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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 112965 January 30, 1997 PHILIPPINES TODAY, INC., BETTY GO-BELMONTE, MAXIMO V. SOLIVEN, ARTURO A. BORJAL, and ISAAC G. BELMONTE, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and FELIX R. ALEGRE, JR., respondents.

PANGANIBAN, J.: May a "Memorandum for File" which did not mention the words "resign" and/or "resignation" nonetheless juridically constitute voluntary resignation? In answering this question, the Court took into account not merely the literal meaning of the words and phrases used but, more importantly, the peculiar circumstances attendant to its writing as well as antecedent, contemporaneous and subsequent actions, which were inconsistent with the desire for continued employment of the writer, an intelligent executive occupying a position of trust in the Philippine Star and gifted with an unusual writing ability. These circumstances and actions are explained by this Court in re-solving this petition for certiorari assailing the Decision 1 of the National Labor Relations Commission (Second Division) 2 in NLRC NCR CA 001863-91 entitled "Felix R. Alegre, Jr. vs. Philippines Today, Inc." promulgated on September 30, 1993, which reversed the decision of Labor Arbiter Pablo C. Espiritu, Jr., dated May 15, 1991. In a Resolution dated November 16, 1993, petitioners' motion for reconsideration was denied. 3 The Facts The undisputed facts are as follows: Petitioner Philippines Today, Inc. (PTI) is the owner of the Philippine Star, a daily newspaper of national and international circulation, while the individual petitioners are officers and members of the board of directors of PTI, namely, Betty Go-Belmonte, chairman of the board; Arturo A. Borjal, president; Maximo V. Soliven, publisher and chairman, editorial board; and Isaac G. Belmonte, treasurer. Private Respondent Felix R. Alegre, Jr. was employed by PTI in July 1986 as a senior investigative reporter of the Philippine Star with a monthly salary of eight thousand pesos (P8,000.00). He later became chief investigative writer and then assistant to the publisher. His monthly compensation was correspondingly increased to ten thousand pesos (P10,000.00). On October 20, 1988, Respondent Alegre filed a request for a thirty-day leave of absence effective on the same date, citing the advice of his personal physician for him to undergo further medical consultations abroad. 4 Four days later, on October 24, 1988, he wrote a "Memorandum for File" 5 addressed to Petitioner Betty Go-Belmonte with copies furnished to members of the board of directors of PTI, the text of which is reproduced below: MEMORANDUM FOR FILE. FOR: BETTY GO-BELMONTE

Chairman & CEO, The STAR Group of Publications. FROM: FELIX R. ALEGRE, JR. DATE: 24 October 1988 SUBJECT: HAVING IT ALL

Truth like medicine hurts. But it cures. The nice little chat we had last Thursday was most revealing. And certainly disconcerting. What you had to tell me pained me, of course. But it has helped me just as much. It enabled me to see things clearly in their right perspectives. More importantly, it provided me with the answers to the questions that had long nagged me in my wakeful state. For quite a time, I got this sinking feeling of being treated like a pariah of sorts by most of the senior executives around here. The frustration at my inability to put a finger at such a feeling somehow enhanced the angst within me. Until our chat. Now all the demons of my anxiety have been exorcised. And I am left alone to lick the wounds of my betrayal. It isn't easy, I know. But I shall pull through. Your candor and demonstrated faith in my person have been most assuaging. And for that alone, I am most grateful. It has never occurred to me that, in my acceptance of the invitation from no less than the publisher himself, to join him at the Philippines Today, Inc., and the STAR Group of Publications, I was unwittingly signing my own death warrant as well. The insults he had later on hurled at my person, the malicious innuendoes he had spread around, casting doubts on my personal and professional integrity, had mercilessly torn at my soul, causing metaphysical death. My credentials as a working journalist, I'd like to believe, got me this job at the STAR in the first place. And my bylines in the series of articles in the STAR From Day One of my official affiliation with the Company, should establish that fact. I was an investigative reporter at the Manila Times when the publisher offered me to work with him at the STAR in 1986. I was given the assignment as senior investigative reporter, then chief investigative writer, until I was given a fancy title of assistant to the publisher. As a corporate guy assisting the publisher in his day-to-day official function and this is where I feel very strongly about citing some specifics of the things I did in this area, to wit: . . . (omitted are said "specifics" of Respondent Alegre's accomplishments as assistant to the publisher deemed by this Court as not relevant to the appreciation of this memorandum in relation to the consideration of the petition.) As can be gleaned from this recital of some of the "things done" (despite my distaste for trumpeting one's deeds, but has to be said, to set the record straight, in this instance), one can see that I obviously don different hats at any one time, doing administration and operations functions, apart from my journalistic duties. That I work as a teamplayer, and trying hard to be good (sic) it, cannot be denied.

FOR DOING ALL THESE in the best spirit of corporate team-upmanship, what did I get in RETURN? 1. A pittance, salary/compensation-wise. 2. Being conveniently bypassed in promotions, pay hikes, and other perks. 3. Hindered from active participation in corporate affairs, by shooting at my ideas that otherwise would have been workable and profitable for the Company and its people (CF. Item 2 of my memo dtd 06 September 88 which had you interested in and supportive of). 4. Personally and professionally maligned, and accused of being an NPA (non-performing asshole, pardon my French). By and large, all that I got are the twin demons of a civilized, unconscionable society: ECONOMIC INJUSTICE and PROFESSIONAL SABOTAGE. When push comes to a shove . . . . . anything or everything comes crashing down. I'M HAVING IT ALL! Since I am on leave, I guess I won't be able to see you for a while. I wish to take this opportunity to express my profound appreciation and sincere thanks for your genuine concren (sic) and honest initiatives to do a good turn on my behalf. You have been most candid and forthright with me. I can't be any less. Thank you for everything. God bless. Very sincerely, Sgd.) FELIX R. ALEGRE, JR. copy furnished: Members of the Board, Phils. Today, Inc. Dr. Ronaldo G. Asuncion Mr. Antonio Roces On December 6, 1988, Respondent Alegre received from Petitioner Belmonte a letter, 6 as follows:Dear Jun, During our board meeting yesterday, we discussed your letter dated October 24, 1988, and the Board decided to accept your resignation and that it would take effect on November 22, 1988 upon expiration of your one-month leave. I would like to take this opportunity to say that we were happy to have had you with the STAR Group of Publications and that we would like to wish you the best of luck. God bless. Thank you. Very truly yours, BETTY GO BELMONTE Chairman of the Board The Philippine Star

This was followed by another letter on January 2,1989, wherein Alegre, through counsel, 8 reiterated that he never resigned. He accused petitioners of illegal dismissal as can be perceived allegedly from the discrimination against him in promotions, benefits and the ploy to oust him by considering his memorandum as a resignation. He claimed that as a result, he suffered mental anguish, social humiliation, besmirched reputation and moral shock. He thus demanded indemnification for "the material and moral losses he has incurred". He further wrote that he was not insisting to be taken back after being shown that he was no longer wanted in the company. Counsel 9 for petitioners, in a reply on January 19, 1989, explained that the acceptance of Alegre's resignation was a collective decision of the board of directors since "nobody in his right mind would write a memorandum of the sort he wrote and still not resign. To them, the memorandum was tantamount to a resignation even if Mr. Alegre did not say so in so much words." With respect to his claim for damages, petitioners' counsel said, "he has not shown any specific fact or circumstance that would justify his claim, even remotely." Hence, "the Star cannot accede to the same." On May 17, 1989, Respondent Alegre filed a complaint for illegal dismissal and damages against herein petitioners. 10 The labor arbiter dismissed said complaint in his decision of May 15, 1991. We quote significant portions of said decision: This office has minutely disected (sic) the letter and while it be said that nothing therein mentions about resigning from his position as Assistant to the Publisher, a perusal of the letter as a whole shows that the intention of the complainant was to resign from his post. The subject as "Having it all" together with his frustrations and disappointment in the office coupled with his statement that "when push comes to a shove, everything comes crushing (sic) down" and that: he is "having it all" and with his concluding sentence of "Thank you for everything" are (sic) clear indications that he was in fact resigning. As a journalist and a writer, complainant need not write his letter of resignation in black and white. He can do so in many other ways, words and actions to show his real intention of leaving his job. xxx xxx xxx Complainant's subsequent overt acts particularly his failure to report to his job after the expiration of his leave of absence, his being gainfully employed with the Office of Senator Laurel (as Chief of Staff) and his act of clearing and removing his personal files, things and belongings from his desk prior to his (complainant) knowledge or receipt of the letter accepting his resignation(,) clearly indicates that complainant was not terminated from his job but rather he resigned from his job. . . xxx xxx xxx WHEREFORE, premises considered, judgment is hereby rendered dismissing the complaint for illegal dismissal and damages for lack of merit, and ordering respondent, Philippines Today, Inc., to pay complainant the amount of THIRTY THOUSAND (P30,000.00) PESOS by way of separation pay in the interest of compassionate labor justice and; dismissing Respondents (sic) counterclaim for damages for lack of merit. 11 On appeal by Alegre, the above decision was set aside by the NLRC. Adopting the definition in Black's Law Dictionary (5th Edition) of resignation as a "formal renouncement or relinquishment of an office," it held that herein Respondent Alegre did not resign as there was no actual act of relinquishment to constitute complete and operative resignation. According to the NLRC, the request for a leave of absence by Respondent Alegre meant that he intended to return after the period of his absence. Such intent was bolstered by his filing of a request for an extension of his leave. Further, when he received the letter of Petitioner Belmonte dated November 9, 1988 informing him of the acceptance by the Board of his resignation, he immediately wrote a letter to Petitioner Belmonte, expressing in no uncertain terms that he

did not resign. These circumstances led the NLRC to hold that Respondent Alegre was constructively dismissed without just cause and to order petitioners to pay him full backwages for three years from the time of dismissal, separation pay in lieu of reinstatement, moral and exemplary damages and attorney's fees. 12 Issues Petitioners argue that the NLRC committed grave abuse of discretion: 1. in finding them guilty of illegally dismissing Respondent Alegre; 2. in awarding Respondent Alegre moral and exemplary damages and attorney's fees without any actual and legal basis; and, 3. even assuming that Respondent Alegre was illegally dismissed, in contravening and disregarding this Court's ruling in Alex Ferrer, et al. vs. NLRC (Second Division) 13 by erroneously computing backwages, as it did not deduct the amounts earned by Respondent Alegre while he was admittedly employed in the office of Senator Sotero H. Laurel. The pivotal question is whether the Memorandum for File of Respondent Alegre addressed to Petitioner Belmonte constitutes a letter of resignation. In construing it so, petitioners advance these arguments: (1) Respondent Alegre had spoken openly to Petitioner Belmonte of his desire to leave the Philippine Star; (2) the contents of his memorandum indicate an intention on his part not to return to his job even if he did not categorically mention resignation; (3) he never returned to work after his authorized leave expired and even cleared his desk of his personal belongings; and, (4) he obtained employment as chief of staff of the office of Senator Sotero Laurel for which he was paid a higher salary. Having been led to believe that Alegre wanted to resign and in honestly perceiving his memorandum as a resignation letter, petitioners cannot be held liable for moral and exemplary damages because they believe their action was in accordance with law. Lastly, petitioners contend that, even assuming they were liable for illegal dismissal, the NLRC, in granting backwages, should have deducted the amount earned by Alegre from his subsequent employment. Private respondent, on the other hand, maintains that he had no intention of resigning from PTI. He insists that: (1) in writing the memorandum, he was merely lamenting the work environment at PTI and apprising Petitioner Belmonte of the situation; (2) a resignation should be unequivocal in nature; (3) his non-return to work after his original leave expired is explained by his subsequent request for an extension thereof due to medical reasons; (4) and the letter of Petitioner Belmonte obviated any desire for him to return to his work since petitioners practically terminated his employment. He further contends that petitioners' tenacious resistance in admitting their mistake bespeaks of bad faith and shows their real intention to end his services, which entitles him to moral and exemplary damages. In representation of public respondent, the Solicitor General supported private respondent's position. The Court's Ruling The petition is meritorious. Pivotal Issue: Did the Memorandum for File Constitute Voluntary Resignation? After a thorough scrutiny of the Memorandum for File of Respondent Alegre and a careful deliberation on the peculiar circumstances attendant to its writing and the antecedent, contemporaneous and subsequent actions of private respondent, we hold that said memorandum juridically constituted a letter of resignation.

We see merit in the findings and conclusions drawn by the labor arbiter. They are more in accord with prudence, common sense and sound judgment. The labor arbiter correctly deduced from Alegre's memorandum and attendant actuations that he resigned. In contrast, the NLRC was too strict in its interpretation of what constitutes "resignation." It adhered literally to the dictionary meaning of the word without relating it to the peculiarity of the factual circumstances surrounding the case. Courts and quasijudicial bodies, in the exercise of their functions and in making decisions, must not be too dogmatic as to restrict themselves to literal interpretations of words, phrases and sentences. A complete and wholistic view must be taken in order to render a just and equitable judgment. Incendiary words and sarcastic remarks negate alleged desire to improve relations Alegre's choice of words and way of expression betray his allegation that the memorandum was simply an "opportunity to open the eyes of (Petitioner) Belmonte to the work environment in petitioners' newspaper with the end in view of persuading (her) to take a hand at improving said environment." Apprising his employer (or top-level management) of his frustrations in his job and differences with his immediate superior is certainly not done in an abrasive, offensive and disrespectful manner. A cordial or, at the very least, civil attitude, according due deference to one's superiors, is still observed, especially among high-ranking management officers. The Court takes judicial notice of the Filipino values of pakikisama and paggalang which are not only prevalent among members of a family and community but within organizations as well, including work sites. An employee is expected to extend due respect to management, the employer being the "proverbial hen that lays the golden egg," 14 so to speak. An aggrieved employee who wants to unburden himself of his disappointments and frustrations in his job or relations with his immediate superior would normally approach said superior directly or otherwise ask some other officer possibly to mediate and discuss the problem with the end in view of settling their differences without causing ferocious conflicts. No matter how the employee dislikes his employer professionally, and even if he is in a confrontational disposition, he cannot afford to be disrespectful and dare to talk with an unguarded tongue and/or with a bileful pen. Here, respondent Alegre was anything but respectful and polite. His memorandum is too affrontive, combative and confrontational. It certainly causes resentment, even when read by an objective reader. His incendiary words and sarcastic remarks, to quote some: For quite a time, I got this sinking feeling of being treated like a pariah of sorts by most of the senior executives around here. The frustration at my inability to put a finger at such a feeling somehow enhanced the angst within me. . . . Now all the demons of my anxiety have been exorcised. And I am left alone to lick the wounds of my betrayal. . . . It has never occurred to me that, in my acceptance of the invitation from no less than the publisher himself, to join him . . . , I was unwittingly signing my own death warrant as well. The insults he had later on hurled at my person, the malicious innuendoes he had spread around, casting doubts on my personal and professional integrity, had mercilessly torn at my soul, causing metaphysical death. negate any desire to improve work relations with Petitioner Soliven and other PTI executives. Such strongly worded letter constituted an act of "burning his bridges" with the officers of the company. Seeking relief incompatible with writing offensive letter Any management officer, much so an immediate superior, would be offended, if not enraged, with the insults and innuendoes stated in said memorandum; more so because the memorandum was not directly addressed to him but to the chairman and CEO and copy furnished all other officers and members of the board of directors. Any discerning mind can perceive that the letter is not simply a recitation of respondent Alegre's gripes, disappointments, frustrations and heartaches against the company and its officers particularly Petitioner Soliven, as postulated by the Solicitor General in his comment. 15 If it were so, why was it not addressed directly to the person concerned? His memorandum clearly indicated that his problems involved, or were supposedly caused by only one person, Mr. Soliven, his immediate superior.

But it was not even addressed to him! How can he expect amends in their relations if that was all he wanted? The Solicitor General was simply turning a blind eye to the obvious fact that said memorandum, for all intents and purposes, was intended, wittingly or unwittingly, to end employment relations. Respondent Alegre a well-educated journalist It should not escape our attention that respondent Alegre is a professional journalist and persuasive writer. On top of that, he was a law graduate. He must have known the drilling effect of his bitter and sarcastic remarks upon the petitioners and must have intended the same. Ordinary words are to be construed in their ordinary meaning. Common sense dictates that Alegre meant to resign when he wrote the memorandum. Otherwise, he should have used a more tempered language and a less confrontational tone. Moreover, he held a position of evident responsibility requiring the utmost confidence of his immediate superior. As assistant to the publisher doing, in his very own words, "administration and operations functions, apart from (my) journalistic duties," it is apparent that Alegre was not employed simply for his writing skills. Top management certainly reposed full trust and confidence in him and placed him in a position of considerable management influence. PTI officers of uncommon intelligence and perception Furthermore, his memorandum was addressed to the chairman and chief executive officer of PTI and furnished all members of the board of directors. These officers which include the likes of the late Betty Go-Belmonte, Maximo V. Soliven and Arturo A. Borjal, long-time and well-respected journalists acclaimed locally and internationally, are themselves people of uncommon perception and intellect. They will not miscomprehend the meaning and intent of Alegre's memorandum, which was not by any means a simple way of seeking relief but well a way to get out of the company. What else could he have meant with these concluding remarks: By and large, all that I got are the twin demons of a civilized, unconscionable society: ECONOMIC INJUSTICE and PROFESSIONAL SABOTAGE. When push comes to a shove . . . . . anything or everything comes crashing down. I'M HAVING IT ALL! Respondent Alegre, being a journalist himself and having worked with them for sometime, knew how his letter would be perceived and received. Besides, as discussed earlier, Alegre is likewise a well-educated man of more than average intelligence. The conclusion is inevitable that he had more than enough sense to anticipate the consequences and effects of his words and actions. Indeed, what a man sows, he reaps. Trust and confidence breached In addition, respondent Alegre is a highly confidential employee who holds his job at the pleasure of his employer or, stated otherwise, for as long as he enjoys the trust and confidence of his employer. Corollarily, he likewise must repose trust and confidence in his employer or, at the very least, his immediate superior. But any superior hurled with invectives from a confidential employee, much more one occupying a managerial position at the same time, will definitely lose trust and confidence in the latter. And there can be no way to interpret such letter other than as a withering of trust and confidence by the employee in his boss. The use of offensive language can only mean expression of disloyalty and disrespect. It renders the writer unworthy of the trust and confidence demanded by his position. It is beyond human nature to expect two persons with underlying mistrust in each other to continue to work together effectively, not to say, harmoniously. Antecedent, Contemporaneous and Subsequent Actions Affirming Resignation

In addition to his memorandum and the circumstances attendant thereto which were just discussed, the Court notes some peculiar actions confirming Alegre's intention to terminate his employment with the Star. (1) Medical reasons for leave of absence not proved First, he claims that his leave of absence was due to medical reasons, for which he was supposed to seek relief abroad. However, the Court scoured the records but found nothing to show that he actually underwent any medical check-up. Much less, medical examination abroad. Nothing really backs up such claim except his bare statements which, evidentially, are at best self-serving. (2) Cleared desk of personal belongings Second, respondent Alegre cleared his desk of his personal belongings even before he knew of the acceptance of his resignation. 16 Such act certainly bares his intent to leave his job. Respondent Alegre has not refuted nor offered any sufficient explanation for this action. We cannot but give due credit to the petitioners' contention that such act was expressive of his intent to resign. (3) Did not report back to work Third, respondent Alegre did not return to his job after his authorized leave of absence expired in November 1988. Although he sent another letter 17 requesting for an extension of his leave, there is no showing on record that the same was approved by petitioners. It is standard office procedure that applications for leave of absence are subject to the approval of the employer. These are not automatically granted upon filing. Except to cite in his request "travel log (sic) coupled with advice of my physician," respondent Alegre has nor proven the emergency nature of the cause/s of his extended leave. Again, we cannot but give due credence to petitioners' contention that this was another operative evidence of Alegre's intent to resign. His non-return to work, though, is not equivalent to abandonment of work. For in the latter, it is necessary to prove "clear and deliberate intent" coupled with unjustified absence and overt acts unerringly pointing to the fact that the employee simply does not want to work anymore. 18 In the case at bench, Alegre voluntarily resigned through his memorandum albeit written in the guise of a grievance letter. The law and jurisprudence on abandonment have thus no application in the present case. (4) Not deprived of chance to return to work Fourth, if Respondent Alegre had really no intention to resign, he could have reported back to work. His contention that he was effectively deprived of any chance to return to his work because of the acceptance of his purported resignation cannot be sustained. He claims that he received the notice dated November 9, 1988 only on December 6, 1988. But this means that for about two weeks after his leave expired, he had all chances to return to his work. Yet he chose not to. The obvious reason is that he had actually no intention of doing so. (5) Alegre expressly manifested intention to resign Prior to sending his memorandum, Respondent Alegre informed Petitioner Belmonte of his intention to resign from the Philippine Star. This is shown by the testimony (cross examination) of the late Mrs. Belmonte before the labor arbiter on January 13, 1990, as follows:. ATTY. BORRETA:

And you took that action, meaning the Board acted on this Memo for File which you considered as his letter of resignation without consulting or talking with the complainant first? WITNESS: The complainant had also applied for leave of absence and he talked with me that he was leaving for the United States. Actually I remember he requested a conversation but he did not specify what the conversation was about, Your Honor. He was telling me that he wanted to leave, has signed another job. And I told him that that is not my prerogative and I am only Chairman of the Board; and he came upon the recommendation of our Publisher and he was at that time Assistant to the Publisher; that he should talk to the Publisher first and I even advised him to patch up whatever differences he might have. In that conversation, he said something about leaving and he even said tome that when he leaves, he would ask his two (2) sons who were working with us to leave too. And I think I made a comment, and that must be what he was referring to. I said; oh, but your sons are very hardworking. In fact I said the Publisher, Max Soliven, told me that "sana you were as good as your sons" maybe that was his feeling. That is my way of trying to tell him that your sons are very hardworking because he said when I leave I am going to ask them to leave too. Maybe because of that he gave me the impression that he wanted to leave. ATTY. BORRETA: And this happened before he wrote this memo for file on October 24,1988? WITNESS: Yes, sir ATTY. BORRETA: And because of that you got the impression that he had the intention to resign? WITNESS: Yes, sir. 19 (6) Assumed job in another office Finally, the most telling of the actions undertaken by Respondent Alegre which evidently demonstrate his intent to resign was his immediate employment as chief of staff of the office of then Senator Sotero H. Laurel, with a much higher compensation at P14,600.00 per month plus P2,000.00 per month driver's allowance. He admitted in his testimony before the labor arbiter on November 6, 1989 that he was employed therein about a year before (the date of his testimony) or sometime in November 1988. 20 The date coincided with the period of his leave of absence or immediately thereafter. If he had no intention of resigning and was on leave for medical reasons as he alleged, why then did he commence a new job in another office at about the same period? His assumption of a new job prior to receiving Mrs. Belmonte's letter on December 6, 1988 is clearly inconsistent with any desire to remain in employment with PTI. This is particularly evident because both jobs required full-time work. Moreover, working in a newspaper which prides in its independence from partisan activities is incompatible with a concurrent political office held by respondent. Side Issue: May a Resignation Be Unilaterally Withdrawn? Having established that Respondent Alegre resigned, we now tackle the corollary issue of whether he can unilaterally withdraw his resignation. We hold that he cannot do so.

