reasonable rotation
which are usually necessary or desirable in the usual business or would be possible. Similarly, despite the provisions of Article 280,
trade of the employer, except where the employment has been fixed
Policy Instructions No. 8 of the Minister of Labor implicitly recognize
for a specific project or undertaking the completion or termination of that certain company officials may be elected for what would amount
which has been determined at the time of engagement of the to fixed periods, at the expiration of which they would have to stand
employee or where the work or services to be performed is seasonal
down, in providing that these officials, "x x may lose their jobs as
in nature and employment is for the duration of the season. president, executive vice-president or vice president, etc. because
the stockholders or the board of directors for one reason or another
An employment shall be deemed to be casual if it is not covered by did not reelect them."26
the preceding paragraph. Provided, That, any employee who has
rendered at least one year of service, whether such service is As a matter of fact, the Court, in its oft-quoted decision in Brent, also
continuous or broken, shall be considered a regular employee with
issued a stern admonition that where, from the circumstances, it is
respect to the activity in which he is employed and his employment apparent that the period was imposed to preclude the acquisition of
shall continue while such activity exists. (Underscoring ours). tenurial security by the employee, then it should be struck down as
being contrary to law, morals, good customs, public order and public
Based on the afore-quoted provision, the following employees are policy.27
accorded regular status: (1) those who are engaged to perform
activities which are necessary or desirable in the usual business or
After considering petitioners’ contracts in their entirety, as well as
trade of the employer, regardless of the length of their employment; the circumstances surrounding petitioners’ employment at
and (2) those who were initially hired as casual employees, but have INNODATA, the Court is convinced that the terms fixed therein were

21
meant only to circumvent petitioners’ right to security of tenure and completion of a project. More importantly, there is also a dearth of
are, therefore, invalid. evidence that such project or undertaking had already been
completed or terminated to justify the dismissal of petitioners. In fact,
petitioners alleged - and respondents failed to dispute that
The contracts of employment submitted by respondents are highly
petitioners did not work on just one project, but continuously worked
suspect for not only being ambiguous, but also for appearing to be
for a series of projects for various clients of INNODATA.
tampered with.

In Magcalas v. National Labor Relations Commission,30 the Court


Petitioners alleged that their employment contracts with INNODATA
struck down a similar claim by the employer therein that the
became effective 16 February 1999, and the first day they reported
dismissed employees were fixed-term and project employees. The
for work was on 17 February 1999. The Certificate of Employment
Court here reiterates the rule that all doubts, uncertainties,
issued by the HRAD Manager of INNODATA also indicated that
ambiguities and insufficiencies should be resolved in favor of labor.
petitioners Price and Domingo were employed by INNODATA on 17
It is a well-entrenched doctrine that in illegal dismissal cases, the
February 1999.
employer has the burden of proof. This burden was not discharged
in the present case.
However, respondents asserted before the Labor Arbiter that
petitioners’ employment contracts were effective only on 6
As a final observation, the Court also takes note of several other
September 1999. They later on admitted in their Memorandum filed
provisions in petitioners’ employment contracts that display utter
with this Court that petitioners were originally hired on 16 February
disregard for their security of tenure. Despite fixing a period or term
1999 but the project for which they were employed was completed
of employment, i.e., one year, INNODATA reserved the right to pre-
before the expiration of one year. Petitioners were merely rehired on
terminate petitioners’ employment under the following
6 September 1999 for a new project. While respondents submitted
circumstances:
employment contracts with 6 September 1999 as beginning date of
effectivity, it is obvious that in one of them, the original beginning
date of effectivity, 16 February 1999, was merely crossed out and 6.1 x x x Further should the Company have no more need for the
replaced with 6 September 1999. The copies of the employment EMPLOYEE’s services on account of completion of the project, lack
contracts submitted by petitioners bore similar alterations. of work (sic) business losses, introduction of new production
processes and techniques, which will negate the need for personnel,
and/or overstaffing, this contract maybe pre-terminated by the
The Court notes that the attempt to change the beginning date of
EMPLOYER upon giving of three (3) days notice to the employee.
effectivity of petitioners’ contracts was very crudely done. The
alterations are very obvious, and they have not been initialed by the
petitioners to indicate their assent to the same. If the contracts were xxxx
truly fixed-term contracts, then a change in the term or period
agreed upon is material and would already constitute a novation of
6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this
the original contract.
CONTRACT, with or without cause, by giving at least Fifteen – (15)
[day] notice to that effect. Provided, that such pre-termination shall
Such modification and denial by respondents as to the real be effective only upon issuance of the appropriate clearance in favor
beginning date of petitioners’ employment contracts render the said of the said EMPLOYEE. (Emphasis ours.)
contracts ambiguous. The contracts themselves state that they
would be effective until 16 February 2000 for a period of one year. If
Pursuant to the afore-quoted provisions, petitioners have no right at
the contracts took effect only on 6 September 1999, then its period
all to expect security of tenure, even for the supposedly one-year
of effectivity would obviously be less than one year, or for a period of
period of employment provided in their contracts, because they can
only about five months.
still be pre-terminated (1) upon the completion of an unspecified
project; or (2) with or without cause, for as long as they are given a
Obviously, respondents wanted to make it appear that petitioners three-day notice. Such contract provisions are repugnant to the
worked for INNODATA for a period of less than one year. The only basic tenet in labor law that no employee may be terminated except
reason the Court can discern from such a move on respondents’ for just or authorized cause.
part is so that they can preclude petitioners from acquiring regular
status based on their employment for one year. Nonetheless, the
Under Section 3, Article XVI of the Constitution, it is the policy of the
Court emphasizes that it has already found that petitioners should
State to assure the workers of security of tenure and free them from
be considered regular employees of INNODATA by the nature of the
the bondage of uncertainty of tenure woven by some employers into
work they performed as formatters, which was necessary in the
their contracts of employment. This was exactly the purpose of the
business or trade of INNODATA. Hence, the total period of their
legislators in drafting Article 280 of the Labor Code – to prevent the
employment becomes irrelevant.
circumvention by unscrupulous employers of the employee’s right to
be secure in his tenure by indiscriminately and completely ruling out
Even assuming that petitioners’ length of employment is material, all written and oral agreements inconsistent with the concept of
given respondents’ muddled assertions, this Court adheres to its regular employment.
pronouncement in Villanueva v. National Labor Relations
Commission,28 to the effect that where a contract of employment,
In all, respondents’ insistence that it can legally dismiss petitioners
being a contract of adhesion, is ambiguous, any ambiguity therein
on the ground that their term of employment has expired is
should be construed strictly against the party who prepared it. The
untenable. To reiterate, petitioners, being regular employees of
Court is, thus, compelled to conclude that petitioners’ contracts of
INNODATA, are entitled to security of tenure. In the words of Article
employment became effective on 16 February 1999, and that they
279 of the Labor Code:
were already working continuously for INNODATA for a year.

ART. 279. Security of Tenure. – In cases of regular employment, the


Further attempting to exonerate itself from any liability for illegal
employer shall not terminate the services of an employee except for
dismissal, INNODATA contends that petitioners were project
a just cause or when authorized by this Title. An employee who is
employees whose employment ceased at the end of a specific
unjustly dismissed from work shall be entitled to reinstatement
project or undertaking. This contention is specious and devoid of
without loss of seniority rights and other privileges and to his full
merit.
backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was
In Philex Mining Corp. v. National Labor Relations withheld from him up to the time of his actual reinstatement.
Commission,29 the Court defined "project employees" as those
workers hired (1) for a specific project or undertaking, and wherein
By virtue of the foregoing, an illegally dismissed employee is entitled
(2) the completion or termination of such project has been
to reinstatement without loss of seniority rights and other privileges,
determined at the time of the engagement of the employee.
with full back wages computed from the time of dismissal up to the
time of actual reinstatement.
Scrutinizing petitioners’ employment contracts with INNODATA,
however, failed to reveal any mention therein of what specific project
Considering that reinstatement is no longer possible on the ground
or undertaking petitioners were hired for. Although the contracts
that INNODATA had ceased its operations in June 2002 due to
made general references to a "project," such project was neither
business losses, the proper award is separation pay equivalent to
named nor described at all therein. The conclusion by the Court of
one month pay31 for every year of service, to be computed from the
Appeals that petitioners were hired for the Earthweb project is not
commencement of their employment up to the closure of
supported by any evidence on record. The one-year period for which
INNODATA.
petitioners were hired was simply fixed in the employment contracts
without reference or connection to the period required for the

22
The amount of back wages awarded to petitioners must be hundreds of employees, some on a regular basis and others on a
computed from the time petitioners were illegally dismissed until the casual basis, as "emergency workers."
time INNODATA ceased its operations in June 2002.32
The petitioners4 were employed by the respondent on different dates
Petitioners are further entitled to attorney’s fees equivalent to 10% of as emergency workers at its poultry plant in Cainta, Rizal, under
the total monetary award herein, for having been forced to litigate separate "temporary/casual contracts of employment" for a period
and incur expenses to protect their rights and interests herein. of five months.5 Most of them worked as chicken dressers, while
the others served as packers or helpers.6 Upon the expiration of their
respective contracts, their services were terminated. They later filed
Finally, unless they have exceeded their authority, corporate officers
separate complaints for illegal dismissal and non-payment of holiday
are, as a general rule, not personally liable for their official acts,
pay, 13th month pay, night-shift differential and service incentive
because a corporation, by legal fiction, has a personality separate
leave pay against the respondent before the Arbitration Branch of
and distinct from its officers, stockholders and members. Although
the National Labor Relations Commission, docketed as NLRC Case
as an exception, corporate directors and officers are solidarily held
No. RAB-IV-9-4519-92-RI; NLRC Case No. RAB-IV-9-4520-92-RI;
liable with the corporation, where terminations of employment are
NLRC Case No. RAB-IV-9-4521-92-RI; NLRC Case No. RAB-IV-9-
done with malice or in bad faith,33 in the absence of evidence that
4541-92-RI; NLRC Case No. RAB-IV-10-4552-92-RI; NLRC Case
they acted with malice or bad faith herein, the Court exempts the
No. RAB-IV-10-4595-92-RI and NLRC Case No. RAB-IV-11-4599-
individual respondents, Leo Rabang and Jane Navarette, from any
92-RI. 7
personal liability for the illegal dismissal of petitioners.

The petitioners alleged that their work as chicken dressers was


WHEREFORE, the Petition for Review on Certiorari is GRANTED.
necessary and desirable in the usual business of the respondent,
The Decision dated 25 September 2006 and Resolution dated 15
and added that although they worked from 10:00 p.m. to 6:00 a.m.,
June 2007 of the Court of Appeals in CA-G.R. SP No. 72795are
they were not paid night-shift differential.8 They stressed that based
hereby REVERSED and SET ASIDE. RespondentInnodata
on the nature of their work, they were regular employees of the
Philippines, Inc./Innodata Corporation is ORDERED to pay
respondent; hence, could not be dismissed from their employment
petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita
unless for just cause and after due notice. In support thereof, the
Arbilera: (a) separation pay, in lieu of reinstatement, equivalent to
petitioners cited the decision of the Honorable Labor Arbiter Perlita
one month pay for every year of service, to be computed from the
B. Velasco in NLRC Case No. NCR-6-2168-86, entitled Estelita
commencement of their employment up to the date respondent
Jayme, et al. vs. General Milling Corporation; and NLRC Case No.
Innodata Philippines, Inc./Innodata Corporation ceased operations;
NCR-9-3726-86, entitled Marilou Carino, et al. vs. General Milling
(b) full backwages, computed from the time petitioners’
Corporation.9 They asserted that the respondent GMC terminated
compensation was withheld from them up to the time respondent
their contract of employment without just cause and due notice.
Innodata Philippines, Inc./Innodata Corporation ceased operations;
They further argued that the respondent could not rely on the
and (3) 10% of the total monetary award as attorney’s fees. Costs
nomenclature of their employment as "temporary or casual."
against respondent Innodata Philippines, Inc./Innodata Corporation.

On August 18, 1997, Labor Arbiter (LA) Voltaire A. Balitaan


SO ORDERED.
rendered a decision in favor of the petitioners declaring that they
were regular employees. Finding that the termination of their
G.R. No. 149329 July 12, 2004 employment was not based on any of the just causes provided for in
the Labor Code, the LA declared that they were allegedly illegally
dismissed. The decretal portion of the decision reads:
ROSITA PANGILINAN, YOLANDA LAYOLA, SALLY GOLDE,
AIDA QUITE, FERDINAND CALE, RAUL ARUITA, MANUEL
ERIFUL, ARNEL PAULO, ROSEMARIE GEOTINA, SAMUELA WHEREFORE, judgment is hereby rendered in these
KUMAR, REBECCA PEREZ, EDGAR BELLO, JOSEPH cases, as follows:
SORIANO, DANILO AMPULLER, TOLENTINO CALLAO,
MANOLITA MANALANG, TORIBIO LETIM, NANCY BELGICA,
1. Declaring respondent corporation guilty of illegally
ALFREDO ARELLANO, JOSEFA CEBUJANO, JUN DEL
dismissing complainants, except Rosalina Basan and
ROSARIO, AVELINO AGUILAR, MILAROSA TIAMSON, EDNA
Filomena Lanting whose complaints are hereby dismissed
DICHOSO, JASMIN BOLISAY, JULIETA DIDAL, GERARDO
on ground of prescription, and as a consequence therefor
BARISO, ANGELITO PEÑAFLOR, NERISSA LETIM,
ordering the said respondent corporation to reinstate them
ALEXANDER BARBOSA, ELIZABETH SAENS, NYMPHA LUGTU,
to their former positions without loss of seniority rights and
MYRNA MORALES, LIZA CRUZ, ELENA FANG, EDNA CRUZA,
other privileges and with full backwages from the time
GORGONIO PALMA, JOSE VERGARA, ALDRIN REMORQUE,
they were illegally dismissed in the aggregate amount
RUDY BLANCO, MARIO BUENVIAJE, MA. CRISTY CEA,
of P15,328,594.04;
REYNALDO GUELAS VILLASENOR, RHOY TADO, LYDIA
SALIPOT, ANGELITO PEREZ VERGARA, RODOLFO GACHO,
JESSIE SAN PEDRO, MARINAO ORCA, JR., PEBELITO 2. Ordering respondent corporation to pay the said
LERONA, PEPE CONGRESO, NIMFA NAPAO, WILHELMINA complainants their 13th month pay, holiday pay and
BAGUISA, OLIVIA CAINCAY, JERRY MANUEL NICOLAS, service incentive leave pay in the aggregate amount
CARLOS ABRATIQUE, JESUS LIM, JR., AND GERRY of P1,979,148.23;
ROXAS, petitioners,
vs.
3. Ordering respondent corporation to pay said
GENERAL MILLING CORPORATION, respondent.
complainants the amount of P1,730,744.22 by way of
attorney's fees, representing ten (10%) percentum of the
total judgment awards.

The case against individual respondent Medardo


DECISION Quiambao is hereby dismissed.10

A copy of the decision was sent by registered mail to the respondent


on October 23, 1997 under Registered Mail No. 004567 addressed
to Atty. Emmanuel O. Pacsi, counsel for GMC, 6th Floor, Corinthian
Plaza Bldg., 121 Paseo de Roxas, Makati City.11 However, Beth
CALLEJO, SR., J.:
Cacal, a clerk of the respondent GMC received the said decision on
October 28, 1997.12 Contending that a copy thereof was received
Before this Court is a petition for review on certiorari of the only on November 3, 1997, the respondent filed an appeal on
Decision1 of the Court of Appeals in CA-G.R. SP No. 51678 and its November 12, 1997, before the National Labor Relations
Resolution denying the motion for reconsideration thereon. Commission (NLRC), docketed as NLRC NCR CA No. 014462-98.
The petitioners filed a Motion to Dismiss Respondents' Notice of
Appeal/Appeal Memorandum on the ground that the appeal was
The Antecedents
filed five days late, considering that the August 18, 1997 Decision
was received by the respondent through its employee, Beth Cacal,
The respondent General Milling Corporation is a domestic on October 28, 1997.13
corporation engaged in the production and sale of livestock and
poultry.2 It is, likewise, the distributor of dressed chicken to various The respondent opposed the motion, contending that Cacal was a
restaurants and establishments nationwide.3 As such, it employs
mere clerk, and was not a member of the staff of its Legal

23
Department. It further contended that the Legal Department was The CA ruled that no grave abuse of discretion could be imputed to
located at the sixth (6th) floor of Corinthian Plaza and had its own the NLRC, considering that the ten-day period to appeal began to
staff, including the legal secretary who served as the Legal run only from the date the decision of the LA was validly served on
Department's receiving clerk.14Invoking Section 10, Rule 13 of the the respondent's counsel. The appellate court also ruled that even
Rules of Court, in relation to Section 2 thereof, the respondent assuming arguendo that the respondent GMC's appeal was filed
alleged that Cacal's receipt of the mail and/or decision was not late, in view of the substantial amount involved, giving due course to
equivalent to receipt by its counsel. In support thereof, the the appeal did not amount to grave abuse of discretion.
respondent cited the cases of Adamson University v. Adamson
University Faculty and Employees Association,15 and PLDT vs.
On the merits of the petition, the CA ruled that where the duties of
NLRC.16
the employee consist of activities usually necessary or desirable in
the usual business of the employer, it does not necessarily follow
On May 25, 1998, the NLRC rendered a decision reversing that of that the parties are forbidden from agreeing on a period of time for
the Labor Arbiter, the dispositive portion of which is herein quoted: the performance of such activities, and cited the case of St.
Theresa's School of Novaliches Foundation v. NLRC.25 The CA
affirmed the entitlement of the petitioners to a proportionate
WHEREFORE, except for its award of "13th month pay,
thirteenth (13th) month pay for the particular year/s the petitioners
holiday pay and service incentive leave pay in the
were employed. As to the awards of holiday pay and service
aggregate amount of P1,979,148.23" which is hereby
incentive leave pay, the CA ruled that they should be limited to the
affirmed, the appealed decision is set aside for being
year/s of actual service.26
contrary to settled jurisprudence.17

The petitioners filed a motion for reconsideration of the said


The NLRC ruled that the respondent GMC filed its appeal within the
decision, which was denied on July 24, 2001.27
reglementary period. Citing the case of Cañete v. NLRC18 which, in
turn, cited Adamson v. Adamson19 and United Placement
International v. NLRC,20 the NLRC held that service by registered The Present Petition
mail is completed only "upon actual receipt thereof by the
addressee." Since the addressee of the mail is the respondent's
The petitioners filed the instant petition, ascribing the following
counsel and the person who received it was a non-member of the
errors to the appellate court:
Legal Staff, the decision cannot be said to have been validly served
on the respondent's counsel on October 28, 1997.
I
The NLRC also held that the petitioners, who were temporary or
contractual employees of the respondent, were legally terminated THE HONORABLE COURT OF APPEALS GRAVELY
upon the expiration of their respective contracts. Citing the case ERRED AND ACTED WITHOUT JURISDICTION WHEN
of Brent School, Inc. vs. Zamora,21 the NLRC explained that while IT MODIFIED THE LABOR ARBITER'S JUDGMENT
the petitioners' work was necessary and desirable in the usual THAT HAS BECOME FINAL AND EXECUTORY FOR
business of GMC, they cannot be considered as regular employees FAILURE OF THE RESPONDENT TO APPEAL WITHIN
since they agreed to a fixed term. THE REGLEMENTARY PERIOD.

The petitioners' motion for reconsideration of the decision having II


been denied by the NLRC on October 12, 1998,22they filed a petition
for certiorari before the Court of Appeals and assigned the following
errors: THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT THE DECISION OF THE
LABOR ARBITER WAS DEEMED SERVED NOT ON
I THE DATE WHEN THE DECISION WAS DELIVERED BY
THE POSTMASTER TO THE OFFICE OF THE
RESPONDENT'S LAWYER, BUT ON THE DATE WHEN
THE RESPONDENT COMMISSION SERIOUSLY ERRED
THE RECEIVING CLERK GAVE THE DECISION TO THE
AND ACTED WITH GRAVE ABUSE OF DISCRETION
LAWYER.
AMOUNTING TO LACK AND/OR IN EXCESS OF ITS
JURISDICTION IN ENTERTAINING AND GIVING DUE
COURSE TO RESPONDENT COMPANY'S APPEAL III
WHICH WAS UNDENIABLY FILED OUT OF TIME AND
CONSEQUENTLY SETTING ASIDE THE FINAL
DECISION OF THE LABOR ARBITER. THE RESPONDENT'S PRACTICE OF HIRING CHICKEN
DRESSERS ON A 5-MONTH CONTRACT AND
REPLACING THEM WITH ANOTHER SET OF 5-MONTH
II CONTRACT WORKERS, OBVIOUSLY TO PREVENT
THEM FROM ATTAINING REGULAR STATUS, IS
VIOLATIVE OF THE CONSTITUTION AND ARTICLES
THE RESPONDENT COMMISSION SERIOUSLY ERRED
279 AND 280 OF THE LABOR CODE.28
AND ACTED WITH GRAVE ABUSE OF DISCRETION IN
HOLDING THAT PETITIONERS' DISMISSAL WAS
LEGAL ON THE GROUND OF EXPIRATION OF The issues for resolution are (a) whether or not the respondent's
EMPLOYMENT CONTRACT WHICH IS NOT A appeal from the Labor Arbiter's decision was filed within the
STATUTORY CAUSE UNDER THE LABOR CODE. reglementary period therefor; and, (b) whether or not the petitioners
were regular employees of the respondent GMC when their
employment was terminated.
III

In petitions for review on certiorari of the decision of the CA, only


THE RESPONDENT COMMISSION [S]ERIOUSLY
errors of law are generally reviewed.29 Normally, the Supreme Court
ERRED AND ACTED WITH GRAVE ABUSE OF
is not a trier of facts.30 In the absence of any showing that the NLRC
DISCRETION IN NOT FINDING THAT PETITIONERS,
committed grave abuse of discretion, or otherwise acted without or
AS REGULAR EMPLOYEES, CANNOT BE DISMISSED
in excess of jurisdiction, the Court is bound by its findings.31 Such
WITHOUT JUST CAUSE AND THE REQUIRED DUE
findings are not infallible, however, particularly when there is a
PROCESS.23
showing that they were arrived at arbitrarily or in disregard of the
evidence on record. In such case, they may be re-examined by the
On September 29, 2000, the CA rendered a decision affirming with Court.
modification the decision of the NLRC, the decretal portion of which Hence, when the factual findings of the NLRC are contrary to those
reads: of the Labor Arbiter, the evidentiary facts may be reviewed by the
appellate court.32 Considering that the NLRC's findings clash with
those of the Labor Arbiter's, this Court is compelled to go over the
WHEREFORE, the appealed decision of the NLRC is
records of the case as well as the submissions of the parties. 33
hereby AFFIRMED, with the MODIFICATION that the
award of 13th month pay, holiday pay, and service
incentive leave pay shall cover only the year or years The Ruling of the Court
when petitioners were actually employed with herein
respondent General Milling Corporation.24
The petition is bereft of merit.

24
Anent the first issue, we agree with the CA that the NLRC did not act that the employer and employee dealt with each other
with grave abuse of discretion when it gave due course to the on more or less equal terms with no moral dominance
appeal of the respondent. Decisions of the Labor Arbiter are final whatever being exercised by the former over the
and executory, unless appealed to the Commission, within ten (10) latter.45
calendar days from receipt thereof.34 Copies of decisions or final
awards are served on both parties and their counsel by registered
An examination of the contracts entered into by the petitioners
mail,35 and such service by registered mail is completed upon actual
showed that their employment was limited to a fixed period, usually
receipt by the addressee or five (5) days from receipt of the first
five or six months, and did not go beyond such period.
notice of the postmaster, whichever is earlier.36

TEMPORARY/CASUAL CONTRACT OF EMPLOYMENT


The records show that the August 18, 1997 Decision of the Labor
Arbiter was served via registered mail, addressed to the respondent
GMC's counsel, Atty. Emmanuel O. Pacsi, at the sixth (6th) Floor, KNOW ALL MEN BY THESE PRESENTS:
Corinthian Plaza Bldg., 121 Paseo de Roxas, Makati City. 37 It was
received by Beth Cacal, a clerk of the respondent, on October 28,
1997. The petitioners insist that Cacal is a person with authority to That the GENERAL MILLING CORPORATION, hereby
temporarily hires ________________ as Emergency
receive legal and judicial correspondence for the respondent's Legal
Department. They point out that such authority to receive mail for worker for a period beginning from ____________ to
and in behalf of the respondent's Legal Department is bolstered by _____________, inclusive, at the rate of _____________
per day, payable every 15th [day] and end of each month.
the certification from the Makati Post Office that she received the
copy of their motion to dismiss the appeal, addressed to the said
department. ________________ hereby binds and obligates
himself/herself to perform his/her assigned work diligently
The respondent GMC counters that the service of the LA's decision and to the best of his/her ability, and promise to obey all
to a person not connected to its Legal Department is not a valid lawful orders of his/ her superior and/or representatives
made in connection with the work for which he/she is
service, and that it is only when a copy of such decision is actually
given to such department that a valid service of the decision is employed.
deemed to have been made. Stressing that factual issues are not
proper in a petition for certiorari under Rule 45, the respondent no IT IS CLEARLY STIPULATED THAT THE CONDITION
longer discussed Cacal's authority to receive legal and judicial OF THIS EMPLOYMENT SHALL BE AS FOLLOWS:
communications for the respondent.
1. This employment contract shall be on a DAY-TO-DAY
A review of the records reveal that Cacal was a clerk at the BASIS and shall not extend beyond the period specified
respondent's office and was assigned at the sixth floor of the above;
Corinthian Plaza Bldg. She was not assigned at the respondent's
Legal Department, which has its own office staff, including a
secretary who serves as the department's receiving clerk. 38 The 2. The employee aforementioned may be laid off or
Court has ruled that a service of a copy of a decision on a person separated from the Firm, EVEN BEFORE THE EXPIRY
who is neither a clerk nor one in charge of the attorney's office is DATE OF THIS CONTRACT, if his/her services are no
invalid.39 Thus, there was no grave abuse of discretion on the part of longer needed, or if such services are found to be
the NLRC in giving due course to the respondent's appeal. unsatisfactory, or if she/he has violated any of the
established rules and regulations of the Company;

On the second issue, we agree that the petitioners were employees


with a fixed period, and, as such, were not regular employees. 3. In any case, the period of employment shall not go
beyond the duration of the work or purpose for which the
aforementioned employee has been engaged;
Article 280 of the Labor Code comprehends three kinds of
employees: (a) regular employees or those whose work is
necessary or desirable to the usual business of the employer; (b) 4. That the employee hereby agrees to work in any work
project employees or those whose employment has been fixed for a shift schedule that may be assigned to him by the Firm
specific project or undertaking the completion or termination of during the period of this contract; and
which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal This Temporary/Casual Employment contract, unless
in nature and the employment is for the duration of the season; and, sooner terminated for any of the causes above-cited, shall
(c) casual employees or those who are neither regular nor project then automatically cease on its expiry date, without the
employees.40 necessity of any prior notice to the employee concerned.46

A regular employee is one who is engaged to perform activities The records reveal that the stipulations in the employment contracts
which are necessary and desirable in the usual business or trade of were knowingly and voluntarily agreed to by the petitioners without
the employer as against those which are undertaken for a specific force, duress or improper pressure, or any circumstances that
project or are seasonal.41There are two separate instances whereby vitiated their consent. Similarly, nothing therein shows that these
it can be determined that an employment is regular: (1) if the contracts were used as a subterfuge by the respondent GMC to
particular activity performed by the employee is necessary or evade the provisions of Articles 279 and 280 of the Labor Code.
desirable in the usual business or trade of the employer; and, (2) if
the employee has been performing the job for at least a year. 42
The petitioners were hired as "emergency workers" and assigned as
chicken dressers, packers and helpers at the Cainta Processing
In the case of St. Theresa's School of Novaliches Foundation vs. Plant. The respondent GMC is a domestic corporation engaged in
NLRC,43 we held that Article 280 of the Labor Code does not the production and sale of livestock and poultry, and is a distributor
proscribe or prohibit an employment contract with a fixed period. We of dressed chicken. While the petitioners' employment as chicken
furthered that it does not necessarily follow that where the duties of dressers is necessary and desirable in the usual business of the
the employee consist of activities usually necessary or desirable in respondent, they were employed on a mere temporary basis, since
the usual business of the employer, the parties are forbidden from their employment was limited to a fixed period. As such, they cannot
agreeing on a period of time for the performance of such activities. be said to be regular employees, but are merely "contractual
There is thus nothing essentially contradictory between a definite employees." Consequently, there was no illegal dismissal when the
period of employment and the nature of the employee's duties. petitioners' services were terminated by reason of the expiration of
their contracts.47 Lack of notice of termination is of no consequence,
Indeed, in the leading case of Brent School Inc. v. Zamora,44 we laid because when the contract specifies the period of its duration, it
down the guideline before a contract of employment may be held as terminates on the expiration of such period. A contract for
valid, to wit: employment for a definite period terminates by its own term at the
end of such period.48

…[S]tipulations in employment contracts providing


for term employment or fixed period employment are In sum, we rule that the appeal was filed within the ten (10)-day
valid when the period were agreed upon knowingly reglementary period. Although the petitioners who mainly worked as
and voluntarily by the parties without force, duress or chicken dressers performed work necessary and desirable in the
improper pressure, being brought to bear upon the usual business of the respondent, they were not regular employees
employee and absent any other circumstances therein. Consequently, the termination of their employment upon the
vitiating his consent, or where it satisfactorily appears expiry of their respective contracts was valid.

25
IN LIGHT OF ALL THE FOREGOING, the petition is hereby Respondent's President Dr. Rafaelita Pelaez-Golez wrote petitioner a
DENIED DUE COURSE. The Decision of the Court of Appeals in letter[9] dated March 16, 2005 informing her that her services as
CA-G.R. SP No. 51678 is AFFIRMED. No costs. dean of the said college will end at the close of the school year.
Thereafter, the College of Physical Therapy ceased operations on
March 31, 2005, and petitioner went on leave without pay starting
SO ORDERED. on April 9, 2005. Subsequently, respondent's Executive Vice
President, Dr. Mariano M. Lerin, through Dr. Glory S. Magdale,
respondent's Vice President for Academic Affairs, sent petitioner a
letter[10] dated April 27, 2005 instructing petitioner to return to work
on June 1, 2005 and report to Ma. Chona Palomares, the Acting
[ G.R. No. 193857, November 28, 2012 ] Dean of the College of Nursing, to receive her teaching load and
assignment as a full-time faculty member in that department for the
school year 2005-2006.
MA. MERCEDES L. BARBA, PETITIONER, VS. LICEO DE
CAGAYAN UNIVERSITY, RESPONDENT. In reply, petitioner informed Dr. Lerin that she had not committed
to teach in the College of Nursing and that as far as she can recall,
DECISION her employment is not dependent on any teaching load. She then
requested for the processing of her separation benefits in view of the
closure of the College of Physical Therapy.[11] She did not report to
VILLARAMA, JR., J.: Palomares on June 1, 2005.
Before the Court is a petition for review on certiorari assailing the On June 8, 2005, petitioner followed up her request for separation
March 29, 2010 Amended Decision[1] and September 14, 2010 pay and other benefits but Dr. Lerin insisted that she report to
Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 02508- Palomares; otherwise, sanctions will be imposed on her. Thus,
MIN. The CA had reconsidered its earlier Decision[3] dated October petitioner through counsel wrote Dr. Golez directly, asking for her
22, 2009 and set aside the September 25, 2007 and June 30, 2008 separation pay and other benefits.
Resolutions[4] of the National Labor Relations Commission (NLRC)
as well as the September 29, 2006 Decision[5] of the Labor Arbiter. On June 21, 2005, Dr. Magdale wrote petitioner a letter[12] directing
The CA held that the Labor Arbiter and NLRC had no jurisdiction her to report for work and to teach her assigned subjects on or
over the illegal dismissal case filed by petitioner against respondent before June 23, 2005. Otherwise, she will be dismissed from
because petitioner's position as Dean of the College of Physical employment on the ground of abandonment. Petitioner, through
Therapy of respondent is a corporate office. counsel, replied that teaching in the College of Nursing is in no way
related to her scholarship and training in the field of rehabilitation
The facts follow. medicine. Petitioner added that coercing her to become a faculty
member from her position as College Dean is a great demotion
Petitioner Dr. Ma. Mercedes L. Barba was the Dean of the College of which amounts to constructive dismissal.[13]
Physical Therapy of respondent Liceo de Cagayan University, Inc., a
private educational institution with school campus located at Dr. Magdale sent another letter[14] to petitioner on June 24, 2005
Carmen, Cagayan de Oro City. ordering her to report for work as she was still bound by the
Scholarship Contract to serve respondent for two more years. But
Petitioner started working for respondent on July 8, 1993 as medical petitioner did not do so. Hence, on June 28, 2005, Dr. Magdale sent
officer/school physician for a period of one school year or until petitioner a notice terminating her services on the ground of
March 31, 1994. In July 1994, she was chosen by respondent to be abandonment.
the recipient of a scholarship grant to pursue a three-year residency
training in Rehabilitation Medicine at the Veterans Memorial Meanwhile, on June 22, 2005, prior to the termination of her
Medical Center (VMMC). The Scholarship Contract[6] provides: services, petitioner filed a complaint before the Labor Arbiter for
illegal dismissal, payment of separation pay and retirement benefits
against respondent, Dr. Magdale and Dr. Golez. She alleged that her
5. That the SCHOLAR after the duration of her study and training transfer to the College of Nursing as a faculty member is a demotion
shall serve the SCHOOL in whatever position the SCHOOL desires amounting to constructive dismissal.
related to the SCHOLAR's studies for a period of not less than ten
(10) years; Respondent claimed that petitioner was not terminated and that it
was only petitioner's appointment as College Dean in the College of
After completing her residency training with VMMC in June 1997, Physical Therapy that expired as a necessary consequence of the
petitioner returned to continue working for respondent. She was eventual closure of the said college. Respondent further averred that
appointed as Acting Dean of the College of Physical Therapy and at petitioner's transfer as full-time professor in the College of Nursing
the same time designated as Doctor-In-Charge of the Rehabilitation does not amount to constructive dismissal since the transfer was
Clinic of the Rodolfo N. Pelaez Hall, City Memorial Hospital. without loss of seniority rights and without diminution of pay. Also,
respondent added that pursuant to the Scholarship Contract,
On June 19, 2002, petitioner's appointment as Doctor-In-Charge of petitioner was still duty bound to serve respondent until 2007 in
the Rehabilitation Clinic was renewed and she was appointed as whatever position related to her studies the school desires.
Dean of the College of Physical Therapy by respondent's President,
Dr. Jose Ma. R. Golez. The appointment letter[7] reads: Labor Arbiter's Ruling

In a Decision[15] dated September 29, 2006, the Labor Arbiter found


xxxx that respondent did not constructively dismiss petitioner; therefore,
she was not entitled to separation pay. The Labor Arbiter held that
Dear Dr. Barba: petitioner's assignment as full-time professor in the College of
Nursing was not a demotion tantamount to constructive dismissal.
You are hereby re-appointed Dean of the College of Physical Therapy The dispositive portion of the Labor Arbiter's decision reads:
and Doctor-In-Charge of the Rehabilitation Clinic at Rodolfo N.
Pelaez Hall, City Memorial Hospital and other rehabilitation clinics
under the management of Liceo de Cagayan University for a period WHEREFORE, in view of the foregoing, judgment is hereby
of three years effective July 1, 2002 unless sooner revoked for valid rendered dismissing the complaint for illegal dismissal for utter lack
cause or causes. of merit, but ordering the respondent Liceo de Cagayan University to
reinstate complainant to an equivalent position without loss of
Your position is one of trust and confidence and the appointment is seniority rights, but without back wages.
subject to the pertinent provisions of the University Administrative
Personnel and Faculty Manuals, and Labor Code. However, if reinstatement is no longer feasible or if there is no
equivalent position to which complainant may be reinstated,
xxxx respondent may opt to pay complainant her separation pay
equivalent to one-half (1/2) month pay for every year of service or in
Petitioner accepted her appointment and assumed the position of the sum of P195,000.00, subject to deduction for advances or
Dean of the College of Physical Therapy. In the school year 2003 to accountabilities which complainant may have had.
2004, the College of Physical Therapy suffered a dramatic decline in
the number of enrollees from a total of 1,121 students in the school Other claims are ordered dismissed for lack of merit.
year 1995 to 1996 to only 29 students in the first semester of school
year 2003 to 2004. This worsened in the next year or in school year SO ORDERED.[16]
2004 to 2005 where a total of only 20 students enrolled.[8]
NLRC's Ruling
Due to the low number of enrollees, respondent decided to freeze the
operation of the College of Physical Therapy indefinitely. Petitioner appealed the above decision to the NLRC. On September
26
25, 2007, the NLRC issued a Resolution[17] reversing the Labor lack of jurisdiction of the Labor Arbiter and the NLRC to be without
Arbiter's decision and holding that petitioner was constructively merit. Dr. Barba, being a College Dean, was not a corporate
dismissed. The NLRC held that petitioner was demoted when she officer.[22] (Emphasis not ours)
was assigned as a professor in the College of Nursing because there
are functions and obligations and certain allowances and benefits
given to a College Dean but not to an ordinary professor. The NLRC The CA further found that no constructive dismissal occurred nor
ruled: has petitioner abandoned her work. According to the CA, a transfer
amounts to constructive dismissal when the transfer is
unreasonable, unlikely, inconvenient, impossible, or prejudicial to
WHEREFORE, in view of the foregoing, the assailed decision is the employee or it involves a demotion in rank or a diminution of
hereby MODIFIED in that complainant is hereby considered as salary and other benefits. In the case of petitioner, the CA held that
constructively dismissed and thus entitled to backwages and she was never demoted and her transfer, being a consequence of the
separation pay of one (1) month salary for every year of service, plus closure of the College of Physical Therapy, was valid.
attorney's fees, which shall be computed at the execution stage
before the Arbitration Branch of origin. The CA also noted that petitioner's appointment as Dean of the
College of Physical Therapy was for a term of three years. Hence,
SO ORDERED.[18] when her appointment as College Dean was no longer renewed on
June 1, 2005 or after her three-year term had expired, it cannot be
The NLRC denied respondent's motion for reconsideration in a said that there was a demotion or that she was dismissed. Her term
Resolution[19] dated June 30, 2008. as Dean had expired and she can no longer claim to be entitled to the
benefits emanating from such office.
Ruling of the Court of Appeals
On the issue of alleged lack of jurisdiction, the CA observed that
Respondent went to the CA on a petition for certiorari alleging that respondent never raised the issue of jurisdiction before the Labor
the NLRC committed grave abuse of discretion when it declared that Arbiter and the NLRC and respondent even actively participated in
petitioner's transfer to the College of Nursing as full-time professor the proceedings below. Hence, respondent is estopped from
but without diminution of salaries and without loss of seniority questioning the jurisdiction of the labor tribunals.
rights amounted to constructive dismissal because there was a
demotion involved in the transfer and because petitioner was Unsatisfied, both petitioner and respondent sought reconsideration
compelled to accept her new assignment. of the CA decision. Petitioner prayed for the reversal of the ruling
that there was no constructive dismissal. Respondent meanwhile
Respondent also filed a Supplemental Petition[20] raising for the first maintained that the labor tribunals have no jurisdiction over the
time the issue of lack of jurisdiction of the Labor Arbiter and the case, petitioner being a corporate officer.
NLRC over the case. Respondent claimed that a College Dean is a
corporate officer under its by-laws and petitioner was a corporate On March 29, 2010, the CA issued the assailed Amended
officer of respondent since her appointment was approved by the Decision[23] setting aside its earlier ruling. This time the CA held that
board of directors. Respondent posited that petitioner was a the position of a College Dean is a corporate office and therefore the
corporate officer since her office was created by the by-laws and her labor tribunals had no jurisdiction over the complaint for
appointment, compensation, duties and functions were approved by constructive dismissal. The CA noted that petitioner's appointment
the board of directors. Thus, respondent maintained that the as Dean of the College of Physical Therapy was approved by the
jurisdiction over the case is with the regular courts and not with the respondent's board of directors thereby concluding that the position
labor tribunals. of a College Dean is a corporate office. Also, the CA held that the
College Director mentioned in respondent's by-laws is the same as a
In its original Decision[21] dated October 22, 2009, the CA reversed College Dean and no one has ever been appointed as College
and set aside the NLRC resolutions and reinstated the decision of Director. The CA added that in the Administrative Manual the words
the Labor Arbiter. The CA did not find merit in respondent's "college" and "department" were used in the same context in the
assertion in its Supplemental Petition that the position of petitioner section on the Duties and Responsibilities of the College Dean, and
as College Dean was a corporate office. Instead, the appellate court that there could not have been any other "head of department" being
held that petitioner was respondent's employee, explaining thus: alluded to in the by-laws but the college dean.