The case of Intertrod Maritime, Inc. vs. NLRC 21 is in point. The employee therein who was a ship engineer, while at Port Pylus, Greece, requested for relief due to "personal reasons." The master of the ship, who had authority to "sign off" an employee requesting relief, approved his request but informed the employee that repatriation expenses were for his account and that he had to give thirty days notice in view of clause 5 of the employment contract. When the vessel was at Port Said, Egypt four days later, the master "signed him off" and paid him in cash all amounts due him less repatriation expenses. On his return to the Philippines, the employee filed a complaint charging his employer with breach of employment contract and violation of the National Seamen Board rules and regulations. He claimed that his request for relief was only for the sole purpose of enabling him to take care of a fellow member of the crew who was hospitalized in Greece. Hence, after he was disallowed from disembarking thereat, the reason no longer existed and, consequently, he was illegally dismissed when he was forced to "sign off" in Egypt even as he signified his intention of continuing his work. The Court ruled against the employee. It held that resignations, once accepted, may not be withdrawn without the consent of the employer. If the employer accepts the withdrawal, the employee retains his job. If the employer does not, the employee cannot claim illegal dismissal. To say that an employee who has resigned is illegally dismissed, is to encroach upon the right of employers to hire persons who will be of service to them. Obviously, this is a recognition of the contractual nature of employment which requires mutuality of consent between the parties. An employment contract is consensual and voluntary. Hence, if the employee "finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, then he has no other choice but to disassociate himself from his employment". 22 If accepted by the employer, the consequent effect of resignation is severance of the contract of employment. A resigned employee who desires to take his job back has to re-apply therefor, and he shall have the status of a stranger who cannot unilaterally demand an appointment. He cannot arrogate unto himself the same position which he earlier decided to leave. To allow him to do so would be to deprive the employer of his basic right to choose whom to employ. Such is tantamount to undue oppression of the employer. It has been held that an employer is free to regulate, according to his own discretion and judgment, all aspects of employment including hiring. 23 The law, in protecting the rights of the laborer, impels neither the oppression nor self-destruction of the employer. 24 Consistent with our ruling in Intertrod, the resignation of respondent Alegre after its acceptance by petitioners can no longer be withdrawn without the consent of the latter. In fairness to the employer, an employee cannot backtrack on his resignation at his whim and without the conformity of the former. The instant case is unlike Molave Tours Corporation vs. NLRC 25 and People's Security, Inc. vs. NLRC 26 In Molave, acting on reports that the employee was on several occasions found drunk within work premises, the employer required him to explain in writing said charges. Notwithstanding his explanation and request for a confrontation with his accusers, the employee was made to sign a resignation letter. Two months after, he filed a complaint for illegal dismissal. The labor arbiter, affirmed by the NLRC, found that the employee was merely forced and intimidated into resigning. The Court reiterated that resignation must be voluntary on the part of the employee. It thus ordered the employer to reinstate the employee and award backwages and other benefits due him since there was no effective resignation. Likewise in People's Security, there was a finding of involuntary resignation. The employees therein who were security guards were not given assignments by their employer after the latter's security services contract with Meralco expired. The employees requested for loans to be deducted from their security bond deposits, which requests were denied by the employer who insisted that they must turn in their resignations first before their security bond deposits could be released. Not having been given new work assignments and being in dire financial need, the employees submitted their resignation letters. Three months later, they filed money claims which were later amended to include illegal dismissal. The employer contended that the employees voluntarily severed their employment because they turned in

their resignation letters and assumed jobs with another security agency. Again, the Court held that resignation is a voluntary act of the employee. When the employees were told that they would not be granted loans unless they resigned, they had no choice since they desperately needed money to meet their respective families' needs. They were also forced to accept jobs at another agency as a practical solution to their employment problems which were caused by the employer's refusal and failure to provide them with new assignments. In the case of Indophil vs. NLRC, 27 on the other hand, the employee voluntarily submitted a resignation letter but later tried to retrieve the same. He contended though, that he was thereafter prevented by the company guard from entering the work premises because of his resignation. He sued for illegal dismissal. His employer claimed abandonment of work since he was required to report and to explain his unauthorized absences but did not. In holding that there was no dismissal, the Court regarded the employer's act of requiring the employee to report and explain his unauthorized absences as nonacceptance of the previous resignation of the employee. Thus, the employer still considered him as its employee in spite of the filed resignation letter. With respect to the latter's allegation that he was prevented by the company guard from entering the premises, the Court chided him for not having inquired into its veracity and for simply relying on the bare statement of the guard. It said that the employee should be more vigilant of his rights. The above three cases are dissimilar to the case at bar. In the first two cases, there were involuntary resignations while in the third there was an unaccepted resignation. In the instant case, however, the resignation was voluntary and it was accepted by the employer. Thus, our grant of the petition. Since we find no case of illegal dismissal, we will no longer pass upon the two other issues raised by petitioners which are mere consequences of the contrary finding made by the NLRC. Necessarily, there can be no award of any moral or exemplary damages, backwages and separation pay. Epilogue Both the Constitution and the Labor Code mandate a bias in favor of labor. Hence, this Court , as a matter of judicial policy, leans backwards to protect labor and the working class against the machinations and incursions of their more financially entrenched employers. In the present case, however, it is obvious to us that private respondent's memorandum could not have been intended merely to persuade management to improve the work environment at the Philippine Star. Rather, it was evidently a recitation of the facts and reasons why respondent Alegre could no longer continue working under what he believed were unbearable conditions in the work place. The offensive language used by a well-educated man endowed with unusual writing skill could not have been intended merely for the "suggestion box." That it was addressed and given to persons of uncommon perception themselves takes the letter out of ordinary employer-employee communications. It is true that there was no direct mention of the word "resignation." However, the incendiary words employed denote a clear intent to end the writer's association of trust and confidence with his superiors and employer. This intent becomes even more manifest when viewed in light of attendant acts of Alegre, particularly his prolonged leave of absence, his clearing of his own desk of personal belongings, his failure to report back to work after the expiration of his approved leave, his verbal expression of his intent to resign, and most notably, his assumption of a higher paying job in a political office which was incompatible with his work at the Star. In deciding cases, this Court does not matter-of-factly apply and interpret laws in a vacuum. General principles do not decide specific cases. Rather, laws are interpreted always in the context of the peculiar factual situation of each case. Each case has its own flesh and blood and cannot be decided simply on the basis of isolated clinical classroom principles. The circumstances of time, place, event, person, and particularly attendant circumstances and actions before, during and after the operative fact should all be taken in their totality so that justice can be rationally and fairly dispensed.

WHEREFORE, premises considered, the petition is GRANTED. The assailed Decision and Resolution of the NLRC are SET ASIDE. The temporary restraining order issued by this Court is made PERMANENT. No costs. SO ORDERED.

The following day, Respondent Alegre wrote Petitioner Belmonte expressing surprise over the acceptance of his "resignation" as stated in the above-quoted letter. His letter 7 partly stated: It certainly beats me to be told that my "'resignation" has been accepted, when in truth and in fact, no such move, however implicit it may be, and no such letter has ever been made from my end. xxx xxx xxx I am writing this letter not, certainly, to make any appeal, but simply to go on record that I did not resign. I filed a leave of absence. Yes. And that was dully (sic) approved. Then I sent you a memorandum for file expressing my sentiments on certain things, candid statements that came to be (sic) expressed inspired by your candor and sincerity in little chat. Now, if you read that memo to mean resignation, that is your responsibility. And I am not just about to contest it. . . .

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 128682 March 18, 1999 JOAQUIN T. SERVIDAD, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, INNODATA PHILIPPINES, INC./ INNODATA CORPORATION, TODD SOLOMON, respondents.

PURISIMA, J.: Commodum ex injuria sua nemo habere debet. No one should obtain an advantage from his wrong. Schemes which preclude acquisition of tenurial security should be condemned as contrary to public policy. No member of the work force of this country should be allowed to be taken advantages of by the employer. 1 In this special civil action the Certiorari petitioner seeks to annul the decision 2 of the National Labor Relations Commission (NLRC) reversing the Labor Arbiter's disposition 3 that he was illegally dismissed. The facts of the case are as follows:

Petitioner Joaquin T. Servidad was employed on May 9, 1994 by respondent INNODATA as a "Data Control Clerk", under a contract of employment Section 2 of which, reads: Sec. 2. This Contract shall be effective for a period of 1 years commencing on May 10, 1994, until May 10, 1995 unless sooner terminated pursuant to the provisions hereof. From May 10, 1994 to November 10, 1994, or for a period of six (6) months, the EMPLOYEE shall be contractual during which the EMPLOYER can terminate the EMPLOYEE's services by serving written notice to that effect. Such termination shall be immediate, or at whatever date within the six-month period, as the EMPLOYER may determine. Should the EMPLOYEE continue his employment beyond November 10, 1994, he shall become a regular employee upon demonstration of sufficient skill in the terms of his ability to meet the standards set by the EMPLOYER. If the EMPLOYEE failto demonstrate the ability to master his task during the first six months he can be placed on probation for another six (6) months after which he will be evaluated for promotion as a regular employee. 4 On November 9, 1995, or after working for six (6) months, he was made to sign a three-month probationary employment and later, an extended three-month probationary employment good until May 9, 1995. 5 On July 7, 1994, the petitioner was given an overall rating of 100% and 98% in the work evaluations conducted by the company. In another evaluation, petitioner received a rating of 98.5% given by the private respondent. 6 On May 9, 1995, petitioner was dismissed from the service on the ground of alleged termination of contract of employment. Such happening prompted petitioner to institute a case for illegal dismissal against the private respondent. In ruling for petitioner, the Labor Arbiter disposed as follows: WHEREFORE, premises considered judgment is hereby rendered finding Respondent guilty of illegal dismissal and concomitantly, Respondent is ordered to pay complainant full backwages from the time of his dismissal till actual or payroll reinstatement, in the amount of P53,826.50 (computed till promulgation only). Respondent is hereby further ordered to reinstate complainant to his former position or equivalent position without loss of seniority rights, privileges and benefits as a regular employee immediately upon receipt of this decision. SO ORDERED. 7 On appeal thereto by INNODATA, the NLRC reversed the aforesaid judgment of the Labor Arbiter. It declared that the contract between petitioner and private respondent was for a fixed term and therefore, the dismissal of petitioner Joaquin T. Servidad, at the end of his one year term agreed upon, was valid. The decretal portion of the decision of NLRC is to the following effect: All said the judgment dated August 20, 1996 is hereby, REVERSED. WHEREFORE, premises considered, the instant case is hereby DISMISSED for lack of merit. SO ORDERED. 8

Undaunted, petitioner found his way to this Court via the present petition faulting NLRC for acting with grave abuse of discretion in adjudging subject contract of employment of petitioner to be for a definite or fixed period. The petition is impressed with merit. At bar is just another scheme to defeat the constitutionally guaranteed right of employees to security of tenure. The issue posited centers on the validity and enforceability of the contract of employment entered into by the parties. The NLRC found that the contract in question is for a fixed term. It is worthy to note, however, that the said contract provides for two periods. The first period was for six months terminable at the option of private respondent, while the second period was also for six months but probationary in character. In both cases, the private respondent did not specify the criteria for the termination or retention of the services of petitioner. Such a wide leeway for the determination of the tenure of an employee during a one year period of employment is violate of the right of the employee against unwarranted dismissal. Decisively in point is Article 1377 of the Civil Code, which provides: Art. 1377. The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity. Certainly, favorable interpretation of the contract in the case under scrutiny should be for petitioner and not for the private respondent which caused the preparation of said contract. If the contract was really for a fixed term, the private respondent should not have been given the discretion to dismiss the petitioner during the one year period of employment for reasons other than the just and authorized causes under the Labor Code. Settled is the rule that an employer can terminate the services of an employee only for valid and just causes which must be shown by clear and convincing evidence. 9 According to the private respondent, the one-year period stipulated in subject contract was to enable petitioner to acquire the skill necessary for the job. In effect, what respondent employer theorized upon is that the one-year term of employment is probationary. If the nature of the job did actually necessitate at least one year for the employee to acquire the requisite training and experience, still, the same could not be a valid probationary employment as it falls short of the requirement of Article 281 10 of the Labor Code. It was not brought to light that the petitioner was duly informed at the start of his employment, of the reasonable standards under which he could qualify as a regular employee. The rudiments of due process demand that an employee should be apprised before hand of the conditions of his employment and the basis for his advancement. 11 The language of the contract in dispute is truly a double-bladed scheme to block the acquisition of the employee of tenurial security. Thereunder, private respondent has two options. It can terminate the employee by reason of expiration of contract, or it may use "failure to meet work standards" as the ground for the employee's dismissal. In either case, the tenor of the contract jeopardizes the right of the worker to security of tenure guaranteed by the Constitution. 12 In the case of Brent School, Inc. vs. Zamora, et al. 13, the Court upheld the principle that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be disregarded for being contrary to public policy. Such circumstance has been indubitably shown here to justify the application of the following conclusion:

Accordingly, and since the entire purpose behind the development of the legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. . . . 14 The agreement in the case under consideration has such an objective and consequently, is a complete nullity. 15 It is abundantly clear that the petitioner was hired as a regular employee, at the outset. He worked as a "Data Control Clerk". His job was directly related to the data processing and data encoding business of Innodata. His work was therefore necessary and important to the business of his employer. Such being the scenario involved, under Article 280 16 of the Labor Code petitioner is considered a regular employee of private respondent. At any rate, even assuming that his original employment was probationary, petitioner was anyway permitted to work beyond the first six-month period and under Article 281 17 an employee allowed to work beyond the probationary period is deemed a regular employee. Reliance by NLRC on the ruling in Mariwasa Manufacturing, Inc., et al. vs. Hen. Leogardo Jr., et al, 18 is misplaced. Pertinent portion of the disquisition therein was as follows: By voluntary agreeing to an extension of the probationary period, Dequila in effect waived any benefit attaching to the completion of said period if he still failed to make the grade during the period of extension. The Court finds nothing in the law which by any fair interpretation prohibits such waiver. And no public policy protecting the employee and the security of tenure is served by proscribing voluntary agreements which, by reasonably extending the period of probation, actually improve and further a probationary employee's prospects of demonstrating his fitness for regular employment. 19 The above-described situation, however, is not the same as what obtained in this case. In the Mariwasa case, the employment was expressly agreed upon as probationary. Here, no such specific designation is stipulated in the contract. The private respondent sought to alternatively avail of probationary employment and employment for a fixed term so as to preclude the regularization of the status of petitioner. The utter disregard of public policy by the contract in question negates the ruling of NLRC that said contract is the law between the parties. The private agreement of the parties cannot prevail over Article 1700 of the Civil Code, which provides: Art. 1700. The relation between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to special laws on labor unions, collective bargaining, strikes and lockouts, closed shops, wages, working conditions, hours of labor and similar subjects. Similarly telling is the case of Pakistan Airlines Corporation vs. Pole, et al. 20 There, it was said: . . . provisions of applicable law, especially provisions relating to matters affected with public policy, are deemed written into the contract. Put a little differently, the governing principle is that the parties may not contract away applicable provisions of law especially peremptory provisions dealing with matters heavily impressed with public interest. The law relating to labor and employment is clearly such an area and parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other. . . . 21 On the averment that NLRC gravely abused its discretion in finding that petitioner failed to meet the standards of the company, we find for petitioner. The decision at NLRC on the matter simply stated that the petitioner fell short of the expectations of the company without specifying factual basis therefor. 22 The public respondent overlooked the undisputed satisfactory ratings of the performance of petitioner in the

two job evaluations conducted by the respondent company. Even granting, therefore, that the contract litigated upon is valid; still, the petitioner, who was permitted to work beyond six months could not be dismissed on the ground of failure to meet the standards of Innodata. By the provisions of the very contract itself, petitioner has become a regular employee of private respondent. Therein, it is stipulated that: ". . . Should the EMPLOYEE continue employment beyond November 10, 1994, he shall become a regular employee upon demonstration of sufficient skill in the terms of his ability to meet the standards set by the EMPLOYER. . . ." 23 Then too, the case at bar is on all fours with the recent case of Villanueva vs. NLRC, et al. 24 where the same standard form of employment contract prepared by INNODATA was at issue. In deciding that the said contract violated the employee's right to security of tenure, the court ratiocinated: The termination of petitioner's employment contract on 21 February 1995, as well as the subsequent issuance on 13 March 1995 of a "new" contract for five months as "data encoder," was a devious, but crude, attempt to circumvent petitioner's right to security of tenure as a regular employee guaranteed by Article 279 of the Labor Code. 25 Hence, the so called "end of contract" on 21 February 1995 amounted to a dismissal without any valid cause. Indeed, the NLRC gravely abused its discretion in construing the contract sued upon as one with a fixed term. To uphold such a finding would be to concede to the private respondent an advantage arising from its own mistake. On the matter of moral damages, however, we rule for the private respondent. Mere allegations of besmirched reputation, embarrassment and sleepless nights are insufficient to warrant an award for moral damages. It must be shown that the proximate cause thereof was the unlawful act or omission of the private respondent. 26 However, the petitioner herein predicated his claim for such damages on mere allegations of sleepless nights, embarrassment, etc., without detailing out what was responsible therefor or the cause thereof. As regards the backwages to be granted to petitioner, the amount thereof should be computed from the time he was illegally dismissed to the time of his actual or payroll reinstatement, without any deduction. 27 WHEREFORE, the petition is GRANTED, the questioned decision of NLRC is SET ASIDE, and the decision of the Labor Arbiter, dated August 20, 1996, in NLRC-NCR-00-055-03471-95 REINSTATED, with the modification that the award of backwages be computed from the time of the dismissal of petitioner to his actual or payroll reinstatement. Costs against the private respondent. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-21278 December 27, 1966

FEATI UNIVERSITY, petitioner, vs. HON. JOSE S. BAUTISTA, Presiding Judge of the Court of Industrial Relations and FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondents.

---------------------------------------G.R. No. L-21462 December 27, 1966

FEATI UNIVERSITY, petitioner-appellant, vs. FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee. ---------------------------------------G.R. No. L-21500 December 27, 1966

FEATI UNIVERSITY, petitioner-appellant, vs. FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee. Rafael Dinglasan for petitioner. Cipriano Cid and Associates for respondents. ZALDIVAR, J.: This Court, by resolution, ordered that these three cases be considered together, and the parties were allowed to file only one brief for the three cases. On January 14, 1963, the President of the respondent Feati University Faculty Club-PAFLU hereinafter referred to as Faculty Club wrote a letter to Mrs. Victoria L. Araneta, President of petitioner Feati University hereinafter referred to as University informing her of the organization of the Faculty Club into a registered labor union. The Faculty Club is composed of members who are professors and/or instructors of the University. On January 22, 1963, the President of the Faculty Club sent another letter containing twenty-six demands that have connection with the employment of the members of the Faculty Club by the University, and requesting an answer within ten days from receipt thereof. The President of the University answered the two letters, requesting that she be given at least thirty days to study thoroughly the different phases of the demands. Meanwhile counsel for the University, to whom the demands were referred, wrote a letter to the President of the Faculty Club demanding proof of its majority status and designation as a bargaining representative. On February 1, 1963, the President of the Faculty Club again wrote the President of the University rejecting the latter's request for extension of time, and on the same day he filed a notice of strike with the Bureau of Labor alleging as reason therefor the refusal of the University to bargain collectively. The parties were called to conferences at the Conciliation Division of the Bureau of Labor but efforts to conciliate them failed. On February 18, 1963, the members of the Faculty Club declared a strike and established picket lines in the premises of the University, resulting in the disruption of classes in the University. Despite further efforts of the officials from the Department of Labor to effect a settlement of the differences between the management of the University and the striking faculty members no satisfactory agreement was arrived at. On March 21, 1963, the President of the Philippines certified to the Court of Industrial Relations the dispute between the management of the University and the Faculty Club pursuant to the provisions of Section 10 of Republic Act No. 875. In connection with the dispute between the University and the Faculty Club and certain incidents related to said dispute, various cases were filed with the Court of Industrial Relations hereinafter referred to as CIR. The three cases now before this Court stemmed from those cases that were filed with the CIR. CASE NO. G.R. NO. L-21278

On May 10, 1963, the University filed before this Court a "petition for certiorari and prohibition with writ of preliminary injunction", docketed as G.R. No. L-21278, praying: (1) for the issuance of the writ of preliminary injunction enjoining respondent Judge Jose S. Bautista of the CIR to desist from proceeding in CIR Cases Nos. 41-IPA, 1183-MC, and V-30; (2) that the proceedings in Cases Nos. 41-IPA and 1183MC be annulled; (3) that the orders dated March 30, 1963 and April 6, 1963 in Case No. 41-IPA, the order dated April 6, 1963 in Case No. 1183-MC, and the order dated April 29, 1963 in Case No. V-30, all be annulled; and (4) that the respondent Judge be ordered to dismiss said cases Nos. 41-IPA, 1183-MC and V-30 of the CIR. On May 10, 1963, this Court issued a writ of preliminary injunction, upon the University's filing a bond of P1,000.00, ordering respondent Judge Jose S. Bautista as Presiding Judge of the CIR, until further order from this Court, "to desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183MC and V-30 of the Court of Industrial Relations)."1 On December 4, 1963, this Court ordered the injunction bond increased to P100,000.00; but on January 23, 1964, upon a motion for reconsideration by the University, this Court reduced the bond to P50,000.00. A brief statement of the three cases CIR Cases 41-IPA, 1183-MC and V-30 involved in the Case G.R. No. L-21278, is here necessary. CIR Case No. 41-IPA, relates to the case in connection with the strike staged by the members of the Faculty Club. As we have stated, the dispute between the University and the Faculty Club was certified on March 21, 1963 by the President of the Philippines to the CIR. On the strength of the presidential certification, respondent Judge Bautista set the case for hearing on March 23, 1963. During the hearing, the Judge endeavored to reconcile the part and it was agreed upon that the striking faculty members would return to work and the University would readmit them under a status quo arrangement. On that very same day, however, the University, thru counsel filed a motion to dismiss the case upon the ground that the CIR has no jurisdiction over the case, because (1) the Industrial Peace Act is not applicable to the University, it being an educational institution, nor to the members of the Faculty Club, they being independent contractors; and (2) the presidential certification is violative of Section 10 of the Industrial Peace Act, as the University is not an industrial establishment and there was no industrial dispute which could be certified to the CIR. On March 30, 1963 the respondent Judge issued an order denying the motion to dismiss and declaring that the Industrial Peace Act is applicable to both parties in the case and that the CIR had acquired jurisdiction over the case by virtue of the presidential certification. In the same order, the respondent Judge, believing that the dispute could not be decided promptly, ordered the strikers to return immediately to work and the University to take them back under the last terms and conditions existing before the dispute arose, as per agreement had during the hearing on March 23, 1963; and likewise enjoined the University, pending adjudication of the case, from dismissing any employee or laborer without previous authorization from the CIR. The University filed on April 1, 1963 a motion for reconsideration of the order of March 30, 1963 by the CIR en banc, and at the same time asking that the motion for reconsideration be first heard by the CIR en banc. Without the motion for reconsideration having been acted upon by the CIR en banc, respondent Judge set the case for hearing on the merits for May 8, 1963. The University moved for the cancellation of said hearing upon the ground that the court en banc should first hear the motion for reconsideration and resolve the issues raised therein before the case is heard on the merits. This motion for cancellation of the hearing was denied. The respondent Judge, however, cancelled the scheduled hearing when counsel for the University manifested that he would take up before the Supreme Court, by a petition for certiorari, the matter regarding the actuations of the respondent Judge and the issues raised in the motion for reconsideration, specially the issue relating to the jurisdiction of the CIR. The order of March 30, 1963 in Case 41-IPA is one of the orders sought to be annulled in the case, G.R. No. L-21278. Before the above-mentioned order of March 30, 1963 was issued by respondent Judge, the University had employed professors and/or instructors to take the places of those professors and/or instructors who had struck. On April 1, 1963, the Faculty Club filed with the CIR in Case 41-IPA a petition to declare in contempt of court certain parties, alleging that the University refused to accept back to work the returning strikers, in violation of the return-to-work order of March 30, 1963. The University filed, on April 5,1963, its

opposition to the petition for contempt, denying the allegations of the Faculty Club and alleging by way of special defense that there was still the motion for reconsideration of the order of March 30, 1963 which had not yet been acted upon by the CIR en banc. On April 6, 1963, the respondent Judge issued an order stating that "said replacements are hereby warned and cautioned, for the time being, not to disturb nor in any manner commit any act tending to disrupt the effectivity of the order of March 30,1963, pending the final resolution of the same."2 On April 8, 1963, there placing professors and/or instructors concerned filed, thru counsel, a motion for reconsideration by the CIR en banc of the order of respondent Judge of April 6, 1963. This order of April 6, 1963 is one of the orders that are sought to be annulled in case G.R. No. L-21278. CIR Case No. 1183-MC relates to a petition for certification election filed by the Faculty Club on March 8, 1963 before the CIR, praying that it be certified as the sole and exclusive bargaining representative of all the employees of the University. The University filed an opposition to the petition for certification election and at the same time a motion to dismiss said petition, raising the very same issues raised in Case No. 41-IPA, claiming that the petition did not comply with the rules promulgated by the CIR; that the Faculty Club is not a legitimate labor union; that the members of the Faculty Club cannot unionize for collective bargaining purposes; that the terms of the individual contracts of the professors, instructors, and teachers, who are members of the Faculty Club, would expire on March 25 or 31, 1963; and that the CIR has no jurisdiction to take cognizance of the petition because the Industrial Peace Act is not applicable to the members of the Faculty Club nor to the University. This case was assigned to Judge Baltazar Villanueva of the CIR. Before Judge Villanueva could act on the motion to dismiss, however, the Faculty Club filed on April 3, 1963 a motion to withdraw the petition on the ground that the labor dispute (Case No. 41-IPA) had already been certified by the President to the CIR and the issues raised in Case No. 1183-MC were absorbed by Case No. 41-IPA. The University opposed the withdrawal, alleging that the issues raised in Case No. 1183-MC were separate and distinct from the issues raised in Case No. 41-IPA; that the questions of recognition and majority status in Case No. 1183-MC were not absorbed by Case No. 41IPA; and that the CIR could not exercise its power of compulsory arbitration unless the legal issue regarding the existence of employer-employee relationship was first resolved. The University prayed that the motion of the Faculty Club to withdraw the petition for certification election be denied, and that its motion to dismiss the petition be heard. Judge Baltazar Villanueva, finding that the reasons stated by the Faculty Club in the motion to withdraw were well taken, on April 6, 1963, issued an order granting the withdrawal. The University filed, on April 24, 1963, a motion for reconsideration of that order of April 6, 1963 by the CIR en banc. This order of April 6, 1963 in Case No. 1183-MC is one of the orders sought to be annulled in the case, G.R. No. L-21278, now before Us. CIR Case No. V-30 relates to a complaint for indirect contempt of court filed against the administrative officials of the University. The Faculty Club, through the Acting Chief Prosecutor of the CIR, filed with the CIR a complaint docketed as Case No. V-30, charging President Victoria L. Araneta, Dean Daniel Salcedo, Executive Vice-President Rodolfo Maslog, and Assistant to the President Jose Segovia, as officials of the University, with indirect contempt of court, reiterating the same charges filed in Case No. 41-IPA for alleged violation of the order dated March 30, 1963. Based on the complaint thus filed by the Acting Chief Prosecutor of the CIR, respondent Judge Bautista issued on April 29, 1963 an order commanding any officer of the law to arrest the above named officials of the University so that they may be dealt with in accordance with law, and the same time fixed the bond for their release at P500.00 each. This order of April 29, 1963 is also one of the orders sought to be annulled in the case, G.R. No. L-2l278. The principal allegation of the University in its petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-21278, now before Us, is that respondent Judge Jose S. Bautista acted without, or in excess of, jurisdiction, or with grave abuse of discretion, in taking cognizance of, and in issuing the questioned orders in, CIR Cases Nos. 41-IPA 1183-MC and V-30. Let it be noted that when the petition for certiorari and prohibition with preliminary injunction was filed on May 10, 1963 in this case, the questioned order in CIR Cases Nos. 41-IPA, 1183-MC and V-30 were still pending action by the CIR en banc upon motions for reconsideration filed by the University.

On June 10, 1963, the Faculty Club filed its answer to the petition for certiorari and prohibition with preliminary injunction, admitting some allegations contained in the petition and denying others, and alleging special defenses which boil down to the contentions that (1) the CIR had acquired jurisdiction to take cognizance of Case No. 41-IPA by virtue of the presidential certification, so that it had jurisdiction to issue the questioned orders in said Case No. 41-IPA; (2) that the Industrial Peace Act (Republic Act 875) is applicable to the University as an employer and to the members of the Faculty Club as employees who are affiliated with a duly registered labor union, so that the Court of Industrial Relations had jurisdiction to take cognizance of Cases Nos. 1183-MC and V-30 and to issue the questioned orders in those two cases; and (3) that the petition for certiorari and prohibition with preliminary injunction was prematurely filed because the orders of the CIR sought to be annulled were still the subjects of pending motions for reconsideration before the CIR en banc when said petition for certiorari and prohibition with preliminary injunction was filed before this Court. CASE G.R. NO. L-21462 This case, G.R. No. L-21462, involves also CIR Case No. 1183-MC. As already stated Case No. 1183MC relates to a petition for certification election filed by the Faculty Club as a labor union, praying that it be certified as the sole and exclusive bargaining representative of all employees of the University. This petition was opposed by the University, and at the same time it filed a motion to dismiss said petition. But before Judge Baltazar Villanueva could act on the petition for certification election and the motion to dismiss the same, Faculty Club filed a motion to withdraw said petition upon the ground that the issue raised in Case No. 1183-MC were absorbed by Case No. 41-IPA which was certified by the President of the Philippines. Judge Baltazar Villanueva, by order April 6, 1963, granted the motion to withdraw. The University filed a motion for reconsideration of that order of April 6, 1963 by the CIR en banc. That motion for reconsideration was pending action by the CIR en banc when the petition for certiorari and prohibition with preliminary injunction in Case G.R. no. L-21278 was filed on May 10, 1963. As earlier stated this Court, in Case G.R. No. L-21278, issued a writ of preliminary injunction on May 10, 1963, ordering respondent Judge Bautista, until further order from this Court, to desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial Relations). On June 5, 1963, that is, after this Court has issued the writ of preliminary injunction in Case G.R. No. L21278, the CIR en banc issued a resolution denying the motion for reconsideration of the order of April 6, 1963 in Case No. 1183-MC. On July 8, 1963, the University filed before this Court a petition for certiorari, by way of an appeal from the resolution of the CIR en banc, dated June 5, 1963, denying the motion for reconsideration of the order of April 6, 1963 in Case No. 1183-MC. This petition was docketed as G.R. No. L-21462. In its petition for certiorari, the University alleges (1) that the resolution of the Court of Industrial Relations of June 5, 1963 was null and void because it was issued in violation of the writ of preliminary injunction issued in Case G.R. No. L-21278; (2) that the issues of employer-employee relationship, the alleged status as a labor union, majority representation and designation as bargaining representative in an appropriate unit of the Faculty Club should have been resolved first in Case No. 1183-MC prior to the determination of the issues in Case No. 41-IPA and therefore the motion to withdraw the petition for certification election should not have been granted upon the ground that the issues in the first case have been absorbed in the second case; and (3) the lower court acted without or in excess of jurisdiction in taking cognizance of the petition for certification election and that the same should have been dismissed instead of having been ordered withdrawn. The University prayed that the proceedings in Case No. 1183-MC and the order of April 6, 1963 and the resolution of June 5, 1963 issued therein be annulled, and that the CIR be ordered to dismiss Case No. 1183-MC on the ground of lack of jurisdiction. The Faculty Club filed its answer, admitting some, and denying other, allegations in the petition for certiorari; and specially alleging that the lower court's order granting the withdrawal of the petition for certification election was in accordance with law, and that the resolution of the court en banc on June 5, 1963 was not a violation of the writ of preliminary injunction issued in Case G.R. No. L-21278 because

said writ of injunction was issued against Judge Jose S. Bautista and not against the Court of Industrial Relations, much less against Judge Baltazar Villanueva who was the trial judge of Case No. 1183-MC. CASE G.R. NO. L-21500 This case, G.R. No. L-21500, involves also CIR Case No. 41-IPA. As earlier stated, Case No. 41-IPA relates to the strike staged by the members of the Faculty Club and the dispute was certified by the President of the Philippines to the CIR. The University filed a motion to dismiss that case upon the ground that the CIR has no jurisdiction over the case, and on March 30, 1963 Judge Jose S. Bautista issued an order denying the motion to dismiss and declaring that the Industrial Peace Act is applicable to both parties in the case and that the CIR had acquired jurisdiction over the case by virtue of the presidential certification; and in that same order Judge Bautista ordered the strikers to return to work and the University to take them back under the last terms and conditions existing before the dispute arose; and enjoined the University from dismissing any employee or laborer without previous authority from the court. On April 1, 1963, the University filed a motion for reconsideration of the order of March 30, 1963 by the CIR en banc. That motion for reconsideration was pending action by the CIR en banc when the petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-21278 was filed on May 10, 1963. As we have already stated, this Court in said case G.R. No. L-21278, issued a writ of preliminary injunction on May 10, 1963 ordering respondent Judge Jose S. Bautista, until further order from this Court, to desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V30 of the Court of Industrial Relations). On July 2, 1963, the University received a copy of the resolution of the CIR en banc, dated May 7, 1963 but actually received and stamped at the Office of the Clerk of the CIR on June 28, 1963, denying the motion for reconsideration of the order dated March 30, 1963 in Case No. 41-IPA. On July 23, 1963, the University filed before this Court a petition for certiorari, by way of an appeal from the resolution of the Court of Industrial Relations en banc dated May 7, 1963 (but actually received by said petitioner on July 2, 1963) denying the motion for reconsideration of the order of March 30, 1963 in Case No. 41-IPA. This petition was docketed as G.R. No. L-21500. In its petition for certiorari the University alleges (1) that the resolution of the CIR en banc, dated May 7, 1963 but filed with the Clerk of the CIR on June 28, 1963, in Case No. 41-IPA, is null and void because it was issued in violation of the writ of preliminary injunction issued by this Court in G.R. No. L-21278; (2) that the CIR, through its Presiding Judge, had no jurisdiction to take cognizance of Case No. 41-IPA and the order of March 30, 1963 and the resolution dated May 7, 1963 issued therein are null and void; (3) that the certification made by the President of the Philippines is not authorized by Section 10 of Republic Act 875, but is violative thereof; (4) that the Faculty Club has no right to unionize or organize as a labor union for collective bargaining purposes and to be certified as a collective bargaining agent within the purview of the Industrial Peace Act, and consequently it has no right to strike and picket on the ground of petitioner's alleged refusal to bargain collectively where such duty does not exist in law and is not enforceable against an educational institution; and (5) that the return-to-work order of March 30, 1963 is improper and illegal. The petition prayed that the proceedings in Case No. 41-IPA be annulled, that the order dated March 30, 1963 and the resolution dated May 7, 1963 be revoked, and that the lower court be ordered to dismiss Case 41-IPA on the ground of lack of jurisdiction. On September 10, 1963, the Faculty Club, through counsel, filed a motion to dismiss the petition for certiorari on the ground that the petition being filed by way of an appeal from the orders of the Court of Industrial Relations denying the motion to dismiss in Case No. 41-IPA, the petition for certiorari is not proper because the orders appealed from are interlocutory in nature. This Court, by resolution of September 26, 1963, ordered that these three cases (G.R. Nos. L-21278, L21462 and L-21500) be considered together and the motion to dismiss in Case G.R. No. L-21500 be taken up when the cases are decided on the merits after the hearing.

Brushing aside certain technical questions raised by the parties in their pleadings, We proceed to decide these three cases on the merits of the issues raised. The University has raised several issues in the present cases, the pivotal one being its claim that the Court of Industrial Relations has no jurisdiction over the parties and the subject matter in CIR Cases 41IPA, 1183-MC and V-30, brought before it, upon the ground that Republic Act No. 875 is not applicable to the University because it is an educational institution and not an industrial establishment and hence not an "employer" in contemplation of said Act; and neither is Republic Act No. 875 applicable to the members of the Faculty Club because the latter are independent contractors and, therefore, not employees within the purview of the said Act. In support of the contention that being an educational institution it is beyond the scope of Republic Act No. 875, the University cites cases decided by this Court: Boy Scouts of the Philippines vs. Juliana Araos, L-10091, Jan. 29, 1958; University of San Agustin vs. CIR, et al., L-12222, May 28, 1958; Cebu Chinese High School vs. Philippine Land-Air-Sea Labor Union, PLASLU, L-12015, April 22, 1959; La Consolacion College, et al. vs. CIR, et al., L-13282, April 22, 1960; University of the Philippines, et al. vs. CIR, et al., L15416, April 8, 1960; Far Eastern University vs. CIR, L-17620, August 31, 1962. We have reviewed these cases, and also related cases subsequent thereto, and We find that they do not sustain the contention of the University. It is true that this Court has ruled that certain educational institutions, like the University of Santo Tomas, University of San Agustin, La Consolacion College, and other juridical entities, like the Boy Scouts of the Philippines and Manila Sanitarium, are beyond the purview of Republic Act No. 875 in the sense that the Court of Industrial Relations has no jurisdiction to take cognizance of charges of unfair labor practice filed against them, but it is nonetheless true that the principal reason of this Court in ruling in those cases that those institutions are excluded from the operation of Republic Act 875 is that those entities are not organized, maintained and operated for profit and do not declare dividends to stockholders. The decision in the case of University of San Agustin vs. Court of Industrial Relations, G.R. No. L-12222, May 28, 1958, is very pertinent. We quote a portion of the decision: It appears that the University of San Agustin, petitioner herein, is an educational institution conducted and managed by a "religious non-stock corporation duly organized and existing under the laws of the Philippines." It was organized not for profit or gain or division of the dividends among its stockholders, but solely for religious and educational purposes. It likewise appears that the Philippine Association of College and University Professors, respondent herein, is a non-stock association composed of professors and teachers in different colleges and universities and that since its organization two years ago, the university has adopted a hostile attitude to its formation and has tried to discriminate, harass and intimidate its members for which reason the association and the members affected filed the unfair labor practice complaint which initiated this proceeding. To the complaint of unfair labor practice, petitioner filed an answer wherein it disputed the jurisdiction of the Court of Industrial Relations over the controversy on the following grounds: "(a) That complainants therein being college and/or university professors were not "industrial" laborers or employees, and the Philippine Association of College and University Professors being composed of persons engaged in the teaching profession, is not and cannot be a legitimate labor organization within the meaning of the laws creating the Court of Industrial Relations and defining its powers and functions; "(b) That the University of San Agustin, respondent therein, is not an institution established for the purpose of gain or division of profits, and consequently, it is not an "industrial" enterprise and the members of its teaching staff are not engaged in "industrial" employment (U.S.T. Hospital Employees Association vs. Sto. Tomas University Hospital, G.R. No. L-6988, 24 May 1954; and San Beda College vs. Court of Industrial Relations and National Labor Union, G.R. No. L-7649, 29 October 1955; 51 O.G. (Nov. 1955) 5636-5640); "(c) That, as a necessary consequence, alleged controversy between therein complainants and respondent is not an "industrial" dispute, and the Court of Industrial Relations has no jurisdiction, not only on the parties but also over the subject matter of the complaint."