The dispositive portion of the Amended Decision reads:


Corporate officers in the context of PD 902-A are those officers of a
corporation who are given that character either by the Corporation
Code or by the corporation's By-Laws. Under Section 25 of the WHEREFORE, in view of the foregoing, We reconsider Our
Corporation Code, the "corporate officers" are the president, Decision on October [22], 2009, and declare that the position of
secretary, treasurer and such other officers as may be provided for in College Dean is a corporate office of Petitioner [Liceo de Cagayan
the By-Laws. University], thereby divesting the Labor Arbiter and the National
Labor Relations Commission of jurisdiction over the instant case.
True, the By-Laws of LDCU provides that there shall be a College Hence, the Resolutions of the Public Respondent dated September
Director. This means a College Director is a corporate officer. 25, 2007 and June 30, 2008 as well as that of the Regional Labor
However, contrary to the allegation of petitioner, the position of Arbiter dated 29 September 2006 are VACATED and SET
Dean does not appear to be the same as that of a College Director. ASIDEas they were rendered by tribunals that had no jurisdiction
over the case.
Aside from the obvious disparity in name, the By-Laws of LDCU
provides for only one College Director. But as shown by LDCU itself, SO ORDERED.[24]
numerous persons have been appointed as Deans. They could not be
the College Director contemplated by the By-Laws inasmuch as the Petitioner filed a motion for reconsideration from the above
By-Laws authorize only the appointment of one not many. If it is decision, but her motion was denied by the CA in its
indeed the intention of LDCU to give its many Deans the Resolution[25] dated September 14, 2010. Hence, petitioner filed the
rank of College Director, then it exceeded the authority present petition.
given to it by its By-Laws because only one College Director
is authorized to be appointed. It must amend its By-Laws. Prior Petitioner argues that the CA erred in ruling that she was a corporate
to such an amendment, the office of College Dean is not a corporate officer and asserts that the CA's previous finding that she was
office. respondent's employee is more in accord with law and
jurisprudence. Petitioner adds that the appellate court erred when it
Another telling sign that a College Director is not the same as a Dean ruled that the labor tribunals had no jurisdiction over her complaint
is the manner of appointment. A College Director is directly for illegal dismissal against respondent. She faults the CA for
appointed by the Board of Directors. However, a College allowing respondent to raise the issue of jurisdiction in a
Dean is appointed by the President upon the recommendation Supplemental Petition after respondent has actively participated in
of the Vice President for Academic Affairs and the Executive Vice the proceedings before the labor tribunals. Petitioner also asserts
President and approval of the Board of Directors. There is a clear that the CA erred in denying her motion for reconsideration from its
distinction on the manner of appointment indicating that the offices Amended Decision on the ground that it is a second motion for
are not one and the same. reconsideration which is a prohibited pleading. Lastly, petitioner
claims that respondent violated the rule against forum shopping
xxxx when it failed to inform the CA of the pendency of the complaint for
breach of contract which it filed against petitioner before the
This shows that it was not the intention of LDCU to make Regional Trial Court of Misamis Oriental, Branch 23.
Dr. Barba a corporate officer as it was stated in her letter of
appointment that the same shall be subject to the provisions of the Respondent, for its part, counters that the petition was filed out of
Labor Code. Otherwise, the appointment letter should have stated time and petitioner's motion for reconsideration from the Amended
that her appointment is governed by the Corporation Code. Thus, Decision was a prohibited pleading since petitioner has already filed
We find the arguments in the Supplemental Petition on the matter of a motion for reconsideration from the original decision of the CA. It
27
is respondent's posture that an Amended Decision is not really a new determines the compensation to be paid to such
decision but the appellate court's own modification of its prior employee. (Emphasis supplied)
decision. More importantly, respondent points out that the
arguments raised by petitioner do not justify a reversal of the In declaring petitioner a corporate officer, the CA considered
Amended Decision of the appellate court. Respondent insists on the respondent's by-laws and gave weight to the certifications of
correctness of the Amended Decision and quotes the assailed respondent's secretary attesting to the resolutions of the board of
decision in its entirety. directors appointing the various academic deans for the School
Years 1991-2002 and 2002-2005, including petitioner. However, an
assiduous perusal of these documents does not convince us that
Issue petitioner occupies a corporate office position in respondent
university.
The decisive issue in the present petition is whether petitioner was
an employee or a corporate officer of respondent university. The relevant portions of respondent's by-laws[30] are hereby quoted
Resolution of this issue resolves the question of whether the as follows:
appellate court was correct in ruling that the Labor Arbiter and the
NLRC had no jurisdiction over petitioner's complaint for
constructive dismissal against respondent. Article III
The Board of Directors

Our Ruling Sec. 3. The Board of Directors shall appoint a College Director,
define his powers and duties, and determine his compensation;
We grant the petition. approve or disapprove recommendations for appointment or
dismissal of teachers and employees submitted to it by the College
Prefatorily, we first discuss the procedural matter raised by Director; and exercise other powers and perform such duties as may
respondent that the present petition is filed out of time. Respondent be required of it hereafter for the proper functioning of the school.
claims that petitioner's motion for reconsideration from the
Amended Decision is a second motion for reconsideration which is a xxxx
prohibited pleading. Respondent's assertion, however, is misplaced
for it should be noted that the CA's Amended Decision totally
reversed and set aside its previous ruling. Section 2, Rule 52 of Article IV
the 1997 Rules of Civil Procedure, as amended, provides that no Officers
second motion for reconsideration of a judgment or final resolution
by the same party shall be entertained. This contemplates a situation Sec. 1. The officers of the corporation shall consist of a President, a
where a second motion for reconsideration is filed by the same party Vice President, and a Secretary-Treasurer, who shall be
assailing the same judgment or final resolution. Here, the motion for chosen from the directors and by the directors themselves. They
reconsideration of petitioner was filed after the appellate court shall be elected annually at the first meeting of the directors
rendered an Amended Decision totally reversing and setting aside its immediately after their election, and shall hold office for one (1) year
previous ruling. Hence, petitioner is not precluded from filing and until their successors are elected and qualified.
another motion for reconsideration from the Amended Decision
which held that the labor tribunals lacked jurisdiction over xxxx
petitioner's complaint for constructive dismissal. The period to file
an appeal should be reckoned not from the denial of her motion for
reconsideration of the original decision, but from the date of Article V
petitioner's receipt of the notice of denial of her motion for Other Appointive Officials
reconsideration from the Amended Decision. And as petitioner
received notice of the denial of her motion for reconsideration from Sec. 1. The Liceo de Cagayan shall have a College Director and
the Amended Decision on September 23, 2010 and filed her petition such heads of departments as may exist in the said college whose
on November 8, 2010, or within the extension period granted by the appointments, compensations, powers and duties shall be
Court to file the petition, her petition was filed on time. determined by the Board of Directors.[31] (Emphasis supplied)

Now on the main issue. On the other hand, the pertinent portions of the two board
resolutions appointing the various academic deans in the university
As a general rule, only questions of law may be allowed in a petition including petitioner, read as follows:
for review on certiorari.[26] Considering, however, that the CA
reversed its earlier decision and made a complete turnaround from xxxx
its previous ruling, and consequently set aside both the findings of
the Labor Arbiter and the NLRC for allegedly having been issued RESOLVE, as it is hereby resolved, that pursuant to Section 3[,]
without jurisdiction, it is necessary for the Court to reexamine the Article III and Section 1[,] Article V of the Corporation's By-laws, the
records and resolve the conflicting rulings. various academic deans for the school years 1999-2002 of the
University, as recommended by the President of the Corporation, are
After a careful review and examination of the records, we find that hereby appointed, whose names are enumerated hereunder and
the CA's previous ruling that petitioner was respondent's employee their respective colleges and their honoraria are indicated opposite
and not a corporate officer is supported by the totality of the their names, all of them having a three (3) year term, to wit:
evidence and more in accord with law and prevailing jurisprudence.

Corporate officers are elected or appointed by the directors or Name and College
stockholders, and are those who are given that character either by Honorarium
the Corporation Code or by the corporation's by-laws.[27] Section
25[28] of the Corporation Code enumerates corporate officers as the Ma. Mercedes Vivares
president, the secretary, the treasurer and such other officers as may 2,660.00
be provided for in the by-laws. In Matling Industrial and Physical Therapy
Commercial Corporation v. Coros,[29] the phrase "such other officers
as may be provided for in the by-laws" has been clarified, thus: xxxx

Conformably with Section 25, a position must be expressly RESOLVE, as it is hereby resolved, that pursuant to Section 3[,]
mentioned in the By-Laws in order to be considered as a Article III and Section 1[,] Article V of the Corporation's By-laws, the
corporate office. Thus, the creation of an office pursuant to or various academic deans for the school years 2002-2005 of the
under a By-Law enabling provision is not enough to make a position University, as recommended by the President of the Corporation, are
a corporate office. Guerrea v. Lezama, the first ruling on the matter, hereby appointed, whose names are enumerated hereunder and
held that the only officers of a corporation were those given that their respective colleges and their honoraria are indicated opposite
character either by the Corporation Code or by the By-Laws; the their names, all of them having a three (3) year term, to wit:
rest of the corporate officers could be considered only as
employees of subordinate officials. Thus, it was held
in Easycall Communications Phils., Inc. v. King: Name and College
Honorarium

An "office" is created by the charter of the corporation and Ma. Mercedes Vivares
the officer is elected by the directors or stockholders. On the other 2,450.00
hand, an employee occupies no office and generally is Physical Therapy
employed not by the action of the directors or stockholders but by
the managing officer of the corporation who also x x x x[32]
28
only one College Director is authorized to be appointed. It
In respondent's by-laws, there are four officers specifically must amend its By-Laws. Prior to such amendment, the office of
mentioned, namely, a president, a vice president, a secretary and a [the] College Dean is not a corporate office.
treasurer. In addition, it is provided that there shall be other
appointive officials, a College Director and heads of departments Another telling sign that a College Director is not the same as a Dean
whose appointments, compensations, powers and duties shall be is the manner of appointment. A College Director is directly
determined by the board of directors. It is worthy to note that a appointed by the Board of Directors. However, a College
College Dean is not among the corporate officers mentioned in Dean is appointed by the President upon the recommendation
respondent's by-laws. Petitioner, being an academic dean, also held of the Vice President for Academic Affairs and the Executive Vice
an administrative post in the university but not a corporate office as President and approval of the Board of Directors. There is a clear
contemplated by law. Petitioner was not directly elected nor distinction on the manner of appointment indicating that the offices
appointed by the board of directors to any corporate office but her are not one and the same.[36](Additional emphasis supplied)
appointment was merely approved by the board together with the
other academic deans of respondent university in accordance with Undoubtedly, petitioner is not a College Director and she is not a
the procedure prescribed in respondent's Administrative corporate officer but an employee of respondent. Applying the four-
Manual.[33] The act of the board of directors in approving the fold test concerning (1) the selection and engagement of the
appointment of petitioner as Dean of the College of Therapy did not employee; (2) the payment of wages; (3) the power of dismissal; (4)
make her a corporate officer of the corporation. the employer's power to control the employee with respect to the
means and methods by which the work is to be accomplished, it is
Moreover, the CA, in its amended decision erroneously equated the clear that there exists an employer-employee relationship between
position of a College Director to that of a College Dean thereby petitioner and respondent. Records show that petitioner was
concluding that petitioner is an officer of respondent. appointed to her position as Dean by Dr. Golez, the university
president and was paid a salary of P32,500 plus transportation
It bears stressing that the appointive officials mentioned in Article V allowance. It was evident that respondent had the power of control
of respondent's by-laws are not corporate officers under the over petitioner as one of its deans. It was also the university
contemplation of the law. Though the board of directors may create president who informed petitioner that her services as Dean of the
appointive positions other than the positions of corporate officers, College of Physical Therapy was terminated effective March 31, 2005
the persons occupying such positions cannot be deemed as corporate and she was subsequently directed to report to the Acting Dean of
officers as contemplated by Section 25 of the Corporation Code. On the College of Nursing for assignment of teaching load.
this point, the SEC Opinion dated November 25, 1993 quoted in the
case of Matling Industrial and Commercial Corporation v. Thus, petitioner, being an employee of respondent, her complaint
Coros,[34] is instructive: for illegal/constructive dismissal against respondent was properly
within the jurisdiction of the Labor Arbiter and the NLRC. Article
217 of the Labor Code provides:
Thus, pursuant to the above provision (Section 25 of the Corporation
Code), whoever are the corporate officers enumerated in the by-laws
are the exclusive Officers of the corporation and the Board has no ART. 217. Jurisdiction of Labor Arbiters and the
power to create other Offices without amending first the corporate Commission. (a) Except as otherwise provided under this Code,
By-laws. However, the Board may create appointive the Arbiters shall have original and exclusive jurisdiction to hear and
positions other than the positions of corporate Officers, decide xxx the following cases involving all workers, whether
but the persons occupying such positions are not agricultural or non-agricultural:
considered as corporate officers within the meaning of
Section 25 of the Corporation Code and are not 1. Unfair labor practice cases;
empowered to exercise the functions of the corporate
Officers, except those functions lawfully delegated to them. Their 2. Termination disputes;
functions and duties are to be determined by the Board of
Directors/Trustees. 3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wage, rates of pay, hours of work and
But even assuming that a College Director may be considered a other terms and conditions of employment;
corporate officer of respondent, a review of the records as well as the
other documents submitted by the parties fails to persuade that 4. Claims for actual, moral, exemplary and other forms of damages
petitioner was the "College Director" mentioned in the by-laws of arising from the employer-employee relations;
respondent. Nowhere in petitioner's appointment letter was it stated
that petitioner was designated as the College Director or that 5. Cases arising from any violation of Article 264 of this Code,
petitioner was to assume the functions and duties of a College including questions involving the legality of strikes and lockouts;
Director. Neither can it be inferred in respondent's by-laws that a and
dean of a college is the same as a College Director of respondent.
Respondent's lone surviving incorporating director Yolanda Rollo 6. Except claims for Employees Compensation, Social Security,
even admitted that no College Director has ever been appointed by Medicare and maternity benefits, all other claims arising from
respondent. In her affidavit, Yolanda also explained the reason for employer-employee relations, including those of persons in domestic
the creation of the position of a College Director, to wit: or household service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied with a claim
for reinstatement.
4. At the time we signed the By-Laws of the Corporation, we, as
directors, did envision to form only a college of law as that was the (b) The Commission shall have exclusive appellate jurisdiction over
main thrust of our president, the late Atty. Rodolfo N. Pelaez. The all cases decided by Labor Arbiters.
original plan then was to have a "College Director" as the head of the
college of law and below him within the college were heads of xxxx
departments. The appointments, remuneration, duties and functions
of the "College Director" and the heads of departments were to be Moreover, we agree with the CA's earlier pronouncement that since
approved by the Board of Directors. x x x[35] respondent actively participated in the proceedings before the Labor
Arbiter and the NLRC, it is already estopped from belatedly raising
Notably, the CA has sufficiently explained why petitioner could not the issue of lack of jurisdiction. In this case, respondent filed
be considered a College Director in its previous decision. The position papers and other supporting documents to bolster its
appellate court explained: defense before the labor tribunals but in all these pleadings, the
issue of lack of jurisdiction was never raised. It was only in its
Supplemental Petition filed before the CA that respondent first
True, the By-Laws of [Liceo de Cagayan University] provides that brought the issue of lack of jurisdiction. We have consistently held
there shall be a College Director. This means a College Director is a that while jurisdiction may be assailed at any stage, a party's active
corporate officer. However, contrary to the allegation of petitioner, participation in the proceedings will estop such party from assailing
the position of Dean does not appear to be the same as that of a its jurisdiction. It is an undesirable practice of a party participating
College Director. in the proceedings and submitting his case for decision and then
accepting the judgment, only if favorable, and attacking it for lack of
Aside from the obvious disparity in name, the By-Laws of [Liceo de jurisdiction, when adverse.[37]
Cagayan University] provides for only one College Director. But as
shown by [Liceo de Cagayan University] itself, numerous persons Under Section 6, Rule 10 of the 1997 Rules of Civil Procedure, as
have been appointed as Deans. They could not be the College amended, governing supplemental pleadings, the court "may" admit
Director contemplated by the By-Laws inasmuch as the By-Laws supplemental pleadings, such as the supplemental petition filed by
authorize only the appointment of one not many. If it is indeed respondent before the appellate court, but the admission of these
the intention of [Liceo de Cagayan University] to give its pleadings remains in the sound discretion of the court. Nevertheless,
many Deans the rank of College Director, then we have already found no credence in respondent's claim that
it exceededthe authority given to it by its By-Laws because petitioner is a corporate officer, consequently, the alleged lack of
29
jurisdiction asserted by respondent in the supplemental petition is
bereft of merit. No pronouncement as to costs.

On the issue of constructive dismissal, we agree with the Labor SO ORDERED.


Arbiter and the appellate court's earlier ruling that petitioner was
not constructively dismissed. Petitioner's letter of appointment
specifically appointed her as Dean of the College of Physical Therapy
and Doctor-in-Charge of the Rehabilitation Clinic "for a period of
three years effective July 1, 2002 unless sooner revoked for valid
cause or causes." Evidently, petitioner's appointment as College
Dean was for a fixed term, subject to reappointment and revocation
or termination for a valid cause. When respondent decided to close G.R. No. 149440 January 28, 2003
its College of Physical Therapy due to drastic decrease in enrollees,
petitioner's appointment as its College Dean was validly revoked and HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO
her subsequent assignment to teach in the College of Nursing was VILLEGAS and CRISTINE SEGURA, petitioners,
justified as it is still related to her scholarship studies in Physical vs.
Therapy. NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD
AND GENERAL TRADE, respondents.
As we observed in Brent School, Inc. v. Zamora,[38] also cited by the
CA, it is common practice in educational institutions to have fixed-
term contracts in administrative positions, thus: PANGANIBAN, J.:

Although the employers have shown that respondents performed


Some familiar examples may be cited of employment contracts work that was seasonal in nature, they failed to prove that the latter
which may be neither for seasonal work nor for specific projects, but worked only for the duration of one particular season. In fact,
to which a fixed term is an essential and natural appurtenance: petitioners do not deny that these workers have served them for
overseas employment contracts, for one, to which, whatever the several years already. Hence, they are regular — not seasonal —
nature of the engagement, the concept of regular employment with employees.
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 The Case
other administrative offices in educational institutions, which are by
practice or tradition rotated among the faculty members, and where
Before the Court is a Petition for Review under Rule 45 of the Rules
fixed terms are a necessity without which no reasonable rotation
of Court, seeking to set aside the February 20, 2001 Decision of the
would be possible. x x x (Emphasis supplied)
Court of Appeals 1 (CA) in CA-GR SP No. 51033. The dispositive
In constructive dismissal cases, the employer has the burden of part of the Decision reads:
proving that its conduct and action or the transfer of an employee
are for valid and legitimate grounds such as genuine business "WHEREFORE, premises considered, the instant special
necessity.[39] Particularly, for a transfer not to be considered a civil action for certiorari is hereby DENIED." 2
constructive dismissal, the employer must be able to show that such
transfer is not unreasonable, inconvenient, or prejudicial to the
employee. In this case, petitioner's transfer was not unreasonable, On the other hand, the National Labor Relations
inconvenient or prejudicial to her. On the contrary, the assignment Commission (NLRC) Decision, 3 upheld by the CA,
of a teaching load in the College of Nursing was undertaken by disposed in this wise:
respondent to accommodate petitioner following the closure of the
College of Physical Therapy. Respondent further considered the fact "WHEREFORE, premises considered, the decision of the
that petitioner still has two years to serve the university under the Labor Arbiter is hereby SET ASIDE and VACATED and a
Scholarship Contract. new one entered declaring complainants to have been
illegally dismissed. Respondents are hereby ORDERED
Petitioner's subsequent transfer to another department or college is to reinstate complainants except Luisa Rombo, Ramona
not tantamount to demotion as it was a valid transfer. There is Rombo, Bobong Abriga and Boboy Silva to their previous
therefore no constructive dismissal to speak of. That petitioner position and to pay full backwages from September 1991
ceased to enjoy the compensation, privileges and benefits as College until reinstated. Respondents being guilty of unfair labor
Dean was but a logical consequence of the valid revocation or practice are further ordered to pay complainant union the
termination of such fixed-term position. Indeed, it would be absurd sum of P10,000.00 as moral damages and P5,000.00 as
and unjust for respondent to maintain a deanship position in a exemplary damages." 4
college or department that has ceased to exist. Under the
circumstances, giving petitioner a teaching load in another
College/Department that is related to Physical Therapy -- thus The Facts
enabling her to serve and complete her remaining two years under
the Scholarship Contract -- is a valid exercise of management
The facts are summarized in the NLRC Decision as follows:
prerogative on the part of respondent.

Lastly, as to whether respondent was guilty of forum shopping when "Contrary to the findings of the Labor Arbiter that
it failed to inform the appellate court of the pendency of Civil Case complainants [herein respondents] refused to work and/or
No. 2009-320, a complaint for breach of contract filed by were choosy in the kind of jobs they wanted to perform,
respondent against petitioner, we rule in the negative. Forum the records is replete with complainants' persistence and
shopping exists when the elements of litis pendentia are present or dogged determination in going back to work.
where a final judgment in one case will amount to res judicata in
another. Litis pendentia requires the concurrence of the following
requisites: (1) identity of parties, or at least such parties as those "Indeed, it would appear that respondents did not look
representing the same interests in both actions; (2) identity of rights with favor workers' having organized themselves into a
asserted and reliefs prayed for, the reliefs being founded on the same union. Thus, when complainant union was certified as the
facts; and (3) identity with respect to the two preceding particulars collective bargaining representative in the certification
in the two cases, such that any judgment that may be rendered in the elections, respondents under the pretext that the result
pending case, regardless of which party is successful, would amount was on appeal, refused to sit down with the union for the
to res judicata in the other case.[40] purpose of entering into a collective bargaining
agreement. Moreover, the workers including complainants
While there is identity of parties in the two cases, the causes of herein were not given work for more than one month. In
action and the reliefs sought are different. The issue raised in the protest, complainants staged a strike which was however
present case is whether there was constructive dismissal committed settled upon the signing of a Memorandum of Agreement
by respondent. On the other hand, the issue in the civil case pending which stipulated among others that:
before the RTC is whether petitioner was guilty of breach of contract.
Hence, respondent is not guilty of forum shopping. 'a) The parties will initially meet for CBA
negotiations on the 11th day of January 1991
WHEREFORE, the petition for review on certiorari and will endeavor to conclude the same within
is GRANTED. The Amended Decision dated March 29, 2010 and thirty (30) days.
Resolution dated September 14, 2010 of the Court of Appeals in CA-
G.R. SP No. 02508-MIN are hereby SET ASIDE. The earlier
Decision dated October 22, 2009 of the Court of Appeals in said case 'b) The management will give priority to the
is REINSTATED and UPHELD. women workers who are members of the union
30
in case work relative . . . or amount[ing] to gahit 'The meeting started at 10:00 A.M. A list of
and [dipol] arises. employees was submitted by Atty. Tayko based
on who received their 13th month pay. The
following are deemed not considered
'c) Ariston Eruela Jr. will be given back his
employees:
normal work load which is six (6) days in a
week.
1. Luisa Rombo
'd) The management will provide fifteen (15) 2. Ramona Rombo
wagons for the workers and that existing
workforce prior to the actual strike will be given 3. Bobong Abrega
priority. However, in case the said workforce 4. Boboy Silva
would not be enough, the management can hire
additional workers to supplement them.
'The name Orencio Rombo shall be verified in
the 1990 payroll.
'e) The management will not anymore allow the
scabs, numbering about eighteen (18)
workers[,] to work in the hacienda; and 'The following employees shall be reinstated
immediately upon availability of work:
'f) The union will immediately lift the picket upon
signing of this agreement.' 1. Jose Dagle 7. Alejandro Teja
2. Rico Dagle 8. Gaudioso Rom
"However, alleging that complainants failed to load the
fifteen wagons, respondents reneged on its commitment 3. Ricardo Dagle 9. Martin Alas-as
to sit down and bargain collectively. Instead, respondent 4. Jesus Silva 10. Cresensio Ab
employed all means including the use of private armed
guards to prevent the organizers from entering the 5. Fernando Silva 11. Ariston Eruel
premises. 6. Ernesto Tejares 12. Ariston Eruel

"Moreover, starting September 1991, respondents did not "When respondents again reneged on its commitment;
any more give work assignments to the complainants complainants filed the present complaint.
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 "But for all their persistence, the risk they had to undergo
complainants and respondents which provides: 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
'Whereas the union staged a strike against management the kind of work they have to perform'." 5 (Citations
on January 2, 1992 grounded on the dismissal of the omitted)
union officials and members;

Ruling of the Court of Appeals


'Whereas parties to the present dispute agree to settle the
case amicably once and for all;
The CA affirmed that while the work of respondents was seasonal in
nature, they were considered to be merely on leave during the off-
'Now therefore, in the interest of both labor and season and were therefore still employed by petitioners. Moreover,
management, parties herein agree as follows: the workers enjoyed security of tenure. Any infringement upon this
right was deemed by the CA to be tantamount to illegal dismissal.
'1. That the list of the names of affected union
members hereto attached and made part of this The appellate court found neither "rhyme nor reason in petitioner's
agreement shall be referred to the Hacienda argument that it was the workers themselves who refused to or were
payroll of 1990 and determine whether or not choosy in their work." As found by the NLRC, the record of this case
this concerned Union members are hacienda is "replete with complainants' persistence and dogged determination
workers; in going back to work." 6

'2. That in addition to the payroll of 1990 as The CA likewise concurred with the NLRC's finding that petitioners
reference, herein parties will use as guide the were guilty of unfair labor practice.
subjects of a Memorandum of Agreement
entered into by and between the parties last
January 4, 1990; Hence this Petition. 7

'3. That herein parties can use other Issues


employment references in support of their
respective claims whether or not any or all of Petitioners raise the following issues for the Court's consideration:
the listed 36 union members are employees or
hacienda workers or not as the case may be;
"A. Whether or not the Court of Appeals erred in holding
that respondents, admittedly seasonal workers, were
'4. That in case conflict or disagreement arises regular employees, contrary to the clear provisions of
in the determination of the status of the Article 280 of the Labor Code, which categorically state
particular hacienda workers subject of this that seasonal employees are not covered by the definition
agreement herein parties further agree to of regular employees under paragraph 1, nor covered
submit the same to voluntary arbitration; under paragraph 2 which refers exclusively to casual
employees who have served for at least one year.
'5. To effect the above, a Committee to be
chaired by Rose Mengaling is hereby created to "B. Whether or not the Court of Appeals erred in rejecting
be composed of three representatives each and the ruling in Mercado, . . . and relying instead on rulings
is given five working days starting Jan. 23, 1992 which are not directly applicable to the case at bench, viz,
to resolve the status of the subject 36 hacienda Philippine Tobacco, Bacolod-Murcia, and Gaco, . . .
workers. (Union representatives: Bernardo
Torres, Martin Alas-as, Ariston Arulea Jr.)"
"C Whether or not the Court of Appeals committed grave
abuse of discretion in upholding the NLRC's conclusion
"Pursuant thereto, the parties subsequently met and the that private respondents were illegally dismissed, that
Minutes of the Conciliation Meeting showed as follows: petitioner[s were] guilty of unfair labor practice, and that
the union be awarded moral and exemplary damages." 8

31
Consistent with the discussion in petitioners' Memorandum, we shall ". . . [T]he fact that [respondents] do not work continuously
take up Items A and B as the first issue and Item C as the second. 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
The Court's Ruling
already settled that seasonal workers who are called to
work from time to time and are temporarily laid off during
The Petition has no merit. off-season are not separated from service in said period,
but merely considered on leave until re-employed." 14
First Issue:
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
Regular Employment required to perform phases of agricultural work for a definite period
of time, after which their services would be available to any other
At the outset, we must stress that only errors of law are generally farm owner. They were not hired regularly and repeatedly for the
reviewed by this Court in petitions for review on certiorari of CA same phase/s of agricultural work, but on and off for any single
decisions. 9 Questions of fact are not entertained. 10 The Court is not phase thereof. On the other hand, herein respondents, having
a trier of facts and, in labor cases, this doctrine applies with greater performed the same tasks for petitioners every season for several
force. 11 Factual questions are for labor tribunals to resolve. 12 In the years, are considered the latter's regular employees for their
present case, these have already been threshed out by the NLRC. respective tasks. Petitioners' eventual refusal to use their services
Its findings were affirmed by the appellate court. — 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
Contrary to petitioners' contention, the CA did not err when it held illegal dismissal of the latter.
that respondents were regular employees.

The Court finds no reason to disturb the CA's dismissal of what


Article 280 of the Labor Code, as amended, states: petitioners claim was their valid exercise of a management
prerogative. The sudden changes in work assignments reeked of
"Art. 280. Regular and Casual Employment. — The bad faith. These changes were implemented immediately after
provisions of written agreement to the contrary respondents had organized themselves into a union and started
notwithstanding and regardless of the oral agreement of demanding collective bargaining. Those who were union members
the parties, an employment shall be deemed to be regular were effectively deprived of their jobs. Petitioners' move actually
where the employee has been engaged to perform amounted to unjustified dismissal of respondents, in violation of the
activities which are usually necessary or desirable in the Labor Code.
usual business or trade of the employer, except where the
employment has been fixed for a specific project or "Where there is no showing of clear, valid and legal cause for the
undertaking the completion or termination of which has termination of employment, the law considers the matter a case of
been determined at the time of the engagement of the illegal dismissal and the burden is on the employer to prove that the
employee or where the work or services to be performed termination was for a valid and authorized cause." 16 In the case at
is seasonal in nature and the employment is for the bar, petitioners failed to prove any such cause for the dismissal of
duration of the season. respondents who, as discussed above, are regular employees.

"An employment shall be deemed to be casual if it is not Second Issue:


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 Unfair Labor Practice
considered a regular employee with respect to the activity
in which he is employed and his employment shall
The NLRC also found herein petitioners guilty of unfair labor
continue while such activity exist." (Italics supplied) practice. It ruled as follows:

For respondents to be excluded from those classified as regular


"Indeed, from respondents' refusal to bargain, to their acts
employees, it is not enough that they perform work or services that of economic inducements resulting in the promotion of
are seasonal in nature. They must have also been employed only for those who withdrew from the union, the use of armed
the duration of one season. The evidence proves the existence of
guards to prevent the organizers to come in, and the
the first, but not of the second, condition. The fact that respondents dismissal of union officials and members, one cannot but
— with the exception of Luisa Rombo, Ramona Rombo, Bobong conclude that respondents did not want a union in their
Abriga and Boboy Silva — repeatedly worked as sugarcane workers
hacienda—a clear interference in the right of the workers
for petitioners for several years is not denied by the latter. Evidently, to self-organization." 17
petitioners employed respondents for more than one season.
Therefore, the general rule of regular employment is applicable.
We uphold the CA's affirmation of the above findings. Indeed,
13 factual findings of labor officials, who are deemed to have acquired
In Abasolo v. National Labor Relations Commission, the Court expertise in matters within their respective jurisdictions, are
issued this clarification:
generally accorded not only respect but even finality. Their findings
are binding on the Supreme Court. 18 Verily, their conclusions are
"[T]he test of whether or not an employee is a regular accorded great weight upon appeal, especially when supported by
employee has been laid down in De Leon v. NLRC, in substantial evidence. 19 Consequently, the Court is not duty-bound
which this Court held: 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 primary standard, therefore, of determining regular
employment is the reasonable connection between the
particular activity performed by the employee in relation to The finding of unfair labor practice done in bad faith carries with it
the usual trade or business of the employer. The test is the sanction of moral and exemplary damages." 21
whether the former is usually necessary or desirable in the
usual trade or business of the employer. The connection WHEREFORE, the Petition is hereby DENIED and the assailed
can be determined by considering the nature of the work Decision AFFIRMED. Costs against petitioners.
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 SO ORDERED.
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 G.R. No. 79869 September 5, 1991
such activity and while such activity exists.
FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO
xxx xxx xxx MERCADO, JR., ANTONIO MERCADO, JOSE CABRAL, LUCIA
MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA

32
MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO, working twelve (12) hours a day the whole year round in the farm,
BRIGIDA ALCANTARA, EMERLITA MERCADO, ROMEO an exaggeration, for the reason that the planting of lice and sugar
GUEVARA, ROMEO MERCADO and LEON cane does not entail a whole year as reported in the findings of the
SANTILLAN, petitioners, Chief of the NLRC Special Task Force.5 Even the sworn statement
vs. of one of the petitioners, Fortunato Mercado, Jr., the son of spouses
NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD Fortunato Mercado, Sr. and Rosa Mercado, indubitably show that
DIVISION; LABOR ARBITER LUCIANO AQUINO, RAB-III; said petitioners were hired only as casuals, on an "on and off" basis,
AURORA L. CRUZ; SPOUSES FRANCISCO DE BORJA and thus, it was within the prerogative of private respondent Aurora Cruz
LETICIA DE BORJA; and STO. NIÑO REALTY, either to take in the petitioners to do further work or not after any
INCORPORATED, respondents. single phase of agricultural work had been completed by them. 6

Servillano S. Santillan for petitioners. Respondent Labor Arbiter was also of the opinion that the real
Luis R. Mauricio for private respondents. cause which triggered the filing of the complaint by the petitioners
who are related to one another, either by consanguinity or affinity,
was the filing of a criminal complaint for theft against Reynaldo
Mercado, son of spouses Fortunate Mercado, Sr. and Rosa
Mercado, for they even asked the help of Jesus David, Zone
Chairman of the locality to talk to private respondent, Aurora Cruz
PADILLA, J.: 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
Assailed in this petition for certiorari is the decision * of the render services when needed, thus adding further support to the
respondent national Labor Relations Commission (NLRC) dated 8
conclusion that petitioners were not regular and permanent
August 1984 which affirmed the decision of respondent Labor employees of private respondent Aurora Cruz.8
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' Respondent Labor Arbiter further held that only money claims from
motion for reconsideration. 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
This petition originated from a complaint for illegal dismissal, law.9 On grounds of equity, however, respondent Labor Arbiter
underpayment of wages, non-payment of overtime pay, holiday pay, awarded petitioners financial assistance by private respondent
service incentive leave benefits, emergency cost of living allowances Aurora Cruz, in the amount of Ten Thousand Pesos (P10,000.00) to
and 13th month pay, filed by above-named petitioners against be equitably divided among an the petitioners except petitioner
private respondents Aurora L. Cruz, Francisco Borja, Leticia C.
Fortunato Mercado, Jr. who had manifested his disinterest in the
Borja and Sto. Niño Realty Incorporated, with Regional Arbitration further prosecution of his complaint against private respondent.10
Branch No. III, National Labor Relations Commission in San
Fernando, Pampanga.1
Both parties filed their appeal with the National Labor Relations
Commissions (NLRC). Petitioners questioned respondent Labor
Petitioners alleged in their complaint that they were agricultural Arbiter's finding that they were not regular and permanent
workers utilized by private respondents in all the agricultural phases
employees of private respondent Aurora Cruz while private
of work on the 7 1/2 hectares of ace land and 10 hectares of sugar respondents questioned the award of financial assistance granted
land owned by the latter; that Fortunato Mercado, Sr. and Leon by respondent Labor Arbiter.
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 The NLRC ruled in favor of private respondents affirming the
all allegedly dismissed from their employment; and that, during the decision of the respondent Labor Arbiter, with the modification of the
period of their employment, petitioners received the following daily deletion of the award for financial assistance to petitioners. The
wages: dispositive portion of the decision of the NLRC reads:

From 1962-1963 — P1.50 WHEREFORE, the Decision of Labor Arbiter Luciano P.