The issue now before us is: Since the University of San Agustin is not an institution established for profit or gain, nor an industrial enterprise, but one established exclusively for educational purposes, can it be said that its relation with its professors is one of employer and employee that comes under the jurisdiction of the Court of Industrial Relations? In other words, do the provisions of the Magna Carta on unfair labor practice apply to the relation between petitioner and members of respondent association? The issue is not new. Thus, in the case of Boy Scouts of the Philippines v. Juliana V. Araos, G.R. No. L10091, promulgated on January 29, 1958, this Court, speaking thru Mr. Justice Montemayor, answered the query in the negative in the following wise: "The main issue involved in the present case is whether or not a charitable institution or one organized not for profit but for more elevated purposes, charitable, humanitarian, etc., like the Boy Scouts of the Philippines, is included in the definition of "employer" contained in Republic Act 875, and whether the employees of said institution fall under the definition of "employee" also contained in the same Republic Act. If they are included, then any act which may be considered unfair labor practice, within the meaning of said Republic Act, would come under the jurisdiction of the Court of Industrial Relations; but if they do not fall within the scope of said Republic Act, particularly, its definitions of employer and employee, then the Industrial Court would have no jurisdiction at all. xxx xxx xxx

"On the basis of the foregoing considerations, there is every reason to believe that our labor legislation from Commonwealth Act No. 103, creating the Court of Industrial Relations, down through the Eight-Hour Labor Law, to the Industrial Peace Act, was intended by the Legislature to apply only to industrial employment and to govern the relations between employers engaged in industry and occupations for purposes of profit and gain, and their industrial employees, but not to organizations and entities which are organized, operated and maintained not for profit or gain, but for elevated and lofty purposes, such as, charity, social service, education and instruction, hospital and medical service, the encouragement and promotion of character, patriotism and kindred virtues in youth of the nation, etc. "In conclusion, we find and hold that Republic Act No. 875, particularly, that portion thereof regarding labor disputes and unfair labor practice, does not apply to the Boy Scouts of the Philippines, and consequently, the Court of Industrial Relations had no jurisdiction to entertain and decide the action or petition filed by respondent Araos. Wherefore, the appealed decision and resolution of the CIR are hereby set aside, with costs against respondent." There being a close analogy between the relation and facts involved in the two cases, we cannot but conclude that the Court of Industrial Relations has no jurisdiction to entertain the complaint for unfair labor practice lodged by respondent association against petitioner and, therefore, we hereby set aside the order and resolution subject to the present petition, with costs against respondent association. The same doctrine was confirmed in the case of University of Santo Tomas v. Hon. Baltazar Villanueva, et al., G.R. No. L-13748, October 30, 1959, where this Court ruled that: In the present case, the record reveals that the petitioner University of Santo Tomas is not an industry organized for profit but an institution of learning devoted exclusively to the education of the youth. The Court of First Instance of Manila in its decision in Civil Case No. 28870, which has long become final and consequently the settled law in the case, found as established by the evidence adduced by the parties therein (herein petitioner and respondent labor union) that while the University collects fees from its students, all its income is used for the improvement and enlargement of the institution. The University declares no dividend, and the members of the corporation who founded it, as ordained in its articles of incorporation, receive no material compensation for the time and sacrifice they render to the University and its students. The respondent union itself in a case before the Industrial Court (Case No. 314-MC) has averred that "the University of Santo Tomas, like the San Beda College, is an educational institution

operated not for profit but for the sole purpose of educating young men." (See Annex "B" to petitioner's motion to dismiss.). It is apparent, therefore, that on the face of the record the University of Santo Tomas is not a corporation created for profit but an educational institution and therefore not an industrial or business organization. In the case of La Consolacion College, et al. vs. CIR, et al., G.R. No. L-13282, April 22, 1960, this Court repeated the same ruling when it said: The main issue in this appeal by petitioner is that the industry trial court committed an error in holding that it has jurisdiction to act in this case even if it involves unfair labor practice considering that the La Consolacion College is not a business enterprise but an educational institution not organized for profit. If the claim that petitioner is an educational institution not operated for profit is true, which apparently is the case, because the very court a quo found that it has no stockholder, nor capital . . . then we are of the opinion that the same does not come under the jurisdiction of the Court of Industrial Relations in view of the ruling in the case of Boy Scouts of the Philippines v. Juliana V. Araos, G.R. No. L-10091, decided on January 29, 1958. It is noteworthy that the cases of the University of San Agustin, the University of Santo Tomas, and La Consolacion College, cited above, all involve charges of unfair labor practice under Republic Act No. 875, and the uniform rulings of this Court are that the Court of Industrial Relations has no jurisdiction over the charges because said Act does not apply to educational institutions that are not operated or maintained for profit and do not declare dividends. On the other hand, in the cases of Far Eastern University v. CIR, et al., G.R. No. L-17620, August 31, 1962, this Court upheld the decision of the Court of Industrial Relations finding the Far Eastern University, also an educational institution, guilty of unfair labor practice. Among the findings of fact in said case was that the Far Eastern University made profits from the school year 1952-1953 to 1958-1959. In affirming the decision of the lower court, this Court had thereby ratified the ruling of the Court of Industrial Relations which applied the Industrial Peace Act to educational institutions that are organized, operated and maintained for profit. It is also noteworthy that in the decisions in the cases of the Boy Scouts of the Philippines, the University of San Agustin, the University of Sto. Tomas, and La Consolacion College, this Court was not unanimous in the view that the Industrial Peace Act (Republic Act No. 875) is not applicable to charitable, eleemosynary or non-profit organizations which include educational institutions not operated for profit. There are members of this Court who hold the view that the Industrial Peace Act would apply also to nonprofit organizations or entities the only exception being the Government, including any political subdivision or instrumentality thereof, in so far as governmental functions are concerned. However, in the Far Eastern University case this Court is unanimous in supporting the view that an educational institution that is operated for profit comes within the scope of the Industrial Peace Act. We consider it a settled doctrine of this Court, therefore, that the Industrial Peace Act is applicable to any organization or entity whatever may be its purpose when it was created that is operated for profit or gain. Does the University operate as an educational institution for profit? Does it declare dividends for its stockholders? If it does not, it must be declared beyond the purview of Republic Act No. 875; but if it does, Republic Act No. 875 must apply to it. The University itself admits that it has declared dividends.3 The CIR in its order dated March 30, 1963 in CIR Case No. 41-IPA which order was issued after evidence was heard also found that the University is not for strictly educational purposes and that "It realizes profits and parts of such earning is distributed as dividends to private stockholders or individuals (Exh. A and also 1 to 1-F, 2-x 3-x and 4-x)"4 Under this circumstance, and in consonance with the rulings in the decisions of this Court, above cited, it is obvious that Republic Act No. 875 is applicable to herein petitioner Feati University. But the University claims that it is not an employer within the contemplation of Republic Act No. 875, because it is not an industrial establishment. At most, it says, it is only a lessee of the services of its

professors and/or instructors pursuant to a contract of services entered into between them. We find no merit in this claim. Let us clarify who is an "employer" under the Act. Section 2(c) of said Act provides: Sec. 2. Definitions.As used in this Act (c) The term employer include any person acting in the interest of an employer, directly or indirectly, but shall not include any labor organization (otherwise than when acting as an employer) or any one acting in the capacity or agent of such labor organization. It will be noted that in defining the term "employer" the Act uses the word "includes", which it also used in defining "employee". [Sec. 2 (d)], and "representative" [Sec. 2(h)]; and not the word "means" which the Act uses in defining the terms "court" [Sec. 2(a)], "labor organization" [Sec. 2(e)], "legitimate labor organization [Sec. 2(f)], "company union" [Sec. 2(g)], "unfair labor practice" [Sec. 2(i)], "supervisor" [Sec. 2(k)], "strike" [Sec. 2(l)] and "lock-out" [Sec. 2(m)]. A methodical variation in terminology is manifest. This variation and distinction in terminology and phraseology cannot be presumed to have been the inconsequential product of an oversight; rather, it must have been the result of a deliberate and purposeful act, more so when we consider that as legislative records show, Republic Act No. 875 had been meticulously and painstakingly drafted and deliberated upon. In using the word "includes" and not "means", Congress did not intend to give a complete definition of "employer", but rather that such definition should be complementary to what is commonly understood as employer. Congress intended the term to be understood in a broad meaning because, firstly, the statutory definition includes not only "a principal employer but also a person acting in the interest of the employer"; and, secondly, the Act itself specifically enumerated those who are not included in the term "employer", namely: (1) a labor organization (otherwise than when acting as an employer), (2) anyone acting in the capacity of officer or agent of such labor organization [Sec. 2(c)], and (3) the Government and any political subdivision or instrumentality thereof insofar as the right to strike for the purpose of securing changes or modifications in the terms and conditions of employment is concerned (Section 11). Among these statutory exemptions, educational institutions are not included; hence, they can be included in the term "employer". This Court, however, has ruled that those educational institutions that are not operated for profit are not within the purview of Republic Act No. 875.5 As stated above, Republic Act No. 875 does not give a comprehensive but only a complementary definition of the term "employer". The term encompasses those that are in ordinary parlance "employers." What is commonly meant by "employer"? The term "employer" has been given several acceptations. The lexical definition is "one who employs; one who uses; one who engages or keeps in service;" and "to employ" is "to provide work and pay for; to engage one's service; to hire." (Webster's New Twentieth Century Dictionary, 2nd ed., 1960, p. 595). The Workmen's Compensation Act defines employer as including "every person or association of persons, incorporated or not, public or private, and the legal representative of the deceased employer" and "includes the owner or lessee of a factory or establishment or place of work or any other person who is virtually the owner or manager of the business carried on in the establishment or place of work but who, for reason that there is an independent contractor in the same, or for any other reason, is not the direct employer of laborers employed there." [Sec. 39(a) of Act No. 3428.] The Minimum Wage Law states that "employer includes any person acting directly or indirectly in the interest of the employer in relation to an employee and shall include the Government and the government corporations". [Rep. Act No. 602, Sec. 2(b)]. The Social Security Act defines employer as "any person, natural or juridical, domestic or foreign, who carries in the Philippines any trade, business, industry, undertaking, or activity of any kind and uses the services of another person who is under his orders as regards the employment, except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government." (Rep. Act No. 1161, Sec. 8[c]). This Court, in the cases of the The Angat River Irrigation System, et al. vs. Angat River Workers' Union (PLUM), et al., G.R. Nos. L-10934 and L-10944, December 28, 1957, which cases involve unfair labor practices and hence within the purview of Republic Act No. 875, defined the term employer as follows:

An employer is one who employs the services of others; one for whom employees work and who pays their wages or salaries (Black Law Dictionary, 4th ed., p. 618). An employer includes any person acting in the interest of an employer, directly or indirectly (Sec. 2-c, Rep. Act 875). Under none of the above definitions may the University be excluded, especially so if it is considered that every professor, instructor or teacher in the teaching staff of the University, as per allegation of the University itself, has a contract with the latter for teaching services, albeit for one semester only. The University engaged the services of the professors, provided them work, and paid them compensation or salary for their services. Even if the University may be considered as a lessee of services under a contract between it and the members of its Faculty, still it is included in the term "employer". "Running through the word `employ' is the thought that there has been an agreement on the part of one person to perform a certain service in return for compensation to be paid by an employer. When you ask how a man is employed, or what is his employment, the thought that he is under agreement to perform some service or services for another is predominant and paramount." (Ballentine Law Dictionary, Philippine ed., p. 430, citing Pinkerton National Detective Agency v. Walker, 157 Ga. 548, 35 A. L. R. 557, 560, 122 S.E. Rep. 202). To bolster its claim of exception from the application of Republic Act No. 875, the University contends that it is not state that the employers included in the definition of 2 (c) of the Act. This contention can not be sustained. In the first place, Sec. 2 (c) of Republic Act No. 875 does not state that the employers included in the definition of the term "employer" are only and exclusively "industrial establishments"; on the contrary, as stated above, the term "employer" encompasses all employers except those specifically excluded by the Act. In the second place, even the Act itself does not refer exclusively to industrial establishments and does not confine its application thereto. This is patent inasmuch as several provisions of the Act are applicable to non-industrial workers, such as Sec. 3, which deals with "employees' right to self-organization"; Sections 4 and 5 which enumerate unfair labor practices; Section 8 which nullifies private contracts contravening employee's rights; Section 9 which relates to injunctions in any case involving a labor dispute; Section 11 which prohibits strikes in the government; Section 12 which provides for the exclusive collective bargaining representation for labor organizations; Section 14 which deals with the procedure for collective bargaining; Section 17 which treats of the rights and conditions of membership in labor organizations; Sections 18, 19, 20 and 21 which provide respectively for the establishment of conciliation service, compilation of collective bargaining contracts, advisory labormanagement relations; Section 22 which empowers the Secretary of Labor to make a study of labor relations; and Section 24 which enumerates the rights of labor organizations. (See Dissenting Opinion of Justice Concepcion in Boy Scouts of the Philippines v. Juliana Araos, G.R. No. L-10091, January 29, 1958.) This Court, in the case of Boy Scouts of the Philippines v. Araos, supra, had occasion to state that the Industrial Peace Act "refers only to organizations and entities created and operated for profits, engaged in a profitable trade, occupation or industry". It cannot be denied that running a university engages time and attention; that it is an occupation or a business from which the one engaged in it may derive profit or gain. The University is not an industrial establishment in the sense that an industrial establishment is one that is engaged in manufacture or trade where raw materials are changed or fashioned into finished products for use. But for the purposes of the Industrial Peace Act the University is an industrial establishment because it is operated for profit and it employs persons who work to earn a living. The term "industry", for the purposes of the application of our labor laws should be given a broad meaning so as to cover all enterprises which are operated for profit and which engage the services of persons who work to earn a living. The word "industry" within State Labor Relations Act controlling labor relations in industry, cover labor conditions in any field of employment where the objective is earning a livelihood on the one side and gaining of a profit on the other. Labor Law Sec. 700 et seq. State Labor Relations Board vs. McChesney, 27 N.Y.S. 2d 866, 868." (Words and Phrases, Permanent Edition, Vol. 21, 1960 edition p. 510).

The University urges that even if it were an employer, still there would be no employer-employee relationship between it and the striking members of the Faculty Club because the latter are not employees within the purview of Sec. 2(d) of Republic Act No. 875 but are independent contractors. This claim is untenable. Section 2 (d) of Republic Act No. 875 provides: (d) The term "employee" shall include any employee and shall not be limited to the employee of a particular employer unless the act explicitly states otherwise and shall include any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unfair labor practice and who has not obtained any other substantially equivalent and regular employment. This definition is again, like the definition of the term "employer" [Sec. 2(c)], by the use of the term "include", complementary. It embraces not only those who are usually and ordinarily considered employees, but also those who have ceased as employees as a consequence of a labor dispute. The term "employee", furthermore, is not limited to those of a particular employer. As already stated, this Court in the cases of The Angat River Irrigation System, et al. v. Angat River Workers' Union (PLUM), et al., supra, has defined the term "employer" as "one who employs the services of others; one for whom employees work and who pays their wages or salaries. "Correlatively, an employee must be one who is engaged in the service of another; who performs services for another; who works for salary or wages. It is admitted by the University that the striking professors and/or instructors are under contract to teach particular courses and that they are paid for their services. They are, therefore, employees of the University. In support of its claim that the members of the Faculty Club are not employees of the University, the latter cites as authority Francisco's Labor Laws, 2nd ed., p. 3, which states: While the term "workers" as used in a particular statute, has been regarded as limited to those performing physical labor, it has been held to embrace stenographers and bookkeepers. Teachers are not included, however. It is evident from the above-quoted authority that "teachers" are not to be included among those who perform "physical labor", but it does not mean that they are not employees. We have checked the source of the authority, which is 31 Am. Jur., Sec. 3, p. 835, and the latter cites Huntworth v. Tanner, 87 Wash 670, 152 P. 523, Ann Cas 1917 D 676. A reading of the last case confirms Our view. That teachers are "employees' has been held in a number of cases (Aebli v. Board of Education of City and County of San Francisco, 145 P. 2d 601, 62 Col. App 2.d 706; Lowe & Campbell Sporting Goods Co. v. Tangipahoa Parish School Board, La. App., 15 So. 2d 98, 100; Sister Odelia v. Church of St. Andrew, 263 N. W. 111, 112, 195 Minn. 357, cited in Words and Phrases, Permanent ed., Vol. 14, pp. 806-807). This Court in the Far Eastern University case, supra, considered university instructors as employees and declared Republic Act No. 875 applicable to them in their employment relations with their school. The professors and/or instructors of the University neither ceased to be employees when they struck, for Section 2 of Rep. Act 875 includes among employees any individual whose work has ceased as consequence of, or in connection with a current labor dispute. Striking employees maintain their status as employees of the employer. (Western Cartridge Co. v. NLRB, C.C.A. 7, 139 F2d 855, 858). The contention of the University that the professors and/or instructors are independent contractors, because the University does not exercise control over their work, is likewise untenable. This Court takes judicial notice that a university controls the work of the members of its faculty; that a university prescribes the courses or subjects that professors teach, and when and where to teach; that the professors' work is characterized by regularity and continuity for a fixed duration; that professors are compensated for their services by wages and salaries, rather than by profits; that the professors and/or instructors cannot

substitute others to do their work without the consent of the university; and that the professors can be laid off if their work is found not satisfactory. All these indicate that the university has control over their work; and professors are, therefore, employees and not independent contractors. There are authorities in support of this view. The principal consideration in determining whether a workman is an employee or an independent contractor is the right to control the manner of doing the work, and it is not the actual exercise of the right by interfering with the work, but the right to control, which constitutes the test. (Amalgamated Roofing Co. v. Travelers' Ins. Co., 133 N.E. 259, 261, 300 Ill. 487, quoted in Words and Phrases, Permanent ed., Vol. 14, p. 576). Where, under Employers' Liability Act, A was instructed when and where to work . . . he is an employee, and not a contractor, though paid specified sum per square. (Heine v. Hill, Harris & Co., 2 La. App. 384, 390, in Words and Phrases, loc, cit.) . Employees are those who are compensated for their labor or services by wages rather than by profits. (People vs. Distributors Division, Smoked Fish Workers Union Local No. 20377, Sup. 7 N. Y. S. 2d 185, 187 in Words and Phrases, loc, cit.) Services of employee or servant, as distinguished from those of a contractor, are usually characterized by regularity and continuity of work for a fixed period or one of indefinite duration, as contrasted with employment to do a single act or a series of isolated acts; by compensation on a fixed salary rather than one regulated by value or amount of work; . . . (Underwood v. Commissioner of Internal Revenue, C.C.A., 56 F. 2d 67, 71 in Words and Phrases, op. cit., p. 579.) Independent contractors can employ others to work and accomplish contemplated result without consent of contractee, while "employee" cannot substitute another in his place without consent of his employer. (Luker Sand & Gravel Co. v. Industrial Commission, 23 P. 2d 225, 82 Utah, 188, in Words and Phrases, Vol. 14, p. 576). Moreover, even if university professors are considered independent contractors, still they would be covered by Rep. Act No. 875. In the case of the Boy Scouts of the Philippines v. Juliana Araos, supra, this Court observed that Republic Act No. 875 was modelled after the Wagner Act, or the National Labor Relations Act, of the United States, and this Act did not exclude "independent contractors" from the orbit of "employees". It was in the subsequent legislation the Labor Management Relation Act (Taft-Harley Act) that "independent contractors" together with agricultural laborers, individuals in domestic service of the home, supervisors, and others were excluded. (See Rothenberg on Labor Relations, 1949, pp. 330331). It having been shown that the members of the Faculty Club are employees, it follows that they have a right to unionize in accordance with the provisions of Section 3 of the Magna Carta of Labor (Republic Act No. 875) which provides as follows: Sec. 3. Employees' right to self-organization.Employees shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection. . . . We agree with the statement of the lower court, in its order of March 30, 1963 which is sought to be set aside in the instant case, that the right of employees to self-organization is guaranteed by the Constitution, that said right would exist even if Republic Act No. 875 is repealed, and that regardless of whether their employers are engaged in commerce or not. Indeed, it is Our considered view that the members of the faculty or teaching staff of private universities, colleges, and schools in the Philippines, regardless of whether the university, college or school is run for profit or not, are included in the term