1963-1965 — P2.00 Aquino dated March 3, 1983 is hereby modified in that the
1965-1967 — P3.00 award of P10,000.00 financial assistance should be
1967-1970 — P4.00 deleted. The said Decision is affirmed in all other aspects.
1970-1973 — P5.00
1973-1975 — P5.00
SO ORDERED.11
1975-1978 — P6.00
1978-1979 — P7.00
Petitioners filed a motion for reconsideration of the Decision of the
Third Division of the NLRC dated 8 August 1984; however, the
Private respondent Aurora Cruz in her answer to petitioners'
NLRC denied tills motion in a resolution dated 17 August 1987. 12
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 In the present Petition for certiorari, petitioners seek the reversal of
"mandarols", that is, persons who take charge in supplying the the above-mentioned rulings. Petitioners contend that respondent
number of workers needed by owners of various farms, but only to Labor Arbiter and respondent NLRC erred when both ruled that
do a particular phase of agricultural work necessary in rice petitioners are not regular and permanent employees of private
production and/or sugar cane production, after which they would be respondents based on the terms and conditions of their hiring, for
free to render services to other farm owners who need their said findings are contrary to the provisions of Article 280 of the
services.2 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
The other private respondents denied having any relationship
Code as amended, petitioners have become regular and permanent
whatsoever with the petitioners and state that they were merely
employees.14
registered owners of the land in question included as corespondents
in this case.3
Moreover, they argue that Policy Instruction No. 1215 of the
Department of Labor and Employment clearly lends support to this
The dispute in this case revolves around the issue of whether or not
contention, when it states:
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 PD 830 has defined the concept of regular and casual
respondents. 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
Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private
desirable to the main business of the employer, then
respondents and held that petitioners were not regular and
employment is regular. If not, then the employment is
permanent workers of the private respondents, for the nature of the
casual. Employment for a definite period which exceeds
terms and conditions of their hiring reveal that they were required to
one (1) year shall be considered re for the duration of the
perform phases of agricultural work for a definite period of time after
definite period.
which their services would be available to any other farm
owner.4 Respondent Labor Arbiter deemed petitioners' contention of
33
This concept of re and casual employment is designed to noteworthy that the findings of the Chief of the Special
put an end to casual employment in regular jobs which Task Force of the Regional Office are similar to this.
has been abused by many employers to prevent so-called
casuals from enjoying the benefits of regular employees
In fact, the sworn statement of one of the petitioners
or to prevent casuals from joining unions.
Fortunato Mercado, Jr., the son of spouses Fortunato
Mercado, Sr. and Rosa Mercado, indubitably shows that
This new concept should be strictly enforced to give said petitioners were only hired as casuals, on-and-off
meaning to the constitutional guarantee of employment basis. With this kind of relationship between the
tenure.16 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
Tested under the laws invoked, petitioners submit that it would be
complaint for illegal dismissal. It is within the prerogative
unjust, if not unlawful, to consider them as casual workers since they
of respondent Aurora Cruz either to take in the petitioners
have been doing all phases of agricultural work for so many years,
to do further work or not after any single phase of
activities which are undeniably necessary, desirable and
agricultural work has been completed by them. We are of
indispensable in the rice and sugar cane production business of the
the opinion that the real cause which triggered the filing of
private respondents.17
this complaint by the petitioners who are related to one
another, either by consanguinity or affinity was due to the
In the Comment filed by private respondents, they submit that the filing of a criminal complaint by the respondent Aurora
decision of the Labor Arbiter, as aimed by respondent NLRC, that Cruz against Reynaldo Mercado, son of spouses
petitioners were only hired as casuals, is based on solid evidence Fortunato Mercado, Sr. and Rosa Mercado. In April 1979,
presented by the parties and also by the Chief of the Special Task according to Jesus David, Zone Chairman of the locality
Force of the NLRC Regional Office and, therefore, in accordance where the petitioners and respondent reside, petitioner
with the rule on findings of fact of administrative agencies, the Fortunato Mercado, Sr. asked for help regarding the case
decision should be given great weight.18 Furthermore, they contend of his son, Reynaldo, to talk with respondent Aurora Cruz
that the arguments used by petitioners in questioning the decision of and the said Zone Chairman also stated under oath that
the Labor Arbiter were based on matters which were not offered as the petitioners were never regularly employed by
evidence in the case heard before the regional office of the then respondent Aurora Cruz but were on-and-off hired to work
Ministry of Labor but rather in the case before the Social Security to render services when needed.25
Commission, also between the same parties.19
A careful examination of the foregoing statements reveals that the
Public respondent NLRC filed a separate comment prepared by the findings of the Labor Arbiter in the case are ably supported by
Solicitor General. It submits that it has long been settled that evidence. There is, therefore, no circumstance that would warrant a
findings of fact of administrative agencies if supported by substantial reversal of the questioned decision of the Labor Arbiter as affirmed
evidence are entitled to great weight.20 Moreover, it argues that by the National Labor Relations Commission.
petitioners cannot be deemed to be permanent and regular
employees since they fall under the exception stated in Article 280
The contention of petitioners that the second paragraph of Article
of the Labor Code, which reads:
280 of the Labor Code should have been applied in their case
presents an opportunity to clarify the afore-mentioned provision of
The provisions of written agreements to the contrary law.
notwithstanding and regardless of the oral agreements of
the parties, an employment shall be deemed to be regular
Article 280 of the Labor Code reads in full:
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 Article 280. Regular and Casual Employment. — The
employment has been fixed for a specific project or provisions of written agreement to the contrary
undertaking the completion or termination of which has notwithstanding and regardless of the oral agreement of
been determined at the time of the engagement of the the parties, an employment shall be deemed to be regular
employee or where the work or services to be performed where the employee has been engaged to perform
is seasonal in nature and the employment is for the activities which are usually necessary or desirable in the
duration of the season.21(emphasis supplied) 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
The Court resolved to give due course to the petition and required
been determined at the time of the engagement of the
the parties to submit their respective memoranda after which the
employee or where the work or services to be performed
case was deemed submitted for decision.
is seasonal in nature and the employment is for the
duration of the season.
The petition is not impressed with merit.
An employment shall be deemed to be casual if it is not
The invariable rule set by the Court in reviewing administrative covered by the preceding paragraph: Provided, That, any
decisions of the Executive Branch of the Government is that the employee who has rendered at least one year of service
findings of fact made therein are respected, so long as they are whether such service is continuous or broken, shall be
supported by substantial evidence, even if not overwhelming or considered a regular employee with respect to the activity
preponderant;22 that it is not for the reviewing court to weigh the in which he is employed and his employment shall
conflicting evidence, determine the credibility of the witnesses or continue while such actually exists.
otherwise substitute its own judgment for that of the administrative
agency on the sufficiency of the evidence;23 that the administrative
The first paragraph answers the question of who are employees. It
decision in matters within the executive's jurisdiction can only be set
states that, regardless of any written or oral agreement to the
aside upon proof of gross abuse of discretion, fraud, or error of
contrary, an employee is deemed regular where he is engaged in
law.24
necessary or desirable activities in the usual business or trade of the
employer, except for project employees.
The questioned decision of the Labor Arbiter reads:
A project employee has been defined to be one whose employment
Focusing the spotlight of judicious scrutiny on the has been fixed for a specific project or undertaking, the completion
evidence on record and the arguments of both parties, it is or termination of which has been determined at the time of the
our well-discerned opinion that the petitioners are not engagement of the employee, or where the work or service to be
regular and permanent workers of the respondents. The performed is seasonal in nature and the employment is for the
very nature of the terms and conditions of their hiring duration of the season26 as in the present case.
reveal that the petitioners were required to perform p of
cultural work for a definite period, after which their
The second paragraph of Art. 280 demarcates as "casual"
services are available to any farm owner. We cannot
employees, all other employees who do not fan under the definition
share the arguments of the petitioners that they worked
of the preceding paragraph. The proviso, in said second paragraph,
continuously the whole year round for twelve hours a day.
deems as regular employees those "casual" employees who have
This, we feel, is an exaggeration which does not deserve
rendered at least one year of service regardless of the fact that such
any serious consideration inasmuch as the plan of rice
service may be continuous or broken.
and sugar cane does not entail a whole year operation,
the area in question being comparatively small. It is

34
Petitioners, in effect, contend that the proviso in the second We, the undersigned unto this Honorable Regional Office/District
paragraph of Art. 280 is applicable to their case and that the Labor Office/Provincial Agency Office respectfully state:
Arbiter should have considered them regular by virtue of said
proviso. The contention is without merit.
1. The undersigned employer, hereby agrees to pay the
sum of FORTY THOUSAND PESOS (₱40,000.00) to the
The general rule is that the office of a proviso is to qualify or modify surviving spouse of JAIME POLO, an employee who died
only the phrase immediately preceding it or restrain or limit the of an accident, as a complete and full payment for all
generality of the clause that it immediately follows.27 Thus, it has claims due the victim.
been held that a proviso is to be construed with reference to the
immediately preceding part of the provision to which it is attached,
2. On the other hand, the undersigned surviving spouse of
and not to the statute itself or to other sections thereof. 28 The only
the victim having received the said amount do [sic] hereby
exception to this rule is where the clear legislative intent is to
release and discharge the employer from any and all
restrain or qualify not only the phrase immediately preceding it (the
claims that maybe due the victim in connection with the
proviso) but also earlier provisions of the statute or even the statute
victim’s employment thereat.
itself as a whole.29

Thereafter, private respondent filed a claim for social security


Policy Instruction No. 12 of the Department of Labor and
benefits with the Social Security System (SSS)–Sorosogon
Employment discloses that the concept of regular and casual
Branch.8 However, upon verification and evaluation, it was
employees was designed to put an end to casual employment in
discovered that the deceased was not a registered member of the
regular jobs, which has been abused by many employers to prevent
SSS.9
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 Upon the insistence of private respondent that her late husband had
designed to stifle small-scale businesses nor to oppress agricultural been employed by petitioner from January 1983 up to his untimely
land owners to further the interests of laborers, whether agricultural death on 4 November 1997, the SSS conducted a field investigation
or industrial. What it seeks to eliminate are abuses of employers to clarify his status of employment. In its field investigation report,10 it
against their employees and not, as petitioners would have us enumerated its findings as follows:
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 In connection with the complaint filed by Mrs. Rosario Fulo,
"project" employees nor the regular employees treated in paragraph hereunder are the findings per interview with Mr. Leonor Delgra,
one of Art. 280. Santiago Bolanos and Amado Gacelo:

Clearly, therefore, petitioners being project employees, or, to use the 1. That Mr. Jaime Fulo was an employee of Jaime
correct term, seasonal employees, their employment legally ends Gapayao as farm laborer from 1983 to 1997.
upon completion of the project or the season. The termination of
their employment cannot and should not constitute an illegal 2. Mr. Leonor Delgra and Santiago Bolanos are co-
dismissal.30 employees of Jaime Fulo.

WHEREFORE, the petition is DISMISSED. The decision of the 3. Mr. Jaime Fulo receives compensation on a daily basis
National Labor Relations Commission affirming that of the Labor ranging from ₱5.00 to ₱60.00 from 1983 to 1997.
Arbiter, under review, is AFFIRMED. No pronouncement as to costs.
Per interview from Mrs. Estela Gapayao, please be informed that:
SO ORDERED.
1. Jaime Fulo is an employee of Mr. & Mrs. Jaime
Gapayao on an extra basis.

G.R. No. 193493 June 13, 2013 2. Sometimes Jaime Fulo is allowed to work in the farm as
abaca harvester and earn 1/3 share of its harvest as his
JAIME N. GAPAYAO, Petitioner, income.
vs.
ROSARIO FULO, SOCIAL SECURITY SYSTEM and SOCIAL 3. Mr. & Mrs. Gapayao hired the services of Jaime Fulo
SECURITY COMMISSION, Respondents. not only in the farm as well as in doing house repairs
whenever it is available. Mr. Fulo receives his
remuneration usually in the afternoon after doing his job.
DECISION

SERENO, CJ.: 4. Mr. & Mrs. Gapayao hires 50-100 persons when
necessary to work in their farm as laborer and Jaime Fulo
is one of them. Jaime Fulo receives more or less ₱50.00 a
This is a Rule 45 Petition1 assailing the Decision2 and Resolution3 of day. (Emphases in the original)
the Court of Appeals (CA) in CA-G.R. SP. No. 101688, affirming the
Resolution4 of the Social Security Commission (SSC). The SSC held
petitioner Jaime N. Gapayao liable to pay the unpaid social security Consequently, the SSS demanded that petitioner remit the social
contributions due to the deceased Jaime Fulo, and the Social security contributions of the deceased. When petitioner denied that
the deceased was his employee, the SSS required private
Security System (SSS) to pay private respondent Rosario L. Fulo,
the widow of the deceased, the appropriate death benefits pursuant respondent to present documentary and testimonial evidence to
to the Social Security Law. refute petitioner’s allegations.11

The antecedent facts are as follows: Instead of presenting evidence, private respondent filed a
Petition12 before the SSC on 17 February 2003. In her Petition, she
sought social security coverage and payment of contributions in
On 4 November 1997, Jaime Fulo (deceased) died of "acute renal order to avail herself of the benefits accruing from the death of her
failure secondary to 1st degree burn 70% secondary husband.
electrocution"5 while doing repairs at the residence and business
establishment of petitioner located at San Julian, Irosin, Sorsogon.
On 6 May 2003, petitioner filed an Answer13 disclaiming any liability
on the premise that the deceased was not the former’s employee,
Allegedly moved by his Christian faith, petitioner extended some but was rather an independent contractor whose tasks were not
financial assistance to private respondent. On 16 November 1997, subject to petitioner’s control and supervision.14 Assuming arguendo
the latter executed an Affidavit of Desistance6 stating that she was that the deceased was petitioner’s employee, he was still not entitled
not holding them liable for the death of her late husband, Jaime to be paid his SSS premiums for the intervening period when he was
Fulo, and was thereby waiving her right and desisting from filing any not at work, as he was an "intermittent worker who was only
criminal or civil action against petitioner. summoned every now and then as the need arose."15 Hence,
petitioner insisted that he was under no obligation to report the
former’s demise to the SSS for social security coverage.
On 14 January 1998, both parties executed a Compromise
Agreement,7 the relevant portion of which is quoted below:
35
Subsequently, on 30 June 2003, the SSS filed a Petition-in- 2012, petitioner filed a "Consolidated Reply to the Comments of the
Intervention16 before the SSC, outlining the factual circumstances of Public Respondents SSS and SSC and Private Respondent Rosario
the case and praying that judgment be rendered based on the Fulo."29
evidence adduced by the parties.
ISSUE
On 14 March 2007, the SSC rendered a Resolution,17 the dispositive
portion of which provides:
The sole issue presented before us is whether or not there exists
between the deceased Jaime Fulo and petitioner an employer-
WHEREFORE, PREMISES CONSIDERED, this Commission finds, employee relationship that would merit an award of benefits in favor
and so holds, that Jaime Fulo, the late husband of petitioner, was of private respondent under social security laws.
employed by respondent Jaime N. Gapayao from January 1983 to
November 4, 1997, working for nine (9) months a year receiving the
THE COURT’S RULING
minimum wage then prevailing.

In asserting the existence of an employer-employee relationship,


Accordingly, the respondent is hereby ordered to pay ₱45,315.95
private respondent alleges that her late husband had been in the
representing the unpaid SS contributions due on behalf of deceased
employ of petitioner for 14 years, from 1983 to 1997.30 During that
Jaime Fulo, the amount of ₱217,710.33 as 3% per month penalty for
period, he was made to work as a laborer in the agricultural
late remittance thereof, computed as of March 30, 2006, without
landholdings, a harvester in the abaca plantation, and a
prejudice to the collection of additional penalty accruing thereafter,
repairman/utility worker in several business establishments owned
and the sum of ₱230,542.20 (SSS) and ₱166,000.00 (EC) as
by petitioner.31 To private respondent, the "considerable length of
damages for the failure of the respondent to report the deceased
time during which [the deceased] was given diverse tasks by
Jaime Fulo for SS coverage prior to his death pursuant to Section
petitioner was a clear indication of the necessity and indispensability
24(a) of the SS Law, as amended.
of her late husband’s services to petitioner’s business."32 This view
is bolstered by the admission of petitioner himself in the
The SSS is hereby directed to pay petitioner Rosario Fulo the Compromise Agreement that he was the deceased’s employer. 33
appropriate death benefit, pursuant to Section 13 of the SS Law, as
amended, as well as its prevailing rules and regulations, and to
Private respondent’s position is similarly espoused by the SSC,
inform this Commission of its compliance herewith.
which contends that its findings are duly supported by evidence on
record.34 It insists that pakyaw workers are considered employees,
SO ORDERED. as long as the employer exercises control over them. In this case,
the exercise of control by the employer was delegated to the
caretaker of his farm, Amado Gacelo. The SSC further asserts that
On 18 May 2007, petitioner filed a Motion for
the deceased rendered services essential for the petitioner’s
Reconsideration,18 which was denied in an Order19 dated 16 August
harvest. While these services were not rendered continuously (in the
2007.
sense that they were not rendered every day throughout the year),
still, the deceased had never stopped working for petitioner from
Aggrieved, petitioner appealed to the CA on 19 December year to year until the day the former died.35 In fact, the deceased
2007.20 On 17 March 2010, the CA rendered a Decision21 in favor of was required to work in the other business ventures of petitioner,
private respondent, as follows: such as the latter’s bakery and grocery store.36 The Compromise
Agreement entered into by petitioner with private respondent should
not be a bar to an employee demanding what is legally due the
In fine, public respondent SSC had sufficient basis in concluding that latter.37
private respondent’s husband was an employee of petitioner and
should, therefore, be entitled to compulsory coverage under the
Social Security Law. The SSS, while clarifying that it is "neither adversarial nor favoring
any of the private parties x x x as it is only tasked to carry out the
purposes of the Social Security Law,"38 agrees with both private
Having ruled in favor of the existence of employer-employee respondent and SSC. It stresses that factual findings of the lower
relationship between petitioner and the late Jaime Fulo, it is no courts, when affirmed by the appellate court, are generally
longer necessary to dwell on the other issues raised.
conclusive and binding upon the Court.39

Resultantly, for his failure to report Jaime Fulo for compulsory social Petitioner, on the other hand, insists that the deceased was not his
security coverage, petitioner should bear the consequences thereof.
employee. Supposedly, the latter, during the performance of his
Under the law, an employer who fails to report his employee for function, was not under petitioner’s control. Control is not
social security coverage is liable to [1] pay the benefits of those who necessarily present even if the worker works inside the premises of
die, become disabled, get sick or reach retirement age; [2] pay all
the person who has engaged his services.40 Granting without
unpaid contributions plus a penalty of three percent per month; and admitting that petitioner gave rules or guidelines to the deceased in
[3] be held liable for a criminal offense punishable by fine and/or the process of the latter’s performing his work, the situation cannot
imprisonment. But an employee is still entitled to social security
be interpreted as control, because it was only intended to promote
benefits even is (sic) his employer fails or refuses to remit his mutually desired results.41
contribution to the SSS.

Alternatively, petitioner insists that the deceased was hired by


WHEREFORE, premises considered, the Resolution appealed from Adolfo Gamba, the contractor whom he had hired to construct their
is AFFIRMED in toto. building;42 and by Amado Gacelo, the tenant whom petitioner
instructed to manage the latter’s farm.43 For this reason, petitioner
SO ORDERED. believes that a tenant is not beholden to the landlord and is not
under the latter’s control and supervision. So if a worker is hired to
work on the land of a tenant – such as petitioner – the former cannot
In holding thus, the CA gave credence to the findings of the SSC. be the worker of the landlord, but of the tenant’s.44
The appellate court held that it "does not follow that a person who
does not observe normal hours of work cannot be deemed an
employee."22 For one, it is not essential for the employer to actually Anent the Compromise Agreement, petitioner clarifies that it was
supervise the performance of duties of the employee; it is sufficient executed to buy peace, because "respondent kept on pestering
that the former has a right to wield the power. In this case, petitioner them by asking for money."45 Petitioner allegedly received threats
exercised his control through an overseer in the person of Amado that if the matter was not settled, private respondent would refer the
Gacelo, the tenant on petitioner’s land.23 Most important, petitioner matter to the New Peoples’ Army.46 Allegedly, the Compromise
entered into a Compromise Agreement with private respondent and Agreement was "extortion camouflaged as an
expressly admitted therein that he was the employer of the agreement."47 Likewise, petitioner maintains that he shouldered the
deceased.24The CA interpreted this admission as a declaration hospitalization and burial expenses of the deceased to express his
against interest, pursuant to Section 26, Rule 130 of the Rules of "compassion and sympathy to a distressed person and his family,"
Court.25 and not to admit liability.48

Hence, this petition. Lastly, petitioner alleges that the deceased is a freelance worker.
Since he was engaged on a pakyaw basis and worked for a short
period of time, in the nature of a farm worker every season, he was
Public respondents SSS26 and SSC27 filed their Comments on 31 not precluded from working with other persons and in fact worked for
January 2011 and 28 February 2011, respectively, while private them. Under Article 280 of the Labor Code,49 seasonal employees
respondent filed her Comment on 14 March 2011.28 On 6 March
36
are not covered by the definitions of regular and casual or trade of the employer. The test is whether the former is usually
employees.50 Petitioner cites Mercado, Sr. v. NLRC,51 in which the necessary or desirable in the usual business or trade of the
Court held that seasonal workers do not become regular employees employer. The connection can be determined by considering the
by the mere fact that they have rendered at least one year of nature of the work performed and its relation to the scheme of the
service, whether continuous or broken.52 particular business or trade in its entirety. Also if the employee has
been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems
We see no cogent reason to reverse the CA.
the repeated and continuing need for its performance as sufficient
evidence of the necessity if not indispensability of that activity to the
I business. Hence, the employment is also considered regular, but
only with respect to such activity and while such activity exists.
Findings of fact of the SSC are given weight and credence.
A reading of the records reveals that the deceased was indeed a
farm worker who was in the regular employ of petitioner. From year
At the outset, it is settled that the Court is not a trier of facts and will to year, starting January 1983 up until his death, the deceased had
not weigh evidence all over again. Findings of fact of administrative been working on petitioner’s land by harvesting abaca and coconut,
agencies and quasi-judicial bodies, which have acquired expertise
processing copra, and clearing weeds. His employment was
because their jurisdiction is confined to specific matters, are continuous in the sense that it was done for more than one
generally accorded not only respect but finality when affirmed by the harvesting season. Moreover, no amount of reasoning could detract
CA.53 For as long as these findings are supported by substantial
from the fact that these tasks were necessary or desirable in the
evidence, they must be upheld.54 usual business of petitioner.

II
The other tasks allegedly done by the deceased outside his usual
farm work only bolster the existence of an employer-employee
Farm workers may be considered regular seasonal employees. relationship. As found by the SSC, the deceased was a construction
worker in the building and a helper in the bakery, grocery, hardware,
and piggery – all owned by petitioner.63 This fact only proves that
Article 280 of the Labor Code states: even during the off season, the deceased was still in the employ of
petitioner.
Article 280. Regular and Casual Employment. — The provisions of
written agreement to the contrary notwithstanding and regardless of The most telling indicia of this relationship is the Compromise
the oral agreement of the parties, an employment shall be deemed Agreement executed by petitioner and private respondent. It is a
to be regular where the employee has been engaged to perform valid agreement as long as the consideration is reasonable and the
activities which are usually necessary or desirable in the usual employee signed the waiver voluntarily, with a full understanding of
business or trade of the employer, except where the employment what he or she was entering into.64 All that is required for the
has been fixed for a specific project or undertaking the completion or compromise to be deemed voluntarily entered into is personal and
termination of which has been determined at the time of the specific individual consent.65 Once executed by the workers or
engagement of the employee or where the work or services to be employees and their employers to settle their differences, and done
performed is seasonal in nature and the employment is for the in good faith, a Compromise Agreement is deemed valid and binding
duration of the season. among the parties.66

An employment shall be deemed to be casual if it is not covered by Petitioner entered into the agreement with full knowledge that he
the preceding paragraph: Provided, That, any employee who has was described as the employer of the deceased.67This knowledge
rendered at least one year of service whether such service is cannot simply be denied by a statement that petitioner was merely
continuous or broken, shall be considered a regular employee with forced or threatened into such an agreement.1âwphi1 His belated
respect to the activity in which he is employed and his employment attempt to circumvent the agreement should not be given any
shall continue while such actually exists. consideration or weight by this Court.

Jurisprudence has identified the three types of employees III


mentioned in the provision: (1) regular employees or those who
have been engaged to perform activities that are usually necessary
or desirable in the usual business or trade of the employer; (2) Pakyaw workers are regular employees,
project employees or those whose employment has been fixed for a
specific project or undertaking, the completion or termination of provided they are subject to the control of petitioner.
which has been determined at the time of their engagement, or
those whose work or service is seasonal in nature and is performed
for the duration of the season; and (3) casual employees or those Pakyaw workers are considered employees for as long as their
who are neither regular nor project employees.55 employers exercise control over them. In Legend Hotel Manila v.
Realuyo,68 the Court held that "the power of the employer to control
the work of the employee is considered the most significant
Farm workers generally fall under the definition of seasonal determinant of the existence of an employer-employee relationship.
employees. We have consistently held that seasonal employees This is the so-called control test and is premised on whether the
may be considered as regular employees.56 Regular seasonal
person for whom the services are performed reserves the right to
employees are those called to work from time to time. The nature of control both the end achieved and the manner and means used to
their relationship with the employer is such that during the off achieve that end." It should be remembered that the control test
season, they are temporarily laid off; but reemployed during the
merely calls for the existence of the right to control, and not
summer season or when their services may be needed.57 They are necessarily the exercise thereof.69 It is not essential that the
in regular employment because of the nature of their job,and not employer actually supervises the performance of duties by the
because of the length of time they have worked.58
employee. It is enough that the former has a right to wield the
power.70
The rule, however, is not absolute. In Hacienda Fatima v. National
Federation of Sugarcane Workers-Food & General Trade,59 the
In this case, we agree with the CA that petitioner wielded control
Court held that seasonal workers who have worked for one season over the deceased in the discharge of his functions. Being the owner
only may not be considered regular employees. Similarly, in of the farm on which the latter worked, petitioner – on his own or
Mercado, Sr. v. NLRC,60 it was held that when seasonal employees
through his overseer – necessarily had the right to review the quality
are free to contract their services with other farm owners, then the of work produced by his laborers. It matters not whether the
former are not regular employees. deceased conducted his work inside petitioner’s farm or not because
petitioner retained the right to control him in his work, and in fact
For regular employees to be considered as such, the primary exercised it through his farm manager Amado Gacelo. The latter
standard used is the reasonable connection between the particular himself testified that petitioner had hired the deceased as one of the
activity they perform and the usual trade or business of the pakyaw workers whose salaries were derived from the gross
employer.61 This test has been explained thoroughly in De Leon v. proceeds of the harvest.71
NLRC,62 viz:
We do not give credence to the allegation that the deceased was an
The primary standard, therefore, of determining a regular independent contractor hired by a certain Adolfo Gamba, the
employment is the reasonable connection between the particular contractor whom petitioner himself had hired to build a building. The
activity performed by the employee in relation to the usual business allegation was based on the self-serving testimony of Joyce Gapay

37
Demate,72 the daughter of petitioner. The latter has not offered any the oral agreement of the parties, an employment shall be deemed
other proof apart from her testimony to prove the contention. 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
The right of an employee to be covered by the Social Security Act is
has been fixed for a specific project or undertaking the completion or
premised on the existence of an employer-employee
termination of which has been determined at the time of the
relationship.73 That having been established, the Court hereby rules
engagement of the employee or where the work or services to be
in h1vor of private respondent.
performed is seasonal in nature and the employment is for the
duration of the season.
WHEREFORE, the Petition for Review on Certiorari is hereby
DENIED. The assailed Decision and resolution of the Court of
An employment shall be deemed to be casual if it is not covered by
Appeals in CA-G.R. SP. No. 101688 dated 17 March 2010 and 13
the preceding paragraph: Provided, That, any employee who has
August 2010, respectively, are hereby AFFIRMED.
rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with
SO ORDERED. respect to the activity in which he is employed and his employment
shall continue while such actually exists.

The foregoing provision provides for three kinds of employees:


(a) regular employees or those who have been "engaged to perform
G.R.No. 159343 September 28, 2007
activities which are usually necessary or desirable in the usual
business or trade of the employer"; (b) project employees or those
PEDY CASERES and ANDITO PAEL, Petitioners, "whose employment has been fixed for a specific project or
vs. undertaking, the completion or termination of which has been
UNIVERSAL ROBINA SUGAR MILLING CORPORATION determined at the time of the engagement of the employee or where
(URSUMCO) and/or RESIDENT MANAGER RENE the work or services to be performed is seasonal in nature and the
CABATE, Respondents. employment is for the duration of the season"; and (c) casual
employees or those who are neither regular nor project employees.9
DECISION
The principal test for determining whether an employee is a project
employee or a regular employee is whether the employment has
AUSTRIA-MARTINEZ, J.: been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the
Universal Robina Sugar Milling Corporation (respondent) is a engagement of the employee.10 A project employee is one whose
corporation engaged in the cane sugar milling business. Pedy employment has been fixed for a specific project or undertaking, the
Caseres (petitioner Caseres) started working for respondent in completion or termination of which has been determined at the time
1989, while Andito Pael (petitioner Pael) in 1993. At the start of their of the engagement of the employee or where the work or service to
respective employments, they were made to sign a Contract of be performed is seasonal in nature and the employment is for the
Employment for Specific Project or Undertaking. Petitioners' duration of the season.11 A true project employee should be
contracts were renewed from time to time, until May 1999 when they assigned to a project which begins and ends at determined or
were informed that their contracts will not be renewed anymore. determinable times, and be informed thereof at the time of hiring.12

Petitioners filed a complaint for illegal dismissal, regularization, Petitioners contend that respondent's repeated hiring of their
incentive leave pay, 13th month pay, damages and attorney’s fees. services qualifies them to the status of regular employees. On this
score, the LA ruled:
In a Decision1 dated August 24, 1999, the Labor Arbiter (LA)
dismissed the complaint "for not being substantiated with clear and This is further buttress[ed] by the fact that the relationship between
convincing evidence." complainants and the respondent URSUMCO, would clearly reveal
that the very nature of the terms and conditions of their hiring would
show that complainants were required to perform phases of special
The National Labor Relations Commission (NLRC) affirmed the LA's projects which are not related to the main operation of the
dismissal,2 and the Court of Appeals (CA)3dismissed the petition respondent for a definite period, after which their services are
filed before it.4 available to any farm owner.13

Hence, herein Petition for Review on Certiorari under Rule 45 of the The NLRC, agreeing with the LA, further ruled that:
Rules of Court with the issues set forth as follows:

In the case at bar, We note that complainants never bothered to


I. WHETHER OR NOT THE PETITIONERS ARE deny that they voluntarily, knowingly and willfully executed the
SEASONAL/PROJECT/TERM EMPLOYEES NOT contracts of employment. Neither was there any showing that
REGULAR EMPLOYEES OF RESPONDENTS; respondents exercised moral dominance on the complainants, x x x
it is clear that the contracts of employment are valid and binding on
II. WHETHER OR NOT THE PETITIONERS WERE the complainants.
ILLEGALLY DISMISSED AND ARE ENTITLED TO
BACKWAGES AND OTHER MONETARY BENEFITS The execution of these contracts in the case at bar is necessitated
PRAYED FOR IN THE COMPLAINT.5 by the peculiar nature of the work in the sugar industry which has an
off milling season. The very nature of the terms and conditions of
The petition is without merit. complainants' hiring reveals that they were required to perform
phases of special projects for a definite period after, their services
are available to other farm owners. This is so because the planting
The rule is clear that a petition for review on certiorari under Rule 45 of sugar does not entail a whole year operation, and utility works are
of the Rules of Court should raise only questions of law, subject to comparatively small during the off-milling season. x x x14
certain exceptions.6 Whether or not respondents were project
employees or regular employees is a question of fact. 7
Finally, the CA noted:
The LA, the NLRC and the CA are one in ruling that petitioners were
not illegally dismissed as they were not regular, but contractual or Petitioner Pedy Caseres first applied with private respondent
project employees. Consequently, the finding of the LA, the NLRC, URSUMCO on January 9, 1989 as a worker assisting the crane
and the CA that petitioners were project employees binds this operator at the transloading station. Upon application, Caseres was
Court.8 interviewed and made to understand that his employment would be
co-terminus with the phase of work to which he would be then
assigned, that is until February 5, 1989 and thereafter he would be
The Court finds no cogent reason to depart from their ruling. free to seek employment elsewhere. Caseres agreed and signed the
contract of employment for specific project or undertaking. After an
Article 280 of the Labor Code provides: absence of more than five (5) months, Caseres re-applied with
respondent as a seasonal project worker assisting in the general
underchassis reconditioning to transport units on July 17, 1989. Like
ART. 280. Regular and Casual Employees. – The provision of his first assignment, Caseres was made to understand that his
written agreement to the contrary notwithstanding and regardless of
38
services would be co-terminus with the work to which he would be WHEREFORE, the petition is DENIED.
then assigned that is from July 17, 1989 to July 20, 1989 and that
thereafter he is free to seek employment elsewhere to which
SO ORDERED.
Caseres agreed and readily signed the contract of employment for
specific project or undertaking issued to him. Thereafter Caseres
voluntarily signed several other employment contracts for various
undertakings with a determinable period. As in the first contract,
Caseres' services were co-terminus with the work to which he was
G.R. No. 114733 January 2, 1997
assigned, and that thereafter, he was free to seek employment with
other sugar millers or elsewhere.
AURORA LAND PROJECTS CORP. Doing business under the
name "AURORA PLAZA" and TERESITA T.
The nature and terms and conditions of employment of petitioner
QUAZON, petitioners,
Andito Pael were the same as that of his co-petitioner Caseres.
vs.
NATIONAL LABOR RELATIONS COMMISSION and HONORIO
xxx DAGUI, respondents.