"employees" as contemplated in Republic Act No. 875 and as such they may organize themselves pursuant to the above-quoted provision of Section 3 of said Act. Certainly, professors, instructors or teachers of private educational institutions who teach to earn a living are entitled to the protection of our labor laws and one such law is Republic Act No. 875. The contention of the University in the instant case that the members of the Faculty Club can not unionize and the Faculty Club can not exist as a valid labor organization is, therefore, without merit. The record shows that the Faculty Club is a duly registered labor organization and this fact is admitted by counsel for the University.5a The other issue raised by the University is the validity of the Presidential certification. The University contends that under Section 10 of Republic Act No. 875 the power of the President of the Philippines to certify is subject to the following conditions, namely: (1) that here is a labor dispute, and (2) that said labor dispute exists in an industry that is vital to the national interest. The University maintains that those conditions do not obtain in the instant case. This contention has also no merit. We have previously stated that the University is an establishment or enterprise that is included in the term "industry" and is covered by the provisions of Republic Act No. 875. Now, was there a labor dispute between the University and the Faculty Club? Republic Act No. 875 defines a labor dispute as follows: The term "labor dispute" includes any controversy concerning terms, tenure or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment regardless of whether the disputants stand in proximate relation of employer and employees. The test of whether a controversy comes within the definition of "labor dispute" depends on whether the controversy involves or concerns "terms, tenure or condition of employment" or "representation." It is admitted by the University, in the instant case, that on January 14, 1963 the President of the Faculty Club wrote to the President of the University a letter informing the latter of the organization of the Faculty Club as a labor union, duly registered with the Bureau of Labor Relations; that again on January 22, 1963 another letter was sent, to which was attached a list of demands consisting of 26 items, and asking the President of the University to answer within ten days from date of receipt thereof; that the University questioned the right of the Faculty Club to be the exclusive representative of the majority of the employees and asked proof that the Faculty Club had been designated or selected as exclusive representative by the vote of the majority of said employees; that on February 1, 1963 the Faculty Club filed with the Bureau of Labor Relations a notice of strike alleging as reason therefor the refusal of the University to bargain collectively with the representative of the faculty members; that on February 18, 1963 the members of the Faculty Club went on strike and established picket lines in the premises of the University, thereby disrupting the schedule of classes; that on March 1, 1963 the Faculty Club filed Case No. 3666-ULP for unfair labor practice against the University, but which was later dismissed (on April 2, 1963 after Case 41-IPA was certified to the CIR); and that on March 7, 1963 a petition for certification election, Case No. 1183-MC, was filed by the Faculty Club in the CIR.6 All these admitted facts show that the controversy between the University and the Faculty Club involved terms and conditions of employment, and the question of representation. Hence, there was a labor dispute between the University and the Faculty Club, as contemplated by Republic Act No. 875. It having been shown that the University is an institution operated for profit, that is an employer, and that there is an employer-employee relationship, between the University and the members of the Faculty Club, and it having been shown that a labor dispute existed between the University and the Faculty Club, the contention of the University, that the certification made by the President is not only not authorized by Section 10 of Republic Act 875 but is violative thereof, is groundless. Section 10 of Republic Act No. 875 provides:

When in the opinion of the President of the Philippines there exists a labor dispute in an industry indispensable to the national interest and when such labor dispute is certified by the President to the Court of Industrial Relations, said Court may cause to be issued a restraining order forbidding the employees to strike or the employer to lockout the employees, and if no other solution to the dispute is found, the Court may issue an order fixing the terms and conditions of employment. This Court had occasion to rule on the application of the above-quoted provision of Section 10 of Republic Act No. 875. In the case of Pampanga Sugar Development Co. v. CIR, et al., G.R. No. L-13178, March 24, 1961, it was held: It thus appears that when in the opinion of the President a labor dispute exists in an industry indispensable to national interest and he certifies it to the Court of Industrial Relations the latter acquires jurisdiction to act thereon in the manner provided by law. Thus the court may take either of the following courses: it may issue an order forbidding the employees to strike or the employer to lockout its employees, or, failing in this, it may issue an order fixing the terms and conditions of employment. It has no other alternative. It can not throw the case out in the assumption that the certification was erroneous. xxx xxx xxx

. . . The fact, however, is that because of the strike declared by the members of the minority unionwhich threatens a major industry the President deemed it wise to certify the controversy to the Court of Industrial Relations for adjudication. This is the power that the law gives to the President the propriety of its exercise being a matter that only devolves upon him. The same is not the concern of the industrial court. What matters is that by virtue of the certification made by the President the case was placed under the jurisdiction of said court. (Emphasis supplied) To certify a labor dispute to the CIR is the prerogative of the President under the law, and this Court will not interfere in, much less curtail, the exercise of that prerogative. The jurisdiction of the CIR in a certified case is exclusive (Rizal Cement Co., Inc. v. Rizal Cement Workers Union (FFW), et al., G.R. No. L12747, July 30, 1960). Once the jurisdiction is acquired pursuant to the presidential certification, the CIR may exercise its broad powers as provided in Commonwealth Act 103. All phases of the labor dispute and the employer-employee relationship may be threshed out before the CIR, and the CIR may issue such order or orders as may be necessary to make effective the exercise of its jurisdiction. The parties involved in the case may appeal to the Supreme Court from the order or orders thus issued by the CIR. And so, in the instant case, when the President took into consideration that the University "has some 18,000 students and employed approximately 500 faculty members", that `the continued disruption in the operation of the University will necessarily prejudice the thousand of students", and that "the dispute affects the national interest",7 and certified the dispute to the CIR, it is not for the CIR nor this Court to pass upon the correctness of the reasons of the President in certifying the labor dispute to the CIR. The third issue raised by the University refers to the question of the legality of the return-to-work order (of March 30, 1963 in Case 41-IPA) and the order implementing the same (of April 6, 1963). It alleges that the orders are illegal upon the grounds: (1) that Republic Act No. 875, supplementing Commonwealth Act No. 103, has withdrawn from the CIR the power to issue a return-to-work order; (2) that the only power granted by Section 10 of Republic Act No. 875 to the CIR is to issue an order forbidding the employees to strike or forbidding the employer to lockout the employees, as the case may be, before either contingency had become a fait accompli; (3) that the taking in by the University of replacement professors was valid, and the return-to-work order of March 30, 1963 constituted impairment of the obligation of contracts; and (4) the CIR could not issue said order without having previously determined the legality or illegality of the strike. The contention of the University that Republic Act No. 875 has withdrawn the power of the Court of Industrial Relations to issue a return-to-work order exercised by it under Commonwealth Act No. 103 can

not be sustained. When a case is certified by the President to the Court of Industrial Relations, the case thereby comes under the operation of Commonwealth Act No. 103, and the Court may exercise the broad powers and jurisdiction granted to it by said Act. Section 10 of Republic Act No. 875 empowers the Court of Industrial Relations to issue an order "fixing the terms of employment." This clause is broad enough to authorize the Court to order the strikers to return to work and the employer to readmit them. This Court, in the cases of the Philippine Marine Officers Association vs. The Court of Industrial Relations, Compania Maritima, et al.; and Compaia Martima, et al. vs. Philippine Marine Radio Officers Association and CIR, et al., G.R. Nos. L-10095 and L-10115, October 31, 1957, declared: We cannot subscribe to the above contention. We agree with counsel for the Philippine Radio Officers' Association that upon certification by the President under Section 10 of Republic Act 875, the case comes under the operation of Commonwealth Act 103, which enforces compulsory arbitration in cases of labor disputes in industries indispensable to the national interest when the President certifies the case to the Court of Industrial Relations. The evident intention of the law is to empower the Court of Industrial Relations to act in such cases, not only in the manner prescribed under Commonwealth Act 103, but with the same broad powers and jurisdiction granted by that act. If the Court of Industrial Relations is granted authority to find a solution to an industrial dispute and such solution consists in the ordering of employees to return back to work, it cannot be contended that the Court of Industrial Relations does not have the power or jurisdiction to carry that solution into effect. And of what use is its power of conciliation and arbitration if it does not have the power and jurisdiction to carry into effect the solution it has adopted? Lastly, if the said court has the power to fix the terms and conditions of employment, it certainly can order the return of the workers with or without backpay as a term or condition of employment. The foregoing ruling was reiterated by this Court in the case of Hind Sugar Co. v. CIR, et al., G.R. No. L13364, July 26, 1960. When a case is certified to the CIR by the President of the Philippines pursuant to Section 10 of Republic Act No. 875, the CIR is granted authority to find a solution to the industrial dispute; and the solution which the CIR has found under the authority of the presidential certification and conformable thereto cannot be questioned (Radio Operators Association of the Philippines vs. Philippine Marine Radio Officers Association, et al., L-10112, Nov. 29, 1957, 54 O.G. 3218). Untenable also is the claim of the University that the CIR cannot issue a return-to-work order after strike has been declared, it being contended that under Section 10 of Republic Act No. 875 the CIR can only prevent a strike or a lockout when either of this situation had not yet occurred. But in the case of Bisaya Land Transportation Co., Inc. vs. Court of Industrial Relations, et al., No. L-10114, Nov. 26, 1957, 50 O.G. 2518, this Court declared: There is no reason or ground for the contention that Presidential certification of labor dispute to the CIR is limited to the prevention of strikes and lockouts. Even after a strike has been declared where the President believes that public interest demands arbitration and conciliation, the President may certify the ease for that purpose. The practice has been for the Court of Industrial Relations to order the strikers to work, pending the determination of the union demands that impelled the strike. There is nothing in the law to indicate that this practice is abolished." (Emphasis supplied) Likewise untenable is the contention of the University that the taking in by it of replacements was valid and the return-to-work order would be an impairment of its contract with the replacements. As stated by the CIR in its order of March 30, 1963, it was agreed before the hearing of Case 41-IPA on March 23, 1963 that the strikers would return to work under the status quo arrangement and the University would readmit them, and the return-to-work order was a confirmation of that agreement. This is a declaration of fact by the CIR which we cannot disregard. The faculty members, by striking, have not abandoned their employment but, rather, they have only ceased from their labor (Keith Theatre v. Vachon et al., 187 A. 692). The striking faculty members have not lost their right to go back to their positions, because the declaration of a strike is not a renunciation of their employment and their employee relationship with the University (Rex Taxicab Co. vs. CIR, et al., 40 O.G., No. 13, 138). The employment of replacements was

not authorized by the CIR. At most, that was a temporary expedient resorted to by the University, which was subject to the power of the CIR to allow to continue or not. The employment of replacements by the University prior to the issuance of the order of March 30, 1963 did not vest in the replacements a permanent right to the positions they held. Neither could such temporary employment bind the University to retain permanently the replacements. Striking employees maintained their status as employees of the employer (Western Castridge Co. v. National Labor Relations Board, C.C.A. 139 F. 2d 855, 858) ; that employees who took the place of strikers do not displace them as `employees." ' (National Labor Relations Board v. A. Sartorius & Co., C.C.A. 2, 140 F. 2d 203, 206, 207.) It is clear from what has been said that the return-to-work order cannot be considered as an impairment of the contract entered into by petitioner with the replacements. Besides, labor contracts must yield to the common good and such contracts are subject to the special laws on labor unions, collective bargaining, strikes and similar subjects (Article 1700, Civil Code). Likewise unsustainable is the contention of the University that the Court of Industrial Relations could not issue the return-to-work order without having resolved previously the issue of the legality or illegality of the strike, citing as authority therefor the case of Philippine Can Company v. Court of Industrial Relations, G.R. No. L-3021, July 13, 1950. The ruling in said case is not applicable to the case at bar, the facts and circumstances being very different. The Philippine Can Company case, unlike the instant case, did not involve the national interest and it was not certified by the President. In that case the company no longer needed the services of the strikers, nor did it need substitutes for the strikers, because the company was losing, and it was imperative that it lay off such laborers as were not necessary for its operation in order to save the company from bankruptcy. This was the reason of this Court in ruling, in that case, that the legality or illegality of the strike should have been decided first before the issuance of the return-to-work order. The University, in the case before Us, does not claim that it no longer needs the services of professors and/or instructors; neither does it claim that it was imperative for it to lay off the striking professors and instructors because of impending bankruptcy. On the contrary, it was imperative for the University to hire replacements for the strikers. Therefore, the ruling in the Philippine Can case that the legality of the strike should be decided first before the issuance of the return-to-work order does not apply to the case at bar. Besides, as We have adverted to, the return-to-work order of March 30, 1963, now in question, was a confirmation of an agreement between the University and the Faculty Club during a prehearing conference on March 23, 1963. The University also maintains that there was no more basis for the claim of the members of the Faculty Club to return to their work, as their individual contracts for teaching had expired on March 25 or 31, 1963, as the case may be, and consequently, there was also no basis for the return-to-work order of the CIR because the contractual relationships having ceased there were no positions to which the members of the Faculty Club could return to. This contention is not well taken. This argument loses sight of the fact that when the professors and instructors struck on February 18, 1963, they continued to be employees of the University for the purposes of the labor controversy notwithstanding the subsequent termination of their teaching contracts, for Section 2(d) of the Industrial Peace Act includes among employees "any individual whose work has ceased a consequence of, or in connection with, any current labor dispute or of any unfair labor practice and who has not obtained any other substantially equivalent and regular employment." The question raised by the University was resolved in a similar case in the United States. In the case of Rapid Roller Co. v. NLRB 126 F. 2d 452, we read: On May 9, 1939 the striking employees, eighty-four in number, offered to the company to return to their employment. The company believing it had not committed any unfair labor practice, refused the employees' offer and claimed the right to employ others to take the place of the strikers, as it might see fit. This constituted discrimination in the hiring and tenure of the striking employees. When the employees went out on a strike because of the unfair labor practice of the company, their status as employees for the

purpose of any controversy growing out of that unfair labor practice was fixed. Sec. 2 (3) of the Act. Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 61 S. Ct. 845, 85. L. ed. 1271, 133 A.L.R. 1217. For the purpose of such controversy they remained employees of the company. The company contended that they could not be their employees in any event since the "contract of their employment expired by its own terms on April 23, 1939." In this we think the company is mistaken for the reason we have just pointed out, that the status of the employees on strike became fixed under Sec. 2 (3) of the Act because of the unfair labor practice of the company which caused the strike. The University, furthermore, claims that the information for indirect contempt filed against the officers of the University (Case No. V-30) as well as the order of April 29, 1963 for their arrest were improper, irregular and illegal because (1) the officers of the University had complied in good faith with the return-towork order and in those cases that they did not, it was due to circumstance beyond their control; (2) the return-to-work order and the order implementing the same were illegal; and (3) even assuming that the order was legal, the same was not Yet final because there was a motion to reconsider it. Again We find no merit in this claim of Petitioner. We have already ruled that the CIR had jurisdiction to issue the order of March 30, 1963 in CIR Case 41-IPA, and the return-to-work provision of that order is valid and legal. Necessarily the order of April 6, 1963 implementing that order of March 30, 1963 was also valid and legal. Section 6 of Commonwealth Act No. 103 empowers the Court of Industrial Relations of any Judge thereof to punish direct and indirect contempts as provided in Rule 64 (now Rule 71) of the Rules of Court, under the same procedure and penalties provided therein. Section 3 of Rule 71 enumerates the acts which would constitute indirect contempt, among which is "disobedience or resistance to lawful writ, process, order, judgment, or command of a court," and the person guilty thereof can be punished after a written charge has been filed and the accused has been given an opportunity to be heard. The last paragraph of said section provides: But nothing in this section shall be so construed as to prevent the court from issuing process tobring the accused party into court, or from holding him in custody pending such proceedings. The provision authorizes the judge to order the arrest of an alleged contemner (Francisco, et al. v. Enriquez, L-7058, March 20, 1954, 94 Phil., 603) and this, apparently, is the provision upon which respondent Judge Bautista relied when he issued the questioned order of arrest. The contention of petitioner that the order of arrest is illegal is unwarranted. The return-to-work order allegedly violated was within the court's jurisdiction to issue. Section 14 of Commonwealth Act No. 103 provides that in cases brought before the Court of Industrial Relations under Section 4 of the Act (referring to strikes and lockouts) the appeal to the Supreme Court from any award, order or decision shall not stay the execution of said award, order or decision sought to be reviewed unless for special reason the court shall order that execution be stayed. Any award, order or decision that is appealed is necessarily not final. Yet under Section 14 of Commonwealth Act No. 103 that award, order or decision, even if not yet final, is executory, and the stay of execution is discretionary with the Court of Industrial Relations. In other words, the Court of Industrial Relations, in cases involving strikes and lockouts, may compel compliance or obedience of its award, order or decision even if the award, order or decision is not yet final because it is appealed, and it follows that any disobedience or non-compliance of the award, order or decision would constitute contempt against the Court of Industrial Relations which the court may punish as provided in the Rules of Court. This power of the Court of Industrial Relations to punish for contempt an act of non-compliance or disobedience of an award, order

or decision, even if not yet final, is a special one and is exercised only in cases involving strikes and lockouts. And there is reason for this special power of the industrial court because in the exercise of its jurisdiction over cases involving strikes and lockouts the court has to issue orders or make decisions that are necessary to effect a prompt solution of the labor dispute that caused the strike or the lockout, or to effect the prompt creation of a situation that would be most beneficial to the management and the employees, and also to the public even if the solution may be temporary, pending the final determination of the case. Otherwise, if the effectiveness of any order, award, or decision of the industrial court in cases involving strikes and lockouts would be suspended pending appeal then it can happen that the coercive powers of the industrial court in the settlement of the labor disputes in those cases would be rendered useless and nugatory. The University points to Section 6 of Commonwealth Act No. 103 which provides that "Any violation of any order, award, or decision of the Court of Industrial Relations shall after such order, award or decision has become final, conclusive and executory constitute contempt of court," and contends that only the disobedience of orders that are final (meaning one that is not appealed) may be the subject of contempt proceedings. We believe that there is no inconsistency between the above-quoted provision of Section 6 and the provision of Section 14 of Commonwealth Act No. 103. It will be noted that Section 6 speaks of order, award or decision that is executory. By the provision of Section 14 an order, award or decision of the Court of Industrial Relations in cases involving strikes and lockouts are immediately executory, so that a violation of that order would constitute an indirect contempt of court. We believe that the action of the CIR in issuing the order of arrest of April 29, 1963 is also authorized under Section 19 of Commonwealth Act No. 103 which provides as follows: SEC. 19. Implied condition in every contract of employment.In every contract of employment whether verbal or written, it is an implied condition that when any dispute between the employer and the employee or laborer has been submitted to the Court of Industrial Relations for settlement or arbitration pursuant to the provisions of this Act . . . and pending award, or decision by the Court of such dispute . . . the employee or laborer shall not strike or walk out of his employment when so enjoined by the Court after hearing and when public interest so requires, and if he has already done so, that he shall forthwith return to it, upon order of the Court, which shall be issued only after hearing when public interest so requires or when the dispute cannot, in its opinion, be promptly decided or settled; and if the employees or laborers fail to return to work, the Court may authorize the employer to accept other employees or laborers. A condition shall further be implied that while such dispute . . . is pending, the employer shall refrain from accepting other employees or laborers, unless with the express authority of the Court, and shall permit the continuation in the service of his employees or laborers under the last terms and conditions existing before the dispute arose. . . . A violation by the employer or by the employee or laborer of such an order or the implied contractual condition set forth in this section shall constitute contempt of the Court of Industrial Relations and shall be punished by the Court itself in the same manner with the same penalties as in the case of contempt of a Court of First Instance. . . . We hold that the CIR acted within its jurisdiction when it ordered the arrest of the officers of the University upon a complaint for indirect contempt filed by the Acting Special Prosecutor of the CIR in CIR Case V30, and that order was valid. Besides those ordered arrested were not yet being punished for contempt; but, having been charged, they were simply ordered arrested to be brought before the Judge to be dealt with according to law. Whether they are guilty of the charge or not is yet to be determined in a proper hearing. Let it be noted that the order of arrest dated April 29, 1963 in CIR Case V-30 is being questioned in Case G.R. No. L-21278 before this Court in a special civil action for certiorari. The University did not appeal from that order. In other words, the only question to be resolved in connection with that order in CIR Case V-30 is whether the CIR had jurisdiction, or had abused its discretion, in issuing that order. We hold that the CIR had jurisdiction to issue that order, and neither did it abuse its discretion when it issued that order.