It must be noted that there were intervals in petitioners' respective


employment contracts, and that their work depended on the
availability of such contracts or projects. Consequently, the
HERMOSISIMA, JR., J.:
employment of URSUMCO's work force was not permanent but co-
terminous with the projects to which the employees were assigned
and from whose payrolls they were paid (Palomares vs. NLRC, 277 The question as to whether an employer-employee relationship
SCRA 439). exists in a certain situation continues to bedevil the courts. Some
businessmen try to avoid the bringing about of an employer-
Petitioners' repeated and successive re-employment on the basis of employee relationship in their enterprises because that judicial
relation spawns obligations connected with workmen's
a contract of employment for more than one year cannot and does
not make them regular employees. Length of service is not the compensation, social security, medicare, minimum wage,
controlling determinant of the employment tenure of a project termination pay, and unionism.1 In light of this observation, it
behooves this Court to be ever vigilant in Checking the
employee (Rada vs. NLRC, 205 SCRA 69). x x x15
unscrupulous efforts of some of our entrepreneurs, primarily aimed
at maximizing their return on investments at the expense of the lowly
It should be stressed that contracts for project employment are valid workingman.
under the law. In Villa v. National Labor Relations Commission,16 the
Court stated that:
This petition for certiorari seeks the reversal of the Resolution2 of
public respondent National Labor Relations Commission dated
x x x by entering into such contract, an employee is deemed to March 16, 1994 affirming with modification the decision of the Labor
understand that his employment is coterminous with the project. He Arbiter, dated May 25, 1992, finding petitioners liable to pay private
may not expect to be employed continuously beyond the completion respondent the total amount of P195,624.00 as separation pay and
of the project. It is of judicial notice that project employees engaged attorney's fees.
for manual services or those for special skills like those of
carpenters or masons, are, as a rule, unschooled. However, this fact
alone is not a valid reason for bestowing special treatment on them The relevant antecedents:
or for invalidating a contract of employment. Project employment
contracts are not lopsided agreements in favor of only one party Private respondent Honorio Dagui was hired by Doña Aurora Suntay
thereto. The employer’s interest is equally important as that of the Tanjangco in 1953 to take charge of the maintenance and repair of
employee’s for theirs is the interest that propels economic activity. the Tanjangco apartments and residential buildings. He was to
While it may be true that it is the employer who drafts project perform carpentry, plumbing, electrical and masonry work. Upon the
employment contracts with its business interest as overriding death of Doña Aurora Tanjangco in 1982, her daughter, petitioner
consideration, such contracts do not, of necessity, prejudice the Teresita Tanjangco Quazon, took over the administration of all the
employee. Neither is the employee left helpless by a prejudicial Tanjangco properties. On June 8, 1991, private respondent Dagui
employment contract. After all, under the law, the interest of the received the shock of his life when Mrs. Quazon suddenly told him:
worker is paramount.171âwphi1 "Wala ka nang trabaho mula ngayon,"3 on the alleged ground that
his work was unsatisfactory. On August 29, 1991, private
The fact that petitioners were constantly re-hired does not ipso respondent, who was then already sixty-two (62) years old, filed a
facto establish that they became regular employees. Their complaint for illegal dismissal with the Labor Arbiter.
respective contracts with respondent show that there were intervals
in their employment. In petitioner Caseres's case, while his On May 25, 1992, Labor Arbiter Ricardo C. Nora rendered
employment lasted from August 1989 to May 1999, the duration of judgment, the decretal portion of which reads:
his employment ranged from one day to several months at a time,
and such successive employments were not continuous. With
regard to petitioner Pael, his employment never lasted for more than IN VIEW OF ALL THE FOREGOING, respondents Aurora
a month at a time. These support the conclusion that they were Plaza and/or Teresita Tanjangco Quazon are hereby
indeed project employees, and since their work depended on the ordered to pay the complainant the total amount of ONE
availability of such contracts or projects, necessarily the employment HUNDRED NINETY FIVE THOUSAND SIX HUNDRED
of respondent’s work force was not permanent but co-terminous with TWENTY FOUR PESOS (P195,624.00) representing
the projects to which they were assigned and from whose payrolls complainant's separation pay and the ten (10%) percent
they were paid. As ruled in Palomares v. National Labor Relations attorney's fees within ten (10) days from receipt of this
Commission,18 it would be extremely burdensome for their employer Decision.
to retain them as permanent employees and pay them wages even if
there were no projects to work on. All other issues are dismissed for lack of merit.4

Moreover, even if petitioners were repeatedly and successively re- Aggrieved, petitioners Aurora Land Projects Corporation and
hired, still it did not qualify them as regular employees, as length of Teresita T. Quazon appealed to the National Labor Relations
service is not the controlling determinant of the employment tenure Commission. The Commission affirmed, with modification, the Labor
of a project employee,19but whether the employment has been fixed Arbiter's decision in a Resolution promulgated on March 16, 1994, in
for a specific project or undertaking, its completion has been the following manner:
determined at the time of the engagement of the
employee.20 Further, the proviso in Article 280, stating that an
employee who has rendered service for at least one (1) year shall WHEREFORE, in view of the above considerations, let
be considered a regular employee, pertains to casual employees the appealed decision be as it is hereby AFFIRMED with
and not to project employees.21 (the) MODIFICATION that complainant must be paid
separation pay in the amount of P88,920.00 instead of
P177,840.00. The award of attorney's fees is hereby
Accordingly, petitioners cannot complain of illegal dismissal deleted.5
inasmuch as the completion of the contract or phase thereof for
which they have been engaged automatically terminates their
employment. As a last recourse, petitioners filed the instant petition based on
grounds not otherwise succinctly and distinctly ascribed, viz:

39
I The bare allegation of petitioners, without more, that private
respondent Dagui is a job contractor has been disbelieved by the
Labor Arbiter and the public respondent NLRC. Dagui, by the
RESPONDENT NLRC COMMITTED A GRAVE ABUSE
findings of both tribunals, was an employee of the petitioners. We
OF DISCRETION AMOUNTING TO LACK OR EXCESS
are not inclined to set aside these findings. The issue whether or not
OF JURISDICTION IN AFFIRMING THE LABOR
an employer-employee relationship exists in a given case is
ARBITER'S DECISION SOLELY ON THE BASIS OF ITS
essentially a question of fact.8 As a rule, repetitious though it has
STATEMENT THAT "WE FAIL TO FIND ANY REASON
become to state, this Court does not review supposed errors in the
OR JUSTIFICATION TO DISAGREE WITH THE LABOR
decision of the NLRC which raise factual issues, because factual
ARBITER IN HIS FINDING THAT HONORIO DAGUI
findings of agencies exercising quasi-judicial functions [like public
WAS DISMISSED BY THE RESPONDENT" (p. 7,
respondent NLRC] are accorded not only respect but even finality,
RESOLUTION), DESPITE — AND WITHOUT EVEN
aside from the consideration that this Court is essentially not a trier
BOTHERING TO CONSIDER — THE GROUNDS
of facts.9
STATED IN PETITIONERS' APPEAL MEMORANDUM
WHICH ARE PLAINLY MERITORIOUS.
However, we deem it wise to discuss this issue full-length if only to
bolster the conclusions reached by the labor tribunals, to which we
II
fully concur.

RESPONDENT NLRC COMMITTED A GRAVE ABUSE


Jurisprudence is firmly settled that whenever the existence of an
OF DISCRETION AMOUNTING TO LACK OR EXCESS
employment relationship is in dispute, four elements constitute the
OF JURISDICTION IN FINDING THAT COMPLAINANT
reliable yardstick: (a) the selection and engagement of the
WAS EMPLOYED BY THE RESPONDENTS MORE SO
employee; (b) the payment of wages; (c) the power of dismissal; and
"FROM 1953 TO 1991" (p. 3, RESOLUTION).
(d) the employer's power to control the employee's conduct. 10 It is
the so-called "control test," and that is, whether the employer
III controls or has reserved the right to control the employee not only
as to the result of the work to be done but also as to the means and
methods by which the same is to be accomplished,11 which
RESPONDENT NLRC COMMITTED A GRAVE ABUSE constitute the most important index of the existence of the employer-
OF DISCRETION AMOUNTING TO LACK OR EXCESS employee relationship. Stated otherwise, an employer-employee
OF JURISDICTION IN AWARDING SEPARATION PAY relationship exists where the person for whom the services are
IN FAVOR OF PRIVATE RESPONDENT MORE SO FOR performed reserves the right to control not only the end to be
THE EQUIVALENT OF 38 YEARS OF ALLEGED achieved but also the means to be used in reaching such end. 12
SERVICE.

All these elements are present in the case at bar. Private


IV respondent was hired in 1953 by Doña Aurora Suntay Tanjangco
(mother of Teresita Tanjangco-Quazon), who was then the one in
RESPONDENT NLRC COMMITTED A GRAVE ABUSE charge of the administration of the Tanjangco's various apartments
OF DISCRETION AMOUNTING TO LACK OR EXCESS and other properties. He was employed as a stay-in worker
OF JURISDICTION IN HOLDING BOTH PETITIONERS performing carpentry, plumbing, electrical and necessary work (sic)
LIABLE FOR SEPARATION PAY.6 needed in the repairs of Tanjangco's properties.13 Upon the demise
of Doña Aurora in 1982, petitioner Teresita Tanjangco-Quazon took
over the administration of these properties and continued to employ
It is our impression that the crux of this petition rests on two the private respondent, until his unceremonious dismissal on June 8,
elemental issues: (1) Whether or not private respondent Honorio 1991.14
Dagui was an employee of petitioners; and (2) If he were, whether or
not he was illegally dismissed.
Dagui was not compensated in terms of profits for his labor or
services like an independent contractor. Rather, he was paid on a
Petitioners insist that private respondent had never been their daily wage basis at the rate of P180.00.15 Employees are those who
employee. Since the establishment of Aurora Plaza, Dagui served are compensated for their labor or services by wages rather than by
therein only as a job contractor. Dagui had control and supervision profits.16 Clearly, Dagui fits under this classification.
of whoever he would take to perform a contracted job. On occasion,
Dagui was hired only as a "tubero" or plumber as the need arises in
order to unclog sewerage pipes. Every time his services were Doña Aurora and later her daughter petitioner Teresita Quazon
needed, he was paid accordingly. It was understood that his job was evidently had the power of dismissal for cause over the private
limited to the specific undertaking of unclogging the pipes. In effect, respondent.17
petitioners would like us to believe that private respondent Dagui
was an independent contractor, particularly a job contractor, and not Finally, the records unmistakably show that the most important
an employee of Aurora Plaza. requisite of control is likewise extant in this case. It should be borne
in mind that the power of control refers merely to the existence of
We are not persuaded. the power and not to the actual exercise thereof. It is not essential
for the employer to actually supervise the performance of duties of
the employee; it is enough that the former has a right to wield the
Section 8, Rule VIII, Book III of the Implementing Rules and power.18 The establishment of petitioners is engaged in the leasing
Regulations of the Labor Code provides in part: of residential and apartment buildings. Naturally, private
respondent's work therein as a maintenance man had to be
There is job contracting permissible under the Code if the performed within the premises of herein petitioners. In fact,
following conditions are met: petitioners do not dispute the fact that Dagui reports for work from
7:00 o'clock in the morning until 4:00 o'clock in the afternoon. It is
not far-fetched to expect, therefore, that Dagui had to observe the
xxx xxx xxx instructions and specifications given by then Doña Aurora and later
by Mrs. Teresita Quazon as to how his work had to be performed.
(2) The contractor has substantial capital or investment in Parenthetically, since the job of a maintenance crew is necessarily
the form of tools, equipment, machineries, work premises, done within company premises, it can be inferred that both Doña
and other materials which are necessary in the conduct of Aurora and Mrs. Quazon could easily exercise control on private
his business. respondent whenever they please.

Honorio Dagui earns a measly sum of P180.00 a day (latest The employment relationship established, the next question would
salary).7 Ostensibly, and by no stretch of the imagination can Dagui have to be: What kind of an employee is the private respondent —
qualify as a job contractor. No proof was adduced by the petitioners regular, casual or probationary?
to show that Dagui was merely a job contractor, and it is absurd to
expect that private respondent, with such humble resources, would We find private respondent to be a regular employee, for Article 280
have substantial capital or investment in the form of tools, of the Labor Code provides:
equipment, and machineries, with which to conduct the business of
supplying Aurora Plaza with manpower and services for the
exclusive purpose of maintaining the apartment houses owned by Regular and Casual employment. — The provisions of
the petitioners herein. 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
40
employee has been engaged to perform activities which Project employees are not entitled to termination pay if
are usually necessary or desirable in the usual business they are terminated as a result of the completion of the
or trade of the employer, except where the employment project or any phase thereof in which they are employed,
has been fixed for a specific project or undertaking the regardless of the number of project in which they have
completion or termination of which has been determined been employed by a particular construction company.
at the time of the engagement of the employee or where Moreover, the company is not required to obtain a
the work or services to be performed is seasonal in nature clearance from the Secretary of Labor in connection with
and the employment is for the duration of the season. such termination. What is required of the company is a
report to the nearest Public Employment Office for
statistical purposes.
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, Throughout the duration of private respondent's employment as
whether such service is continuous or broken, shall be maintenance man, there should have been filed as many reports of
considered a regular employee with respect to the activity termination as there were projects actually finished, if it were true
in which he is employed and his employment shall that private respondent was only a project worker. Failure of the
continue while such actually exists. petitioners to comply with this simple, but nonetheless compulsory,
requirement is proof that Dagui is not a project employee.27
As can be gleaned from this provision, there are two kinds of regular
employees, namely: (1) those who are engaged to perform activities Coming now to the second issue as to whether or not private
which are usually necessary or desirable in the usual business or respondent Dagui was illegally dismissed, we rule in the affirmative.
trade of the employer; and (2) those who have rendered at least one
year of service, whether continuous or broken, with respect to the
Jurisprudence abound as to the rule that the twin requirements of
activity in which they are employed.19
due process, substantive and procedural, must be complied with,
before a valid dismissal exists.28 Without which the dismissal
Whichever standard is applied, private respondent qualifies as a becomes void.29
regular employee. As aptly ruled by the Labor Arbiter:
The twin requirements of notice and hearing constitute the essential
. . . As owner of many residential and apartment buildings elements of due process. This simply means that the employer shall
in Metro Manila, the necessity of maintaining and afford the worker ample opportunity to be beard and to defend
employing a permanent stay-in worker to perform himself with the assistance of his representative, if he so
carpentry, plumbing, electrical and necessary work desires.30 As held in the case of Pepsi Cola Bottling Co. v. NLRC:31
needed in the repairs of Tanjangco's properties is readily
apparent and is in fact needed. So much so that upon the
The law requires that the employer must furnish the
demise of Doña Aurora Tanjangco, respondent's daughter
worker sought to be dismissed with two written
Teresita Tanjangco-Quazon apparently took over the
noticesbefore termination of employee can be legally
administration of the properties and continued to employ
effected: (1) notice which apprises the employee of the
complainant until his outright dismissal on June 8, 1991. .
particular acts or omissions for which his dismissal is
. . 20
sought; and (2) the subsequent notice which informs the
employee of the employer's decision to dismiss him
The jobs assigned to private respondent as maintenance man, (Section 13, BP 130; Sections, 2-6, Rule XIV, Book V
carpenter, plumber, electrician and mason were directly related to Rules and Regulations Implementing the Labor Code as
the business of petitioners as lessors of residential and apartment amended), Failure to comply with the requirements taints
buildings. Moreover, such a continuing need for his services by the dismissal with illegality. This procedure is mandatory;
herein petitioners is sufficient evidence of the necessity and in the absence of which, any judgment reached by
indispensability of his services to petitioners' business or trade. management is void and inexistent. (Tingson, Jr. v. NLRC,
185 SCRA 498 [1990]; National Service Corporation v.
NLRC, 168 SCRA 122 [1988]; Ruffy v. NLRC, 182 SCRA
Private respondent Dagui should likewise be considered a regular
365 [1990].
employee by the mere fact that he rendered service for the
Tanjangcos for more than one year, that is, beginning 1953 until
1982, under Doña Aurora; and then from 1982 up to June 8, 1991 These mandatory requirements were undeniably absent in the case
under the petitioners, for a total of twenty-nine (29) and nine (9) at bar. Petitioner Quazon dismissed private respondent on June 8,
years respectively. Owing to private respondent's length of service, 1991, without giving him any written notice informing the worker
he became a regular employee, by operation of law, one year after herein of the cause for his termination. Neither was there any
he was employed in 1953 and subsequently in 1982. In Baguio hearing conducted in order to give Dagui the opportunity to be heard
Country Club Corp., v. NLRC,21 we decided that it is more in and defend himself. He was simply told: "Wala ka nang trabaho
consonance with the intent and spirit of the law to rule that the status mula ngayon," allegedly because of poor workmanship on a
of regular employment attaches to the casual employee on the day previous job.32 The undignified manner by which private
immediately after the end of his first year of service. To rule respondent's services were terminated smacks of absolute denial of
otherwise is to impose a burden on the employee which is not the employee's right to due process and betrays petitioner Quazon's
sanctioned by law. Thus, the law does not provide the qualification utter lack of respect for labor. Such an attitude indeed deserves
that the employee must first be issued a regular appointment or condemnation.
must first be formally declared as such before he can acquire a
regular status.
The Court, however, is bewildered why only an award for separation
pay in lieu of reinstatement was made by both the Labor Arbiter and
Petitioners argue, however, that even assuming arguendo that the NLRC. No backwages were awarded. It must be remembered
private respondent can be considered an employee, he cannot be that backwages and reinstatement are two reliefs that should be
classified as a regular employee. He was merely a project employee given to an illegally dismissed employee. They are separate and
whose services were hired only with respect to a specific job and distinct from each other. In the event that reinstatement is no longer
only while the same exists,22 thus falling under the exception of possible, as in this case,33 separation pay is awarded to the
Article 280, paragraph 1 of the Labor Code. Hence, it is claimed that employee. The award of separation pay is in lieu of reinstatement
he is not entitled to the benefits prayed for and subsequently and not of backwages. In other words, an illegally dismissed
awarded by the Labor Arbiter as modified by public respondent employee is entitled to (1) either reinstatement, if viable, or
NLRC. separation pay if reinstatement is no longer viable, and (2)
backwages.34 Payment of backwages is specifically designed to
restore an employee's income that was lost because of his unjust
The circumstances of this case in light of settled case law do not, at
dismissal.35 On the other hand, payment of separation pay is
all, support this averment. Consonant with a string of cases
intended to provide the employee money during the period in which
beginning with Ochoco v. NLRC,23 followed by Philippine National
he will be looking for another employment.36
Construction Corporation v. NLRC,24 Magante
v. NLRC,25 and Capitol Industrial Construction Corporation
v. NLRC,26 if truly, private respondent was employed as a "project Considering, however, that the termination of private respondent
employee," petitioners should have submitted a report of termination Dagui was made on June 8, 1991 or after the effectivity of the
to the nearest public employment office everytime his employment is amendatory provision of Republic Act No. 6715 on March 21, 1989,
terminated due to completion of each project, as required by Policy private respondent's backwages should be computed on the basis of
Instruction No. 20, which provides: said law.

41
It is true that private respondent did not appeal the award of the WHEREFORE, the instant petition is partly GRANTED and the
Labor Arbiter awarding separation pay sans backwages. While as a Resolution of the public respondent National Labor Relations
general rule, a party who has not appealed is not entitled to Commission dated March 16, 1994 is hereby MODIFIED in that the
affirmative relief other than the ones granted in the decision of the award of separation pay against the petitioners shall be reckoned
court below,37 law and jurisprudence authorize a tribunal to consider from the date private respondent was re-employed by the petitioners
errors, although unassigned, if they involve (1) errors affecting the in 1982, until June 8, 1991. In addition to separation pay, full
lower court's jurisdiction over the subject matter, (2) plain errors not backwages are likewise awarded to private respondent, inclusive of
specified, and (3) clerical errors.38 In this case, the failure of the allowances, and other benefits or their monetary equivalent pursuant
Labor Arbiter and the public respondent NLRC to award backwages to Article 27946 of the Labor Code, as amended by Section 34 of
to the private respondent, who is legally entitled thereto having been Republic Act No. 6715, computed from the time he was dismissed
illegally dismissed, amounts to a "plain error" which we may rectify on June 8, 1991 up to the finality of this decision, without deducting
in this petition, although private respondent Dagui did not bring any therefrom the earnings derived by private respondent elsewhere
appeal regarding the matter, in the interest of substantial justice. during the period of his illegal dismissal, pursuant to our ruling
The Supreme Court is clothed with ample authority to review in Osmalik Bustamante, et al. v. National Labor Relations
matters, even if they are not assigned as errors on appeal, if it finds Commission.47
that their consideration is necessary in arriving at a just decision of
the case.39 Rules of procedure are mere tools designed to facilitate
No costs.
the attainment of justice. Their strict and rigid application, which
would result in technicalities that tend to frustrate rather than
promote substantial justice, must always be avoided.40 Thus, SO ORDERED.
substantive rights like the award of backwages resulting from illegal
dismissal must not be prejudiced by a rigid and technical application
of the rules.41

Petitioner Quazon argues that, granting the petitioner corporation


should be held liable for the claims of private respondent, she
cannot be made jointly and severally liable with the corporation, G.R. No. 186169 August 1, 2012
notwithstanding the fact that she is the highest ranking officer of the
company, since Aurora Plaza has a separate juridical personality.
MYLENE CARVAJAL, Petitioner,
vs.
We disagree. LUZON DEVELOPMENT BANK AND/OR OSCAR Z.
RAMIREZ, Respondents.
In the cases of Maglutac v. National Labor Relations
Commission,42 Chua v. National Labor Relations DECISION
Commission,43 and A.C. Ransom Labor Union-CCLU v. National
Labor Relations Commission 44 we were consistent in holding that
the highest and most ranking officer of the corporation, which in this PEREZ, J.:
case is petitioner Teresita Quazon as manager of Aurora Land
Projects Corporation, can be held jointly and severally liable with the In this Petition for Review on Certiorari, petitioner Mylene Carvajal
corporation for the payment of the unpaid money claims of its assails the Decision1 of the Court of Appeals, Second Division, dated
employees who were illegally dismissed. In this case, not only was 20 August 2008 which dismissed her complaint for illegal dismissal.
Teresita Quazon the most ranking officer of Aurora Plaza at the time The Court or Appeals reversed and set aside the Resolution2 of the
of the termination of the private respondent, but worse, she had a National Labor Relations Commission (NLRC) affirming with
direct hand in the private respondent's illegal dismissal. A corporate modification the Labor Arbiter’s Decision3 finding petitioner’s
officer is not personally liable for the money claims of discharged dismissal as illegal and ordering reinstatement or payment of
corporate employees unless he acted with evident malice and bad backwages and attorney’s fees.
faith in terminating their employment.45 Here, the failure of petitioner
Quazon to observe the mandatory requirements of due process in
terminating the services of Dagui evinced malice and bad faith on The facts are as follows:
her part, thus making her liable.
Petitioner Mylene Carvajal was employed as a trainee-teller by
Finally, we must address one last point. Petitioners aver that, respondent Luzon Development Bank (Bank) on 28 October 2003
assuming that private respondent can be considered an employee of under a six-month probationary employment contract, with a monthly
Aurora Plaza, petitioners cannot be held liable for separation pay for salary of P5,175.00. Respondent Oscar Ramirez is the President
the duration of his employment with Doña Aurora Tanjangco from and Chief Executive Officer of the Bank.
1953 up to 1982. If petitioners should be held liable as employers,
their liability for separation pay should only be counted from the time On 10 December 2003, the Bank sent petitioner a
Dagui was rehired by the petitioners in 1982 as a maintenance man. Memorandum4 directing her to explain in writing why she should not
be subjected to disciplinary action for "chronic tardiness" on
We agree. November 3, 5, 6, 14, 18, 20, 21 and 28 2003 or for a total of eight
(8) times. Petitioner apologized in writing and explained that she
was in the process of making adjustments regarding her work and
Petitioners' liability for separation pay ought to be reckoned from house chores.5 She was thus reprimanded in writing and reminded
1982 when petitioner Teresita Quazon, as manager of Aurora Plaza, of her status as a probationary employee.6 Still, on 6 January 2004,
continued to employ private respondent. From 1953 up to the death a second Memorandum was sent to petitioner directing her to
of Doña Aurora sometime in 1982, private respondent's claim for explain why she should not be suspended for "chronic tardiness" on
separation pay should have been filed in the testate or intestate 13 occasions or on December 2, 3, 4, 5, 8, 10, 11, 12, 15, 16, 18,
proceedings of Doña Aurora. This is because the demand for 22, and 23 2003. On 7 January 2004, petitioner submitted her
separation pay covered by the years 1953-1982 is actually a money written explanation and manifested her acceptance of the
claim against the estate of Doña Aurora, which claim did not survive consequences of her actions.7 On 12 January 2004, petitioner was
the death of the old woman. Thus, it must be filed against her estate informed, through a Memorandum,8 of her suspension for three (3)
in accordance with Section 5, Rule 86 of the Revised Rules of Court, working days without pay effective 21 January 2004. Finally, in a
to wit: Memorandum dated 22 January 2004, petitioner’s suspension was
lifted but in the same breath, her employment was terminated
Sec. 5. Claims which must be filed under tire notice. If not effective 23 January 2004.9
filed, barred; exceptions. — All claims for money against
the decedent, arising from contract, express or implied, Hence, petitioner’s filing of the Complaint for illegal dismissal before
whether the same be due, not due, or contingent, all the Labor Arbiter. Petitioner alleged, in her position paper, that the
claims for funeral expenses for the last sickness of the following were the reasons for her termination: 1) she is not an
decedent, and judgment for money against the decedent, effective frontliner; 2) she has mistakenly cleared a check; 3)
must be filed within the time limited in the notice; tardiness; 4) absenteeism; and 5) shortage.10
otherwise they are barred forever, except that they may
be set forth as counterclaims in any action that the
executor or administrator may bring against the claimants. In their position paper, respondents averred that petitioner was
... terminated as a probationary employee on three grounds, namely:
1) chronic tardiness; 2) unauthorized absence; and 3) failure to
perform satisfactorily as a probationary employee. Respondents
explained that petitioner was a chronic violator of the bank’s rules

42
and regulations on tardiness and absenteeism. Aside from her THE HON. COURT OF APPEALS COMMITTED ERROR IN LAW IN
numerous tardiness, petitioner was absent without leave for 2 days. DECIDING ISSUES WHICH WERE NOT RAISED BEFORE THE
She also cleared a check which later turned out to be a bounced NLRC ON APPEAL.16
check. Finally, petitioner garnered only a rating of 2.17, with 4 being
the highest and 1 the lowest, in her performance evaluation.
Petitioner harps on the finality of the Labor Arbiter’s ruling on illegal
dismissal and questions the judgment of the Court of Appeals in
On 9 June 2005, the Labor Arbiter ruled that petitioner was illegally discussing and upholding the validity of her dismissal.
dismissed. Respondents were held solidarily liable for payment of
money claims. The dispositive portion of the Decision reads:
Indeed, respondents did not assail the ruling of the Labor Arbiter. It
was in fact petitioner who partially appealed the Labor Arbiter’s
WHEREFORE, premises considered, judgment is rendered computation of backwages. Provided with the opportunity,
declaring that complainant as probationary employee was illegally respondents assailed the Labor Arbiter’s Decision in their Comment
dismissed. Respondents are ordered to immediately reinstate to the Partial
complainant to her former position, without loss of any seniority
rights and other monetary benefits. However, if reinstatement is no
Appeal. Upon affirmance of the Labor Arbiter’s Decision by the
longer feasible due to strained relationship between the parties,
NLRC, respondent filed a petition for certiorari with the Court of
respondents are further ordered to pay complainant, jointly and
Appeals insisting on the validity of the dismissal.
severally the amount of P20,070.38, representing full backwages of
complainant from the time of her illegal dismissal up to the end of
her probationary contract of employment with respondent bank. Petitioner seeks to limit the issues to her employment status and
Plus, 10% of the monetary award as attorney’s fee.11 backwages, her basis being that the illegality of her dismissal has
already been finally determined by the Labor Arbiter.
The Labor Arbiter found that petitioner was dismissed without due
process because "she was not afforded the notice in writing We disagree. As We noted, the facts show that the illegality of
informing her of what respondent (the Bank) would like to bring out petitioner’s dismissal was an issue that was squarely before the
to her for the latter to answer in writing." The Labor Arbiter also did NLRC. When the NLRC decision was reversed by the Court of
not consider "unsatisfactory performance" as a valid ground to Appeals, from which the issue was elevated to us, we had a
shorten the six-month contract of petitioner with the Bank.12 situation where "the findings of facts are conflicting." Thus, we find
applicable the rule that while generally, only questions of law can be
raised in a petition for review on certiorari under Rule 45 of the
The decision of the Labor Arbiter was partially appealed to the
Rules of Court, the rule admits of certain exceptions, namely: (1)
NLRC by petitioner. Petitioner contended that she should be
when the findings are grounded entirely on speculations, surmises,
considered a regular employee and that the computation by the
or conjectures; (2) when the inference made is manifestly mistaken,
Labor Arbiter of backwages up to the end of her probationary
absurd, or impossible; (3) when there is a grave abuse of discretion;
contract is without basis. In its Comment, respondent argued against
(4) when the judgment is based on misappreciation of facts; (5)
the illegality of petitioner’s dismissal and their joint and solidary
when the findings of fact are conflicting; (6) when in making its
liability to pay complainant’s monetary claims. On 31 May 2006, the
findings, the same are contrary to the admissions of both appellant
NLRC affirmed with modification the Labor Arbiter’s Decision and
and appellee; (7) when the findings are contrary to those of the trial
ordered for petitioner’s reinstatement, to wit:
court; (8) when the findings are conclusions without citation of
specific evidence on which they are based; (9) when the facts set
WHEREFORE, premises considered, the assailed decision is forth in the petition as well as in the petitioner’s main and reply briefs
hereby affirmed with MODIFICATION ordering the respondents to are not disputed by the respondent; and (10) when the findings of
reinstate the complainant to her former position, without loss of any fact are premised on the supposed absence of evidence and
seniority rights and other monetary benefits and to pay her full contradicted by the evidence on record.17
backwages from the date of her dismissal to the date of her
reinstatement, actual or in payroll.
The petition comes within the purview of exception (5) and by
analogy, exception (7). Hence, the Court resolves to scour the
All other aspects of the assailed decision stands. 13 records of this case.

Respondents filed a motion for reconsideration but the NLRC denied Truly, it is axiomatic that an appeal, once accepted by this Court,
the same in a Resolution14 dated 20 July 2006. throws the entire case open to review, and that this Court has the
authority to review matters not specifically raised or assigned as
error by the parties, if their consideration is necessary in arriving at a
In a petition for certiorari filed by respondents, the Court of Appeals
just resolution of the case.18
rendered the 20 August 2008 Decision reversing the NLRC ruling,
thus:
Petitioner premised her appeal on Article 279 of the Labor Code
which provides:
IN VIEW OF ALL THE FOREGOING, the instant petition is
GRANTED. The assailed NLRC Resolution in NLRC CA No.
046866-05 dated May 31, 2006 which affirmed with modification the Art. 279. Security of Tenure — In cases of regular employment, the
Decision of the Labor Arbiter in NLRC Case No. RAB IV-2-18910- employer shall not terminate the services of an employee except for
04-L dated June 9, 2005 is hereby REVERSED and SET ASIDE. All a just cause or when authorized by this Title. An employee who is
monetary liabilities decreed in the Labor Arbiter’s Decision against unjustly dismissed from work shall be entitled to reinstatement
petitioners are hereby SET ASIDE. The Complaint for illegal without loss of seniority rights and other privileges and to his full
dismissal, money claims and damages is ORDERED DISMISSED.15 backwages, inclusive of allowances, and to his other benefits or
other monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
The Court of Appeals found that petitioner is not entitled to
reinstatement.
backwages because she was rightfully dismissed for failure to meet
the employment standards.
Petitioner maintained that she became a regular employee by virtue
of Book VI, Rule 1, Section 6(d) of the Implementing Rules of the
The motion for reconsideration filed by petitioner was likewise
Labor Code which states:
dismissed.

(d) In all cases of probationary employment, the employer shall


Petitioner elevated the case to this Court via petition for review
make known to the employee the standards under which he will
on certiorari, raising the following errors allegedly committed by the
qualify as a regular employee at the time of his engagement. Where
Court of Appeals:
no standards are made known to the employee at that time, he shall
be deemed a regular employee.
THE HON. COURT OF APPEALS COMMITTED ERRORS IN LAW
IN DECIDING THE ISSUE ON PETITIONER’S VALIDITY OF
It is beyond dispute that petitioner was hired as a probationary
DISMISSAL DESPITE SUCH ISSUE HAD LONG BECOME FINAL
employee. Whether her employment status ripened into a regular
AND EXECUTORY FOR FAILURE OF PRIVATE RESPONDENT
one is the point of contention.
LUZON DEVELOPMENT BANK TO APPEAL THE DECISION OF
THE LABOR ARBITER FINDING PETITIONER’S DISMISSAL
ILLEGAL. Under the very provision cited by petitioner, we cannot, by any
hermeneutics, see petitioner’s employment status as regular. At the
time of her engagement and as mandated by law, petitioner was
43
informed in writing of the standards necessary to qualify her as a habitual neglect of duty, a just cause to dismiss a regular employee.
regular employee. Her appointment letter19 reads: Assuming that petitioner was not apprised of the standards
concomitant to her job, it is but common sense that she must abide
by the work hours imposed by the bank. As we have aptly stated in
Dear Ms. Carvajal:
Aberdeen Court, Inc. v. Agustin, Jr.,23 the rule on reasonable
standards made known to the employee prior to engagement should
We are pleased to confirm your appointment as not be used to exculpate a probationary employee who acts in a
follows: manner contrary to basic knowledge and common sense, in regard
to which there is no need to spell out a policy or standard to be met.
Position : Trainee- Teller
Assignment : Main Branch Respondent also cited other infractions such as unauthorized leaves
Status : Probationary (6 months) of absence, mistake in clearing of a check, and underperformance.
Effectivity : October 28, 2003 All of these infractions were not refuted by petitioner. The Labor
Remuneration : P5,175.00 (262) Arbiter failed to discuss the veracity of these grounds. It focused on
unsatisfactory performance and concluded that such is not a
sufficient ground to terminate the probationary employment. The
Possible extension of this contract will depend on the job
Labor Arbiter relied on its own misappreciation of facts for a finding
requirements of the Bank and your overall performance. that, resultingly, is contradicted by the evidence on record.
Performance review will be conducted before possible
renewal can take effect.
More importantly, satisfactory performance is and should be one of
the basic standards for regularization. Naturally, before an employer
The Bank reserves the right to immediately terminate this hires an employee, the former can require the employee, upon his
contract in the event of a below satisfactory performance,
engagement, to undergo a trial period during which the employer
serious disregard of company rules and policies and other determines his fitness to qualify for regular employment based on
reasons critical to its interests. reasonable standards made known to him at the time of
engagement. This is the concept of probationary employment which
Kindly sign below if the above conditions are acceptable. is intended to afford the employer an opportunity to observe the
We look forward to a performance commensurate to your fitness of a probationary employee while at work, and to ascertain
presented capabilities. whether he will become an efficient and productive employee. While
the employer observes the fitness, propriety and efficiency of a
probationer to ascertain whether he is qualified for permanent
Very truly yours, employment, the probationer, on the other hand, seeks to prove to
the satisfaction of the employer that he has the qualifications to
[sgd] meet the reasonable standards for permanent employment.24
Oscar S. Ramirez
Vice President Moreover, in the letter of appointment, respondents reserved the
right to "immediately terminate this contract in the event of a below
CONFORME: satisfactory performance, serious disregard of company rules and
policies and other reasons critical to its interests."
[sgd]
Mylene T. Carvajal [Emphasis Supplied] In finding for illegal dismissal, the Labor Arbiter held that the
dismissal was without due process. We hold otherwise.1âwphi1 As
elucidated by this Court in Philippine Daily Inquirer, Inc. v. Magtibay,
Petitioner knew, at the time of her engagement, that she must Jr.:25
comply with the standards set forth by respondent and perform
satisfactorily in order to attain regular status. She was apprised of
her functions and duties as a trainee-teller. Respondent released to Unlike under the first ground for the valid termination of probationary
petitioner its evaluation20 of her performance. Petitioner was found employment which is for just cause, the second ground failure to
wanting. Even the NLRC upheld petitioner’s probationary status, qualify in accordance with the standards prescribed by employer
thus: does not require notice and hearing. Due process of law for this
second ground consists of making the reasonable standards
expected of the employee during his probationary period known to
During the time that the complainant was dismissed by respondents, him at the time of his probationary employment. By the very nature
she was holding the position of a trainee-teller on probationary of a probationary employment, the employee knows from the very
status. Thus, with the Labor Arbiter’s finding of illegal dismissal, start that he will be under close observation and his performance of
which the respondent left unchallenged, the complainant is entitled his assigned duties and functions would be under continuous
to be reinstated to resume the functions of a trainee-teller, no more scrutiny by his superiors. It is in apprising him of the standards
no less. Reinstatement is not synonymous with regularization. The against which his performance shall be continuously assessed
determination of whether the complainant can qualify to become one where due process regarding the second ground lies, and not in
of respondent bank’s regular employees is still within the well notice and hearing as in the case of the first ground.26
recognized management’s prerogative.21 [Emphasis Supplied]

As we have underscored, respondent complied with the basic


A probationary employee, like a regular employee, enjoys security of requirements of due process as defined in Magtibay, Jr. Petitioner
tenure. However, in cases of probationary employment, aside from had more than sufficient knowledge of the standards her job entails.
just or authorized causes of termination, an additional ground is Respondent had not been remiss in reminding petitioner, through
provided under Article 281 of the Labor Code, i.e., the probationary memoranda, of the standards that should be observed in aspiring for
employee may also be terminated for failure to qualify as a regular regularization.
employee in accordance with reasonable standards made known by
the employer to the employee at the time of the engagement. Thus,
the services of an employee who has been engaged on probationary Petitioner was even notified in two (2) memoranda regarding the
basis may be terminated for any of the following: (1) a just or (2) an bank’s displeasure over her chronic tardiness. Every memorandum
authorized cause and (3) when he fails to qualify as a regular directed petitioner to explain in writing why she should not be
employee in accordance with reasonable standards prescribed by subjected to disciplinary action. Each time, petitioner acknowledged
the employer.22 her fault and assured the bank that she would, in her daily
schedules, make adjustments to make amends. This certainly is
compliance with due process. Taken together with her low
It is evident that the primary cause of respondent’s dismissal from performance rating and other infractions, petitioner was called by the
her probationary employment was her "chronic tardiness." At the head of Human Resources who discussed with her the reasons for
very start of her employment, petitioner already exhibited poor the discontinuance of her probationary appointment before she was
working habits. Even during her first month on the job, she already formally served the termination letter on that very same day. There
incurred eight (8) tardiness. In a Memorandum dated 11 December was, in this case, full accordance to petitioner of the opportunity to
2003, petitioner was warned that her tardiness might affect her be heard.
opportunity to become a permanent or regular employee. And
petitioner did not provide a satisfactory explanation for the cause of
her tardiness. In sum, petitioner was validly dismissed from probationary
employment before the expiration of her 6-montb probationary
employment contract. If the termination is for cause, it may be done
Punctuality is a reasonable standard imposed on every employee, anytime during the probation; the employer docs not have to wait
whether in government or private sector. As a matter of fact, habitual until the probation period is over.27
tardiness is a serious offense that may very well constitute gross or
44
With a valid reason for petitioner's dismissal coupled with the proper Effectivity : February 15, 2005 to August 14, 2005
observance of due process, the claim for back wages must
necessarily fail.
Basic Salary : ₱110,000.00/ month

In view of the foregoing, we find no reason to disturb the findings


It is understood that you agree to abide by all existing policies, rules
and conclusions of the Court of Appeals.
and regulations of the company, as well as those, which may be
hereinafter promulgated.
WHEREFORE, the petition is DENIED.
Unless renewed, probationary appointment expires on the date
SO ORDERED. indicated subject to earlier termination by the Company for any
justifiable reason.

If you agree to the terms and conditions of your employment, please


signify your conformity below and return a copy to HRD.
G.R. No. 192571 July 23, 2013

Welcome to Abbott!
ABBOTT LABORATORIES, PHILIPPINES, CECILLE A.
TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA T. YABUTMISA,
TERESITA C. BERNARDO, AND ALLAN G. Very truly yours,
ALMAZAR, Petitioners,
vs.
Sgd.
PEARLIE ANN F. ALCARAZ, Respondent.
EDWIN D. FEIST
General Manager
DECISION
CONFORME:
PERLAS-BERNABE, J.:
Sgd.
Assailed in this petition for review on certiorari1 are the PEARLIE ANN FERRER-ALCARAZ
Decision2 dated December 10,2009 and Resolution3 dated June 9,
2010 of the Court of Appeals (CA) in CA-G.R. SP No. 101045 which
During Alcaraz’s pre-employment orientation, petitioner Allan G.
pronounced that the National Labor Relations Commission (NLRC)
Almazar (Almazar), Hospira’s Country Transition Manager, briefed
did not gravely abuse its discretion when it ruled that respondent
her on her duties and responsibilities as Regulatory Affairs Manager,
Pearlie Ann F. Alcaraz (Alcaraz) was illegally dismissed from her
stating that: (a) she will handle the staff of Hospira ALSU and will
employment.
directly report to Almazar on matters regarding Hopira’s local
operations, operational budget, and performance evaluation of the
The Facts Hospira ALSU Staff who are on probationary status; (b) she must
implement Abbott’s Code of Good Corporate Conduct (Code of
Conduct), office policies on human resources and finance, and
On June 27, 2004, petitioner Abbott Laboratories, Philippines
ensure that Abbott will hire people who are fit in the organizational
(Abbott) caused the publication in a major broadsheet newspaper of
discipline; (c) petitioner Kelly Walsh (Walsh), Manager of the
its need for a Medical and Regulatory Affairs Manager (Regulatory
Literature Drug Surveillance Drug Safety of Hospira, will be her
Affairs Manager) who would: (a) be responsible for drug safety
immediate supervisor; (d) she should always coordinate with
surveillance operations, staffing, and budget; (b) lead the
Abbott’s human resource officers in the management and discipline
development and implementation of standard operating
of the staff; (e) Hospira ALSU will spin off from Abbott in early 2006
procedures/policies for drug safety surveillance and vigilance; and
and will be officially incorporated and known as Hospira, Philippines.
(c) act as the primary interface with internal and external customers
In the interim, Hospira ALSU operations will still be under Abbott’s
regarding safety operations and queries.4 Alcaraz - who was then a
management, excluding the technical aspects of the operations
Regulatory Affairs and Information Manager at Aventis Pasteur
which is under the control and supervision of Walsh; and (f) the
Philippines, Incorporated (another pharmaceutical company like
processing of information and/or raw material data subject of
Abbott) – showed interest and submitted her application on October
Hospira ALSU operations will be strictly confined and controlled
4, 2004.5
under the computer system and network being maintained and
operated from the United States. For this purpose, all those involved
On December 7, 2004, Abbott formally offered Alcaraz the in Hospira ALSU are required to use two identification cards: one, to
abovementioned position which was an item under the company’s identify them as Abbott’s employees and another, to identify them as
Hospira Affiliate Local Surveillance Unit (ALSU) department. 6 In Hospira employees.11
Abbott’s offer sheet.7 it was stated that Alcaraz was to be employed
on a probationary basis.8 Later that day, she accepted the said offer
On March 3, 2005, petitioner Maria Olivia T. Yabut-Misa (Misa),
and received an electronic mail (e-mail) from Abbott’s Recruitment
Abbott’s Human Resources (HR) Director, sent Alcaraz an e-mail
Officer, petitioner Teresita C. Bernardo (Bernardo), confirming the
which contained an explanation of the procedure for evaluating the
same. Attached to Bernardo’s e-mail were Abbott’s organizational
performance of probationary employees and further indicated that
chart and a job description of Alcaraz’s work.9
Abbott had only one evaluation system for all of its employees.
Alcaraz was also given copies of Abbott’s Code of Conduct and
On February 12, 2005, Alcaraz signed an employment contract Probationary Performance Standards and Evaluation (PPSE) and
which stated, inter alia, that she was to be placed on probation for a Performance Excellence Orientation Modules (Performance
period of six (6) months beginning February 15, 2005 to August 14, Modules) which she had to apply in line with her task of evaluating
2005. The said contract was also signed by Abbott’s General the Hospira ALSU staff.12
Manager, petitioner Edwin Feist (Feist):10
Abbott’s PPSE procedure mandates that the job performance of a
PROBATIONARY EMPLOYMENT probationary employee should be formally reviewed and discussed
with the employee at least twice: first on the third month and second
on the fifth month from the date of employment. The necessary
Dear Pearl, Performance Improvement Plan should also be made during the
third-month review in case of a gap between the employee’s
After having successfully passed the pre-employment requirements, performance and the standards set. These performance standards
you are hereby appointed as follows: should be discussed in detail with the employee within the first two
(2) weeks on the job. It was equally required that a signed copy of
the PPSE form must be submitted to Abbott’s Human Resources
Position Title : Regulatory Affairs Manager Department (HRD) and shall serve as documentation of the
employee’s performance during his/her probationary period. This
Department : Hospira shall form the basis for recommending the confirmation or
termination of the probationary employment.13
The terms of your employment are:
During the course of her employment, Alcaraz noticed that some of
the staff had disciplinary problems. Thus, she would reprimand them
Nature of Employment : Probationary for their unprofessional behavior such as non-observance of the
45
dress code, moonlighting, and disrespect of Abbott officers. the LA found that there was no evidence to conclude that Abbott’s
However, Alcaraz’s method of management was considered by officers and employees acted in bad faith in terminating Alcaraz’s
Walsh to be "too strict."14 Alcaraz approached Misa to discuss these employment.33
concerns and was told to "lie low" and let Walsh handle the matter.
Misa even assured her that Abbott’s HRD would support her in all
Displeased with the LA’s ruling, Alcaraz filed an appeal with the
her management decisions.15
National Labor Relations Commission (NLRC).

On April 12, 2005, Alcaraz received an e-mail from Misa requesting


The NLRC Ruling
immediate action on the staff’s performance evaluation as their
probationary periods were about to end. This Alcaraz eventually
submitted.16 On September 15, 2006, the NLRC rendered a Decision,34 annulling
and setting aside the LA’s ruling, the dispositive portion of which
reads:
On April 20, 2005, Alcaraz had a meeting with petitioner Cecille
Terrible (Terrible), Abbott’s former HR Director, to discuss certain
issues regarding staff performance standards. In the course thereof, WHEREFORE, the Decision of the Labor Arbiter dated 31 March
Alcaraz accidentally saw a printed copy of an e-mail sent by Walsh 2006 [sic] is hereby reversed, annulled and set aside and judgment
to some staff members which essentially contained queries is hereby rendered:
regarding the former’s job performance. Alcaraz asked if Walsh’s
action was the normal process of evaluation. Terrible said that it was
1. Finding respondents Abbot [sic] and individual
not.17
respondents to have committed illegal dismissal;

On May 16, 2005, Alcaraz was called to a meeting with Walsh and
2. Respondents are ordered to immediately reinstate
Terrible where she was informed that she failed to meet the
regularization standards for the position of Regulatory Affairs complainant to her former position without loss of seniority
Manager.18 Thereafter, Walsh and Terrible requested Alcaraz to rights immediately upon receipt hereof;
tender her resignation, else they be forced to terminate her services.
She was also told that, regardless of her choice, she should no 3. To jointly and severally pay complainant backwages
longer report for work and was asked to surrender her office computed from 16 May 2005 until finality of this decision.
identification cards. She requested to be given one week to decide As of the date hereof the backwages is computed at
on the same, but to no avail.19

On May 17, 2005, Alcaraz told her administrative assistant, Claude a. Backwages for 15 PhP
Gonzales (Gonzales), that she would be on leave for that day. months - 1,650,000.00
However, Gonzales told her that Walsh and Terrible already
announced to the whole Hospira ALSU staff that Alcaraz already b. 13th month pay - 110,000.00
resigned due to health reasons.20
PhP
TOTAL
1,760,000.00
On May 23, 2005, Walsh, Almazar, and Bernardo personally handed
to Alcaraz a letter stating that her services had been terminated
effective May 19, 2005.21 The letter detailed the reasons for 4. Respondents are ordered to pay complainant moral
Alcaraz’s termination – particularly, that Alcaraz: (a) did not manage damages of ₱50,000.00 and exemplary damages of
her time effectively; (b) failed to gain the trust of her staff and to ₱50,000.00.
build an effective rapport with them; (c) failed to train her staff
effectively; and (d) was not able to obtain the knowledge and ability
to make sound judgments on case processing and article review 5. Respondents are also ordered to pay attorney’s fees of
which were necessary for the proper performance of her 10% of the total award.
duties.22 On May 27, 2005, Alcaraz received another copy of the
said termination letter via registered mail.23 6. All other claims are dismissed for lack of merit.

Alcaraz felt that she was unjustly terminated from her employment SO ORDERED.35
and thus, filed a complaint for illegal dismissal and damages against
Abbott and its officers, namely, Misa, Bernardo, Almazar, Walsh,
Terrible, and Feist.24 She claimed that she should have already The NLRC reversed the findings of the LA and ruled that there was
been considered as a regular and not a probationary employee no evidence showing that Alcaraz had been apprised of her
given Abbott’s failure to inform her of the reasonable standards for probationary status and the requirements which she should have
her regularization upon her engagement as required under Article complied with in order to be a regular employee.36 It held that
29525 of the Labor Code. In this relation, she contended that while Alcaraz’s receipt of her job description and Abbott’s Code of
her employment contract stated that she was to be engaged on a Conduct and Performance Modules was not equivalent to her being
probationary status, the same did not indicate the standards on actually informed of the performance standards upon which she
which her regularization would be based.26 She further averred that should have been evaluated on.37 It further observed that Abbott did
the individual petitioners maliciously connived to illegally dismiss her not comply with its own standard operating procedure in evaluating
when: (a) they threatened her with termination; (b) she was ordered probationary employees.38 The NLRC was also not convinced that
not to enter company premises even if she was still an employee Alcaraz was terminated for a valid cause given that petitioners’
thereof; and (c) they publicly announced that she already resigned in allegation of Alcaraz’s "poor performance" remained
order to humiliate her.27 unsubstantiated.39

On the contrary, petitioners maintained that Alcaraz was validly Petitioners filed a motion for reconsideration which was denied by
terminated from her probationary employment given her failure to the NLRC in a Resolution dated July 31, 2007.40
satisfy the prescribed standards for her regularization which were
made known to her at the time of her engagement.28 Aggrieved, petitioners filed with the CA a Petition for Certiorari with
Prayer for Issuance of a Temporary Restraining Order and/or Writ of
The LA Ruling Preliminary Injunction, docketed as CA G.R. SP No. 101045 (First
CA Petition), alleging grave abuse of discretion on the part of NLRC
when it ruled that Alcaraz was illegally dismissed.41
In a Decision dated March 30, 2006,29 the LA dismissed Alcaraz’s
complaint for lack of merit.
Pending resolution of the First CA Petition, Alcaraz moved for the
execution of the NLRC’s Decision before the LA, which petitioners
The LA rejected Alcaraz’s argument that she was not informed of strongly opposed. The LA denied the said motion in an Order dated
the reasonable standards to qualify as a regular employee July 8, 2008 which was, however, eventually reversed on appeal by
considering her admissions that she was briefed by Almazar on her the NLRC.42 Due to the foregoing, petitioners filed another Petition
work during her pre-employment orientation meeting30 and that she for Certiorari with the CA, docketed as CA G.R. SP No. 111318
received copies of Abbott’s Code of Conduct and Performance (Second CA Petition), assailing the propriety of the execution of the
Modules which were used for evaluating all types of Abbott NLRC decision.43
employees.31 As Alcaraz was unable to meet the standards set by
Abbott as per her performance evaluation, the LA ruled that the
termination of her probationary employment was justified.32 Lastly, The CA Ruling

46
With regard to the First CA Petition, the CA, in a Decision44 dated successively, to secure a favorable judgment. It exists where the
December 10, 2009, affirmed the ruling of the NLRC and held that elements of litis pendentia are present, namely: (a) identity of
the latter did not commit any grave abuse of discretion in finding that parties, or at least such parties who represent the same interests in
Alcaraz was illegally dismissed. both actions; (b) identity of rights asserted and relief prayed for, the
relief being founded on the same facts; and (c) the identity with
respect to the two preceding particulars in the two (2) cases is such
It observed that Alcaraz was not apprised at the start of her
that any judgment that may be rendered in the pending case,
employment of the reasonable standards under which she could
regardless of which party is successful, would amount to res judicata
qualify as a regular employee.45 This was based on its examination
in the other case.57
of the employment contract which showed that the same did not
contain any standard of performance or any stipulation that Alcaraz
shall undergo a performance evaluation before she could qualify as In this case, records show that, except for the element of identity of
a regular employee.46 It also found that Abbott was unable to prove parties, the elements of forum shopping do not exist. Evidently, the
that there was any reasonable ground to terminate Alcaraz’s First CA Petition was instituted to question the ruling of the NLRC
employment.47 Abbott moved for the reconsideration of the that Alcaraz was illegally dismissed. On the other hand, the Second
aforementioned ruling which was, however, denied by the CA in a CA Petition pertains to the propriety of the enforcement of the
Resolution48 dated June 9, 2010. judgment award pending the resolution of the First CA Petition and
the finality of the decision in the labor dispute between Alcaraz and
the petitioners. Based on the foregoing, a judgment in the Second
The CA likewise denied the Second CA Petition in a Resolution
CA Petition will not constitute res judicata insofar as the First CA
dated May 18, 2010 (May 18, 2010 Resolution) and ruled that the
Petition is concerned. Thus, considering that the two petitions clearly
NLRC was correct in upholding the execution of the NLRC
cover different subject matters and causes of action, there exists no
Decision.49 Thus, petitioners filed a motion for reconsideration.
forum shopping.

While the petitioners’ motion for reconsideration of the CA’s May 18,
As to the second, Alcaraz further imputes that the petitioners
2010 Resolution was pending, Alcaraz again moved for the issuance
violated the certification requirement under Section 5, Rule 7 of the
of a writ of execution before the LA. On June 7, 2010, petitioners
Rules of Court58 by not disclosing the fact that it filed the June 16,
received the LA’s order granting Alcaraz’s motion for execution
2010 Memorandum of Appeal before the NLRC in the instant
which they in turn appealed to the NLRC – through a Memorandum
petition.
of Appeal dated June 16, 2010 (June 16, 2010 Memorandum of
Appeal ) – on the ground that the implementation of the LA’s order
would render its motion for reconsideration moot and academic. 50 In this regard, Section 5(b), Rule 7 of the Rules of Court requires
that a plaintiff who files a case should provide a complete statement
of the present status of any pending case if the latter involves the
Meanwhile, petitioners’ motion for reconsideration of the CA’s May
same issues as the one that was filed. If there is no such similar
18, 2010 Resolution in the Second CA Petition was denied via a
pending case, Section 5(a) of the same rule provides that the
Resolution dated October 4, 2010.51 This attained finality on January
plaintiff is obliged to declare under oath that to the best of his
10, 2011 for petitioners’ failure to timely appeal the same. 52 Hence,
knowledge, no such other action or claim is pending.
as it stands, only the issues in the First CA petition are left to be
resolved.
Records show that the issues raised in the instant petition and those
in the June 16, 2010 Memorandum of Appeal filed with the NLRC
Incidentally, in her Comment dated November 15, 2010, Alcaraz
likewise cover different subject matters and causes of action. In this
also alleges that petitioners were guilty of forum shopping when they
case, the validity of Alcaraz’s dismissal is at issue whereas in the
filed the Second CA Petition pending the resolution of their motion
said Memorandum of Appeal, the propriety of the issuance of a writ
for reconsideration of the CA’s December 10, 2009 Decision i.e., the
of execution was in question.
decision in the First CA Petition.53 She also contends that petitioners
have not complied with the certification requirement under Section 5,
Rule 7 of the Rules of Court when they failed to disclose in the Thus, given the dissimilar issues, petitioners did not have to disclose
instant petition the filing of the June 16, 2010 Memorandum of in the present petition the filing of their June 16, 2010 Memorandum
Appeal filed before the NLRC.54 of Appeal with the NLRC. In any event, considering that the issue on
the propriety of the issuance of a writ of execution had been
resolved in the Second CA Petition – which in fact had already
The Issues Before the Court
attained finality – the matter of disclosing the June 16, 2010
Memorandum of Appeal is now moot and academic.
The following issues have been raised for the Court’s resolution: (a)
whether or not petitioners are guilty of forum shopping and have
Having settled the foregoing procedural matter, the Court now
violated the certification requirement under Section 5, Rule 7 of the
proceeds to resolve the substantive issues.
Rules of Court; (b) whether or not Alcaraz was sufficiently informed
of the reasonable standards to qualify her as a regular employee; (c)
whether or not Alcaraz was validly terminated from her employment; B. Probationary employment;
and (d) whether or not the individual petitioners herein are liable. grounds for termination.

The Court’s Ruling A probationary employee, like a regular employee, enjoys security of
tenure. However, in cases of probationary employment, aside from
just or authorized causes of termination, an additional ground is
A. Forum Shopping and
provided under Article 295 of the Labor Code, i.e., the probationary
Violation of Section 5, Rule 7
employee may also be terminated for failure to qualify as a regular
of the Rules of Court.
employee in accordance with the reasonable standards made
known by the employer to the employee at the time of the
At the outset, it is noteworthy to mention that the prohibition against engagement.59 Thus, the services of an employee who has been
forum shopping is different from a violation of the certification engaged on probationary basis may be terminated for any of the
requirement under Section 5, Rule 7 of the Rules of Court. In Sps. following: (a) a just or (b) an authorized cause; and (c) when he fails
Ong v. CA,55 the Court explained that: to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer.60
x x x The distinction between the prohibition against forum shopping
and the certification requirement should by now be too elementary to Corollary thereto, Section 6(d), Rule I, Book VI of the Implementing
be misunderstood. To reiterate, compliance with the certification Rules of the Labor Code provides that if the employer fails to inform
against forum shopping is separate from and independent of the the probationary employee of the reasonable standards upon which
avoidance of the act of forum shopping itself. There is a difference in the regularization would be based on at the time of the engagement,
the treatment between failure to comply with the certification then the said employee shall be deemed a regular employee, viz.:
requirement and violation of the prohibition against forum shopping
not only in terms of imposable sanctions but also in the manner of
(d) In all cases of probationary employment, the employer shall
enforcing them. The former constitutes sufficient cause for the
make known to the employee the standards under which he will
dismissal without prejudice to the filing of the complaint or initiatory
qualify as a regular employee at the time of his engagement. Where
pleading upon motion and after hearing, while the latter is a ground
no standards are made known to the employee at that time, he shall
for summary dismissal thereof and for direct contempt. x x x. 56
be deemed a regular employee.

As to the first, forum shopping takes place when a litigant files


In other words, the employer is made to comply with two (2)
multiple suits involving the same parties, either simultaneously or
requirements when dealing with a probationary employee: first, the
47
employer must communicate the regularization standards to the "extensive training and background" to acquire the
probationary employee; and second, the employer must make such necessary skills for her job.63
communication at the time of the probationary employee’s
engagement. If the employer fails to comply with either, the
Considering the totality of the above-stated circumstances, it cannot,
employee is deemed as a regular and not a probationary employee.
therefore, be doubted that Alcaraz was well-aware that her
regularization would depend on her ability and capacity to fulfill the
Keeping with these rules, an employer is deemed to have made requirements of her position as Regulatory Affairs Manager and that
known the standards that would qualify a probationary employee to her failure to perform such would give Abbott a valid cause to
be a regular employee when it has exerted reasonable efforts to terminate her probationary employment.
apprise the employee of what he is expected to do or accomplish
during the trial period of probation. This goes without saying that the
Verily, basic knowledge and common sense dictate that the
employee is sufficiently made aware of his probationary status as
adequate performance of one’s duties is, by and of itself, an inherent
well as the length of time of the probation.
and implied standard for a probationary employee to be regularized;
such is a regularization standard which need not be literally spelled
The exception to the foregoing is when the job is self-descriptive in out or mapped into technical indicators in every case. In this regard,
nature, for instance, in the case of maids, cooks, drivers, or it must be observed that the assessment of adequate duty
messengers.61 Also, in Aberdeen Court, Inc. v. Agustin,62 it has been performance is in the nature of a management prerogative which
held that the rule on notifying a probationary employee of the when reasonably exercised – as Abbott did in this case – should be
standards of regularization should not be used to exculpate an respected. This is especially true of a managerial employee like
employee who acts in a manner contrary to basic knowledge and Alcaraz who was tasked with the vital responsibility of handling the
common sense in regard to which there is no need to spell out a personnel and important matters of her department.
policy or standard to be met. In the same light, an employee’s failure
to perform the duties and responsibilities which have been clearly
In fine, the Court rules that Alcaraz’s status as a probationary
made known to him constitutes a justifiable basis for a probationary
employee and her consequent dismissal must stand. Consequently,
employee’s non-regularization.
in holding that Alcaraz was illegally dismissed due to her status as a
regular and not a probationary employee, the Court finds that the
In this case, petitioners contend that Alcaraz was terminated NLRC committed a grave abuse of discretion.
because she failed to qualify as a regular employee according to
Abbott’s standards which were made known to her at the time of her
To elucidate, records show that the NLRC based its decision on the
engagement. Contrarily, Alcaraz claims that Abbott never apprised
premise that Alcaraz’s receipt of her job description and Abbott’s
her of these standards and thus, maintains that she is a regular and
Code of Conduct and Performance Modules was not equivalent to
not a mere probationary employee.
being actually informed of the performance standards upon which
she should have been evaluated on.64 It, however, overlooked the
The Court finds petitioners’ assertions to be well-taken. legal implication of the other attendant circumstances as detailed
herein which should have warranted a contrary finding that Alcaraz
was indeed a probationary and not a regular employee – more
A punctilious examination of the records reveals that Abbott had
particularly the fact that she was well-aware of her duties and
indeed complied with the above-stated requirements. This
responsibilities and that her failure to adequately perform the same
conclusion is largely impelled by the fact that Abbott clearly
would lead to her non-regularization and eventually, her termination.
conveyed to Alcaraz her duties and responsibilities as Regulatory
Affairs Manager prior to, during the time of her engagement, and the
incipient stages of her employment. On this score, the Court finds it Accordingly, by affirming the NLRC’s pronouncement which is
apt to detail not only the incidents which point out to the efforts tainted with grave abuse of discretion, the CA committed a
made by Abbott but also those circumstances which would show reversible error which, perforce, necessitates the reversal of its
that Alcaraz was well-apprised of her employer’s expectations that decision.
would, in turn, determine her regularization:
C. Probationary employment;
(a) On June 27, 2004, Abbott caused the publication in a termination procedure.
major broadsheet newspaper of its need for a Regulatory
Affairs Manager, indicating therein the job description for
A different procedure is applied when terminating a probationary
as well as the duties and responsibilities attendant to the
employee; the usual two-notice rule does not govern.65 Section 2,
aforesaid position; this prompted Alcaraz to submit her
Rule I, Book VI of the Implementing Rules of the Labor Code states
application to Abbott on October 4, 2004;
that "if the termination is brought about by the x x x failure of an
employee to meet the standards of the employer in case of
(b) In Abbott’s December 7, 2004 offer sheet, it was stated probationary employment, it shall be sufficient that a written notice is
that Alcaraz was to be employed on a probationary status; served the employee, within a reasonable time from the effective
date of termination."
(c) On February 12, 2005, Alcaraz signed an employment
contract which specifically stated, inter alia, that she was As the records show, Alcaraz's dismissal was effected through a
to be placed on probation for a period of six (6) months letter dated May 19, 2005 which she received on May 23, 2005 and
beginning February 15, 2005 to August 14, 2005; again on May 27, 2005. Stated therein were the reasons for her
termination, i.e., that after proper evaluation, Abbott determined that
she failed to meet the reasonable standards for her regularization
(d) On the day Alcaraz accepted Abbott’s employment
considering her lack of time and people management and decision-
offer, Bernardo sent her copies of Abbott’s organizational
making skills, which are necessary in the performance of her
structure and her job description through e-mail;
functions as Regulatory Affairs Manager.66 Undeniably, this written
notice sufficiently meets the criteria set forth above, thereby
(e) Alcaraz was made to undergo a pre-employment legitimizing the cause and manner of Alcaraz’s dismissal as a
orientation where Almazar informed her that she had to probationary employee under the parameters set by the Labor
implement Abbott’s Code of Conduct and office policies Code.67
on human resources and finance and that she would be
reporting directly to Walsh;
D. Employer’s violation of
company policy and
(f) Alcaraz was also required to undergo a training procedure.
program as part of her orientation;
Nonetheless, despite the existence of a sufficient ground to
(g) Alcaraz received copies of Abbott’s Code of Conduct terminate Alcaraz’s employment and Abbott’s compliance with the
and Performance Modules from Misa who explained to Labor Code termination procedure, it is readily apparent that Abbott
her the procedure for evaluating the performance of breached its contractual obligation to Alcaraz when it failed to abide
probationary employees; she was further notified that by its own procedure in evaluating the performance of a
Abbott had only one evaluation system for all of its probationary employee.
employees; and
Veritably, a company policy partakes of the nature of an implied
(h) Moreover, Alcaraz had previously worked for another contract between the employer and employee. In Parts Depot, Inc.
pharmaceutical company and had admitted to have an v. Beiswenger,68 it has been held that:

48
Employer statements of policy . . . can give rise to contractual rights (now Article 297) but the employer failed to comply with the notice
in employees without evidence that the parties mutually agreed that requirement, the sanction should be stiffer because the dismissal
the policy statements would create contractual rights in the process was initiated by the employer’s exercise of his management
employee, and, hence, although the statement of policy is signed by prerogative.75 Hence, in Jaka, where the employee was dismissed
neither party, can be unilaterally amended by the employer without for an authorized cause of retrenchment76 – as contradistinguished
notice to the employee, and contains no reference to a specific from the employee in Agabon who was dismissed for a just cause of
employee, his job description or compensation, and although no neglect of duty77 – the Court ordered the employer to pay the
reference was made to the policy statement in pre-employment employee nominal damages at the higher amount of ₱50,000.00.
interviews and the employee does not learn of its existence until
after his hiring. Toussaint, 292 N.W .2d at 892. The principle is akin
Evidently, the sanctions imposed in both Agabon and Jaka proceed
to estoppel. Once an employer establishes an express personnel
from the necessity to deter employers from future violations of the
policy and the employee continues to work while the policy remains
statutory due process rights of employees.78 In similar regard, the
in effect, the policy is deemed an implied contract for so long as it
Court deems it proper to apply the same principle to the case at bar
remains in effect. If the employer unilaterally changes the policy, the
for the reason that an employer’s contractual breach of its own
terms of the implied contract are also thereby
company procedure – albeit not statutory in source – has the parallel
changed.1âwphi1 (Emphasis and underscoring supplied.)
effect of violating the laborer’s rights. Suffice it to state, the contract
is the law between the parties and thus, breaches of the same impel
Hence, given such nature, company personnel policies create an recompense to vindicate a right that has been violated.
obligation on the part of both the employee and the employer to Consequently, while the Court is wont to uphold the dismissal of
abide by the same. Alcaraz because a valid cause exists, the payment of nominal
damages on account of Abbott’s contractual breach is warranted in
accordance with Article 2221 of the Civil Code.79
Records show that Abbott’s PPSE procedure mandates, inter alia,
that the job performance of a probationary employee should be
formally reviewed and discussed with the employee at least twice: Anent the proper amount of damages to be awarded, the Court
first on the third month and second on the fifth month from the date observes that Alcaraz’s dismissal proceeded from her failure to
of employment. Abbott is also required to come up with a comply with the standards required for her regularization. As such, it
Performance Improvement Plan during the third month review to is undeniable that the dismissal process was, in effect, initiated by
bridge the gap between the employee’s performance and the an act imputable to the employee, akin to dismissals due to just
standards set, if any.69 In addition, a signed copy of the PPSE form causes under Article 296 of the Labor Code. Therefore, the Court
should be submitted to Abbott’s HRD as the same would serve as deems it appropriate to fix the amount of nominal damages at the
basis for recommending the confirmation or termination of the amount of ₱30,000.00, consistent with its rulings in both Agabon
probationary employment.70 and Jaka.

In this case, it is apparent that Abbott failed to follow the above- E. Liability of individual
stated procedure in evaluating Alcaraz. For one, there lies a hiatus petitioners as corporate
of evidence that a signed copy of Alcaraz’s PPSE form was officers.
submitted to the HRD. It was not even shown that a PPSE form was
completed to formally assess her performance. Neither was the
It is hornbook principle that personal liability of corporate directors,
performance evaluation discussed with her during the third and fifth
trustees or officers attaches only when: (a) they assent to a patently
months of her employment. Nor did Abbott come up with the
unlawful act of the corporation, or when they are guilty of bad faith or
necessary Performance Improvement Plan to properly gauge
gross negligence in directing its affairs, or when there is a conflict of
Alcaraz’s performance with the set company standards.
interest resulting in damages to the corporation, its stockholders or
other persons; (b) they consent to the issuance of watered down
While it is Abbott’s management prerogative to promulgate its own stocks or when, having knowledge of such issuance, do not forthwith
company rules and even subsequently amend them, this right file with the corporate secretary their written objection; (c) they agree
equally demands that when it does create its own policies and to hold themselves personally and solidarily liable with the
thereafter notify its employee of the same, it accords upon itself the corporation; or (d) they are made by specific provision of law
obligation to faithfully implement them. Indeed, a contrary personally answerable for their corporate action.80
interpretation would entail a disharmonious relationship in the work
place for the laborer should never be mired by the uncertainty of
In this case, Alcaraz alleges that the individual petitioners acted in
flimsy rules in which the latter’s labor rights and duties would, to
bad faith with regard to the supposed crude manner by which her
some extent, depend.
probationary employment was terminated and thus, should be held
liable together with Abbott. In the same vein, she further attributes
In this light, while there lies due cause to terminate Alcaraz’s the loss of some of her remaining belongings to them.81
probationary employment for her failure to meet the standards
required for her regularization, and while it must be further pointed
Alcaraz’s contention fails to persuade.
out that Abbott had satisfied its statutory duty to serve a written
notice of termination, the fact that it violated its own company
procedure renders the termination of Alcaraz’s employment A judicious perusal of the records show that other than her
procedurally infirm, warranting the payment of nominal damages. A unfounded assertions on the matter, there is no evidence to support
further exposition is apropos. the fact that the individual petitioners herein, in their capacity as
Abbott’s officers and employees, acted in bad faith or were
motivated by ill will in terminating
Case law has settled that an employer who terminates an employee
for a valid cause but does so through invalid procedure is liable to
pay the latter nominal damages. Alcaraz’s services. The fact that Alcaraz was made to resign and not
allowed to enter the workplace does not necessarily indicate bad
faith on Abbott’s part since a sufficient ground existed for the latter
In Agabon v. NLRC (Agabon),71 the Court pronounced that where
to actually proceed with her termination. On the alleged loss of her
the dismissal is for a just cause, the lack of statutory due process
personal belongings, records are bereft of any showing that the
should not nullify the dismissal, or render it illegal, or ineffectual.
same could be attributed to Abbott or any of its officers. It is a well-
However, the employer should indemnify the employee for the
settled rule that bad faith cannot be presumed and he who alleges
violation of his statutory rights.72 Thus, in Agabon, the employer was
bad faith has the onus of proving it. All told, since Alcaraz failed to
ordered to pay the employee nominal damages in the amount of
prove any malicious act on the part of Abbott or any of its officers,
₱30,000.00.73
the Court finds the award of moral or exemplary damages
unwarranted.
Proceeding from the same ratio, the Court modified Agabon in the
case of Jaka Food Processing Corporation v. Pacot (Jaka)74 where it
WHEREFORE, the petition is GRANTED. The Decision dated
created a distinction between procedurally defective dismissals due
December 10, 2009 and Resolution dated June 9, 2010 of the Court
to a just cause, on one hand, and those due to an authorized cause,
of Appeals in CA-G.R. SP No. 101045 are hereby REVERSED and
on the other.
SET ASIDE. Accordingly, the Decision dated March 30, 2006 of the
Labor Arbiter is REINSTATED with the MODIFICATION that
It was explained that if the dismissal is based on a just cause under petitioner Abbott Laboratories, Philippines be ORDERED to pay
Article 282 of the Labor Code (now Article 296) but the employer respondent Pearlie Ann F. Alcaraz nominal damages in the amount
failed to comply with the notice requirement, the sanction to be of ₱30,000.00 on account of its breach of its own company
imposed upon him should be tempered because the dismissal procedure.
process was, in effect, initiated by an act imputable to the employee;
if the dismissal is based on an authorized cause under Article 283
49
SO ORDERED. 2004. Aliling’s explanation came with a query regarding the
withholding of his salary corresponding to September 11 to 25,
2004.

In a separate letter dated September 27, 2004,13 Aliling wrote San


G.R. No. 185829 April 25, 2012
Mateo stating: "Pursuant to your instruction on September 20, 2004,
I hereby tender my resignation effective October 15, 2004." While
ARMANDO ALILING, Petitioner, WWWEC took no action on his tender, Aliling nonetheless
vs. demanded reinstatement and a written apology, claiming in a
JOSE B. FELICIANO, MANUEL F. SAN MATEO III, JOSEPH R. subsequent letter dated October 1, 200414 to management that San
LARIOSA, and WIDE WIDE WORLD EXPRESS Mateo had forced him to resign.
CORPORATION, Respondents.
Lariosa’s response-letter of October 1, 2004,15 informed Aliling that
DECISION his case was still in the process of being evaluated. On October 6,
2004,16 Lariosa again wrote, this time to advise Aliling of the
termination of his services effective as of that date owing to his "non-
VELASCO, JR., J.:
satisfactory performance" during his probationary period. Records
show that Aliling, for the period indicated, was paid his outstanding
The Case salary which consisted of:

This Petition for Review on Certiorari under Rule 45 assails and


PhP (salary for the September 25, 2004
seeks to set aside the July 3, 2008 Decision1 and December 15,
4,988.18 payroll)
2008 Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No.
101309, entitled Armando Aliling v. National Labor Relations
1,987.28 (salary for 4 days in October 2004)
Commission, Wide Wide World Express Corporation, Jose B.
Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa. The
------------------
assailed issuances modified the Resolutions dated May 31,
PhP
20073 and August 31, 20074 rendered by the National Labor 6,975.46 Total
Relations Commission (NLRC) in NLRC NCR Case No. 00-10-
11166-2004, affirming the Decision dated April 25, 20065 of the
Labor Arbiter.
Earlier, however, or on October 4, 2004, Aliling filed a
Complaint17 for illegal dismissal due to forced resignation,
The Facts nonpayment of salaries as well as damages with the NLRC against
WWWEC. Appended to the complaint was Aliling’s Affidavit dated
November 12, 2004,18 in which he stated: "5. At the time of my
Via a letter dated June 2, 2004,6 respondent Wide Wide World
engagement, respondents did not make known to me the standards
Express Corporation (WWWEC) offered to employ petitioner
under which I will qualify as a regular employee."
Armando Aliling (Aliling) as "Account Executive (Seafreight Sales),"
with the following compensation package: a monthly salary of PhP
13,000, transportation allowance of PhP 3,000, clothing allowance of Refuting Aliling’s basic posture, WWWEC stated in its Position
PhP 800, cost of living allowance of PhP 500, each payable on a per Paper dated November 22, 200419 that, in addition to the letter-offer
month basis and a 14th month pay depending on the profitability and and employment contract adverted to, WWWEC and Aliling have
availability of financial resources of the company. The offer came signed a letter of appointment20 on June 11, 2004 containing the
with a six (6)-month probation period condition with this express following terms of engagement:
caveat: "Performance during [sic] probationary period shall be made
as basis for confirmation to Regular or Permanent Status."
Additionally, upon the effectivity of your probation, you and your
immediate superior are required to jointly define your objectives
On June 11, 2004, Aliling and WWWEC inked an Employment compared with the job requirements of the position. Based on the
Contract7 under the following terms, among others: pre-agreed objectives, your performance shall be reviewed on the
3rd month to assess your competence and work attitude. The 5th
month Performance Appraisal shall be the basis in elevating or
 Conversion to regular status shall be determined on the confirming your employment status from Probationary to Regular.
basis of work performance; and
 Employment services may, at any time, be terminated for
Failure to meet the job requirements during the probation stage
just cause or in accordance with the standards defined at
means that your services may be terminated without prior notice and
the time of engagement.8
without recourse to separation pay.