In Case G.R. No. L-21462 the University appealed from the order of Judge Villanueva of the CIR in Case No. 1183-MC, dated April 6, 1963, granting the motion of the Faculty Club to withdraw its petition for certification election, and from the resolution of the CIR en banc, dated June 5, 1963, denying the motion to reconsider said order of April 6, 1963. The ground of the Faculty Club in asking for the withdrawal of that petition for certification election was because the issues involved in that petition were absorbed by the issues in Case 41-IPA. The University opposed the petition for withdrawal, but at the same time it moved for the dismissal of the petition for certification election. It is contended by the University before this Court, in G.R. L-21462, that the issues of employer-employee relationship between the University and the Faculty Club, the alleged status of the Faculty Club as a labor union, its majority representation and designation as bargaining representative in an appropriate unit of the Faculty Club should have been resolved first in Case No. 1183-MC prior to the determination of the issues in Case No. 41-IPA, and, therefore, the motion to withdraw the petition for certification election should not have been granted upon the ground that the issues in the first case were absorbed in the second case. We believe that these contentions of the University in Case G.R. No. L-21462 have been sufficiently covered by the discussion in this decision of the main issues raised in the principal case, which is Case G.R. No. L-21278. After all, the University wanted CIR Case 1183-MC dismissed, and the withdrawal of the petition for certification election had in a way produced the situation desired by the University. After considering the arguments adduced by the University in support of its petition for certiorari by way of appeal in Case G.R. No. L-21278, We hold that the CIR did not commit any error when it granted the withdrawal of the petition for certification election in Case No. 1183-MC. The principal case before the CIR is Case No. 41-IPA and all the questions relating to the labor disputes between the University and the Faculty Club may be threshed out, and decided, in that case. In Case G.R. No. L-21500 the University appealed from the order of the CIR of March 30, 1963, issued by Judge Bautista, and from the resolution of the CIR en banc promulgated on June 28, 1963, denying the motion for the reconsideration of that order of March 30, 1963, in CIR Case No. 41-IPA. We have already ruled that the CIR has jurisdiction to issue that order of March 30, 1963, and that order is valid, and We, therefore, hold that the CIR did not err in issuing that order of March 30, 1963 and in issuing the resolution promulgated on June 28, 1963 (although dated May 7, 1963) denying the motion to reconsider that order of March 30, 1963. IN VIEW OF THE FOREGOING, the petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-21278 is dismissed and the writs prayed for therein are denied. The writ of preliminary injunction issued in Case G.R. No. L-21278 is dissolved. The orders and resolutions appealed from, in Cases Nos. L-21462 and L-21500, are affirmed, with costs in these three cases against the petitionerappellant Feati University. It is so ordered. Concepcion, C.J., Dizon, Regala, Makalintal, Bengzon, J.P., Sanchez and Castro, JJ., concur. Reyes, J.B.L., J., concurs but reserves his vote on the teacher's right to strike. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 87700 June 13, 1990 SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II, HERMINIA REYES, MARCELA PURIFICACION, ET AL., petitioners,

vs. HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166, RTC, PASIG, and SAN MIGUEL CORPORATION, respondents. Romeo C. Lagman for petitioners. Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.

MELENCIO-HERRERA, J.: Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in this special civil action for certiorari and Prohibition for having issued the challenged Writ of Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San Miguel Corporation vs. SMCEU-PTGWO, et als." Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse of discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig. for short), for its part, defends the Writ on the ground of absence of any employer-employee relationship between it and the contractual workers employed by the companies Lipercon Services, Inc. (Lipercon) and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of personality to represent said workers for purposes of collective bargaining. The Solicitor General agrees with the position of SanMig. The antecedents of the controversy reveal that: Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with Lipercon and D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are independent contractors duly licensed by the Department of Labor and Employment (DOLE). SanMig entered into those contracts to maintain its competitive position and in keeping with the imperatives of efficiency, business expansion and diversity of its operation. In said contracts, it was expressly understood and agreed that the workers employed by the contractors were to be paid by the latter and that none of them were to be deemed employees or agents of SanMig. There was to be no employer-employee relation between the contractors and/or its workers, on the one hand, and SanMig on the other. Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly authorized representative of the monthly paid rank-and-file employees of SanMig with whom the latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989 (Annex A, SanMig's Comment). Section 1 of their CBA specifically provides that "temporary, probationary, or contract employees and workers are excluded from the bargaining unit and, therefore, outside the scope of this Agreement." In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some Lipercon and D'Rite workers had signed up for union membership and sought the regularization of their employment with SMC. The Union alleged that this group of employees, while appearing to be contractual workers supposedly independent contractors, have been continuously working for SanMig for a period ranging from six (6) months to fifteen (15) years and that their work is neither casual nor seasonal as they are performing work or activities necessary or desirable in the usual business or trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting situation. It was then demanded that the employment status of these workers be regularized.

On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig, the Union filed a notice of strike for unfair labor practice, CBA violations, and union busting (Annex D, Petition). On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex F, Petition). As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently, the two (2) notices of strike were consolidated and several conciliation conferences were held to settle the dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G, Petition). Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and D'Rite workers in various SMC plants and offices. On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent Court to enjoin the Union from: a. representing and/or acting for and in behalf of the employees of LIPERCON and/or D'RITE for the purposes of collective bargaining; b. calling for and holding a strike vote, to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE; c. inciting, instigating and/or inducing the employees or workers of LIPERCON andD'RITE to demonstrate and/or picket at the plants and offices of plaintiff within the bargaining unit referred to in the CBA,...; d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE; e. using the employees or workers of LIPERCON AND D'RITE to man the strike area and/or picket lines and/or barricades which the defendants may set up at the plants and offices of plaintiff within the bargaining unit referred to in the CBA ...; f. intimidating, threatening with bodily harm and/or molesting the other employees and/or contract workers of plaintiff, as well as those persons lawfully transacting business with plaintiff at the work places within the bargaining unit referred to in the CBA, ..., to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE; g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to, and egress from, the work places within the bargaining unit referred to in the CBA .., to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE; h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the work places within the bargaining unit referred to in the CBA, Annex 'C' hereof, to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE. (Annex H, Petition) Respondent Court found the Complaint sufficient in form and substance and issued a Temporary Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction for hearing. In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by SanMig. That Motion was denied by respondent Judge in an Order dated 11 April 1989.

After several hearings on SanMig's application for injunctive relief, where the parties presented both testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned Order (Annex A, Petition) granting the application and enjoining the Union from Committing the acts complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding Writ of Preliminary Injunction after SanMig had posted the required bond of P100,000.00 to answer for whatever damages petitioners may sustain by reason thereof. In issuing the Injunction, respondent Court rationalized: The absence of employer-employee relationship negates the existence of labor dispute. Verily, this court has jurisdiction to take cognizance of plaintiff's grievance. The evidence so far presented indicates that plaintiff has contracts for services with Lipercon and D'Rite. The application and contract for employment of the defendants' witnesses are either with Lipercon or D'Rite. What could be discerned is that there is no employer-employee relationship between plaintiff and the contractual workers employed by Lipercon and D'Rite. This, however, does not mean that a final determination regarding the question of the existence of employer-employee relationship has already been made. To finally resolve this dispute, the court must extensively consider and delve into the manner of selection and engagement of the putative employee; the mode of payment of wages; the presence or absence of a power of dismissal; and the Presence or absence of a power to control the putative employee's conduct. This necessitates a full-blown trial. If the acts complained of are not restrained, plaintiff would, undoubtedly, suffer irreparable damages. Upon the other hand, a writ of injunction does not necessarily expose defendants to irreparable damages. Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo) Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the implementation of the Injunction issued by respondent Court. The Union construed this to mean that "we can now strike," which it superimposed on the Order and widely circulated to entice the Union membership to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we required the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo). In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen (13) of the latter's plants and offices. On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to conciliation. The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite employees were recalled, and discussion on their other demands, such as wage distortion and appointment of coordinators, were made. Effected eventually was a Memorandum of Agreement between SanMig and the Union that "without prejudice to the outcome of G.R. No. 87700 (this case) and Civil Case No. 57055 (the case below), the laid-off individuals ... shall be recalled effective 8 May 1989 to their former jobs or equivalent positions under the same terms and conditions prior to "lay-off" (Annex 15, SanMig Comment). In turn, the Union would immediately lift the pickets and return to work. After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and required the parties to submit their memoranda simultaneously, the last of which was filed on 9 January 1990. The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction over the present controversy and properly issued the Writ of Preliminary Injunction to the resolution of that question, is the matter of whether, or not the case at bar involves, or is in connection with, or relates to a

labor dispute. An affirmative answer would bring the case within the original and exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts. Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves or arose out of a labor dispute and is directly connected or interwoven with the cases pending with the NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the acts complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners' Memo). On the other hand, SanMig denies the existence of any employer-employee relationship and consequently of any labor dispute between itself and the Union. SanMig submits, in particular, that "respondent Court is vested with jurisdiction and judicial competence to enjoin the specific type of strike staged by petitioner union and its officers herein complained of," for the reasons that: A. The exclusive bargaining representative of an employer unit cannot strike to compel the employer to hire and thereby create an employment relationship with contractual workers, especially were the contractual workers were recognized by the union, under the governing collective bargaining agreement, as excluded from, and therefore strangers to, the bargaining unit. B. A strike is a coercive economic weapon granted the bargaining representative only in the event of a deadlock in a labor dispute over 'wages, hours of work and all other and of the employment' of the employees in the unit. The union leaders cannot instigate a strike to compel the employer, especially on the eve of certification elections, to hire strangers or workers outside the unit, in the hope the latter will help re-elect them. C. Civil courts have the jurisdiction to enjoin the above because this specie of strike does not arise out of a labor dispute, is an abuse of right, and violates the employer's constitutional liberty to hire or not to hire. (SanMig's Memorandum, pp. 475-476, Rollo). We find the Petition of a meritorious character. A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee." While it is SanMig's submission that no employer-employee relationship exists between itself, on the one hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can nevertheless exist "regardless of whether the disputants stand in the proximate relationship of employer and employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns, among others, the terms and conditions of employment or a "change" or "arrangement" thereof (ibid). Put differently, and as defined by law, the existence of a labor dispute is not negative by the fact that the plaintiffs and defendants do not stand in the proximate relation of employer and employee. That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union seeks is to regularize the status of the employees contracted by Lipercon and D'Rite in effect, that they be absorbed into the working unit of SanMig. This matter definitely dwells on the working relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their employment and the arrangement of those terms are thus involved bringing the matter within the purview of a labor dispute. Further, the Union also seeks to represent those workers, who have signed up for Union membership, for the purpose of collective bargaining. SanMig, for its part, resists that Union demand on the ground that there is no employer-employee relationship between it and those workers and because the demand violates the terms of their CBA. Obvious then is that representation and association, for the purpose of

negotiating the conditions of employment are also involved. In fact, the injunction sought by SanMig was precisely also to prevent such representation. Again, the matter of representation falls within the scope of a labor dispute. Neither can it be denied that the controversy below is directly connected with the labor dispute already taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS01-093-83). Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and D'Rite constitute "labor-only" contracting and, therefore, a regular employer-employee relationship may, in fact, be said to exist; whether or not the Union can lawfully represent the workers of Lipercon and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the notice of strike was valid and the strike itself legal when it was allegedly instigated to compel the employer to hire strangers outside the working unit; those are issues the resolution of which call for the application of labor laws, and SanMig's cause's of action in the Court below are inextricably linked with those issues. The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon by SanMig is not controlling as in that case there was no controversy over terms, tenure or conditions, of employment or the representation of employees that called for the application of labor laws. In that case, what the petitioning union demanded was not a change in working terms and conditions, or the representation of the employees, but that its members be hired as stevedores in the place of the members of a rival union, which petitioners wanted discharged notwithstanding the existing contract of the arrastre company with the latter union. Hence, the ruling therein, on the basis of those facts unique to that case, that such a demand could hardly be considered a labor dispute. As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on 21 March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original and exclusive jurisdiction to hear and decide the following cases involving all workers including "1. unfair labor practice cases; 2. those that workers may file involving wages, hours of work and other terms and conditions of employment; ... and 5. cases arising from any violation of Article 265 of this Code, including questions involving the legality of striker and lockouts. ..." Article 217 lays down the plain command of the law. The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil Code would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That claim for damages is interwoven with a labor dispute existing between the parties and would have to be ventilated before the administrative machinery established for the expeditious settlement of those disputes. To allow the action filed below to prosper would bring about "split jurisdiction" which is obnoxious to the orderly administration of justice (Philippine Communications, Electronics and Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321). We recognize the proprietary right of SanMig to exercise an inherent management prerogative and its best business judgment to determine whether it should contract out the performance of some of its work to independent contractors. However, the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law (Section 3, Article XIII, 1987 Constitution) equally call for recognition and protection. Those contending interests must be placed in proper perspective and equilibrium. WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March 1989 and 29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent Judge is enjoined from taking any further action in Civil Case No. 57055 except for the purpose of dismissing it. The status quo ante declaration of strike ordered by the Court on 24 May 1989 shall be observed pending the proceedings in the National Conciliation Mediation Board-Department of Labor and Employment, docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs.

SO ORDERED. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 147816 May 9, 2003

EFREN P. PAGUIO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, METROMEDIA TIMES CORPORATION, ROBINA Y. GOKONGWEI, LIBERATO GOMEZ, JR., YOLANDA E. ARAGON, FREDERICK D. GO and ALDA IGLESIA, respondents. VITUG, J.: On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an agreement with petitioner Efren P. Paguio, appointing the latter to be an account executive of the firm.1 Again, petitioner was to solicit advertisements for "The Manila Times," a newspaper of general circulation, published by respondent company. Petitioner, for his efforts, was to receive compensation consisting of a 15% commission on direct advertisements less withholding tax and a 10% commission on agency advertisements based on gross revenues less agency commission and the corresponding withholding tax. The commissions, released every fifteen days of each month, were to be given to petitioner only after the clients would have paid for the advertisements. Apart from commissions, petitioner was also entitled to a monthly allowance of P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the contentious points raised by the parties had something to do with the following stipulations of the agreement; viz: "12. You are not an employee of the Metromedia Times Corporation nor does the company have any obligations towards anyone you may employ, nor any responsibility for your operating expenses or for any liability you may incur. The only rights and obligations between us are those set forth in this agreement. This agreement cannot be amended or modified in any way except with the duly authorized consent in writing of both parties. "13. Either party may terminate this agreement at any time by giving written notice to the other, thirty (30) days prior to effectivity of termination."2 On 15 August 1992, barely two months after the renewal of his contract, petitioner received the following notice from respondent firm "Dear Mr. Paguio, "Please be advised of our decision to terminate your services as Account Executive of Manila Times effective September 30, 1992. "This is in accordance with our contract signed last July 1, 1992."3 Apart from vague allegations of misconduct on which he was not given the opportunity to defend himself, i.e., pirating clients from his co-executives and failing to produce results, no definite cause for petitioner's termination was given. Aggrieved, petitioner filed a case before the labor arbiter, asking that his dismissal be declared unlawful and that his reinstatement, with entitlement to backwages without loss of seniority

rights, be ordered. Petitioner also prayed that respondent company officials be held accountable for acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00 exemplary damages. In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any agreement with petitioner outside of the contract of services under Articles 1642 and 1644 of the Civil Code of the Philippines.4 Asserting their right to terminate the contract with petitioner, respondents pointed to the last provision thereof stating that both parties could opt to end the contract provided that either party would serve, thirty days prior to the intended date of termination, the corresponding notice to the other. The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered respondent Metromedia Times Corporation and its officers to reinstate petitioner to his former position, without loss of seniority rights, and to pay him his commissions and other remuneration accruing from the date of dismissal on 15 August 1992 up until his reinstatement. He likewise adjudged that Liberato I. Gomez, general manager of respondent corporation, be held liable to petitioner for moral damages in the amount of P20,000.00. On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the labor arbiter and declared the contractual relationship between the parties as being for a fixed-term employment. The NLRC declared a fixed-term employment to be lawful as long as "it was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the worker and absent any other circumstances vitiating his consent."5 The finding of the NLRC was primarily hinged on the assumption that petitioner, on account of his educated stature, having indeed personally prepared his pleadings without the aid of counsel, was an unlikely victim of a lopsided contract. Rejecting the assertion of petitioner that he was a regular employee, the NLRC held: "The decisive determinant would not be the activities that the employee (was) called upon to perform but rather, the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be that which (would) necessarily come, although it (might) not be known when."6 Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in toto the findings of the commission. In his petition for review on certiorari, petitioner raised the following issues for resolution: "WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENT'S COMPANY IS FOR A FIXED PERIOD. "WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL. "WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND MORAL DAMAGES."7 The crux of the matter would entail the determination of the nature of contractual relationship between petitioner and respondent company - was it or was it not one of regular employment? A "regular employment," whether it is one or not, is aptly gauged from the concurrence, or the nonconcurrence, of the following factors - a) the manner of selection and engagement of the putative employee, b) the mode of payment of wages, c) the presence or absence of the power of dismissal; and d) the presence or absence of the power to control the conduct of the putative employee or the power to control the employee with respect to the means or methods by which his work is to be accomplished.8 The "control test" assumes primacy in the overall consideration. Under this test, an employment relation obtains where work is performed or services are rendered under the control and supervision of the party contracting for the service, not only as to the result of the work but also as to the manner and details of the performance desired.9

An indicum of regular employment, rightly taken into account by the labor arbiter, was the reservation by respondent Metromedia Times Corporation not only of the right to control the results to be achieved but likewise the manner and the means used in reaching that end.10 Metromedia Times Corporation exercised such control by requiring petitioner, among other things, to submit a daily sales activity report and also a monthly sales report as well. Various solicitation letters would indeed show that Robina Gokongwei, company president, Alda Iglesia, the advertising manager, and Frederick Go, the advertising director, directed and monitored the sales activities of petitioner. The Labor Code, in Article 280 thereof, provides: "ART. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. "An employment shall be deemed to be casual if it is not covered by the proceeding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists." Thus defined, a regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as against those which are undertaken for a specific project or are seasonal. Even in these latter cases, where such person has rendered at least one year of service, regardless of the nature of the activity performed or of whether it is continuous or intermittent, the employment is considered regular as long as the activity exists, it not being indispensable that he be first issued a regular appointment or be formally declared as such before acquiring a regular status.11 That petitioner performed activities which were necessary and desirable to the business of the employer, and that the same went on for more than a year, could hardly be denied. Petitioner was an account executive in soliciting advertisements, clearly necessary and desirable, for the survival and continued operation of the business of respondent corporation. Robina Gokongwei, its President, herself admitted that the income generated from paid advertisements was the lifeblood of the newspaper's existence. Implicitly, respondent corporation recognized petitioner's invaluable contribution to the business when it renewed, not just once but five times, its contract with petitioner. Respondent company cannot seek refuge under the terms of the agreement it has entered into with petitioner. The law, in defining their contractual relationship, does so, not necessarily or exclusively upon the terms of their written or oral contract, but also on the basis of the nature of the work petitioner has been called upon to perform.12 The law affords protection to an employee, and it will not countenance any attempt to subvert its spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized to deprive the employee of his security of tenure.13 The sheer inequality that characterizes employer-employee relations, where the scales generally tip against the employee, often scarcely provides him real and better options. The real question that should thus be posed is whether or not petitioner has been justly dismissed from service. A lawful dismissal must meet both substantive and procedural requirements; in fine, the dismissal must be for a just or authorized cause and must comply with the rudimentary due process of notice and hearing. It is not shown that respondent company has fully bothered itself with either of these requirements in terminating the services of petitioner. The notice of termination recites no valid or just

cause for the dismissal of petitioner nor does it appear that he has been given an opportunity to be heard in his defense. The evidence, however, found by the appellate court is wanting that would indicate bad faith or malice on the part of respondents, particularly by respondent Liberato I. Gomez, and the award of moral damages must thus be deleted. WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in C.A. G.R. SP No. 527773 and that of the National Labor Relations Commission are hereby SET ASIDE and that of the Labor Arbiter is REINSTATED except with respect to the P20,000.00 moral damages adjudged against respondent Liberato I. Gomez which award is deleted. SO ORDERED. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 151228 August 15, 2002

ROLANDO Y. TAN, petitioner, vs. LEOVIGILDO LAGRAMA and THE HONORABLE COURT OF APPEALS, respondents. MENDOZA, J.: This is a petition for review on certiorari of the decision,1 dated May 31, 2001, and the resolution,2 dated November 27, 2001, of the Court of Appeals in C.A.-G.R. SP. No. 63160, annulling the resolutions of the National Labor Relations Commission (NLRC) and reinstating the ruling of the Labor Arbiter which found petitioner Rolando Tan guilty of illegally dismissing private respondent Leovigildo Lagrama and ordering him to pay the latter the amount of P136,849.99 by way of separation pay, backwages, and damages. The following are the facts. Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter, making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters for more than 10 years, from September 1, 1988 to October 17, 1998. On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: "Nangihi na naman ka sulod sa imong drawinganan." ("You again urinated inside your work area.") When Lagrama asked what Tan was saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon, wala nay drawing. Gawas." ("Don't say anything further. I don't want you to draw anymore. From now on, no more drawing. Get out.") Lagrama denied the charge against him. He claimed that he was not the only one who entered the drawing area and that, even if the charge was true, it was a minor infraction to warrant his dismissal. However, everytime he spoke, Tan shouted "Gawas" ("Get out"), leaving him with no other choice but to leave the premises.

Lagrama filed a complaint with the Sub-Regional Arbitration Branch No. X of the National Labor Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary differential, and damages. Petitioner Tan denied that Lagrama was his employee. He asserted that Lagrama was an independent contractor who did his work according to his methods, while he (petitioner) was only interested in the result thereof. He cited the admission of Lagrama during the conferences before the Labor Arbiter that he was paid on a fixed piece-work basis, i.e., that he was paid for every painting turned out as ad billboard or mural for the pictures shown in the three theaters, on the basis of a "no mural/billboard drawn, no pay" policy. He submitted the affidavits of other cinema owners, an amusement park owner, and those supervising the construction of a church to prove that the services of Lagrama were contracted by them. He denied having dismissed Lagrama and alleged that it was the latter who refused to paint for him after he was scolded for his habits. As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the parties to file their position papers. On June 17, 1999, he rendered a decision, the dispositive portion of which reads: WHEREFORE, premises considered judgment is hereby ordered: 1. Declaring complainant's [Lagrama's] dismissal illegal and 2. Ordering respondents [Tan] to pay complainant the following: A. Separation Pay B. Backwages (from 17 October 1998 to 17 June 1999) C. 13th month pay (3 years) D. Service Incentive Leave Pay (3 years) E. Damages TOTAL P 59,000.00 47,200.00

17,700.00 2, 949.99 10,000.00 [P136,849.99]

Complainant's other claims are dismissed for lack of merit.3 Petitioner Rolando Tan appealed to the NLRC Fifth Division, Cagayan de Oro City, which, on June 30, 2000, rendered a decision4 finding Lagrama to be an independent contractor, and for this reason reversing the decision of the Labor Arbiter. Respondent Lagrama filed a motion for reconsideration, but it was denied for lack of merit by the NLRC in a resolution of September 29, 2000. He then filed a petition for certiorari under Rule 65 before the Court of Appeals. The Court of Appeals found that petitioner exercised control over Lagrama's work by dictating the time when Lagrama should submit his billboards and murals and setting rules on the use of the work area and rest room. Although it found that Lagrama did work for other cinema owners, the appeals court held it to be a mere sideline insufficient to prove that he was not an employee of Tan. The appeals court also found no evidence of any intention on the part of Lagrama to leave his job or sever his employment relationship with Tan. Accordingly, on May 31, 2001, the Court of Appeals rendered a decision, the dispositive portion of which reads:

IN THE LIGHT OF ALL THE FOREGOING, the Petition is hereby GRANTED. The Resolutions of the Public Respondent issued on June 30, 2000 and September 29, 2000 are ANNULLED. The Decision of the Honorable Labor Arbiter Rogelio P. Legaspi on June 17, 1999 is hereby REINSTATED. Petitioner moved for a reconsideration, but the Court of Appeals found no reason to reverse its decision and so denied his motion for lack of merit.5 Hence, this petition for review on certiorari based on the following assignments of errors: I. With all due respect, the decision of respondent Court of Appeals in CA-G.R. SP NO. 63160 is bereft of any finding that Public Respondent NLRC, 5th Division, had no jurisdiction or exceeded it or otherwise gravely abused its discretion in its Resolution of 30 June 2000 in NLRC CA-NO. M004950-99. II. With all due respect, respondent Court of Appeals, absent any positive finding on its part that the Resolution of 30 June 2000 of the NLRC is not supported by substantial evidence, is without authority to substitute its conclusion for that of said NLRC. III. With all due respect, respondent Court of Appeals' discourse on "freelance artists and painters" in the decision in question is misplaced or has no factual or legal basis in the record. IV. With all due respect, respondent Court of Appeals' opening statement in its decision as to "employment," "monthly salary of P1,475.00" and "work schedule from Monday to Saturday, from 8:00 o'clock in the morning up to 5:00 o'clock in the afternoon" as "facts" is not supported by the evidence on record. V. With all due respect, the case of Lambo, et al., v. NLRC, et al., 317 SCRA 420 [G.R. No. 111042 October 26, 1999] relied upon by respondent Court of Appeals is not applicable to the peculiar circumstances of this case.6 The issues raised boil down to whether or not an employer-employee relationship existed between petitioner and private respondent, and whether petitioner is guilty of illegally dismissing private respondent. We find the answers to these issues to be in the affirmative. I. In determining whether there is an employer-employee relationship, we have applied a "four-fold test," to wit: (1) whether the alleged employer has the power of selection and engagement of employees; (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages.7 These elements of the employer-employee relationship are present in this case. First. The existence in this case of the first element is undisputed. It was petitioner who engaged the services of Lagrama without the intervention of a third party. It is the existence of the second element, the power of control, that requires discussion here. Of the four elements of the employer-employee relationship, the "control test" is the most important. Compared to an employee, an independent contractor is one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under its own responsibility according to its own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof.8 Hence, while an independent contractor enjoys independence and freedom from the control and supervision of his

principal, an employee is subject to the employer's power to control the means and methods by which the employee's work is to be performed and accomplished. In the case at bar, albeit petitioner Tan claims that private respondent Lagrama was an independent contractor and never his employee, the evidence shows that the latter performed his work as painter under the supervision and control of petitioner. Lagrama worked in a designated work area inside the Crown Theater of petitioner, for the use of which petitioner prescribed rules. The rules included the observance of cleanliness and hygiene and a prohibition against urinating in the work area and any place other than the toilet or the rest rooms.9 Petitioner's control over Lagrama's work extended not only to the use of the work area, but also to the result of Lagrama's work, and the manner and means by which the work was to be accomplished. Moreover, it would appear that petitioner not only provided the workplace, but supplied as well the materials used for the paintings, because he admitted that he paid Lagrama only for the latter's services.10 Private respondent Lagrama claimed that he worked daily, from 8 o'clock in the morning to 5 o'clock in the afternoon. Petitioner disputed this allegation and maintained that he paid Lagrama P1,475.00 per week for the murals for the three theaters which the latter usually finished in 3 to 4 days in one week.11 Even assuming this to be true, the fact that Lagrama worked for at least 3 to 4 days a week proves regularity in his employment by petitioner. Second. That petitioner had the right to hire and fire was admitted by him in his position paper submitted to the NLRC, the pertinent portions of which stated: Complainant did not know how to use the available comfort rooms or toilets in and about his work premises. He was urinating right at the place where he was working when it was so easy for him, as everybody else did and had he only wanted to, to go to the comfort rooms. But no, the complainant had to make a virtual urinal out of his work place! The place then stunk to high heavens, naturally, to the consternation of respondents and everyone who could smell the malodor. ... Given such circumstances, the respondents had every right, nay all the compelling reason, to fire him from his painting job upon discovery and his admission of such acts. Nonetheless, though thoroughly scolded, he was not fired. It was he who stopped to paint for respondents.12 By stating that he had the right to fire Lagrama, petitioner in effect acknowledged Lagrama to be his employee. For the right to hire and fire is another important element of the employer-employee relationship.13 Indeed, the fact that, as petitioner himself said, he waited for Lagrama to report for work but the latter simply stopped reporting for work reinforces the conviction that Lagrama was indeed an employee of petitioner. For only an employee can nurture such an expectancy, the frustration of which, unless satisfactorily explained, can bring about some disciplinary action on the part of the employer. Third. Payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation. Wages are defined as "remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered."14 That Lagrama worked for Tan on a fixed piece-work basis is of no moment. Payment by result is a method of compensation and does not define the essence of the relation.15 It is a method of computing compensation, not a basis for determining the existence or absence of employeremployee relationship. One may be paid on the basis of results or time expended on the work, and may

or may not acquire an employment status, depending on whether the elements of an employer-employee relationship are present or not.16 The Rules Implementing the Labor Code require every employer to pay his employees by means of payroll.17 The payroll should show among other things, the employee's rate of pay, deductions made, and the amount actually paid to the employee. In the case at bar, petitioner did not present the payroll to support his claim that Lagrama was not his employee, raising speculations whether his failure to do so proves that its presentation would be adverse to his case.18 The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer.19 In this case, there is such a connection between the job of Lagrama painting billboards and murals and the business of petitioner. To let the people know what movie was to be shown in a movie theater requires billboards. Petitioner in fact admits that the billboards are important to his business.20 The fact that Lagrama was not reported as an employee to the SSS is not conclusive on the question of whether he was an employee of petitioner.21 Otherwise, an employer would be rewarded for his failure or even neglect to perform his obligation.22 Neither does the fact that Lagrama painted for other persons affect or alter his employment relationship with petitioner. That he did so only during weekends has not been denied by petitioner. On the other hand, Samuel Villalba, for whom Lagrama had rendered service, admitted in a sworn statement that he was told by Lagrama that the latter worked for petitioner.23 Lagrama had been employed by petitioner since 1988. Under the law, therefore, he is deemed a regular employee and is thus entitled to security of tenure, as provided in Art. 279 of Labor Code: ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. This Court has held that if the employee has been performing the job for at least one year, even if not continuously but intermittently, the repeated and continuing need for its performance is sufficient evidence of the necessity, if not indispensability, of that activity to the business of his employer. Hence, the employment is also considered regular, although with respect only to such activity, and while such activity exists.24 It is claimed that Lagrama abandoned his work. There is no evidence to show this. Abandonment requires two elements: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor and being manifested by some overt acts.25 Mere absence is not sufficient. What is more, the burden is on the employer to show a deliberate and unjustified refusal on the part of the employee to resume his employment without any intention of returning.26 In the case at bar, the Court of Appeals correctly ruled: Neither do we agree that Petitioner abandoned his job. In order for abandonment to be a just and valid ground for dismissal, the employer must show, by clear proof, the intention of the employee to abandon his job. . . . In the present recourse, the Private Respondent has not established clear proof of the intention of the Petitioner to abandon his job or to sever the employment relationship between him and the

Private Respondent. On the contrary, it was Private Respondent who told Petitioner that he did not want the latter to draw for him and thereafter refused to give him work to do or any mural or billboard to paint or draw on. More, after the repeated refusal of the Private Respondent to give Petitioner murals or billboards to work on, the Petitioner filed, with the Sub-Regional Arbitration Branch No. X of the National Labor Relations Commission, a Complaint for "Illegal Dismissal and Money Claims." Such act has, as the Supreme Court declared, negate any intention to sever employment relationship. . . .27 II. The second issue is whether private respondent Lagrama was illegally dismissed. To begin, the employer has the burden of proving the lawfulness of his employee's dismissal.28 The validity of the charge must be clearly established in a manner consistent with due process. The Implementing Rules of the Labor Code29 provide that no worker shall be dismissed except for a just or authorized cause provided by law and after due process. This provision has two aspects: (1) the legality of the act of dismissal, that is, dismissal under the grounds provided for under Article 282 of the Labor Code and (2) the legality in the manner of dismissal. The illegality of the act of dismissal constitutes discharge without just cause, while illegality in the manner of dismissal is dismissal without due process.30 In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as the latter tried to explain his side, petitioner made it plain that Lagrama was dismissed. Urinating in a work place other than the one designated for the purpose by the employer constitutes violation of reasonable regulations intended to promote a healthy environment under Art. 282(1) of the Labor Code for purposes of terminating employment, but the same must be shown by evidence. Here there is no evidence that Lagrama did urinate in a place other than a rest room in the premises of his work. Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor Arbiter found that the relationship between the employer and the employee has been so strained that the latter's reinstatement would no longer serve any purpose. The parties do not dispute this finding. Hence, the grant of separation pay in lieu of reinstatement is appropriate. This is of course in addition to the payment of backwages which, in accordance with the ruling in Bustamante v. NLRC,31 should be computed from the time of Lagrama's dismissal up to the time of the finality of this decision, without any deduction or qualification. The Bureau of Working Conditions32 classifies workers paid by results into two groups, namely; (1) those whose time and performance is supervised by the employer, and (2) those whose time and performance is unsupervised by the employer. The first involves an element of control and supervision over the manner the work is to be performed, while the second does not. If a piece worker is supervised, there is an employer-employee relationship, as in this case. However, such an employee is not entitled to service incentive leave pay since, as pointed out in Makati Haberdashery v. NLRC33 and Mark Roche International v. NLRC,34 he is paid a fixed amount for work done, regardless of the time he spent in accomplishing such work. WHEREFORE, based on the foregoing, the petition is DENIED for lack of showing that the Court of Appeals committed any reversible error. The decision of the Court of Appeals, reversing the decision of the National Labor Relations Commission and reinstating the decision of the Labor Arbiter, is AFFIRMED with the MODIFICATION that the backwages and other benefits awarded to private respondent Leovigildo Lagrama should be computed from the time of his dismissal up to the time of the finality of this decision, without any deduction and qualification. However, the service incentive leave pay awarded to him is DELETED. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 122122 July 20, 1999 PHILIPPINE FRUIT & VEGETABLE INDUSTRIES, INC. and its President and General Manager, MR. PEDRO CASTILLO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, and Philippine Fruit and Vegetable Workers UnionTupas Local Chapter, respondents.

KAPUNAN, J.: In this special civil action for certiorari, petitioners assail the Decision dated May 31, 1995 of public respondent National Labor Relations Commission (NLRC) which upheld with modification the decision of Labor Arbiter Quintin C. Mendoza finding that the members of respondent union were illegally dismissed and granting them, among others, their backwages and separation pay if their reinstatement is no longer feasible; and the Resolution dated August 22, 1995 of the same public respondent, which denied petitioners' motion for reconsideration of the above decision.1wphi1.nt Petitioner Philippine Fruit and Vegetable Industries, Inc. (PFVII, for brevity) is a government-owned and controlled corporation engaged in the manufacture and processing of fruit and vegetable purees for export. Petitioner Pedro Castillo is the former President and General Manager of petitioner PFVII. On September 5, 1988 herein private respondent Philippine Fruit and Vegetable Workers Union-Tupas Local Chapter, for and in behalf of 127 of its members, filed a complaint for unfair labor practice and/or illegal dismissal with damages against petitioner corporation. Private respondent alleged that many of its complaining members started working for San Carlos Fruits Corporation which later incorporated into PFVII in January or February 1983 until their dismissal on different dates in 1985, 1986, 1987 and 1988. They further alleged that the dismissals were due to complainants' involvement in union activities and were without just cause. On September 23, 1988, herein petitioners filed a motion to dismiss. On October 13, 1988, respondent union filed its position paper wherein it added as complainants 33 more of its members, raising the number of complainants to 160. On November 21, 1988, respondent union filed a supplemental position paper alleging that there were actually 194 complainants. Respondent union attached thereto a list of their names and the amounts of their claims. On December 26, 1988, Labor Arbiter Ricardo Olairez rendered a decision holding petitioners liable for illegal dismissal. On appeal, the third division of the NLRC, in its Resolution dated May 31, 1990, set aside the appealed decision and remanded the case to the Arbitration Branch for further proceedings.

In the Arbitration Branch, Labor Arbiter Melquiades Sol D. del Rosario, and subsequently, Labor Arbiter Quintin C. Mendoza, received the evidence presented by both parties. On July 28, 1992, Labor Arbiter Mendoza rendered a decision finding petitioners liable for, among others, illegal dismissal. The dispositive portion of the decision reads: WHEREFORE, decision is hereby issued ordering the respondent Philippine Fruits and Vegetable, Industries Corporation and or its President/General Manager Pedro Castillo to pay the aforementioned 190 complainants their full backwages and 13th month pay in the aforestated amounts, aggregating six million one hundred forty two thousand fifty-one pesos and 37/100 centavos, (P6,142,051.37), plus separation pay of one-half month pay for every year of service including 1991, at the option of respondent, if reinstatement is no longer feasible. Likewise, attorney's fee representing ten percent (10%) of the total award is hereby granted, the same to be shared proportionately between complainants former counsel ALAR, COMIA, MANALO and ASSOCIATES LAW OFFICES, c/o Atty. Benjamin Alar, and counsel of record Atty. Alejandro Villamil, the former having established its right and lien over the award. SO ORDERED. 1 On appeal, respondent NLRC affirmed the decision of the Labor Arbiter "with modification that the award of attorneys fees shall be based only on the amounts corresponding to 13th month pay." 2 Petitioners filed a motion for reconsideration which was denied by respondent NLRC in a Resolution dated August 22, 1995. 3 Hence, this petition wherein petitioners raise the following issues: I THE QUESTIONED DECISION IS NOT SUPPORTED BY EVIDENCE, APPLICABLE LAWS AND JURISPRUDENCE. II PRIVATE RESPONDENTS ARE SEASONAL EMPLOYEES WHOSE EMPLOYMENTS CEASED DURING THE OFF-SEASON DUE TO NO WORK AND NOT DUE TO ILLEGAL DISMISSAL. III THE LABOR ARBITER AND THE NLRC COMMITTED MANIFEST ERROR IN ORDERING PETITIONER TO PAY 194 INDIVIDUALS BACKWAGES, 13TH MONTH PAY AND SEPARATION PAY BENEFITS. 4 Petitioners contend that the NLRC's findings of fact are incorrect and unsubstantiated. They allege that the aforementioned San Carlos Fruits Corporation is separate and distinct from herein petitioner PFVII; hence, it was arbitrary on the part of public respondent to hold petitioners liable to the employees of San Carlos Fruits Corporation. Petitioners further argue that PFVII operates on a seasonal basis and the complainants who are members of respondent union are seasonal workers because they work only during the period that the company is in operation. According to petitioners, its operation starts only in February with the processing of tomatoes into tomato paste and ceases by the end of the same month when the supply is consumed. It then resumes operations at the end of April or early May, depending on the availability of supply with the

processing of mangoes into purees and ceases operation in June. 5 The severance of complainants' employment from petitioner corporation was a necessary consequence of the nature of seasonal employment; and since complainants are seasonal workers as defined by the Labor Code, they cannot invoke any tenurial benefit. 6 Petitioners further claim that many of the complainants failed or refused to undergo the medical examination required by petitioners as a prerequisite to employment. They have legal, right, petitioners argue, to prescribe their own rules and regulations; and, their right to require their employees to under a medical examination is clearly legal. Finally, petitioners allege that the Labor Arbiter and respondent NLRC erred in ordering them to pay backwages, 13th month pay and separation pay benefits to the 194 respondents (union members) when only 78 of them were able to testify and substantiate their claims. This is contrary to the agreement of both parties that those who will not be able to testify and substantiate their respective claims for actual damages will be considered to have abandoned their complaints. 7 In fact, according to petitioners, it was by virtue of this agreement that petitioners limited the rebuttal evidence (only to refute whatever may have been adduced by the said 78 union members). 8 The above arguments boil down to the issue of whether or not complaining members of respondent union are regular employees of PFVII or are seasonal workers whose employment ceased during the offseason due to the non-availability of work. Well-settled is the rule that findings of fact of the National Labor Relations Commission, affirming those of the Labor Arbiter are entitled to great weight and will not be disturbed if they are supported by substantial evidence. 9 The questioned decision of the Labor Arbiter reads in part: . . . (T)he employment of most started in January (sic) or February 1983 with the processing of the fruits, i.e. mangoes and calamansi from January to July, tomatoes from January to April, then mangoes up to August and guyabano and others like papayas and pineapples until November or end of the year, and that respondent corporation operates for the whole year. (TNS [sic], of April 11, 1991 hearing, pp. 1011). . . . Their employments on the other hand are spelled-out in complainants' Annexes "A" to "A-194" and in their individual affidavits and detailed at times for those who were called to testify in their direct testimony; and these positive testimonies are bolstered by their common but separate individual evidence, like the pay slips, apprentice agreements before their appointments, identification cards, saving accounts and pass books . . . . Thus, we cannot give credence to the "Factory Workers Attendance Report" of respondent (Annex "2" marked as Exhibit "B") where it is represented in summary form or indicated that some of the complainants worked for one or several weeks or months only during some years they claimed to be employed, or did not at all worked (sic) for respondents. This exhibit is visibly (sic) self-serving and not the best evidence to prove the insistence of respondents. Rather, the best evidence should be some kind directly prepared or signed documents in the course of their normal relation indicating with clarity the days, hours and months actually worked and signed by the workers to rebut the positive assertion in their affidavits, testimonies and the messages of the Annexes. . . . 10 On the other hand, the NLRC's findings of fact are as follows: As culled from the records, it appears that herein 194 individual complainants are members of complainant union in respondent company which is engaged in the manufacture and processing of fruit . . . and vegetable purees for export. They were employed as seeders, operators, sorters, slicers, janitors, drivers, truck helpers, mechanics and office personnel.