Training then started. However, instead of a Seafreight Sale


WWWEC also attached to its Position Paper a memo dated
assignment, WWWEC asked Aliling to handle Ground Express (GX),
September 20, 200421 in which San Mateo asked Aliling to explain
a new company product launched on June 18, 2004 involving
why he should not be terminated for failure to meet the expected job
domestic cargo forwarding service for Luzon. Marketing this product
performance, considering that the load factor for the GX Shuttles for
and finding daily contracts for it formed the core of Aliling’s new
the period July to September was only 0.18% as opposed to the
assignment.
allegedly agreed upon load of 80% targeted for August 5, 2004.
According to WWWEC, Aliling, instead of explaining himself, simply
Barely a month after, Manuel F. San Mateo III (San Mateo), submitted a resignation letter.
WWWEC Sales and Marketing Director, emailed Aliling9to express
dissatisfaction with the latter’s performance, thus:
In a Reply-Affidavit dated December 13, 2004,22 Aliling denied
having received a copy of San Mateo’s September 20, 2004 letter.
Armand,
Issues having been joined, the Labor Arbiter issued on April 25,
My expectations is [sic] that GX Shuttles should be 80% full by the 200623 a Decision declaring Aliling’s termination as unjustified. In its
3rd week (August 5) after launch (July 15). Pls. make that happen. It pertinent parts, the decision reads:
has been more than a month since you came in. I am expecting
sales to be pumping in by now. Thanks.
The grounds upon which complainant’s dismissal was based did not
conform not only the standard but also the compliance required
Nonong under Article 281 of the Labor Code, Necessarily, complainant’s
termination is not justified for failure to comply with the mandate the
law requires. Respondents should be ordered to pay salaries
Thereafter, in a letter of September 25, 2004,10 Joseph R. Lariosa corresponding to the unexpired portion of the contract of
(Lariosa), Human Resources Manager of WWWEC, asked Aliling to employment and all other benefits amounting to a total of THIRTY
report to the Human Resources Department to explain his absence FIVE THOUSAND EIGHT HUNDRED ELEVEN PESOS
taken without leave from September 20, 2004. (P35,811.00) covering the period from October 6 to December 7,
2004, computed as follows:
Aliling responded two days later. He denied being absent on the
days in question, attaching to his reply-letter11 a copy of his Unexpired Portion of the Contract:
timesheet12 which showed that he worked from September 20 to 24,
50
Aliling’s motion for reconsideration was rejected by the CA through
Basic Salary P13,000.00 the assailed Resolution dated December 15, 2008.
Transportation 3,000.00
Hence, the instant petition.
Clothing Allowance 800.00
The Issues
ECOLA 500.00

----------------- Aliling raises the following issues for consideration:


P17,300.00
A. The failure of the Court of Appeals to order
reinstatement (despite its finding that petitioner was
10/06/04 – 12/07/04
illegally dismissed from employment) is contrary to law
P17,300.00 x 2.7 mos. = P35,811.00
and applicable jurisprudence.

Complainant’s 13th month pay proportionately for 2004 was not


B. The failure of the Court of Appeals to award backwages
shown to have been paid to complainant, respondent be made liable
(even if it did not order reinstatement) is contrary to law
to him therefore computed at SIX THOUSAND FIVE HUNDRED
and applicable jurisprudence.
THIRTY TWO PESOS AND 50/100 (P6,532.50).

C. The failure of the Court of Appeals to award moral and


For engaging the services of counsel to protect his interest,
exemplary damages (despite its finding that petitioner was
complainant is likewise entitled to a 10% attorney’s fees of the
dismissed to prevent the acquisition of his regular status)
judgment amount. Such other claims for lack of basis sufficient to
is contrary to law and applicable jurisprudence.25
support for their grant are unwarranted.

In their Comment,26 respondents reiterated their position that


WHEREFORE, judgment is hereby rendered ordering respondent
WWWEC hired petitioner on a probationary basis and fired him
company to pay complainant Armando Aliling the sum of THIRTY
before he became a regular employee.
FIVE THOUSAND EIGHT HUNDRED ELEVEN PESOS
(P35,811.00) representing his salaries and other benefits as
discussed above. The Court’s Ruling

Respondent company is likewise ordered to pay said complainant The petition is partly meritorious.
the amount of TEN THOUSAND SEVEN HUNDRED SIXTY SIX
PESOS AND 85/100 ONLY (10.766.85) representing his
Petitioner is a regular employee
proportionate 13th month pay for 2004 plus 10% of the total
judgment as and by way of attorney’s fees.
On a procedural matter, petitioner Aliling argues that WWWEC, not
having appealed from the judgment of CA which declared Aliling as
Other claims are hereby denied for lack of merit. (Emphasis
a regular employee from the time he signed the employment
supplied.)
contract, is now precluded from questioning the appellate court’s
determination as to the nature of his employment.
The labor arbiter gave credence to Aliling’s allegation about not
receiving and, therefore, not bound by, San Mateo’s purported
Petitioner errs. The Court has, when a case is on appeal, the
September 20, 2004 memo. The memo, to reiterate, supposedly
authority to review matters not specifically raised or assigned as
apprised Aliling of the sales quota he was, but failed, to meet.
error if their consideration is necessary in reaching a just conclusion
Pushing the point, the labor arbiter explained that Aliling cannot be
of the case. We said as much in Sociedad Europea de Financiacion,
validly terminated for non-compliance with the quota threshold
SA v. Court of Appeals,27 "It is axiomatic that an appeal, once
absent a prior advisory of the reasonable standards upon which his
accepted by this Court, throws the entire case open to review, and
performance would be evaluated.
that this Court has the authority to review matters not specifically
raised or assigned as error by the parties, if their consideration is
Both parties appealed the above decision to the NLRC, which necessary in arriving at a just resolution of the case."
affirmed the Decision in toto in its Resolution dated May 31, 2007.
The separate motions for reconsideration were also denied by the
The issue of whether or not petitioner was, during the period
NLRC in its Resolution dated August 31, 2007.
material, a probationary or regular employee is of pivotal import. Its
resolution is doubtless necessary at arriving at a fair and just
Therefrom, Aliling went on certiorari to the CA, which eventually disposition of the controversy.
rendered the assailed Decision, the dispositive portion of which
reads:
The Labor Arbiter cryptically held in his decision dated April 25,
2006 that:
WHEREFORE, the petition is PARTLY GRANTED. The assailed
Resolutions of respondent (Third Division) National Labor Relations
Be that as it may, there appears no showing that indeed the said
Commission are AFFIRMED, with the following
September 20, 2004 Memorandum addressed to complainant was
MODIFICATION/CLARIFICATION: Respondents Wide Wide World
received by him. Moreover, complainant’s tasked where he was
Express Corp. and its officers, Jose B. Feliciano, Manuel F. San
assigned was a new developed service. In this regard, it is noted:
Mateo III and Joseph R. Lariosa, are jointly and severally liable to
pay petitioner Armando Aliling: (A) the sum of Forty Two Thousand
Three Hundred Thirty Three & 50/100 (P42,333.50) as the total "Due process dictates that an employee be apprised beforehand of
money judgment, (B) the sum of Four Thousand Two Hundred Thirty the conditions of his employment and of the terms of advancement
Three & 35/100 (P4,233.35) as attorney’s fees, and (C) the therein. Precisely, implicit in Article 281 of the Labor Code is the
additional sum equivalent to one-half (1/2) month of petitioner’s requirement that reasonable standards be previously made known
salary as separation pay. by the employer to the employee at the time of his engagement
(Ibid, citing Sameer Overseas Placement Agency, Inc. vs. NLRC,
G.R. No. 132564, October 20, 1999).28
SO ORDERED.24 (Emphasis supplied.)

From our review, it appears that the labor arbiter, and later the
The CA anchored its assailed action on the strength of the following
NLRC, considered Aliling a probationary employee despite finding
premises: (a) respondents failed to prove that Aliling’s dismal
that he was not informed of the reasonable standards by which his
performance constituted gross and habitual neglect necessary to
probationary employment was to be judged.
justify his dismissal; (b) not having been informed at the time of his
engagement of the reasonable standards under which he will qualify
as a regular employee, Aliling was deemed to have been hired from The CA, on the other hand, citing Cielo v. National Labor Relations
day one as a regular employee; and (c) the strained relationship Commission,29 ruled that petitioner was a regular employee from the
existing between the parties argues against the propriety of outset inasmuch as he was not informed of the standards by which
reinstatement. his probationary employment would be measured. The CA wrote:

51
Petitioner was regularized from the time of the execution of the qualify for regular employment, based on reasonable standards
employment contract on June 11, 2004, although respondent made known to him at the time of engagement.
company had arbitrarily shortened his tenure. As pointed out,
respondent company did not make known the reasonable standards
Probationary employment shall be governed by the following rules:
under which he will qualify as a regular employee at the time of his
engagement. Hence, he was deemed to have been hired from day
one as a regular employee.30 (Emphasis supplied.) xxxx

WWWEC, however, excepts on the argument that it put Aliling on (d) In all cases of probationary employment, the employer shall
notice that he would be evaluated on the 3rd and 5th months of his make known to the employee the standards under which he will
probationary employment. To WWWEC, its efforts translate to qualify as a regular employee at the time of his engagement. Where
sufficient compliance with the requirement that a probationary no standards are made known to the employee at that time, he shall
worker be apprised of the reasonable standards for his be deemed a regular employee. (Emphasis supplied.)
regularization. WWWEC invokes the ensuing holding in Alcira v.
National Labor Relations Commission31 to support its case:
To repeat, the labor arbiter, NLRC and the CA are agreed, on the
basis of documentary evidence adduced, that respondent WWWEC
Conversely, an employer is deemed to substantially comply with the did not inform petitioner Aliling of the reasonable standards by which
rule on notification of standards if he apprises the employee that he his probation would be measured against at the time of his
will be subjected to a performance evaluation on a particular date engagement. The Court is loathed to interfere with this factual
after his hiring. We agree with the labor arbiter when he ruled that: determination. As We have held:

In the instant case, petitioner cannot successfully say that he was Settled is the rule that the findings of the Labor Arbiter, when
never informed by private respondent of the standards that he must affirmed by the NLRC and the Court of Appeals, are binding on the
satisfy in order to be converted into regular status. This rans (sic) Supreme Court, unless patently erroneous. It is not the function of
counter to the agreement between the parties that after five months the Supreme Court to analyze or weigh all over again the evidence
of service the petitioner’s performance would be evaluated. It is only already considered in the proceedings below. The jurisdiction of this
but natural that the evaluation should be made vis-à-vis the Court in a petition for review on certiorari is limited to reviewing only
performance standards for the job.1âwphi1 Private respondent errors of law, not of fact, unless the factual findings being assailed
Trifona Mamaradlo speaks of such standard in her affidavit referring are not supported by evidence on record or the impugned judgment
to the fact that petitioner did not perform well in his assigned work is based on a misapprehension of facts.32
and his attitude was below par compared to the company’s standard
required of him. (Emphasis supplied.)
The more recent Peñafrancia Tours and Travel Transport, Inc., v.
Sarmiento33 has reaffirmed the above ruling, to wit:
WWWEC’s contention is untenable.
Finally, the CA affirmed the ruling of the NLRC and adopted as its
Alcira is cast under a different factual setting. There, the labor own the latter's factual findings. Long-established is the doctrine that
arbiter, the NLRC, the CA, and even finally this Court were one in findings of fact of quasi-judicial bodies x x x are accorded respect,
their findings that the employee concerned knew, having been duly even finality, if supported by substantial evidence. When passed
informed during his engagement, of the standards for becoming a upon and upheld by the CA, they are binding and conclusive upon
regular employee. This is in stark contrast to the instant case where this Court and will not normally be disturbed. Though this doctrine is
the element of being informed of the regularizing standards does not not without exceptions, the Court finds that none are applicable to
obtain. As such, Alcira cannot be made to apply to the instant case. the present case.

To note, the June 2, 2004 letter-offer itself states that the WWWEC also cannot validly argue that "the factual findings being
regularization standards or the performance norms to be used are assailed are not supported by evidence on record or the impugned
still to be agreed upon by Aliling and his supervisor. WWWEC has judgment is based on a misapprehension of facts." Its very own
failed to prove that an agreement as regards thereto has been letter-offer of employment argues against its above posture.
reached. Clearly then, there were actually no performance Excerpts of the letter-offer:
standards to speak of. And lest it be overlooked, Aliling was
assigned to GX trucking sales, an activity entirely different to the
Seafreight Sales he was originally hired and trained for. Thus, at the Additionally, upon the effectivity of your probation, you and your
immediate superior are required to jointly define your objectives
time of his engagement, the standards relative to his assignment
with GX sales could not have plausibly been communicated to him compared with the job requirements of the position. Based on the
as he was under Seafreight Sales. Even for this reason alone, the pre-agreed objectives, your performance shall be reviewed on the
3rd month to assess your competence and work attitude. The 5th
conclusion reached in Alcira is of little relevant to the instant case.
month Performance Appraisal shall be the basis in elevating or
confirming your employment status from Probationary to Regular.
Based on the facts established in this case in light of extant
jurisprudence, the CA’s holding as to the kind of employment
petitioner enjoyed is correct. So was the NLRC ruling, affirmatory of Failure to meet the job requirements during the probation stage
that of the labor arbiter. In the final analysis, one common thread means that your services may be terminated without prior notice and
without recourse to separation pay. (Emphasis supplied.)
runs through the holding of the labor arbiter, the NLRC and the CA,
i.e., petitioner Aliling, albeit hired from management’s standpoint as
a probationary employee, was deemed a regular employee by force Respondents further allege that San Mateo’s email dated July 16,
of the following self-explanatory provisions: 2004 shows that the standards for his regularization were made
known to petitioner Aliling at the time of his engagement. To recall,
Article 281 of the Labor Code in that email message, San Mateo reminded Aliling of the sales
quota he ought to meet as a condition for his continued employment,
i.e., that the GX trucks should already be 80% full by August 5,
ART. 281. Probationary employment. - Probationary employment 2004. Contrary to respondents’ contention, San Mateo’s email
shall not exceed six (6) months from the date the employee started cannot support their allegation on Aliling being informed of the
working, unless it is covered by an apprenticeship agreement standards for his continued employment, such as the sales quota, at
stipulating a longer period. The services of an employee who has the time of his engagement. As it were, the email message was sent
been engaged on a probationary basis may be terminated for a just to Aliling more than a month after he signed his employment
cause or when he fails to qualify as a regular employee in contract with WWWEC. The aforequoted Section 6 of the
accordance with reasonable standards made known by the Implementing Rules of Book VI, Rule VIII-A of the Code specifically
employer to the employee at the time of his engagement. An requires the employer to inform the probationary employee of such
employee who is allowed to work after a probationary period shall be reasonable standards at the time of his engagement, not at any time
considered a regular employee. (Emphasis supplied.) later; else, the latter shall be considered a regular employee. Thus,
pursuant to the explicit provision of Article 281 of the Labor Code,
Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the
Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the
Labor Code and settled jurisprudence, petitioner Aliling is deemed a
Labor Code
regular employee as of June 11, 2004, the date of his employment
contract.
Sec. 6. Probationary employment. – There is probationary
employment where the employee, upon his engagement, is made to
Petitioner was illegally dismissed
undergo a trial period where the employee determines his fitness to

52
To justify fully the dismissal of an employee, the employer must, as [t]he practice of a company in laying off workers because they failed
a rule, prove that the dismissal was for a just cause and that the to make the work quota has been recognized in this jurisdiction.
employee was afforded due process prior to dismissal. As a (Philippine American Embroideries vs. Embroidery and Garment
complementary principle, the employer has the onus of proving with Workers, 26 SCRA 634, 639). In the case at bar, the petitioners'
clear, accurate, consistent, and convincing evidence the validity of failure to meet the sales quota assigned to each of them constitute a
the dismissal.34 just cause of their dismissal, regardless of the permanent or
probationary status of their employment. Failure to observe
prescribed standards of work, or to fulfill reasonable work
WWWEC had failed to discharge its twin burden in the instant case.
assignments due to inefficiency may constitute just cause for
dismissal. Such inefficiency is understood to mean failure to attain
First off, the attendant circumstances in the instant case aptly show work goals or work quotas, either by failing to complete the same
that the issue of petitioner’s alleged failure to achieve his quota, as a within the allotted reasonable period, or by producing unsatisfactory
ground for terminating employment, strikes the Court as a mere results. This management prerogative of requiring standards may be
afterthought on the part of WWWEC. Consider: Lariosa’s letter of availed of so long as they are exercised in good faith for the
September 25, 2004 already betrayed management’s intention to advancement of the employer's interest. (Emphasis supplied.)
dismiss the petitioner for alleged unauthorized absences. Aliling was
in fact made to explain and he did so satisfactorily. But, lo and
In fine, an employee’s failure to meet sales or work quotas falls
behold, WWWEC nonetheless proceeded with its plan to dismiss the
under the concept of gross inefficiency, which in turn is analogous to
petitioner for non-satisfactory performance, although the
gross neglect of duty that is a just cause for dismissal under Article
corresponding termination letter dated October 6, 2004 did not even
282 of the Code. However, in order for the quota imposed to be
specifically state Aliling’s "non-satisfactory performance," or that
considered a valid productivity standard and thereby validate a
Aliling’s termination was by reason of his failure to achieve his set
dismissal, management’s prerogative of fixing the quota must be
quota.
exercised in good faith for the advancement of its interest. The duty
to prove good faith, however, rests with WWWEC as part of its
What WWWEC considered as the evidence purportedly showing it burden to show that the dismissal was for a just cause. WWWEC
gave Aliling the chance to explain his inability to reach his quota was must show that such quota was imposed in good faith. This
a purported September 20, 2004 memo of San Mateo addressed to WWWEC failed to do, perceptibly because it could not. The fact of
the latter. However, Aliling denies having received such letter and the matter is that the alleged imposition of the quota was a
WWWEC has failed to refute his contention of non-receipt. In net desperate attempt to lend a semblance of validity to Aliling’s illegal
effect, WWWEC was at a loss to explain the exact just reason for dismissal. It must be stressed that even WWWEC’s sales manager,
dismissing Aliling. Eve Amador (Amador), in an internal e-mail to San Mateo, hedged
on whether petitioner performed below or above expectation:
At any event, assuming for argument that the petitioner indeed failed
to achieve his sales quota, his termination from employment on that Could not quantify level of performance as he as was tasked to
ground would still be unjustified. handle a new product (GX). Revenue report is not yet administered
by IT on a month-to-month basis. Moreover, this in a way is an
experimental activity. Practically you have a close monitoring with
Article 282 of the Labor Code considers any of the following acts or Armand with regards to his performance. Your assessment of him
omission on the part of the employee as just cause or ground for would be more accurate.
terminating employment:

Being an experimental activity and having been launched for the first
(a) Serious misconduct or willful disobedience by the time, the sales of GX services could not be reasonably quantified.
employee of the lawful orders of his employer or
This would explain why Amador implied in her email that other
representative in connection with his work; bases besides sales figures will be used to determine Aliling’s
performance. And yet, despite such a neutral observation, Aliling
(b) Gross and habitual neglect by the employee of his was still dismissed for his dismal sales of GX services. In any event,
duties; WWWEC failed to demonstrate the reasonableness and the bona
fides on the quota imposition.
(c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized Employees must be reminded that while probationary employees do
representative; not enjoy permanent status, they enjoy the constitutional protection
of security of tenure. They can only be terminated for cause or when
they otherwise fail to meet the reasonable standards made known to
(d) Commission of a crime or offense by the employee them by the employer at the time of their engagement.37 Respondent
against the person of his employer or any immediate WWWEC miserably failed to prove the termination of petitioner was
member of his family or his duly authorized for a just cause nor was there substantial evidence to demonstrate
representatives; and the standards were made known to the latter at the time of his
engagement. Hence, petitioner’s right to security of tenure was
(e) Other causes analogous to the foregoing. (Emphasis breached.
supplied)
Aliling’s right to procedural due process was violated
In Lim v. National Labor Relations Commission,35 the Court
considered inefficiency as an analogous just cause for termination of As earlier stated, to effect a legal dismissal, the employer must show
employment under Article 282 of the Labor Code: not only a valid ground therefor, but also that procedural due
process has properly been observed. When the Labor Code speaks
We cannot but agree with PEPSI that "gross inefficiency" falls within of procedural due process, the reference is usually to the two (2)-
the purview of "other causes analogous to the foregoing," this written notice rule envisaged in Section 2 (III), Rule XXIII, Book V of
constitutes, therefore, just cause to terminate an employee under the Omnibus Rules Implementing the Labor Code, which provides:
Article 282 of the Labor Code. One is analogous to another if it is
susceptible of comparison with the latter either in general or in some Section 2. Standard of due process: requirements of notice. — In all
specific detail; or has a close relationship with the latter. "Gross cases of termination of employment, the following standards of due
inefficiency" is closely related to "gross neglect," for both involve process shall be substantially observed.
specific acts of omission on the part of the employee resulting in
damage to the employer or to his business. In Buiser vs. Leogardo,
this Court ruled that failure to observed prescribed standards to I. For termination of employment based on just causes as defined in
inefficiency may constitute just cause for dismissal. (Emphasis Article 282 of the Code:
supplied.)
(a) A written notice served on the employee specifying the
It did so anew in Leonardo v. National Labor Relations ground or grounds for termination, and giving to said
Commission36 on the following rationale: employee reasonable opportunity within which to explain
his side;
An employer is entitled to impose productivity standards for its
workers, and in fact, non-compliance may be visited with a penalty (b) A hearing or conference during which the employee
even more severe than demotion. Thus, concerned, with the assistance of counsel if the employee
so desires, is given opportunity to respond to the charge,

53
present his evidence or rebut the evidence presented the circumstances involving the charge to justify severance of
against him; and employment.

(c) A written notice [of] termination served on the Aliling is entitled to backwages
employee indicating that upon due consideration of all the and separation pay in lieu of reinstatement
circumstance, grounds have been established to justify his
termination.
As may be noted, the CA found Aliling’s dismissal as having been
illegally effected, but nonetheless concluded that his employment
In case of termination, the foregoing notices shall be served on the ceased at the end of the probationary period. Thus, the appellate
employee’s last known address. court merely affirmed the monetary award made by the NLRC,
which consisted of the payment of that amount corresponding to the
unserved portion of the contract of employment.
MGG Marine Services, Inc. v. NLRC38 tersely described the
mechanics of what may be considered a two-part due process
requirement which includes the two-notice rule, "x x x one, of the The case disposition on the award is erroneous.
intention to dismiss, indicating therein his acts or omissions
complained against, and two, notice of the decision to dismiss; and
As earlier explained, Aliling cannot be rightfully considered as a
an opportunity to answer and rebut the charges against him, in
mere probationary employee. Accordingly, the probationary period
between such notices."
set in the contract of employment dated June 11, 2004 was of no
moment. In net effect, as of that date June 11, 2004, Aliling became
King of Kings Transport, Inc. v. Mamac39 expounded on this part of the WWWEC organization as a regular employee of the
procedural requirement in this manner: company without a fixed term of employment. Thus, he is entitled to
backwages reckoned from the time he was illegally dismissed on
October 6, 2004, with a PhP 17,300.00 monthly salary, until the
(1) The first written notice to be served on the employees
finality of this Decision. This disposition hews with the Court’s
should contain the specific causes or grounds for
ensuing holding in Javellana v. Belen:40
termination against them, and a directive that the
employees are given the opportunity to submit their
written explanation within a reasonable period. Article 279 of the Labor Code, as amended by Section 34 of
"Reasonable opportunity" under the Omnibus Rules Republic Act 6715 instructs:
means every kind of assistance that management must
accord to the employees to enable them to prepare
Art. 279. Security of Tenure. - In cases of regular employment, the
adequately for their defense. This should be construed as
employer shall not terminate the services of an employee except for
a period of at least five calendar days from receipt of the
a just cause or when authorized by this Title. An employee who is
notice xxxx Moreover, in order to enable the employees to
unjustly dismissed from work shall be entitled to reinstatement
intelligently prepare their explanation and defenses, the
without loss of seniority rights and other privileges and to his full
notice should contain a detailed narration of the facts and
backwages, inclusive of allowances, and to his other benefits or their
circumstances that will serve as basis for the charge
monetary equivalent computed from the time his compensation was
against the employees. A general description of the
withheld from him up to the time of his actual reinstatement.
charge will not suffice. Lastly, the notice should
(Emphasis supplied)
specifically mention which company rules, if any, are
violated and/or which among the grounds under Art. 288
[of the Labor Code] is being charged against the Clearly, the law intends the award of backwages and similar benefits
employees to accumulate past the date of the Labor Arbiter’s decision until the
dismissed employee is actually reinstated. But if, as in this case,
reinstatement is no longer possible, this Court has consistently ruled
(2) After serving the first notice, the employees should
that backwages shall be computed from the time of illegal dismissal
schedule and conduct a hearing or conference wherein
until the date the decision becomes final. (Emphasis supplied.)
the employees will be given the opportunity to (1) explain
and clarify their defenses to the charge against them; (2)
present evidence in support of their defenses; and (3) Additionally, Aliling is entitled to separation pay in lieu of
rebut the evidence presented against them by the reinstatement on the ground of strained relationship.
management. During the hearing or conference, the
employees are given the chance to defend themselves
In Golden Ace Builders v. Talde,41 the Court ruled:
personally, with the assistance of a representative or
counsel of their choice x x x.
The basis for the payment of backwages is different from that for the
award of separation pay.1âwphi1 Separation pay is granted where
(3) After determining that termination is justified, the
employer shall serve the employees a written notice of reinstatement is no longer advisable because of strained relations
termination indicating that: (1) all the circumstances between the employee and the employer. Backwages represent
compensation that should have been earned but were not collected
involving the charge against the employees have been
considered; and (2) grounds have been established to because of the unjust dismissal. The basis for computing
justify the severance of their employment. (Emphasis in backwages is usually the length of the employee's service while that
for separation pay is the actual period when the employee was
the original.)
unlawfully prevented from working.

Here, the first and second notice requirements have not been
As to how both awards should be computed, Macasero v. Southern
properly observed, thus tainting petitioner’s dismissal with illegality.
Industrial Gases Philippines instructs:

The adverted memo dated September 20, 2004 of WWWEC


[T]he award of separation pay is inconsistent with a finding that
supposedly informing Aliling of the likelihood of his termination and
directing him to account for his failure to meet the expected job there was no illegal dismissal, for under Article 279 of the Labor
performance would have had constituted the "charge sheet," Code and as held in a catena of cases, an employee who is
dismissed without just cause and without due process is entitled to
sufficient to answer for the first notice requirement, but for the fact
that there is no proof such letter had been sent to and received by backwages and reinstatement or payment of separation pay in lieu
him. In fact, in his December 13, 2004 Complainant’s Reply thereof:
Affidavit, Aliling goes on to tag such letter/memorandum as
fabrication. WWWEC did not adduce proof to show that a copy of Thus, an illegally dismissed employee is entitled to two reliefs:
the letter was duly served upon Aliling. Clearly enough, WWWEC backwages and reinstatement. The two reliefs provided are separate
did not comply with the first notice requirement. and distinct. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the
Neither was there compliance with the imperatives of a hearing or employer, separation pay is granted. In effect, an illegally dismissed
employee is entitled to either reinstatement, if viable, or separation
conference. The Court need not dwell at length on this particular
breach of the due procedural requirement. Suffice it to point out that pay if reinstatement is no longer viable, and backwages.
the record is devoid of any showing of a hearing or conference
having been conducted. On the contrary, in its October 1, 2004 letter The normal consequences of respondents’ illegal dismissal, then,
to Aliling, or barely five (5) days after it served the notice of are reinstatement without loss of seniority rights, and payment of
termination, WWWEC acknowledged that it was still evaluating his backwages computed from the time compensation was withheld up
case. And the written notice of termination itself did not indicate all to the date of actual reinstatement. Where reinstatement is no

54
longer viable as an option, separation pay equivalent to one (1) law, does not simply connote bad judgment or negligence. It imports
month salary for every year of service should be awarded as an a dishonest purpose or some moral obliquity and conscious doing of
alternative. The payment of separation pay is in addition to payment a wrong, a breach of a known duty through some motive or interest
of backwages. x x x or ill will that partakes of the nature of fraud. (Emphasis supplied.)

Velasco v. National Labor Relations Commission emphasizes: In alleging that WWWEC acted in bad faith, Aliling has the burden of
proof to present evidence in support of his claim, as ruled in Culili v.
Eastern Telecommunications Philippines, Inc.:46
The accepted doctrine is that separation pay may avail in lieu of
reinstatement if reinstatement is no longer practical or in the best
interest of the parties. Separation pay in lieu of reinstatement may According to jurisprudence, "basic is the principle that good faith is
likewise be awarded if the employee decides not to be reinstated. presumed and he who alleges bad faith has the duty to prove the
(emphasis in the original; italics supplied) same." By imputing bad faith to the actuations of ETPI, Culili has the
burden of proof to present substantial evidence to support the
allegation of unfair labor practice. Culili failed to discharge this
Under the doctrine of strained relations, the payment of separation
burden and his bare allegations deserve no credit.
pay is considered an acceptable alternative to reinstatement when
the latter option is no longer desirable or viable. On one hand, such
payment liberates the employee from what could be a highly This was reiterated in United Claimants Association of NEA
oppressive work environment. On the other hand, it releases the (UNICAN) v. National Electrification Administration (NEA),47 in this
employer from the grossly unpalatable obligation of maintaining in its wise:
employ a worker it could no longer trust.
It must be noted that the burden of proving bad faith rests on the
Strained relations must be demonstrated as a fact, however, to be one alleging it. As the Court ruled in Culili v. Eastern
adequately supported by evidence — substantial evidence to show Telecommunications, Inc., "According to jurisprudence, ‘basic is the
that the relationship between the employer and the employee is principle that good faith is presumed and he who alleges bad faith
indeed strained as a necessary consequence of the judicial has the duty to prove the same.’" Moreover, in Spouses Palada v.
controversy. Solidbank Corporation, the Court stated, "Allegations of bad faith
and fraud must be proved by clear and convincing evidence."
In the present case, the Labor Arbiter found that actual animosity
existed between petitioner Azul and respondent as a result of the Similarly, Aliling has failed to overcome such burden to prove bad
filing of the illegal dismissal case. Such finding, especially when faith on the part of WWWEC. Aliling has not presented any clear and
affirmed by the appellate court as in the case at bar, is binding upon convincing evidence to show bad faith. The fact that he was illegally
the Court, consistent with the prevailing rules that this Court will not dismissed is insufficient to prove bad faith. Thus, the CA correctly
try facts anew and that findings of facts of quasi-judicial bodies are ruled that "[t]here was no sufficient showing of bad faith or abuse of
accorded great respect, even finality. (Emphasis supplied.) management prerogatives in the personal action taken against
petitioner."48 In Lambert Pawnbrokers and Jewelry Corporation v.
Binamira,49 the Court ruled:
As the CA correctly observed, "To reinstate petitioner [Aliling] would
only create an atmosphere of antagonism and distrust, more so that
he had only a short stint with respondent company."42 The Court A dismissal may be contrary to law but by itself alone, it does not
need not belabor the fact that the patent animosity that had establish bad faith to entitle the dismissed employee to moral
developed between employer and employee generated what may be damages. The award of moral and exemplary damages cannot be
considered as the arbitrary dismissal of the petitioner. justified solely upon the premise that the employer dismissed his
employee without authorized cause and due process.
Following the pronouncements of this Court Sagales v. Rustan’s
Commercial Corporation,43 the computation of separation pay in lieu The officers of WWWEC cannot be held
of reinstatement includes the period for which backwages were jointly and severally liable with the company
awarded:
The CA held the president of WWWEC, Jose B. Feliciano, San
Thus, in lieu of reinstatement, it is but proper to award petitioner Mateo and Lariosa jointly and severally liable for the monetary
separation pay computed at one-month salary for every year of awards of Aliling on the ground that the officers are considered
service, a fraction of at least six (6) months considered as one whole "employers" acting in the interest of the corporation. The CA cited
year. In the computation of separation pay, the period where NYK International Knitwear Corporation Philippines (NYK) v.
backwages are awarded must be included. (Emphasis supplied.) National Labor Relations Commission50 in support of its argument.
Notably, NYK in turn cited A.C. Ransom Labor Union-CCLU v.
NLRC.51
Thus, Aliling is entitled to both backwages and separation pay (in
lieu of reinstatement) in the amount of one (1) month’s salary for
every year of service, that is, from June 11, 2004 (date of Such ruling has been reversed by the Court in Alba v.
employment contract) until the finality of this decision with a fraction Yupangco,52 where the Court ruled:
of a year of at least six (6) months to be considered as one (1)
whole year. As determined by the labor arbiter, the basis for the
By Order of September 5, 2007, the Labor Arbiter denied
computation of backwages and separation pay will be Aliling’s
respondent’s motion to quash the 3rd alias writ. Brushing aside
monthly salary at PhP 17,300.
respondent’s contention that his liability is merely joint, the Labor
Arbiter ruled:
Finally, Aliling is entitled to an award of PhP 30,000 as nominal
damages in consonance with prevailing jurisprudence44 for violation
Such issue regarding the personal liability of the officers of a
of due process.
corporation for the payment of wages and money claims to its
employees, as in the instant case, has long been resolved by the
Petitioner is not entitled to moral and exemplary damages Supreme Court in a long list of cases [A.C. Ransom Labor Union-
CLU vs. NLRC (142 SCRA 269) and reiterated in the cases of Chua
vs. NLRC (182 SCRA 353), Gudez vs. NLRC (183 SCRA 644)]. In
In Nazareno v. City of Dumaguete,45 the Court expounded on the
the aforementioned cases, the Supreme Court has expressly held
requisite elements for a litigant’s entitlement to moral damages,
that the irresponsible officer of the corporation (e.g. President) is
thus:
liable for the corporation’s obligations to its workers. Thus,
respondent Yupangco, being the president of the respondent YL
Moral damages are awarded if the following elements exist in the Land and Ultra Motors Corp., is properly jointly and severally liable
case: (1) an injury clearly sustained by the claimant; (2) a culpable with the defendant corporations for the labor claims of Complainants
act or omission factually established; (3) a wrongful act or omission Alba and De Guzman. x x x
by the defendant as the proximate cause of the injury sustained by
the claimant; and (4) the award of damages predicated on any of the
xxxx
cases stated Article 2219 of the Civil Code. In addition, the person
claiming moral damages must prove the existence of bad faith by
clear and convincing evidence for the law always presumes good As reflected above, the Labor Arbiter held that respondent’s liability
faith. It is not enough that one merely suffered sleepless nights, is solidary.
mental anguish, and serious anxiety as the result of the actuations
of the other party. Invariably such action must be shown to have
been willfully done in bad faith or with ill motive. Bad faith, under the
55
There is solidary liability when the obligation expressly so states, backwages reckoned from October 6, 2004 up to the finality of this
when the law so provides, or when the nature of the obligation so Decision based on a salary of PhP 17,300 a month, with interest at
requires. MAM Realty Development Corporation v. NLRC, on 6% per annum on the principal amount from October 6, 2004 until
solidary liability of corporate officers in labor disputes, enlightens: fully paid; (b) the additional sum equivalent to one (1) month salary
for every year of service, with a fraction of at least six (6) months
considered as one whole year based on the period from June 11,
x x x A corporation being a juridical entity, may act only through its
2004 (date of employment contract) until the finality of this Decision,
directors, officers and employees. Obligations incurred by them,
as separation pay; (c) PhP 30,000 as nominal damages; and (d)
acting as such corporate agents are not theirs but the direct
Attorney’s Fees equivalent to 10% of the total award.
accountabilities of the corporation they represent. True solidary
liabilities may at times be incurred but only when exceptional
circumstances warrant such as, generally, in the following cases: SO ORDERED.

1. When directors and trustees or, in appropriate cases, the officers


of a corporation:
G.R. No. L-63316 July 31, 1984
(a) vote for or assent to patently unlawful acts of the
corporation;
ILUMINADA VER BUISER, MA. CECILIA RILLOACUÑA and MA.
MERCEDES P. INTENGAN, petitioners,
(b) act in bad faith or with gross negligence in directing the vs.
corporate affairs; HON. VICENTE LEOGARDO, JR., in his capacity as Deputy
Minister of the Ministry of Labor & Employment, and GENERAL
TELEPHONE DIRECTORY, CO., respondents.
xxxx

Jimenez, Apolo & Leynes Law Office for petitioners.


In labor cases, for instance, the Court has held corporate directors
and officers solidarily liable with the corporation for the termination
of employment of employees done with malice or in bad faith. The Solicitor General for respondent Deputy Minister.

A review of the facts of the case does not reveal ample and Abad, Legayada & Associates for private respondent.
satisfactory proof that respondent officers of WWEC acted in bad
faith or with malice in effecting the termination of petitioner Aliling.
Even assuming arguendo that the actions of WWWEC are ill-
conceived and erroneous, respondent officers cannot be held jointly
and solidarily with it. Hence, the ruling on the joint and solidary GUERRERO, J.:
liability of individual respondents must be recalled.
This is a petition for certiorari seeking to set aside the Order of the
Aliling is entitled to Attorney’s Fees and Legal Interest Deputy Minister of Labor and Employment, affirming the Order of the
Regional Director, National Capital Region, in Case No. NCR-STF-
5-2851-81, which dismissed the petitioners' complainant for alleged
Petitioner Aliling is also entitled to attorney’s fees in the amount of
illegal dismissal and unpaid commission.
ten percent (10%) of his total monetary award, having been forced
to litigate in order to seek redress of his grievances, pursuant to
Article 111 of the Labor Code and following our ruling in Exodus Petitioners were employed by the private respondent GENERAL
International Construction Corporation v. Biscocho,53 to wit: TELEPHONE DIRECTORY COMPANY as sales representatives
and charged with the duty of soliciting advertisements for inclusion
in a telephone directory.
In Rutaquio v. National Labor Relations Commission, this Court held
that:
The records show that petitioners Iluminada Ver Buiser and Ma.
Mercedes P. Intengan entered into an "Employment Contract (on
It is settled that in actions for recovery of wages or where an
Probationary Status)" on May 26, 1980 with private respondent, a
employee was forced to litigate and, thus, incur expenses to protect
corporation engaged in the business of publication and circulation of
his rights and interest, the award of attorney’s fees is legally and
the directory of the Philippine Long Distance Telephone Company.
morally justifiable.
Petitioner Ma. Cecilia Rillo-Acuna entered into the same
employment contract on June 11, 1980 with the private respondent.
In Producers Bank of the Philippines v. Court of Appeals this Court
ruled that:
Among others, the "Employment Contract (On Probationary Status)"
included the following common provisions:
Attorney’s fees may be awarded when a party is compelled to
litigate or to incur expenses to protect his interest by reason of an
l. The company hereby employs the employee
unjustified act of the other party.
as telephone representative on a probationary
status for a period of eighteen (18) months, i.e.
While in Lambert Pawnbrokers and Jewelry Corporation, 54 the Court from May 1980 to October 1981, inclusive. It is
specifically ruled: understood that darung the probationary period
of employment, the Employee may be
terminated at the pleasure of the company
However, the award of attorney’s fee is warranted pursuant to Article
without the necessity of giving notice of
111 of the Labor Code. Ten (10%) percent of the total award is
termination or the payment of termination pay.
usually the reasonable amount of attorney’s fees awarded. It is
settled that where an employee was forced to litigate and, thus,
incur expenses to protect his rights and interest, the award of The Employee recognizes the fact that the
attorney’s fees is legally and morally justifiable. nature of the telephone sales representative's
job is such that the company would be able to
determine his true character, conduct and
Finally, legal interest shall be imposed on the monetary awards
selling capabilities only after the publication of
herein granted at the rate of 6% per annum from October 6, 2004
the directory, and that it takes about eighteen
(date of termination) until fully paid.
(18) months before his worth as a telephone
saw representative can be fully evaluated
WHEREFORE, the petition is PARTIALLY GRANTED. The July 3, inasmuch as the advertisement solicited by him
2008 Decision of the Court of Appeals in CA-G.R. SP No. 101309 is for a particular year are published in the
hereby MODIFIED to read: directory only the following year.

WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Corollary to this, the private respondent prescribed sales quotas to
Resolutions of respondent (Third Division) National Labor Relations be accomplished or met by the petitioners. Failing to meet their
Commission are AFFIRMED, with the following respective sales quotas, the petitioners were dismissed from the
MODIFICATION/CLARIFICATION: Respondent Wide Wide World service by the private respondent. The records show that the private
Express Corp. is liable to pay Armando Aliling the following: (a) respondent terminated the services of petitioners Iluminada Ver

56
Buiser and Cecilia Rillo-Acuna on May 14, 1981 and petitioner Ma. Provided, That, any employee who has
Mercedes P. Intengan on May 18, 1981 for their failure to meet their rendered at least one year of service, whether
sales quotas. such service is continuous or broken, shall be
considered a regular employee with respect to
the activity in which he is employed and his
Thus, on May 27, 1981, petitioners filed with the National Capital
employment shall continue while such actually
Region, Ministry of Labor and Employment, a complaint for illegal
exists. (As amended by PD 850).
dismissal with claims for backwages, earned commissions and other
benefits, docketed as Case No. NCR-STF-5-2851-81.
It is petitioners' submission that probationary employment cannot
exceed six (6) months, the only exception being apprenticeship and
The Regional Director of said ministry, in an Order dated September
learnership agreements as provided in the Labor Code; that the
21, 1982, dismissed the complaints of the petitioners, except the
Policy Instruction of the Minister of Labor and Employment nor any
claim for allowances which private respondent was ordered to pay.
agreement of the parties could prevail over this mandatory
A reconsideration of the Order was sought by the petitioners in a
requirement of the law; that this six months prescription of the Labor
motion filed on September 30, 1982. This motion, however, was
Code was mandated to give further efficacy to the constitutionally-
treated as an appeal to the Minister of Labor.
guaranteed security of tenure of workers; and that the law does not
allow any discretion on the part of the Minister of Labor and
On appeal, Deputy Minister Vicente Leogardo, Jr. of the Ministry of Employment to extend the probationary period for a longer period
Labor issued an Order dated January 7, 1983, affirming the except in the aforecited instances. Finally, petitioners maintain that
Regional Director's Order dated September 21, 1982, wherein it since they are regular employees, they can only be removed or
ruled that the petitioners have not attained permanent status since dismissed for any of the just and valid causes enumerated under
private respondent was justified in requiring a longer period of Article 283 of the Labor Code.
probation, and that the termination of petitioners' services was valid
since the latter failed to meet their sales quotas.
We reject petitioners' contentions. They have no basis in law.

Hence, this petition for certiorari on the alleged ground that public
Generally, the probationary period of employment is limited to six (6)
respondent committed grave abuse of discretion amounting to lack
months. The exception to this general rule is When the parties to an
of jurisdiction. Specifically, petitioners submit that:
employment contract may agree otherwise, such as when the same
is established by company policy or when the same is required by
1. The Hon. Regional Director and the Hon. Deputy Minister the nature of work to be performed by the employee. In the latter
committed grave abuse of discretion amounting to lack of jurisdiction case, there is recognition of the exercise of managerial prerogatives
in ruling that the probationary employment of petitioners herein is in requiring a longer period of probationary employment, such as in
eighteen (18) months instead of the mandated six (6) months under the present case where the probationary period was set for eighteen
the Labor Code, and in consequently further ruling that petitioners (18) months, i.e. from May, 1980 to October, 1981 inclusive,
are not entitled to security of tenure while under said probation for especially where the employee must learn a particular kind of work
18 months. such as selling, or when the job requires certain qualifications, skills,
experience or training.
2. The Hon. Regional Director and the Hon. Deputy Minister
committed grave abuse of discretion amounting to lack of jurisdiction Policy Instruction No. 11 of the Minister of Labor and Employment
in ruling that petitioners were dismissed for a just and valid cause. has clarified any and all doubts on the period of probationary
employment. It states as follows:
3. The Hon. Regional Director and the Hon. Deputy Minister
committed grave abuse of discretion amounting to lack of jurisdiction Probationary Employment has been the subject
in ruling that petitioners are not entitled to the commissions they of misunderstanding in some quarter. Some
have earned and accrued during their period of employment. people believe six (6) months is the
probationary period in all cases. On the other
hand employs who have already served the
Petitioners contend that under Articles 281-282 of the Labor Code, probationary period are sometimes required to
having served the respondent company continuously for over six (6)
serve again on probation.
months, they have become automatically regular employees
notwithstanding an agreement to the contrary. Articles 281-282 read
thus: Under the Labor Code, six (6) months is the
general probationary period ' but the
probationary period is actually the period
Art. 282. Probationary Employment. — needed to determine fitness for the job. This
Probationary employment shall not exceed six
period, for lack of a better measurement is
(6) months from the date the employee started deemed to be the period needed to learn the
working, unless it iscCovered by an job.
apprenticeship agreement stipulating a longer
period. The services of an employee who has
been engaged on a probationary basis may be The purpose of this policy is to protect the
terminated for a just cause or when he fails to worker at the same time enable the employer to
qualify as a regular employee in accordance make a meaningful employee selection. This
with reasonable standards made known by the purpose should be kept in mind in enforcing this
employer to the employee at the time of his provision of the Code. This issuance shall take
engagement. An employee who is allowed to effect immediately.
work after a probationary period shall be
considered a regular employee. (As amended
In the case at bar, it is shown that private respondent Company
by PD 850).
needs at least eighteen (18) months to determine the character and
selling capabilities of the petitioners as sales representatives. The
Art. 281. Regular and Casual Employment. — Company is engaged in advertisement and publication in the Yellow
The provisions of written agreement to the Pages of the PLDT Telephone Directories. Publication of solicited
contrary notwithstanding and regardless of the ads are only made a year after the sale has been made and only
oral agreements of the parties, an employment then win the company be able to evaluate the efficiency, conduct,
shall be deemed to be regular where the and selling ability of its sales representatives, the evaluation being
employee has been engaged to perform based on the published ads. Moreover, an eighteen month
activities which are usually necessary or probationary period is recognized by the Labor Union in the private
desirable in the usual business or trade of the respondent company, which is Article V of the Collective Bargaining
employer, except where the employment has Agreement, ... thus:
been fixed for a specific project or undertaking
the completion or termination of which has been
Probationary Period — New employees hired
determined at the time of the engagement of the
for regular or permanent shall undergo a
employee or where the work or services to be
probationary or trial period of six (6) months,
performed is seasonal in nature and the
except in the cases of telephone or sales
employment is for the duration of the season.
representatives where the probationary period
shall be eighteen (I 8) months.
An employment shall be deemed to be casual if
it is not covered by the preceeding paragraph.
57
And as indicated earlier, the very contracts of employment signed The factual and procedural antecedents follow:
and acquiesced to by the petitioners specifically indicate that "the
company hereby employs the employee as telephone sales
Petitioner Woodridge School is a private educational institution
representative on a probationary status for a period of eighteen (18)
located at Woodwinds Village, Molino 6, Bacoor, Cavite.
months, i.e. from May 1980 to October 1981, inclusive. This
Respondents Joanne C. Pe Benito (Pe Benito) and Randy T.
stipulation is not contrary to law, morals and public policy.
Balaguer (Balaguer) were hired as probationary high school
teachers effective June 1998 and June 1999, respectively.4 Their
We, therefore, hold and rule that the probationary employment of contracts of employment covered a three (3) year probationary
petitioners set to eighteen (18) months is legal and valid and that the period. Pe Benito handled Chemistry and Physics while Balaguer
Regional Director and the Deputy Minister of Labor and Employment taught Values Education and Christian Living.5
committed no abuse of discretion in ruling accordingly.
On February 19, 2001, respondents, together with twenty other
On the second assignment of error that public respondent teachers, presented petitioner with a Manifesto Establishing
committed grave abuse of discretion in ruling that petitioners were Relevant Issues Concerning the School6 raising various issues
dismissed for a just and valid cause, this is not the first time that this which they wanted addressed, among which were:
issue has been raised before this Court. Earlier, in the case of
"Arthur Golez vs. The National Labor Relations Commission and
I. NSAT/NEAT ANOMALY:
General Telephone Directory Co. "G.R. No. L-64459, July 25, 1983,
the petition for certiorari which raised the same issue against the
herein private respondent was dismissed by this Court for lack of We emphatically condemn the school’s grave act of wrongdoing
merit. when it involved itself on the NSAT and NEAT anomaly. We demand
that we be given assurance "in writing" that this illegal and immoral
conduct will never happen again, otherwise, we will be obligated as
The practice of a company in laying off workers because they failed
moral guardians of the youth to make more proper action.
to make the work quota has been recognized in this jurisdiction.
(Philippine American Embroideries vs. Embroidery and Garment
Workers, 26 SCRA 634, 639). In the case at bar, the petitioners' II. TEACHER’S RIGHT FOR A DUE PROCESS:
failure to meet the sales quota assigned to each of them constitute a
just cause of their dismissal, regardless of the permanent or
We felt betrayed when one of our former colleague[s] who was then
probationary status of their employment. Failure to observe
prescribed standards of work, or to fulfill reasonable work regularly employed and was perceived to be harmless and an asset
assignments due to inefficiency may constitute just cause for to the school, for no solid basis or apparent investigation conducted
dismissal. Such inefficiency is understood to mean failure to attain by the school, was suddenly expelled from his job.
work goals or work quotas, either by failing to complete the same
within the alloted reasonable period, or by producing unsatisfactory xxxx
results. This management prerogative of requiring standards availed
of so long as they are exercised in good faith for the advancement of
the employer's interest. III. ISSUANCE OF INDIVIDUAL CONTRACTS:

Petitioners anchor their claim for commission pay on the Collective We wonder until now even after a number of years have already
Bargaining Agreement (CBA) of September 1981, in support of their passed, our copies of individual contracts with the school have not
third assignment of error. Petitioners cannot avail of this agreement yet been furnished to us. We demand that this legal document will
since their services had been terminated in May, 1981, at a time be (sic) issued to us for job security and other legal purposes it may
when the CBA of September, 1981 was not yet in existence. serve.

In fine, there is nothing in the records to show any abuse or misuse We also demand that AN APPOINTMENT OF PERMANENCY shall
of power properly vested in the respondent Deputy Minister of Labor be (sic) given to a permanent teacher from the time the teacher is
and Employment. For certiorari to lie, "there must be capricious, qualified to be permanent based on the duly set terms/standards of
arbitrary and whimsical exercise of power, the very antithesis of the permanency of the school.
judicial prerogative inaccordance with centuries of both civil and
common law traditions." (Panaligan vs. Adolfo, 67 SCRA 176, 180). IV. NON-CLEAR-CUT SCHOOL POLICIES:
The "abuse of discretion must be grave and patent, and it must be
shown that the discretion was exercised arbitrarily or despotically."
(Palma and Ignacio vs. Q. & S., Inc., et al., 17 SCRA 97, 100; It has been observed and experienced from the past school years
Philippine Virginia Tobacco Administration vs. Lucero, 125 SCRA and until the present that there are a lot of inconsistencies regarding
337, 343). the school’s policies like:

WHEREFORE, the petition is DISMISSED for lack of merit. A. Changing of:

SO ORDERED. · The narrative forms of students

· Grades, and

· Behavioral rating sheets

G.R. No. 160240 October 29, 2008 With these experiences, the teachers felt cheated and that these
affect (sic) their sense of worth and credibility. We then ask that the
school should as always respect what the teachers deemed to be
WOODRIDGE SCHOOL (now known as WOODRIDGE right and just fitting for the students. After all, the teachers are the
COLLEGE, INC.), Petitioner, ones meeting and facing the students and they know what is due to
vs. the students better that (sic) anyone else in the school.
JOANNE C. PE BENITO and RANDY T.
BALAGUER, Respondents.
B. Others.7

DECISION
A confrontation between the school administrators and the
concerned teachers was held, but no settlement was arrived at.
NACHURA, J.:
For failure of the parties to resolve the issues, especially the alleged
This is a Petition for Review on Certiorari under Rule 45 of the Rules NSAT/NEAT anomaly, respondents filed a formal complaint against
of Court seeking to set aside the Court of Appeals (CA) petitioner with the Department of Education, Culture and Sports
Decision1 dated June 30, 2003 and its Resolution2 dated September (DECS)8 requesting the latter to undertake a formal investigation,
26, 2003 in CA-G.R. SP No. 75249. The assailed decision in turn set institute appropriate charges, and impose proper sanctions against
aside the Resolution3 of the National Labor Relations Commission petitioner.9 During the pendency of the DECS case, and for lack of a
(NLRC) dated June 28, 2002 in NLRC Case No. RAB-IV-3-13593- positive action from petitioner, respondents appeared on television
01-C (CA No. 030579-02). and spoke over the radio on the alleged NEAT/NSAT anomaly.

58
On February 28, 2001, petitioner sent two separate Memoranda10 to petitioner’s inaction on their grievances.19 No bad faith could be
respondents placing them under preventive suspension for a period attributed to respondents in acting the way they did.
of thirty days on the following grounds: 1) uttering defamatory
remarks against the school principal in the presence of their co-
The appellate court likewise refused to sustain petitioner’s
teachers; 2) announcing to the students and teachers their alleged
contention that respondents failed to qualify for permanent
immediate termination from service; 3) tardiness; 4) spreading false
employment, as there was no sufficient evidence to prove the
accusations against petitioner; 5) absence without official leave; and
same.20 The appellate court emphasized that because respondents
6) appearing on television and speaking over the radio to malign
are probationary employees, legal protection extends only to the
petitioner. In the same memoranda, respondents were required to
period of their probation.21 The dismissal breached their
explain in writing within seventy-two (72) hours why they should not
probationary employment, and being tainted with bad faith, the court
be terminated from their employment. This prompted respondents to
upheld the award of moral and exemplary damages.22
commence an action for illegal suspension before the NLRC. The
case was docketed as NLRC NCR CASE NO. RAB-IV-3-13593-01-
C. Aggrieved, petitioner comes before this Court in this petition for
review on certiorari, raising the sole issue of:
On March 19, 2001, petitioner issued respondents their Notice of
Termination,11 each to take effect similarly on March 31, 2001, citing WHETHER OR NOT THE COURT OF APPEALS COMMITTED
the foregoing grounds. In addition, petitioner informed respondents SERIOUS ERROR IN GRANTING RESPONDENTS’ PETITION
that they did not qualify as regular employees for their failure to FOR CERTIORARI AND IN SETTING ASIDE THE FINDINGS OF
meet the performance standards made known to them at the start of BOTH THE NLRC AND THE LABOR ARBITER A QUO.23
their probationary period.
We deny the petition.
Respondents then amended their initial complaint, to include illegal
dismissal.
Petitioner asserts that the CA should have outrightly dismissed the
petition, because the verification and certificate of non-forum
After the submission of the parties’ position papers, on November shopping was signed by only one of the respondents, without the
29, 2001, Labor Arbiter Vicente R. Layawen rendered a Decision authority of the other.24
dismissing the complaint.12 He concluded that the termination of the
respondents’ probationary employment was justified because of
their failure to submit vital teaching documents. Specifically, Pe Time and again, we have said that the lack of verification is merely a
Benito failed to submit her day book/lesson plans; while Balaguer formal defect that is neither jurisdictional nor fatal. In a proper case,
failed to submit the subject syllabi and he had no record of class the court may order the correction of the pleading, or act on the
requirements as to quizzes, seatworks, homeworks, and recitation unverified pleading, if the attending circumstances are such that the
which were supposed to be the bases in rating the students’ rule may be dispensed with in order to serve the ends of justice. It
performance.13 More importantly, the Labor Arbiter found should be stressed that rules of procedure were conceived and
respondents guilty of serious misconduct warranting their dismissal promulgated to effectively aid the court in the dispensation of
justice.25 Verification is mainly intended to secure the assurance that
from service because of maliciously spreading false accusation
against the school through the mass media. These acts, according the allegations in the petition are done in good faith or are true and
to the Labor Arbiter, made them unfit to remain in the school’s roster correct and not mere speculation.26
of teachers.14 The Labor Arbiter also validated the preventive
suspension of respondents for their having used the classroom as In the instant case, this requirement was substantially complied with
venue in spreading uncorroborated charges against petitioner, thus when one of the petitioners (respondents herein), who undoubtedly
posing a serious threat to petitioner’s business and reputation as a had sufficient knowledge and belief to swear to the truth of the
respectable institution.15 allegations in the petition, signed the verification attached to it.
Indeed, the Court has ruled in the past that a pleading required by
the Rules of Court to be verified may be given due course even
On appeal to the NLRC, the Commission affirmed16 the Labor
Arbiter’s disposition in its entirety. The Commission concluded that without a verification, if the circumstances warrant the suspension of
respondents’ acts, taken together, constitute serious misconduct, the rules in the interest of justice, as in the present case. 27
warranting their dismissal from service.
As to the certification against forum shopping, the CA correctly
Aggrieved, respondents elevated the matter to the CA in CA-G.R. relaxed the Rules in order to serve the ends of justice. While the
general rule is that the certificate of non-forum shopping must be
SP No. 75249. The CA granted the petition and set aside the NLRC
ruling in a decision, the dispositive portion of which reads: signed by all the plaintiffs or petitioners in a case and the signature
of only one of them is insufficient, this Court has stressed that the
rules on forum shopping, which were designed to promote and
WHEREFORE, premises considered, the present petition is hereby facilitate the orderly administration of justice, should not be
GIVEN DUE COURSE and the writ prayed for accordingly interpreted with absolute literalness as to subvert its own ultimate
GRANTED. Consequently, the assailed Resolutions of public and legitimate objective. Strict compliance with the provisions
respondent NLRC are hereby SET ASIDE and a new one is hereby regarding the certificate of non-forum shopping merely underscores
entered declaring the thirty (30)-day suspension of petitioners on its mandatory nature in that the certification cannot be altogether
February 28, 2001 as illegal and ordering private respondent dispensed with or its requirements completely disregarded. It does
Woodridge School to pay to both petitioners Joanne C. Pe Benito not, however, interdict substantial compliance with its provisions
and Randy T. Balaguer their salaries and benefits accruing during under justifiable circumstances.28
said period of illegal suspension. Woodridge School is also ordered
to pay to petitioner Balaguer back wages for the period April 1, 2001
up to March 31, 2002. Finally, it is further ordered to pay each of the In fact, we have relaxed the rules in a number of cases for two
petitioners the sums of ₱50,000.00 as moral damages, ₱50,000.00 compelling reasons: social justice considerations 29and the apparent
merit30 of the petition. In light of these jurisprudential
as exemplary damages and attorney’s fees equivalent to ten percent
(10%) of the total amount due. pronouncements, the CA should not be faulted in setting aside the
procedural infirmity, allowing the petition to proceed and deciding
the case on the merits. In rendering justice, courts have always
No pronouncement as to costs. been, as they ought to be, conscientiously guided by the norm that
on the balance, technicalities take a backseat vis-à-vis substantive
rights, and not the other way around.31
SO ORDERED.17

Now on the substantive issue of the validity of the dismissal and


The appellate court declared the preventive suspension of
preventive suspension of respondents.
respondents invalid because it was based on the alleged violation of
school regulations on the wearing of uniform, tardiness or absence,
and maliciously spreading false accusations against the school, Petitioner insists that respondents’ dismissal from service was lawful
grounds that do not pose a serious threat to the life or property of and justified by the following grounds: 1) as probationary
the employer or of the workers.18 Contrary to the Labor Arbiter and employees, respondents failed to meet the reasonable standards for
the Commission’s findings, the CA concluded that respondents’ acts their permanent employment; and 2) in publicly accusing petitioner
do not constitute serious misconduct. Respondents’ act of exposing on radio and national television, of dishonesty and wrongdoing,
the alleged NSAT/NEAT anomaly, as well as raising the other issues during the pendency of the administrative investigation of the
haunting the school administration, only indicates their concern for alleged dishonest acts, undertaken by the proper government
the integrity of the government examination and of the school. The agency.32
use of the mass media was simply the respondents’ response to the

59
Initially, it should be clarified that this controversy revolves only on argues that by appearing on television and speaking over the radio,
respondents’ probationary employment. On March 31, 2001, the respondents were undeserving to become part of the school
effective date of their dismissal,33 respondents were not regular or community, and the school, therefore, could not be compelled to
permanent employees; they had not yet completed three (3) years of retain in its employ such undisciplined teachers.
satisfactory service as academic personnel which would have
entitled them to tenure as permanent employees in accordance with
In this regard, we find it necessary to go back to where the
the Manual of Regulations for Private Schools.34 On that date, Pe
controversy started, when the concerned teachers, including
Benito’s contract of employment still had two months to run, while
respondents, presented to petitioner a manifesto, setting forth the
Balaguer’s probationary employment was to expire after one year
issues they wanted the school to address. As correctly observed by
and two months.
the CA, the tenor of the manifesto indicated good faith, as the
teachers, in fact, expressly stated that their ultimate objective was
A probationary employee is one who, for a given period of time, is not to put the school down, but to work for some changes which
being observed and evaluated to determine whether or not he is would be beneficial to the students, teachers, the school and the
qualified for permanent employment. A probationary appointment country as a whole.48 In their effort to settle the issues amicably, the
affords the employer an opportunity to observe the skill, competence teachers (including respondents) asked for a dialogue with petitioner
and attitude of a probationer. The word "probationary," as used to but the latter, instead of engaging in creative resolution of the
describe the period of employment, implies the purpose of the term matter, uttered unnecessary statement against respondents. This
or period. While the employer observes the fitness, propriety and incident was followed by subsequent acts of petitioner showing
efficiency of a probationer to ascertain whether he is qualified for abuse of its power over the teachers, especially respondents, who at
permanent employment, the probationer at the same time, seeks to that time, were under probation. Notwithstanding its claim that
prove to the employer that he has the qualifications to meet the respondents were remiss in their duties as teachers during the
reasonable standards for permanent employment.35 whole period of probation, it was only after the NSAT/NEAT exposé
when petitioner informed respondents of their alleged substandard
performance. The chronology of events, therefore, supports the view
Probationary employees enjoy security of tenure in the sense that
that respondents’ suspension and eventual dismissal from service
during their probationary employment, they cannot be dismissed
were tainted with bad faith, as obvious retaliatory acts on the part of
except for cause or when he fails to qualify as a regular
petitioner.
employee.36 However, upon expiration of their contract of
employment, probationary employees cannot claim security of
tenure and compel their employers to renew their employment The totality of the acts of respondents cannot be characterized as
contracts. In fact, the services of an employee hired on probationary "misconduct" under the law, serious enough to warrant the severe
basis may be terminated when he fails to qualify as a regular penalty of dismissal. This is especially true because there is no
employee in accordance with reasonable standards made known by finding of malice or wrongful intent attributable to respondents. We
the employer to the employee at the time of his engagement. There quote with approval the CA’s ratiocination in this wise:
is nothing that would hinder the employer from extending a regular
or permanent appointment to an employee once the employer finds
Petitioners [respondents herein], along with their colleagues,
that the employee is qualified for regular employment even before
initiated the dialogue and brought the above issues to the school
the expiration of the probationary period. Conversely, if the purpose
authorities but the School Principal’s reaction was far from what the
sought by the employer is neither attained nor attainable within the
teachers expected. Instead of taking serious concern and properly
said period, the law does not preclude the employer from
addressing the teachers’ grievances as expressed in the Manifesto,
terminating the probationary employment on justifiable ground.37
Mrs. Palabrica got angry and hysterical accusing the petitioners
[respondents] of malice and bad faith and even threatened to
The notices of termination sent by petitioner to respondents stated dismiss them. Petitioners’ [respondents’] subsequent media exposé
that the latter failed to qualify as regular employees.38 However, and filing of a formal complaint was necessitated by private
nowhere in the notices did petitioner explain the details of said respondents’ [petitioner’s] inaction and refusal to heed their
"failure to qualify" and the standards not met by respondents. We legitimate complaint. Being but a legitimate exercise of their rights
can only speculate that this conclusion was based on the alleged as such teachers/educators and as citizens, under the
acts of respondents in uttering defamatory remarks against the circumstances, We cannot readily impute malice and bad faith on
school and the school principal;39 failure to report for work for two or the part of the petitioners [respondents] who, in fact, risked such the
three times;40 going to class without wearing proper uniform;41 delay harsh consequence of loss of their job and non-renewal of their
in the submission of class records; and non-submission of class probationary employment contract just so the issue of the
syllabi. Yet, other than bare allegations, petitioner failed to NEAT/NSAT anomaly involving their school would be ventilated in
substantiate the same by documentary evidence. Considering that the proper forum as to compel or somehow pressure not only their
respondents were on probation for three years, and they were school but more important, the government’s education officials at
subjected to yearly evaluation by the students and by the school the DECS to undertake proper and urgent measures. Hardly would
administrators (principal and vice-principal), it is safe to assume that such acts in relation to a matter impressed with public interest – i.e.
the results thereof were definitely documented. As such, petitioner the integrity of the NEAT/NSAT process as a tool designed by the
should have presented the evaluation reports and other related DECS to measure or gauge the achievement level of pupils and
documents to support its claim, instead of relying solely on the students in the schools nationwide – be considered as showing
affidavits of their witnesses. The unavoidable inference, therefore, moral depravity or ill will on the part of the petitioners. x x x49
remains that the respondents’ dismissal is invalid.
In light of this disquisition, it is settled that petitioner failed to comply
If respondents could not be dismissed on the above-mentioned with the requirement of substantial due process in terminating the
ground, could their services have been validly terminated on the employment of respondents.
ground of serious misconduct?
We now determine whether petitioner had complied with the
The Labor Code commands that before an employer may legally procedural aspect of lawful dismissal.
dismiss an employee from the service, the requirement of
substantial and procedural due process must be complied
In the termination of employment, the employer must (a) give the
with.42 Under the requirement of substantial due process, the
employee a written notice specifying the ground or grounds of
grounds for termination of employment must be based on just43 or
termination, giving to said employee reasonable opportunity within
authorized causes.44
which to explain his side; (b) conduct a hearing or conference during
which the employee concerned, with the assistance of counsel if the
Misconduct is defined as improper or wrong conduct. It is the employee so desires, is given the opportunity to respond to the
transgression of some established and definite rule of action, a charge, present his evidence or rebut the evidence presented
forbidden act, a dereliction of duty, willful in character, and implies against him; and (c) give the employee a written notice of
wrongful intent and not mere error of judgment. The misconduct to termination indicating that upon due consideration of all
be serious within the meaning of the Act, must be of such a grave circumstances, grounds have been established to justify his
and aggravated character and not merely trivial or termination.50
unimportant.45 Such misconduct, however serious, must
nevertheless be in connection with the work of the employee to
Suffice it to state that respondents were afforded their rights to
constitute just cause for his separation.46 It is not sufficient that the
answer to petitioner’s allegation and were given the opportunity to
act or conduct complained of has violated some established rules or
present evidence in support of their defense. Nowhere in any of their
policies. It is equally important and required that the act or conduct
pleadings did they question the procedure for their termination
must have been performed with wrongful intent.47
except to challenge the ground relied upon by petitioner. Ostensibly,
therefore, petitioner had complied with the procedural aspect of due
Petitioner anchored its imputation of serious misconduct principally process in terminating the employment of respondents. However,
on the respondents’ expose of the NSAT/NEAT anomaly. Petitioner
60
we still hold that the dismissal is illegal, because of petitioner’s 30, 2003 and September 26, 2003, respectively, in CA-G.R. SP No.
failure to satisfy the substantive aspect thereof, as discussed above. 75249, are AFFIRMED.

We are not unmindful of the equally important right of petitioner, as SO ORDERED.


employer, under our Constitution, to be protected in their property
and interest. Nevertheless, the particular circumstances surrounding
this case convince us that the supreme penalty of dismissal upon
respondents is not justified. The law regards the workers with
compassion. This is not only because of the law’s concern for the G.R. No. 164532 July 24, 2007
workingman. There is, in addition, his family to consider.
Unemployment brings untold hardships and sorrows on those
PHILIPPINE DAILY INQUIRER, INC., Petitioner,
dependent upon the wage-earner.51
vs.
LEON M. MAGTIBAY, JR. and PHILIPPINE DAILY INQUIRER
Respondents likewise questioned their preventive suspension, but EMPLOYEES UNION (PDIEU), Respondents.
the Labor Arbiter and the NLRC sustained its validity. The CA, on
the other hand, declared the same to be illegal. Thus, petitioner
DECISION
insists that respondents’ preventive suspension was proper, in view
of the latter’s acts of utilizing their time, not to teach, but to spread
rumors that the former was about to cease operation. 52 GARCIA, J.:

The law is clear on this matter. While the employer may place the By this petition for review on certiorari under Rule 45 of the Rules of
worker concerned under preventive suspension, it can do so only if Court, petitioner Philippine Daily Inquirer, Inc. (PDI) seeks the
the latter’s continued employment poses a serious and imminent reversal and setting aside of the decision1 dated May 25, 2004 of the
threat to the life or property of the employer or of his co-workers.53 In Court of Appeals (CA) in CA G.R. SP No. 78963, affirming the
this case, the grounds relied upon by petitioner in placing resolution dated September 23, 2002 of the National Labor
respondents under preventive suspension were the alleged violation Relations Commission (NLRC) in NLRC Case No. 00-03-01945-96.
of school rules and regulations on the wearing of uniform, tardiness The affirmed NLRC resolution reversed an earlier decision dated
or absence, and maliciously spreading false accusations against the July 29, 1996 of the Labor Arbiter in NLRC Case No. 011800-96,
school.54 These grounds do not, in any way, pose a threat to the life which dismissed the complaint for illegal dismissal filed by the herein
or property of the school, of the teachers or of the students and their respondent Leon Magtibay, Jr. against the petitioner.
parents. Hence, we affirm the CA’s conclusion that respondents’
preventive suspension was illegal.lawphi1
The factual antecedents are undisputed:

As probationary employees, respondents’ security of tenure is


limited to the period of their probation – for Pe Benito, until June On February 7, 1995, PDI hired Magtibay, on contractual basis, to
200155 and for Balaguer, June 2002.56 As they were no longer assist, for a period of five months from February 17, 1995, the
extended new appointments, they are not entitled to reinstatement regular phone operator. Before the expiration of Magtibay’s
and full backwages. Rather, Pe Benito is only entitled to her salary contractual employment, he and PDI agreed to a fifteen-day contract
for her 30-day preventive suspension.57 As to Balaguer, in addition extension, or from July 17, 1995 up to July 31, 1995, under the
to his 30-day salary during his illegal preventive suspension, he is same conditions as the existing contract.
entitled to his backwages for the unexpired term of his contract of
probationary employment. After the expiration of Magtibay’s contractual employment, as
extended, PDI announced the creation and availability of a new
Lastly, petitioner faults the appellate court for awarding moral and position for a second telephone operator who would undergo
exemplary damages in favor of respondents despite lack of sufficient probationary employment. Apparently, it was PDI’s policy to accord
basis to support the award.58 regular employees preference for new vacancies in the company.
Thus, Ms. Regina M. Layague, a PDI employee and member of
respondent PDI Employees Union (PDIEU), filed her application for
A dismissed employee is entitled to moral damages when the the new position. However, she later withdrew her application,
dismissal is attended by bad faith or fraud; or constitutes an act paving the way for outsiders or non-PDI employees, like Magtibay in
oppressive to labor; or is done in a manner contrary to good morals, this case, to apply.
good customs or public policy. Exemplary damages, on the other
hand, may be awarded if the dismissal is effected in a wanton,
oppressive or malevolent manner.59 The award of said damages After the usual interview for the second telephone operator slot, PDI
cannot be justified solely upon the premise that the employer fired chose to hire Magtibay on a probationary basis for a period of six (6)
his employee without just cause or due process. It is necessary that months. The signing of a written contract of employment followed.
additional facts be pleaded and proven that the act of dismissal was
attended by bad faith, fraud, et al., and that social humiliation, On March 13, 1996, or a week before the end the agreed 6-month
wounded feelings and grave anxiety resulted therefrom. 60 probationary period, PDI officer Benita del Rosario handed Magtibay
his termination paper, grounded on his alleged failure to meet
Be that as it may, we find the award of moral and exemplary company standards. Aggrieved, Magtibay immediately filed a
damages proper, as we quote with approval the CA’s justification for complaint for illegal dismissal and damages before the Labor
the award, thus: Arbiter. PDIEU later joined the fray by filing a supplemental
complaint for unfair labor practice.

At any rate, there is no question that both petitioners [respondents


herein] are entitled to the award of moral and exemplary damages, Magtibay anchored his case principally on the postulate that he had
in view of the proven acts done in bad faith on the part of private become a regular employee by operation of law, considering that he
respondents [petitioner herein] who threatened petitioners’ had been employed by and had worked for PDI for a total period of
[respondents’] immediate dismissal when the Manifesto was ten months, i.e., four months more than the maximum six-month
presented by petitioners [respondents], berating and verbally period provided for by law on probationary employment. He also
castigating petitioner [respondent] Pe Benito, portraying them as claimed that he was not apprised at the beginning of his
mere detractors in an open letter to the parents who were merely employment of the performance standards of the company, hence,
motivated by the design to malign the integrity of the school. x x x there was no basis for his dismissal. Finally, he described his
We find such bad faith on the part of private respondents [petitioner] dismissal as tainted with bad faith and effected without due process.
in effectively exerting pressure to silence the petitioners
[respondents] regarding their legitimate grievances against the PDI, for its part, denied all the factual allegations of Magtibay,
school as sufficiently established in the records, private adding that his previous contractual employment was validly
respondents’ [petitioner’s] actuations having sullied the professional terminated upon the expiration of the period stated therein. Pressing
integrity of the petitioners [respondents] and divided the faculty the point, PDI alleged that the period covered by the contractual
members on the controversy. For such unjustified acts in relation to employment cannot be counted with or tacked to the period for
the NEAT/NSAT controversy that resulted to loss, prejudice and probation, inasmuch as there is no basis to consider Magtibay a
damage to petitioners [respondents], private respondents [petitioner] regular employee. PDI additionally claimed that Magtibay was
are liable for moral and exemplary damages.61 dismissed for violation of company rules and policies, such as
allowing his lover to enter and linger inside the telephone operator’s
WHEREFORE, premises considered, the petition is hereby booth and for failure to meet prescribed company standards which
DENIED. The Court of Appeals Decision and Resolution dated June were allegedly made known to him at the start through an orientation
seminar conducted by the company.

61
After due proceedings, the Labor Arbiter found for PDI and EMASCULATING PETITIONER’S RIGHT TO CHOOSE
accordingly dismissed Magtibay’s complaint for illegal dismissal. The ITS EMPLOYEES.
Labor Arbiter premised his holding on the validity of the previous
contractual employment of Magtibay as an independent contract. He
II.
also declared as binding the stipulation in the contract specifying a
fixed period of employment. According to the Labor Arbiter, upon
termination of the period stated therein, the contractual employment THE COURT OF APPEALS COMMITTED A GRAVE
was also effectively terminated, implying that Magtibay was merely ERROR IN REFUSING TO FIND THAT PROCEDURAL
on a probationary status when his services were terminated DUE PROCESS AS LAID DOWN IN SECTION 2, RULE
inasmuch as the reckoning period for probation should be from XXIII OF THE IMPLEMENTING RULES OF THE LABOR
September 21, 1995 up to March 31, 1996 as expressly provided in CODE HAD BEEN OBSERVED BY THE PETITIONER.
their probationary employment contract. In fine, it was the Labor
Arbiter’s position that Magtibay’s previous contractual employment,
We GRANT the petition.
as later extended by 15 days, cannot be considered as part of his
subsequent probationary employment.
This Court, to be sure, has for a reason, consistently tended to be
partial in favor of workers or employees in labor cases whenever
Apart from the foregoing consideration, the Labor Arbiter further
ruled that Magtibay’s dismissal from his probationary employment social legislations are involved. However, in its quest to strike a
was for a valid reason. Albeit the basis for termination was couched balance between the employer’s prerogative to choose his
employees and the employee’s right to security of tenure, the Court
in the abstract, i.e., "you did not meet the standards of the
company," there were three specific reasons for Magtibay’s remains guided by the gem of a holding in an old but still applicable
termination, to wit: (1) he repeatedly violated the company rule case of Pampanga Bus, Co. v. Pambusco Employees Union, Inc.2 In
it, the Court said:
prohibiting unauthorized persons from entering the telephone
operator’s room; (2) he intentionally omitted to indicate in his
application form his having a dependent child; and (3) he exhibited The right of a laborer to sell his labor to such persons as he may
lack of sense of responsibility by locking the door of the telephone choose is, in its essence, the same as the right of an employer to
operator’s room on March 10, 1996 without switching the proper purchase labor from any person whom it chooses. The employer
lines to the company guards so that incoming calls may be and the employee have thus an equality of right guaranteed by the
answered by them. Constitution. If the employer can compel the employee to work
against the latter’s will, this is servitude. If the employee can compel
The Labor Arbiter likewise dismissed allegations of denial of due the employer to give him work against the employer’s will, this is
process and the commission by PDI of unfair labor practice. oppression.

PDIEU and Magtibay appealed the decision of the Labor Arbiter to Management and labor, or the employer and the employee are more
the NLRC. As stated earlier, the NLRC reversed and set aside said often not situated on the same level playing field, so to speak.
decision, effectively ruling that Magtibay was illegally dismissed. Recognizing this reality, the State has seen fit to adopt measures
envisaged to give those who have less in life more in law. Article
According to the NLRC, Magtibay’s probationary employment had
ripened into a regular one. 279 of the Labor Code which gives employees the security of tenure
is one playing field leveling measure:

With the NLRC’s denial of its motion for reconsideration, PDI went to
the CA on a petition for certiorari. Eventually, the CA denied due Art. 279. Security of Tenure. ̶ In cases of regular employment, the
course to PDI’s petition on the strength of the following employer shall not terminate the services of an employee except for
a just cause or when authorized by this Title. x x x.
observations:

We agree with the findings of respondent NLRC. But hand in hand with the restraining effect of Section 279, the same
Labor Code also gives the employer a period within which to
determine whether a particular employee is fit to work for him or not.
Petitioner PDI failed to prove that such rules and regulations were This employer’s prerogative is spelled out in the following provision:
included in or form part of the standards that were supposed to be
made known to respondent Magtibay at the time of his engagement
as telephone operator. Particularly, as regards the first stated Art. 281. Probationary employment. ̶ Probationary employment shall
infraction xxx petitioner PDI, contrary to its assertion, stated in its not exceed six (6) months from the date the employee started
working, unless it is covered by an apprenticeship agreement
position paper, motion for reconsideration and in this petition that
respondent Magtibay failed to abide by the rules and regulations of stipulating a longer period. The services of an employee who has
the company issued by Ms. Benita del Rosario regarding the entry of been engaged on a probationary basis may be terminated for a just
cause or when he fails to qualify as a regular employee in
persons in the operator’s booth when respondent was already
working for petitioner PDI. Further, nowhere can it be found in the accordance with reasonable standards made known by the
list of Basic Responsibility and Specific Duties and Responsibilities employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be
(Annex D of the petition) of respondent Magtibay that he has to
abide by the duties, rules and regulations that he has allegedly considered a regular employee.
violated. The infractions considered by petitioner PDI as grounds for
the dismissal of respondent Magtibay may at most be classified as In International Catholic Migration Commission v. NLRC,3 we have
just causes for the termination of the latter’s employment. x x x. elucidated what probationary employment entails:

xxx xxx xxx x x x. A probationary employee, as understood under Article 282


(now Article 281) of the Labor Code, is one who is on trial by an
Finally, the three questionable grounds also relied upon by petitioner employer during which the employer determines whether or not he is
qualified for permanent employment. A probationary appointment is
PDI in dismissing respondent Magtibay may be considered as just
causes. However, petitioner PDI did not raise the same as an issue made to afford the employer an opportunity to observe the fitness of
in the present petition because the procedure it adopted in a probationer while at work, and to ascertain whether he will become
a proper and efficient employee. The word "probationary," as used
dismissing respondent Magtibay fell short of the minimum
requirements provided by law. to describe the period of employment, implies the purpose of the
term or period but not its length.

PDI filed a motion for reconsideration but to no avail.


Being in the nature of a "trial period" the essence of a probationary
period of employment fundamentally lies in the purpose or objective
Hence, this recourse by PDI on the following submissions: sought to be attained by both the employer and the employee during
said period. The length of time is immaterial in determining the
correlative rights of both in dealing with each other during said
I.
period. While the employer, as stated earlier, observes the fitness,
propriety and efficiency of a probationer to ascertain whether he is
THE COURT OF APPEALS COMMITTED GRAVE qualified for permanent employment, the probationer, on the other,
ERROR IN FINDING THAT A PROBATIONARY seeks to prove to the employer, that he has the qualifications to
EMPLOYEE’S FAILURE TO FOLLOW AN EMPLOYER’S meet the reasonable standards for permanent employment.
RULES AND REGULATIONS CANNOT BE DEEMED
FAILURE BY SAID EMPLOYEE TO MEET THE
It is well settled that the employer has the right or is at liberty to
STANDARDS OF HIS EMPLOYER THUS
choose who will be hired and who will be denied employment. In that
62
sense, it is within the exercise of the right to select his employees Lest it be overlooked, Magtibay had previously worked for PDI as
that the employer may set or fix a probationary period within which telephone operator from February 7, 1995 to July 31, 1995 as a
the latter may test and observe the conduct of the former before contractual employee. Thus, the Court entertains no doubt that
hiring him permanently. x x x. when PDI took him in on September 21, 1995, Magtibay was
already very much aware of the level of competency and
professionalism PDI wanted out of him for the entire duration of his
Within the limited legal six-month probationary period, probationary
probationary employment.
employees are still entitled to security of tenure. It is expressly
provided in the afore-quoted Article 281 that a probationary
employee may be terminated only on two grounds: (a) for just PDI was only exercising its statutory hiring prerogative when it
cause, or (b) when he fails to qualify as a regular employee in refused to hire Magtibay on a permanent basis upon the expiration
accordance with reasonable standards made known by the of the six-month probationary period. This was established during
employer to the employee at the time of his engagement.4 the proceedings before the labor arbiter and borne out by the
records and the pleadings before the Court. When the NLRC
disregarded the substantial evidence establishing the legal
PDI invokes the second ground under the premises. In claiming that
termination of Magtibay’s probationary employment and rendered
it had adequately apprised Magtibay of the reasonable standards
judgment grossly and directly contradicting such clear evidence, the
against which his performance will be gauged for purposes of
NLRC commits grave abuse of discretion amounting to lack or
permanent employment, PDI cited the one-on-one seminar between
excess of jurisdiction. It was, therefore, reversible error on the part
Magtibay and its Personnel Assistant, Ms. Rachel Isip-Cuzio. PDI
of the appellate court not to annul and set aside such void judgment
also pointed to Magtibay’s direct superior, Benita del Rosario, who
of the NLRC.1avvphi1
diligently briefed him about his responsibilities in PDI. These factual
assertions were never denied nor controverted by Magtibay. Neither
did he belie the existence of a specific rule prohibiting unauthorized WHEREFORE, the assailed decision dated May 25, 2004 of the CA
persons from entering the telephone operator’s booth and that he in CA G.R. SP No. 78963 is hereby REVERSED and SET ASIDE,
violated that prohibition. This notwithstanding, the NLRC and the CA and the earlier resolution dated September 23, 2002 of the NLRC in
proceeded nonetheless to rule that the records of the case are NLRC Case No. 00-03-01945-96 is declared NULL and VOID. The
bereft of any evidence showing that these rules and regulations form earlier decision dated July 29, 1996 of the Labor Arbiter in NLRC
part of the so-called company standards. Case No. 011800-96, dismissing respondent Leon Magtibay, Jr.’s
complaint for alleged illegal dismissal, is REINSTATED.
We do not agree with the appellate court when it cleared the NLRC
of commission of grave abuse of discretion despite the latter’s No pronouncement as to costs.
disregard of clear and convincing evidence that there were
reasonable standards made known by PDI to Magtibay during his
SO ORDERED.
probationary employment. It is on record that Magtibay committed
obstinate infractions of company rules and regulations, which in turn
constitute sufficient manifestations of his inadequacy to meet
reasonable employment norms. The suggestion that Magtibay ought
to have been made to understand during his briefing and orientation
G.R. No. 96779 November 10, 1993
that he is expected to obey and comply with company rules and
regulations strains credulity for acceptance. The CA’s observation
that "nowhere can it be found in the list of Basic Responsibility and PINE CITY EDUCATIONAL CENTER and EUGENIO
Specific Duties and Responsibilities of respondent Magtibay that he BALTAO, petitioners,
has to abide by the duties, rules and regulations that he has vs.
allegedly violated" is a strained rationalization of an unacceptable THE NATIONAL LABOR RELATIONS COMMISSION (THIRD
conduct of an employee. Common industry practice and ordinary DIVISION) and DANGWA BENTREZ, ROLAND PICART, APOLLO
human experience do not support the CA’s posture. All employees, RIBAYA, SR., RUPERTA RIBAYA, VIRGINIA BOADO, CECILIA
be they regular or probationary, are expected to comply with EMOCLING, JANE BENTREZ, LEILA DOMINGUEZ, ROSE ANN
company-imposed rules and regulations, else why establish them in BERMUDEZ and LUCIA CHAN, respondents.
the first place. Probationary employees unwilling to abide by such
rules have no right to expect, much less demand, permanent
employment. We, therefore find sufficient factual and legal basis, Tenefrancia, Agranzamendez, Liceralde & Associates for
duly established by substantial evidence, for PDI to legally terminate petitioners.
Magtibay’s probationary employment effective upon the end of the
6-month probationary period. Reynaldo B. Cajucom for private respondents.

It is undisputed that PDI apprised Magtibay of the ground of his


termination, i.e., he failed to qualify as a regular employee in
accordance with reasonable standards made known to him at the
time of engagement, only a week before the expiration of the six- NOCON, J.:
month probationary period. Given this perspective, does this make
his termination unlawful for being violative of his right to due process The is a petition for certiorari seeking the reversal of the resolution
of law? of public respondent National Labor Relations Commission dated
November 29, 1990, in NLRC Case No. 01-04-0056-89, which
It does not. affirmed in toto the decision of the Labor Arbiter dated February
28,1990.

Unlike under the first ground for the valid termination of probationary
employment which is for just cause, the second ground does not The antecedent facts are, a follows:
require notice and hearing. Due process of law for this second
ground consists of making the reasonable standards expected of the Private respondents Dangwa Bentrez, Roland Picart, Apollo Ribaya,
employee during his probationary period known to him at the time of Sr., Ruperta Ribaya, Virginia Boado, Cecilia Emocling, Jane
his probationary employment. By the very nature of a probationary Bentrez, Leila Dominguez, Rose Ann Bermudez and Lucia Chan
employment, the employee knows from the very start that he will be were all employed as teachers on probationary basis by petitioner
under close observation and his performance of his assigned duties Pines City Educational Center, represented in this proceedings by
and functions would be under continuous scrutiny by his superiors. It its President, Eugenio Baltao. With the exception of Jane Bentrez
is in apprising him of the standards against which his performance who was hired as a grade school teacher, the remaining private
shall be continuously assessed where due process regarding the respondents were hired as college instructors. All the private
second ground lies, and not in notice and hearing as in the case of respondents, except Roland Picart and Lucia Chan, signed
the first ground. contracts of employment with petitioner for a fixed duration. On
March 31, 1989, due to the expiration of private respondents'
Even if perhaps he wanted to, Magtibay cannot deny – as he has contracts and their poor performance as teachers, they were notified
not denied – PDI’s assertion that he was duly apprised of the of petitioners' decision not to renew their contracts anymore.
employment standards expected of him at the time of his
probationary employment when he underwent a one-on-one On April 10, 1989, private respondents filed a complaint for illegal
orientation with PDI’s personnel assistant, Ms. Rachel Isip-Cuzio. dismissal before the Labor Arbiter, alleging that their dismissals
Neither has he denied nor rebutted PDI’s further claim that his direct were without cause and in violation of due process. Except for
superior, Benita del Rosario, briefed him regarding his private respondent Leila Dominguez who worked with petitioners for
responsibilities in PDI. one semester, all other private respondents were employed for one
to two years. They were never informed in writing by petitioners
63
regarding the standards or criteria of evaluation so as to enable 6) ROSE ANN BERMUDEZ
them to meet the requirements for appointment as regular
employees. They were merely notified in writing by petitioners,
a) Latest salary per month P2,600.00
through its chancellor, Dra. Nimia R. Concepcion, of the termination
b) Multiplied by period covered x 10 months
of their respective services as on March 31, 1989, on account of
—————
their below-par performance as teachers.
c) Equals backwages due P26,000.00

For their part, petitioners contended that private respondents'


7) DANGWA BENTREZ
separation from employment, apart from their poor performance,
was due to the expiration of the periods stipulated in their respective
contracts. In the case of private respondent Dangwa Bentrez, the a) Latest salary per month P1,700.00
duration of his employment contract was for one year, or beginning b) Multiplied by period covered x 10 months
June, 1988 to March 1989 whereas in the case of the other private —————
respondents, the duration of their employment contracts was for one c) Equals backwages due P17,000.00
semester, or beginning November, 1988 to March 1989. These
stipulations were the laws that governed their relationships, and
8) JANE BENTREZ
there was nothing in said contracts which was contrary to law,
morals, good customs and public policy. They argued further that
they cannot be compelled o enter into new contracts with private a) Latest salary per month P1,315.44
respondents. they concluded that the separation of private b) ultiplied by period covered x 10 months
respondents from the service was justified. —————
c) Equals backwages due P13,154.40
On February 28, 1990, the Labor Arbiter rendered judgment in favor
of private respondents, the dispositive portion of which reads: 9) APOLLO RIBAYA

WHEREFORE, in the light of the foregoing a) Latest salary per month P1,875.00
considerations, judgment is hereby rendered b) Multiplied by period covered x 10 months
ORDERING the respondents to reinstate the —————
complainants immediately to their former c) Equals backwages due P18,7500.00
positions and to pay their full backwages and
other benefits and privileges without
qualification and deduction from the time they 10) VIRGINIA BOADO
were dismissed up to their actual reinstatement.
a) Latest salary per month P1,648.24
Thus respondents should pay complainants the b) Multiplied by period covered x 10 months
following: —————
c) Equals backwages due P16,482.40

BACKWAGES
SUMMARY

NOTE: Computation covers only the


period complainants were terminated 1) Roland Picart 21,360.00
up to January 31, 1990 or 10 months 2) Lucia Chan 16,000.00
and does not include backwages from 3) Leila Dominguez
January 31, 1990 up to their actual 16,482.40
reinstatement. 4) Ruperta Ribaya
18,560.00
5) Cecilia Emocling
1) ROLAND PICART 16,480.00
6) Rose Ann Bermudez
26,000.00
a) Latest salary per month P2,136.00
b) Multiplied by period covered 7) Dangwa Bentrez
(March 31, 1989 to January 31, 1990) x 10 17,000.00
8) Jane Bentrez 13,154.40
months
————— 9) Apollo Ribaya 18,750.00
c) Equals backwages due P21,360.00 10) Virginia Boado
16,482.40
—————
2) LUCIA CHAN GRAND TOTAL
(Backwages) P180,269.20
a) Latest salary per month P1,600.00
b) Multiplied by period covered x 10 months Complainants claims for indemnity pay,
————— premium pay for holidays and rest days, illegal
c) Equals backwages due P16,000.00 deduction, 13th month pay and underpayment
are hereby DENIED for lack of merit.
3) LEILA DOMINGUEZ
SO ORDERED.1
a) Latest salary per month P1,648.24
b) Multiplied by period covered x 10 months In support of this decision, the Labor Arbiter rationalized that the
————— teacher's contracts2 are vague and do not include the specific
c) Equals backwages due P16,482.40 description of duties and assignments of private respondents. They
do not categorically state that there will be no renewal because their
appointments automatically terminate at the end of the semester.
4) RUPERTA RIBAYA
Petitioners did not present any written evidence to substantiate their
allegation that the Academic Committee has evaluated private
a) Latest salary per month P1,856.00 respondents' performance during their one semester employment.
b) Multiplied by period covered x 10 months On the contrary, they were hastily dismissed.
—————
c) Equals backwages due P18,560.00
On appeal to the National Labor Relations Commission, the decision
was affirmed in toto in its resolution dated November 29, 1990, with
5) CECILIA EMOCLING the additional reasoning that "the stipulation in the contract providing
for a definite period in the employment of complainant is obviously
null and void, as such stipulation directly assails the safeguards laid
a) Latest salary per month P1,648.00
down in Article 280 (of the Labor Code), 3 which explicitly abhors the
b) Multiplied by period covered x 10 months
consideration of written or oral agreements pertaining to definite
—————
period in regular employments. 4 Hence, the present petition
c) Equals backwages due P16,480.00

64
for certiorari with prayer for the issuance of a temporary restraining written proofs or evidence to support their
order. allegation. 11

As prayed for, this Court issued a temporary restraining order on xxx xxx xxx
March 11, 1991, enjoining respondents from enforcing the
questioned resolution.5
There is absolutely nothing in the record which
will show that the complainants were afforded
Petitioners raise this sole issue: "THAT THERE IS PRIMA even an iota of chance to refute respondents'
FACIE EVIDENCE OF GRAVE ABUSE OF DISCRETION ON THE allegations that the complainants did not meet
PART OF THE LABOR ARBITER BY WANTONLY, the reasonable standards and criteria set by the
CAPRICIOUSLY AND MALICIOUSLY DISREGARDING school. . . .12
PROVISIONS OF THE LAW AND JURISPRUDENCE LAID DOWN
IN DECISIONS OF THE HONORABLE SUPREME COURT."6
We concur with these factual findings, there being no showing that
they were resolved arbitrarily. 13 Thus, the order for their
Petitioners reiterate their previous arguments, relying heavily in the reinstatement and payment of full backwages and other benefits and
case of Brent School, Inc. et al., v. Zamora, et al. 7 privileges from the time they were dismissed up to their actual
reinstatement is proper, conformably with Article 279 of the Labor
Code, as amended by Section 34 of Republic Act No. 6715, 14 which
It is quite easy to resolve the present controversy because
took effect on March 21, 1989. 15 It should be noted that private
the Brent case, which is a product of extensive research, already
respondents Roland Picart and Lucia Chan were dismissed illegally
provides the answer. We were categorical therein that:
on March 31, 1989, or after the effectivity of said amendatory law.
However, in ascertaining the total amount of backwages payable to
Accordingly, and since the entire purpose them, we go back to the rule prior to the mercury drug rule 16 that the
behind the development of legislation total amount derived from employment elsewhere by the employee
culminating in the present Article 280 of the from the date of dismissal up to the date of reinstatement, if any,
Labor Code clearly appears to have been, as should be deducted therefrom. 17 We restate the underlying reason
already observed, to prevent circumvention of that employees should not be permitted to enrich themselves at the
the employee's right to be secure in his tenure, expense of their employer.18In addition, the law abhors double
the clause in said article indiscriminately and compensation.19 to this extent, our ruling in Alex Ferrer, et al., v.
completely ruling out all written and oral NLRC, et al.,G.R. No. 100898, promulgated on July 5, 1993, is
agreements conflicting with the concept of hereby modified.
regular employment as defined therein should
be construed to refer to the substantive evil that
Public respondent cannot claim not knowing the ruling in
the Code itself has singled out: agreements
the Brent case because in its questioned resolution, it is stated that
entered into precisely to prevent security of
one of the cases invoked by petitioners in their appeal is said
tenure. It should have no application to
case.20 This notwithstanding, it disregarded Our ruling therein
instances where a fixed period of employment
without any reason at all and expressed the erroneous view that:
was agreed upon knowingly and voluntarily by
the parties, without any force, duress or
improper pressure brought to bear upon the The agreement of the parties fixing a definite
employee and absent any other circumstances date for the termination of the employment
vitiating his consent, or where it satisfactorily relations is contrary to the specific provision of
appears that the employer or employee dealt Article 280. being contrary to law, the
with each other on more or less equal terms agreement cannot be legitimized. . . . 21
with no moral dominance whatever being
exercised by the former over the latter. Unless
Stare decisis et no quieta movere. Once a case ha been decided
thus limited in its purview, the law would be
one way, then another case, involving exactly the same point at
made to apply to purposes other than those
issue, should be decided in the same manner. Public respondent
expressly stated by its framers; it thus becomes
had no choice on the matter. It could not have ruled in any other
pointless and arbitrary, unjust in its effects and
way. This Tribunal having spoken in the Brent case, its duty was to
apt to lead to absurd and unintended
obey. 22 Let it be warned that to defy its decisions is to court
consequences. (Emphasis supplied.)
contempt. 23

The ruling was reiterated in Pakistan International Airlines


WHEREFORE, the resolution of public respondent National Labor
Corporation v. Ople, etc., et al.8 and La Sallete of
Relations Commission dated November 29, 1990 is hereby
Santiago, Inc. v. NLRC, et al.9
MODIFIED. private respondents Roland Picart and Lucia Chan are
ordered reinstated without loss of seniority rights and other
In the present case, however, We have to make a distinction. privileges and their backwages paid in full inclusive of allowances,
and to their other benefits or their monetary equivalent pursuant to
Article 279 of the Labor Code, as amended by Section 34 of
Insofar as the private respondents who knowingly and voluntarily
Republic Act No. 6715, subject to deduction of income earned
agreed upon fixed periods of employment are concerned, their
elsewhere during the period of dismissal, if any, to be computed
services were lawfully terminated by reason of the expiration of the
from the time they were dismissed up to the time of their actual
periods of their respective contracts. These are Dangwa Bentrez,
reinstatement. the rest of the Labor Arbiter's decision dated
Apollo Ribaya, Sr., Ruperta Ribaya, Virginia Boado, Cecilia
February 28, 1990, as affirmed by the NLRC is set aside. The
Emocling, Jose Bentrez, Leila Dominguez and Rose Ann Bermudez.
temporary restraining order issued on March 11, 1991 is made
Thus, public respondent committed grave abuse of discretion in
permanent.
affirming the decision of the Labor Arbiter ordering the reinstatement
and payment of full backwages and other benefits and privileges.
SO ORDERED.
With respect to private respondents Roland Picart and Lucia Chan,
both of whom did not sign any contract fixing the periods of their
employment nor to have knowingly and voluntarily agreed upon
fixed periods of employment, petitioners had the burden of proving
G.R. No. 204406 February 26, 2014
that the termination of their services was legal. As probationary
employees, they are likewise protected by the security of tenure
provision of the Constitution. Consequently, they cannot be removed MACARTHUR MALICDEM and HERMENIGILDO
from their positions unless for cause. 10 On the other hand, petitioner FLORES, Petitioners,
contended that base don the evaluation of the Academic Committee vs.
their performance as teachers was poor. The Labor Arbiter, MARULAS INDUSTRIAL CORPORATION and MIKE
however, was not convinced. Thus he found as follows: MANCILLA, Respondents.

Respondents likewise aver that the Academic DECISION


Committee has evaluated their performance
during their one semester employment (see
MENDOZA, J.:
Annexes "M" to "X" of complainants' position
paper). However, they did not present any

65
This petition for review on certiorari1 under Rule 45 of the Rules of
₱404 x ₱362 = ₱42
Court filed by Macarthur Malicdem (Malicdem) and Hermenigildo
Flores (Flores) assails the July 18, 2012 Decision2 and the
x 26 days x 5.50 mos. = 6,006.00
November 12, 2012 Resolution3 of the Court of Appeals (CA) in CA-
G.R. SP No. 1244 70, dismissing their petition for certiorari under
18,440.50
Rule 65 in an action for illegal dismissal.

The Facts: All other claims are dismissed for lack of merit.

A complaint4 for illegal dismissal, separation pay, money claims, SO ORDERED.6


moral and exemplary damages, and attorney's fees was filed by
petitioners Malicdem and Flores against respondents Marulas
Malicdem and Flores appealed to the NLRC which partially granted
Industrial Corporation (Marulas) and Mike Mancilla (Mancilla), who
their appeal with the award of payment of 13th month pay, service
were engaged in the business of manufacturing sacks intended for
local and export markets. incentive leave and holiday pay for three (3) years. The dispositive
portion of its December 19, 2011 Decision7 reads:

Malicdem and Flores were first hired by Marulas as extruder


operators in 2006, as shown by their employment contracts. They WHEREFORE, the appeal is GRANTED IN PART. The Decision of
Labor Arbiter Raymund M. Celino, dated July 13, 2011, is
were responsible for the bagging of filament yarn, the quality of pp
MODIFIED. In addition to the award of salary differentials,
yarn package and the cleanliness of the work place area. Their
complainants should also be awarded 13th month pay, service
employment contracts were for a period of one (1) year. Every year
incentive leave and holiday pay for three years.
thereafter, they would sign a Resignation/Quitclaim in favor of
Marulas a day after their contracts ended, and then sign another
contract for one (1) year. Until one day, on December 16, 2010, SO ORDERED.8
Flores was told not to report for work anymore after being asked to
sign a paper by Marulas' HR Head to the effect that he
acknowledged the completion of his contractual status. On February Still, petitioners filed a motion for reconsideration, but it was denied
1, 2011, Malicdem was also terminated after signing a similar by the NLRC on February 29, 2011.
document. Thus, both claimed to have been illegally dismissed.
Aggrieved, Malicdem and Flores filed a petition for certiorari under
Marulas countered that their contracts showed that they were fixed- Rule 65 with the CA.
term employees for a specific undertaking which was to work on a
particular order of a customer for a specific period. Their severance On July 18, 2012, the CA denied the petition,9 finding no grave
from employment was due to the expiration of their contracts. abuse of discretion amounting to lack or excess of jurisdiction on the
part of the NLRC. It ruled that the issue of whether or not the
On February 7, 2011, Malicdem and Flores lodged a complaint petitioners were project employees or regular employees was
against Marulas and Mancilla for illegal dismissal. factual in nature and, thus, not within the ambit of a petition for
certiorari. Moreover, it accorded respect and due consideration to
the factual findings of the NLRC, affirming those of the LA, as they
On July 13, 2011, the Labor Arbiter (LA) rendered a decision5 in were supported by substantial evidence.
favor of the respondents, finding no illegal dismissal. He ruled that
Malicdem and Flores were not terminated and that their employment
naturally ceased when their contracts expired. The LA, however, On the substantive issue, the CA explained that "the repeated and
ordered Marulas to pay Malicdem and Flores their respective wage successive rehiring of project employees do not qualify them as
differentials, to wit: regular employees, as length of service is not the controlling
determinant of the employment tenure of a project employee, but
whether the employment has been fixed for a specific project or
WHEREFORE, the complaints for illegal dismissal are dismissed for undertaking, its completion has been determined at the time of the
lack of merit. Respondent Marulas Industrial Corporation is, engagement of the employee."10
however, ordered to pay complainants wage differential in the
following amounts:
Corollarily, considering that there was no illegal dismissal, the CA
ruled that payment of backwages, separation pay, damages, and
attorney's fees had no factual and legal bases. Hence, they could
1. Macarthur Malicdem ₱20,111.2
not be awarded to the petitioners.
6

2/2/07 – 6/13/08 = None Aggrieved, Malicdem and Flores filed a motion for reconsideration,
but their pleas were denied in the CA Resolution, dated November
6/14/08 – 8/27/08 = 2.47 mos. 12, 2012.

₱377 – 362 = ₱15


The Petition
x 26 days x 2.47 mos. = 963.30
Malicdem and Flores now come before this Court by way of a
8/28/08 – 6/30/10 = 22.06 mos. petition for review on certiorari under Rule 45 of the Rules of Court
praying for the reversal of the CA decision anchored on the principal
₱382 – ₱362 = ₱20 argument that the appellate court erred in affirming the NLRC
decision that there was no illegal dismissal because the petitioners’
x 26 days x 22.06 mos. = 11,471.20 contracts of employment with the respondents simply expired. They
claim that their continuous rehiring paved the way for their
7/1/10 – 2/2/11 = 7.03 mos. regularization and, for said reason, they could not be terminated
from their jobs without just cause.
₱404 – ₱362 = ₱42

x 26 days x 7.03 mos. = 7,676.76 In their Comment,11 the respondents averred that the petitioners
failed to show that the CA erred in affirming the NLRC decision.
20,111.26 They posit that the petitioners were contractual employees and their
rehiring did not amount to regularization. The CA cited William Uy
; and Construction Corp. v. Trinidad,12 where it was held that the repeated
and successive rehiring of project employees did not qualify them as
2. Herminigildo Flores ₱18,440.50 regular employees, as length of service was not the controlling
determinant of the employment tenure of a project employee, but
2/2/08 – 6/13/08 = 4.36 mos. None whether the employment had been fixed for a specific project or
undertaking, its completion had been determined at the time of the
6/14/08 – 8/27/08 = 963.30 engagement of the employee. The respondents add that for said
reason, the petitioners were not entitled to full backwages,
8/28/08 – 6/30/10 = 11,471.20 separation pay, moral and exemplary damages, and attorney’s fees.

7/1/10 – 12/16/10 = 5.50 mos.

66
Now, the question is whether or not the CA erred in not finding any of, the respondents cannot invoke the exception in Article 280 of the
grave abuse of discretion amounting to lack or excess of jurisdiction Labor Code.18 This is a clear attempt to frustrate the regularization
on the part of the NLRC. of the petitioners and to circumvent the law.

The Court’s Ruling: Next, granting that they were project employees, the petitioners
could only be considered as regular employees as the two factors
enumerated in Maraguinot, Jr., are present in this case. It is
The Court grants the petition.
undisputed that the petitioners were continuously rehired by the
same employer for the same position as extruder operators. As
The petitioners have convincingly shown that they should be such, they were responsible for the operation of machines that
considered regular employees and, as such, entitled to full produced the sacks. Hence, their work was vital, necessary and
backwages and other entitlements. indispensable to the usual business or trade of the employer.

A reading of the 2008 employment contracts,13 denominated as In D.M. Consunji, Inc. v. Estelito Jamin19 and Liganza v. RBL
"Project Employment Agreement," reveals that there was a Shipyard Corporation,20 the Court reiterated the ruling that an
stipulated probationary period of six (6) months from its employment ceases to be coterminous with specific projects when
commencement. It was provided therein that in the event that they the employee is continuously rehired due to the demands of the
would be able to comply with the company’s standards and criteria employer’s business and re-engaged for many more projects without
within such period, they shall be reclassified as project employees interruption.
with respect to the remaining period of the effectivity of the contract.
Specifically, paragraph 3(b) of the agreement reads:
The respondents cannot use the alleged expiration of the
employment contracts of the petitioners as a shield of their illegal
The SECOND PARTY hereby acknowledges, agrees and acts. The project employment contracts that the petitioners were
understands that the nature of his/her employment is probationary made to sign every year since the start of their employment were
and on a project-basis. The SECOND PARTY further acknowledges, only a stratagem to violate their security of tenure in the company.
agrees and understands that within the effectivity of this Contract, As restated in Poseidon Fishing v. NLRC,21 "if from the
his/her job performance will be evaluated in accordance with the circumstances it is apparent that periods have been imposed to
standards and criteria explained and disclosed to him/her prior to preclude acquisition of tenurial security by the employee, they
signing of this Contract. In the event that the SECOND PARTY is should be disregarded for being contrary to public policy."
able to comply with the said standards and criteria within the
probationary period of six month/s from commencement of this
The respondents’ invocation of William Uy Construction Corp. v.
Contract, he/she shall be reclassified as a project employee of (o)f
Trinidad22 is misplaced because it is applicable only in cases
the FIRST PARTY with respect to the remaining period of the
involving the tenure of project employees in the construction
effectivity of this Contract.
industry. It is widely known that in the construction industry, a project
employee's work depends on the availability of projects, necessarily
Under Article 281 of the Labor Code, however, "an employee who is the duration of his employment.23 It is not permanent but
allowed to work after a probationary period shall be considered a coterminous with the work to which he is assigned. 24 It would be
regular employee." When an employer renews a contract of extremely burdensome for the employer, who depends on the
employment after the lapse of the six-month probationary period, the availability of projects, to carry him as a permanent employee and
employee thereby becomes a regular employee. No employer is pay him wages even if there are no projects for him to work
allowed to determine indefinitely the fitness of its employees. 14 While on.25 The rationale behind this is that once the project is completed it
length of time is not the controlling test for project employment, it is would be unjust to require the employer to maintain these
vital in determining if the employee was hired for a specific employees in their payroll. To do so would make the employee a
undertaking or tasked to perform functions vital, necessary and privileged retainer who collects payment from his employer for work
indispensable to the usual business of trade of the not done. This is extremely unfair to the employers and amounts to
employer.15 Thus, in the earlier case of Maraguinot, Jr. v. NLRC,16 it labor coddling at the expense of management.26"
was ruled that a project or work pool employee, who has been: (1)
continuously, as opposed to intermittently, rehired by the same
Now that it has been clearly established that the petitioners were
employer for the same tasks or nature of tasks; and (2) those tasks
regular employees, their termination is considered illegal for lack of
are vital, necessary and indispensable to the usual business or trade
just or authorized causes. Under Article 279 of the Labor Code, an
of the employer, must be deemed a regular employee. Thus:
employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and
x x x. Lest it be misunderstood, this ruling does not mean that simply to his full backwages, inclusive of allowances, and to his other
because an employee is a project or work pool employee even benefits or their monetary equivalent computed from the time his
outside the construction industry, he is deemed, ipso jure, a regular compensation was withheld from him up to the time of his actual
employee. All that we hold today is that once a project or work pool reinstatement. The law intends the award of backwages and similar
employee has been: (1) continuously, as opposed to intermittently, benefits to accumulate past the date of the LA decision until the
re-hired by the same employer for the same tasks or nature of tasks; dismissed employee is actually reinstated.
and (2) these tasks are vital, necessary and indispensable to the
usual business or trade of the employer, then the employee must be
WHEREFORE, the petition is GRANTED. The assailed July 18,
deemed a regular employee, pursuant to Article 280 of the Labor
2012 decision of the Court of Appeals and its November 12, 2012
Code and jurisprudence. To rule otherwise would allow
Resolution in CA-G.R. SP No. 1244 70, are hereby ANNULLED and
circumvention of labor laws in industries not falling within the ambit
SET ASIDE.
of Policy Instruction No. 20/Department Order No. 19, hence
allowing the prevention of acquisition of tenurial security by project
or work pool employees who have already gained the status of Accordingly, respondent Marulas Industrial Corporation is hereby
regular employees by the employer's conduct.1âwphi1 ordered to reinstate petitioners Macarthur Malicdem and
Hermenigildo Flores to their former positions without loss of seniority
rights and other privileges and to pay their full backwages, inclusive
The test to determine whether employment is regular or not is the
of allowances and their other benefits or their monetary equivalent
reasonable connection between the particular activity performed by
computed from the time their compensations were withheld from
the employee in relation to the usual business or trade of the
them up to the time of their actual reinstatement plus the wage
employer. If the employee has been performing the job for at least
differentials stated in the July 13, 2011 decision of the Labor Arbiter,
one year, even if the performance is not continuous or merely
as modified by the December 19, 2011 NLRC decision.
intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not
indispensability of that activity to the business.17 SO ORDERED.

Guided by the foregoing, the Court is of the considered view that


there was clearly a deliberate intent to prevent the regularization of
the petitioners.
G.R. Nos. 196280 & 196286 April 2, 2014

To begin with, there is no actual project. The only stipulations in the


UNIVERSIDAD DE STA. ISABEL, Petitioner,
contracts were the dates of their effectivity, the duties and
vs.
responsibilities of the petitioners as extruder operators, the rights
MARVIN-JULIAN L. SAMBAJON, JR., Respondent.
and obligations of the parties, and the petitioners’ compensation and
allowances. As there was no specific project or undertaking to speak

67
DECISION were completing two years of service, the University adjusted your
salary in the light of the CHED Special Order you submitted showing
that you had obtained the degree of Master of Arts in Education.
VILLARAMA, JR., J.:
Instead of being grateful for the adjustment, you insist that the
adjustment be made retroactive to June 2003. Simply stated, you
Before us is a petition for review on certiorari under Rule 45 urging want your salary adjusted after one semester of probationary
this Court to set aside the Decision1 dated March 25, 2011 of the service. We do not think a probationary teacher has better rights
Court of Appeals (CA) in CA-GR. SP Nos. 108103 and 108168 than a permanent teacher in the matter of re-ranking or
which affirmed with modification the Decision2 dated August 1, 2008 "evaluation."9
of the National Labor Relations Commission (NLRC). The NLRC
affirmed the Decision3 dated August 22, 2006 of the Labor Arbiter in
However, respondent found the above explanation insufficient and
NLRC Sub-RAB V-05-04-00053-05) declaring petitioner liable for
not clear enough. In his letter dated January 12, 2005, he pointed
illegal dismissal of respondent.
out the case of another faculty member -- whom he did not name --
also on probationary status whose salary was supposedly adjusted
The Facts by petitioner at the start of school year (June) after he/she had
completed his/her master’s degree in March. Respondent thus
pleaded for the release of his salary differential, or at the very least,
Universidad de Sta. Isabel (petitioner) is a non-stock, non-profit that petitioner give him categorical answers to his questions.10
religious educational institution in Naga City. Petitioner hired Marvin-
Julian L. Sambajon, Jr. (respondent) as a full-time college faculty
member with the rank of Assistant Professor on probationary status, Apparently, to resolve the issue, a dialogue was held between
as evidenced by an Appointment Contract4 dated November 1, respondent and Sr. Evidente. As to the outcome of this
2002, effective November 1, 2002 up to March 30, 2003. conversation, the parties gave conflicting accounts. Respondent
claimed that Sr. Evidente told him that the school administration had
decided to shorten his probationary period to two years on the basis
After the aforesaid contract expired, petitioner continued to give of his satisfactory performance.11 This was categorically denied by
teaching loads to respondent who remained a full-time faculty
Sr. Evidente though the latter admitted having informed respondent
member of the Department of Religious Education for the two "that he was made Associate Professor on account of his incessant
semesters of school-year (SY) 2003-2004 (June 1, 2003 to March requests for a salary increase which the Universidad de Santa
31, 2004); and two semesters of SY 2004-2005 (June 2004