xxx xxx xxx By the very nature of things in a business enterprise like respondent company's, to our mind, the services of herein complainants are, indeed, more than six (6) months a year. We take note of the undisputed fact that the company did not confine itself just to the processing of tomatoes and mangoes. It also processed guyabano, calamansi, papaya, pineapple, etc. Besides, there is the office administrative functions, cleaning and upkeeping of machines and other duties and tasks to keep up (sic) a big food processing corporation. Considering, therefore, that under of (sic) Article 280 of the Labor Code "the provisions of written agreement to the contrary notwithstanding and considering further that the tasks which complainants performed were usually necessary and desirable in the employer's usual business or trade, we hold that complainants are regular seasonal employees, thus, entitled to security of tenure. 11 The findings of both the Labor Arbiter and the NLRC are supported by substantial evidence. There is, therefore, no circumstance that would warrant a reversal of their decisions. Art. 280 of the Labor Code provides: Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employers, except where the employment has been fixed for a specific project. . . . An employment shall be deemed to be casual if it is not covered by the preceeding paragraph; provided, that, any employee who has rendered at least one year of service whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. Under the above provision, an employment shall be deemed regular where the employee: a) has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; or b) has rendered at least one year of service, whether such service is continuous or broken, with respect to the activity in which he is employed. 12 In the case at bar, the work of complainants as seeders, operators, sorters, slicers, janitors, drivers, truck helpers, mechanics and office personnel is without doubt necessary in the usual business of a food processing company like petitioner PFVII. It should be noted that complainants' employment has not been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of their appointment or hiring. 13 Neither is their employment seasonal in nature. While it may be true that some phases of petitioner company's processing operations is dependent on the supply of fruits for a particular season, the other equally important aspects of its business, such as manufacturing and marketing are not seasonal. The fact is that large-scale food processing companies such as petitioner company continue to operate and do business throughout the year even if the availability of fruits and vegetables is seasonal. Having determined that private respondents are regular employees under the first paragraph, we need not dwell on the question of whether or not they had rendered one year of service. This Court has clearly stated in Mercado, Sr. vs. NLRC, 14 that: The second paragraph of Article 280 demarcates as "casual" employees, all other employees who do not fall under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as

regular employees those "casual" employees who have rendered at least one year of service regardless of the fact that such service may be continuous or broken.1wphi1.nt . . . Hence, the proviso is applicable only to the employees who are deemed "casuals" but not to the "project" employees nor the regular employees treated in paragraph one of Art. 280. As correctly noted by the Office of the Solicitor General; private respondents in this case are deemed regular employees by virtue of the fact that they performed functions which are necessary and desirable in the usual business of PFVII as provided under the first paragraph of Art. 280 of the Labor Code. Finally, on the issue of whether or not the NLRC committed manifest error in ordering petitioners to pay backwages, 13th month pay and separation pay benefits to 194 members of respondent union, we have to rule in the affirmative. A careful examination of the records shows that only 80 of the 194 union members presented evidence to support and prove their claims in the form of affidavits and/or testimonies, pay slips, passbooks, identification cards and other relevant documents. The other 114 members did not present any kind of evidence whatsoever. It is a basic rule in evidence that each party must prove his affirmative allegation the plaintiff or complainant has to prove his affirmative allegations in the complaints and the defendant or respondent has to prove the affirmative allegations in his affirmative defenses and counterclaims. 15 Hence, as correctly noted by the Solicitor General, the Labor Arbiter erred in appreciating the evidence presented by the complaining union members in favor of the other 114 because the evidence is personal to each of them. Whatever testimony or other proof of employment submitted by any of them proves only the status of his own employment and not that of any other complainant. Thus, only those members of respondent union who were able to prove their claims are entitled to awards of backwages, 13th month pay and separation pay. They are as follows: 1. Antonio Cayabyab 2. Ricardo Malicdem 3. Raymundo De Guzman 4. Virgilio M. Sison 5. Marilou R. Sabangan 6. Antonio Calixto 7. Marietta A. Sabangan8. Divina S. Mandapat9. Silverio G. Tamondong10. Pepito P. Bulatao 11. Orlando Salangad 12. Servillano Reyes 13. Corazon Leocadio 14. Myrna R. Vistro 15. Nicanor R. Turingan 16. Gerondio M. Magat 17. Jose Sabangan, Jr. 18. Francisca Bautista 19. Loreta Pidlaoan 20. Francisco Cuison 21. Ramil de Guzman 22. Roberto Lomibao 23. Rolando Aquino24. Adoracion de Guzman25. Violeta Antonio26. Elena N. Diaz27. Priscilla Vinoya28. Julita Macaraeg29. Fe Vilma S. Mandapat30. Fidel B. Tamondong31. Julita V. Gamboa32. Leonora Castro33. Roberto C. Angeles34. Corazon Munoz35. Brigida de Guzman36. Isabelita S. Mandapat37. Emma Macam38. Reynaldo C. de Guzman39. Jimmy D. Montilla40. Romeo Macam41. Eligida D. Montilla42. Rodolfo Rosario43. Alex Bautista44. Remegio Alcantara45. Domingo Bautista46. Romulo G. Gural47. Romulo Bautista48. Lolita A. Malicdem49. Jose D. Diaz50. Eleno Bulatao51. Juliana M. Saplan52. Felicidad A. Rosario53. Eugenio A. Macaraeg54. Helen A. Diaz55. Betty Grace V. Lolarga56. Rebecca C. Fernandez57. Narcisa M. Malicdem58. Manuel Velasco59. Jose S. Untalan60. Rodolfo Soriano61. Dionisio Gutie62. Natividad P. Velasquez63. Lourdes Arenas64. Lydia Clemente65. Alfonso Manzon66. Francisco Bautista67. Adelaida Ramirez68. Bienvenido Resuello69. Melanda Albarida70. Marino Cayabyab71. Cecilia Bautista72. Herminia Arizabal73. Gaudencio Castro74. Elizabeth Valdez75. Douglas Dalisay76. Teresita Velasco77. Jaime T. Aquino78. Virginia Cayabyab79. Romeo Macam80. Romeo D. de Vera 16 ACCORDINGLY, the questioned decision of the NLRC is hereby AFFIRMED insofar as the 80 union members who were able to prove their respective claims are concerned, but REVERSED with respect to the other 114 union members, who did not adduce evidence in support of their claims. SO ORDERED.1wphi1.nt

Davide, Jr., C.J., Melo, Pardo and Ynarez-Santiago, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 160905 July 4, 2008

BIENVENIDO D. GOMA, petitioner, vs. PAMPLONA PLANTATION INCORPORATED, respondent. DECISION NACHURA, J.: For review is the Decision1 of the Court of Appeals (CA) dated August 27, 2003 granting respondent Pamplona Plantation, Inc.s petition for certiorari and its Resolution2 dated November 11, 2003 denying petitioner Bienvenido Gomas motion for reconsideration, in CAG.R. SP No. 74892. Petitioner commenced3 the instant suit by filing a complaint for illegal dismissal, underpayment of wages, non-payment of premium pay for holiday and rest day, five (5) days incentive leave pay, damages and attorneys fees, against the respondent. The case was filed with the SubRegional Arbitration Branch No. VII of Dumaguete City. Petitioner claimed that he worked as a carpenter at the Hacienda Pamplona since 1995; that he worked from 7:30 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. daily with a salary rate of P90.00 a day paid weekly; and that he worked continuously until 1997 when he was not given any work assignment.4 On a claim that he was a regular employee, petitioner alleged to have been illegally dismissed when the respondent refused without just cause to give him work assignment. Thus, he prayed for backwages, salary differential, service incentive leave pay, damages and attorneys fees.5 On the other hand, respondent denied having hired the petitioner as its regular employee. It instead argued that petitioner was hired by a certain Antoy Caaveral, the manager of the hacienda at the time it was owned by Mr. Bower and leased by Manuel Gonzales, a jai-alai pelotari known as "Ybarra."6 Respondent added that it was not obliged to absorb the employees of the former owner. In 1995, Pamplona Plantation Leisure Corporation (PPLC) was created for the operation of tourist resorts, hotels and bars. Petitioner, thus, rendered service in the construction of the facilities of PPLC. If at all, petitioner was a project but not a regular employee.7

On June 28, 1999, Labor Arbiter Geoffrey P. Villahermosa dismissed the case for lack of merit.8 The Labor Arbiter concluded that petitioner was hired by the former owner, hence, was not an employee of the respondent. Consequently, his money claims were denied.9 On appeal to the National Labor Relations Commission (NLRC), the petitioner obtained favorable judgment when the tribunal reversed and set aside the Labor Arbiters decision. The dispositive portion of the NLRC decision reads: WHEREFORE, the Decision of the Labor Arbiter is hereby SET ASIDE and a new one is hereby issued ORDERING the respondent, Pamplona Plantation Incorporated, the following: 1) to reinstate the complainant, BIENVENIDO D. GOMA to his former position immediately without loss of seniority rights and other privileges; 2) to pay the same complainant TWELVE THOUSAND THREE HUNDRED FIFTY-NINE PESOS (P12,359.00) in salary differentials; 3) to pay to the same complainant ONE HUNDRED ONE THOUSAND SIX HUNDRED SIXTY PESOS (P101,660.00) in backwages to be updated until actual reinstatement; and 4) to pay attorneys fee in the amount of ELEVEN THOUSAND FOUR HUNDRED TWO PESOS (P11,402.00) which is equivalent to ten percent (10%) of the total judgment award.1avvphi1 The respondent is further ordered to pay the aggregate amount of ONE HUNDRED FOURTEEN THOUSAND AND NINETEEN PESOS (P114,019.00) to the complainant through the cashier of this Commission within ten (10) days from receipt hereof. SO ORDERED.10 Respondents motion for reconsideration was denied by the NLRC on September 9, 2002.11 The NLRC upheld the existence of an employer-employee relationship, ratiocinating that it was difficult to believe that a simple carpenter from far away Pamplona would go to Dumaguete City to hire a competent lawyer to help him secure justice if he did not believe that his right as a laborer had been violated.12 It added that the creation of the PPLC required the tremendous task of constructing hotels, inns, restaurants, bars, boutiques and service shops, thus involving extensive carpentry work. As an old carpentry hand in the old corporation, the possibility of petitioners employment was great.13 The NLRC likewise held that the respondent should have presented its employment records if only to show that petitioner was not included in its list of employees; its failure to do so was fatal.14 Considering that petitioner worked for the respondent for a period of two years, he was a regular employee.15 Aggrieved, respondent instituted a special civil action for certiorari under Rule 65 before the Court of Appeals which granted the same; and consequently annulled and set aside the NLRC decision. The CA disposed, as follows:

WHEREFORE, premises considered, the instant petition is GRANTED. The assailed decision of the NLRC dated October 24, 2000, as well as the Resolution dated September 9, 2002 in NLRC Case No. V-000882-99, RAB VII-0088-98-D are hereby ANNULLED and SET ASIDE. The complaint is ordered DISMISSED. SO ORDERED.16 Contrary to the NLRCs finding, the CA concluded that there was no employer-employee relationship. The CA stressed that petitioner having raised a positive averment, had the burden of proving the existence of an employer-employee relationship. Respondent, therefore, had no obligation to prove its negative averment.17 The appellate court further held that while the respondents business required the performance of occasional repairs and carpentry work, the retention of a carpenter in its payroll was not necessary or desirable in the conduct of its usual business.18 Lastly, although the petitioner was an employee of the former owner of the hacienda, the respondent was not required to absorb such employees because employment contracts are in personam and binding only between the parties.19 Petitioner now comes before this Court raising the sole issue: WHETHER OR NOT THE DECISION OF [THE] COURT OF APPEALS DATED AUGUST 27, 2003, REVERSING AND SETTING ASIDE THE NLRC (Fourth Division, Cebu City) RULING THAT THE "PETITIONER WAS NOT ILLEGALLY DISMISSED AS HE WAS NOT AN EMPLOYEE OF RESPONDENT", IS CONTRARY TO LAW AND JURISPRUDENCE ON WHICH IT WAS BASED, AND NOT IN CONSONANCE WITH THE EVIDENCE ON RECORD.20 The disposition of this petition rests on the resolution of the following questions: 1) Is the petitioner a regular employee of the respondent? 2) If so, was he illegally dismissed from employment? and 3) Is he entitled to his monetary claims? Petitioner insists that he was a regular employee of the respondent corporation. The respondent, on the other hand, counters that it did not hire the petitioner, hence, he was never an employee, much less a regular one. Both the Labor Arbiter and the CA concluded that there was no employer-employee relationship between the petitioner and respondent. They based their conclusion on the alleged admission of the petitioner that he was previously hired by the former owner of the hacienda. Thus, they rationalized that since the respondent was not obliged to absorb all the employees of the former owner, petitioners claim of employment could not be sustained. The NLRC, on the other hand, upheld petitioners claim of regular employment because of the respondents failure to present its employment records. The existence of an employer-employee relationship involves a question of fact which is well within the province of the CA to determine. Nonetheless, given the reality that the CAs findings are at odds with those of the NLRC, the Court is constrained to probe into the attendant circumstances as appearing on record.21

A thorough examination of the records compels this Court to reach a conclusion different from that of the CA. It is true that petitioner admitted having been employed by the former owner prior to 1993 or before the respondent took over the ownership and management of the plantation, however, he likewise alleged having been hired by the respondent as a carpenter in 1995 and having worked as such for two years until 1997. Notably, at the outset, respondent categorically denied that it hired the petitioner. Yet, in its petition filed before the CA, respondent made this admission: Private respondent [petitioner herein] cannot be considered a regular employee since the nature of his work is merely project in character in relation to the construction of the facilities of the Pamplona Plantation Leisure Corporation. He is a project employee as he was hired 1) for a specific project or undertaking, and 2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee. x x x. xxxx In other words, as regards those workers who worked in 1995 specifically in connection with the construction of the facilities of Pamplona Plantation Leisure Corporation, their employment was definitely "temporary" in character and not regular employment. Their employment was deemed terminated by operation of law the moment they had finished the job or activity under which they were employed.22 Thus, departing from its initial stand that it never hired petitioner, the respondent eventually admitted the existence of employer-employee relationship before the CA. It, however, qualified such admission by claiming that it was PPLC that hired the petitioner and that the nature of his employment therein was that of a "project" and not "regular" employee. Parenthetically, this Court in Pamplona Plantation Company, Inc. v. Tinghil23 and Pamplona Plantation Company v. Acosta24 had pierced the veil of corporate fiction and declared that the two corporations,25 PPLC and the herein respondent, are one and the same. By setting forth these defenses, respondent, in effect, admitted that petitioner worked for it, albeit in a different capacity. Such an allegation is in the nature of a negative pregnant, a denial pregnant with the admission of the substantial facts in the pleadings responded to which are not squarely denied, and amounts to an acknowledgment that petitioner was indeed employed by respondent.26 The employment relationship having been established, the next question we must answer is: Is the petitioner a regular or project employee? We find the petitioner to be a regular employee. Article 280 of the Labor Code, as amended, provides:

ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. As can be gleaned from this provision, there are two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed.27 Simply stated, regular employees are classified into: regular employees by nature of work; and regular employees by years of service. The former refers to those employees who perform a particular activity which is necessary or desirable in the usual business or trade of the employer, regardless of their length of service; while the latter refers to those employees who have been performing the job, regardless of the nature thereof, for at least a year.28 If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability, of that activity to the business.29 Respondent is engaged in the management of the Pamplona Plantation as well as in the operation of tourist resorts, hotels, inns, restaurants, etc. Petitioner, on the other hand, was engaged to perform carpentry work. His services were needed for a period of two years until such time that the respondent decided not to give him work assignment anymore. Owing to his length of service, petitioner became a regular employee, by operation of law. Respondent argues that, even assuming that petitioner can be considered an employee, he cannot be classified as a regular employee, but merely as a project employee whose services were hired only with respect to a specific job and only while that specific job existed. A project employee is assigned to carry out a specific project or undertaking the duration and scope of which are specified at the time the employee is engaged in the project. A project is a job or undertaking which is distinct, separate and identifiable from the usual or regular undertakings of the company. A project employee is assigned to a project which begins and ends at determined or determinable times.30 The principal test used to determine whether employees are project employees as distinguished from regular employees, is whether or not the employees were assigned to carry out a specific project or undertaking, the duration or scope of which was specified at the time the employees

were engaged for that project.31 In this case, apart from respondents bare allegation that petitioner was a project employee, it had not shown that petitioner was informed that he would be assigned to a specific project or undertaking. Neither was it established that he was informed of the duration and scope of such project or undertaking at the time of his engagement. Most important of all, based on the records, respondent did not report the termination of petitioners supposed project employment to the Department of Labor and Employment (DOLE). Department Order No. 19 (as well as the old Policy Instructions No. 20) requires employers to submit a report of an employees termination to the nearest public employment office every time the employment is terminated due to a completion of a project. Respondents failure to file termination reports, particularly on the cessation of petitioners employment, was an indication that the petitioner was not a project but a regular employee.32 We stress herein that the law overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining position necessitates the succor of the State. What determines whether a certain employment is regular or otherwise is not the will or word of the employer, to which the worker oftentimes acquiesces. Neither is it the procedure of hiring the employee nor the manner of paying the salary or the actual time spent at work. It is the character of the activities performed by the employer in relation to the particular trade or business of the employer, taking into account all the circumstances, including the length of time of its performance and its continued existence. Given the attendant circumstances in the case at bar, it is obvious that one year after he was employed by the respondent, petitioner became a regular employee by operation of law.33 As to the question of whether petitioner was illegally dismissed, we answer in the affirmative. Well-established is the rule that regular employees enjoy security of tenure and they can only be dismissed for just cause and with due process, i.e., after notice and hearing. In cases involving an employees dismissal, the burden is on the employer to prove that the dismissal was legal. This burden was not amply discharged by the respondent in this case. Obviously, petitioners dismissal was not based on any of the just or authorized causes enumerated under Articles 282,34 28335 and 28436 of the Labor Code, as amended. After working for the respondent for a period of two years, petitioner was shocked to find out that he was not given any work assignment anymore. Hence, the requirement of substantive due process was not complied with. Apart from the requirement that the dismissal of an employee be based on any of the just or authorized causes, the procedure laid down in Book VI, Rule I, Section 2 (d) of the Omnibus Rules Implementing the Labor Code, must be followed.37 Failure to observe the rules is a violation of the employees right to procedural due process. In view of the non-observance of both substantive and procedural due process, in accordance with the guidelines outlined by this Court in Agabon v. National Labor Relations Commission,38 we declare that petitioners dismissal from employment is illegal.39

Having shown that petitioner is a regular employee and that his dismissal was illegal, we now discuss the propriety of the monetary claims of the petitioner. An illegally dismissed employee is entitled to: (1) either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and (2) backwages.40 In the instant case, we are prepared to concede the impossibility of the reinstatement of petitioner considering that his position or any equivalent position may no longer be available in view of the length of time that this case has been pending. Moreover, the protracted litigation may have seriously abraded the relationship of the parties so as to render reinstatement impractical. Accordingly, petitioner may be awarded separation pay in lieu of reinstatement.41 Petitioners separation pay is pegged at the amount equivalent to petitioners one (1) month pay, or one-half (1/2) month pay for every year of service, whichever is higher, reckoned from his first day of employment up to finality of this decision. Full backwages, on the other hand, should be computed from the date of his illegal dismissal until the finality of this decision. On petitioners entitlement to attorneys fees, we must take into account the fact that petitioner was illegally dismissed from his employment and that his wages and other benefits were withheld from him without any valid and legal basis. As a consequence, he was compelled to file an action for the recovery of his lawful wages and other benefits and, in the process, incurred expenses. On these bases, the Court finds that he is entitled to attorneys fees equivalent to ten percent (10%) of the monetary award.42 Lastly, we affirm the NLRCs award of salary differential. In light of our foregoing disquisition on the illegality of petitioners dismissal, and our adoption of the NLRCs findings, suffice it to state that such issue is a question of fact, and we find no cogent reason to disturb the findings of the labor tribunal. WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Court of Appeals dated August 27, 2003 and its Resolution dated November 11, 2003 in CA-G.R. SP No. 74892 are REVERSED and SET ASIDE. Petitioner is found to have been illegally dismissed from employment and thus, is ENTITLED to: 1) Salary Differential embodied in the NLRC decision dated October 24, 2000 in NLRC Case No. V-000882-99; 2) Separation Pay; 3) Backwages; and 4) Attorneys fees equivalent to ten percent (10%) of the monetary awards. Upon finality of this judgment, let the records of the case be remanded to the NLRC for the computation of the exact amounts due the petitioner. SO ORDERED. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 100518 January 24, 2000

ASSOCIATION OF TRADE UNIONS (ATU), RODOLFO MONTECLARO and EDGAR JUESAN, petitioners, vs. HON. COMMISSIONERS OSCAR N. ABELLA, MUSIB N. BUAT, LEON GONZAGA JR., ALGON ENGINEERING CONSTRUCTION CORP., ALEX GONZALES and EDITHA YAP, respondents. QUISUMBING, J.: This special civil action for certiorari under Rule 65 of the Rules of Court assails the resolution of the National Labor Relations Commission promulgated on May 17, 1991, which modified the decision of the labor arbiter. Respondent company is a domestic corporation engaged in road construction projects of the government. From 1968 to 1989, it engaged the services of the following workers to work on various projects on different dates: Rodolfo Monteclaro (mechanic), Edgar Juesan1 (painter), Victorio Lunzaga (tanker driver), Alfredo Jalet (batteryman), Julito Macabodbod (trailer helper), Ramon Tabada (carpenter), Remsy2 Asensi (machinist), Armand Acero (helper mechanic), Lordito Tatad (painter helper), Rogelio Tantuan (painter), Teodoro Tabio (checker), Gemudo3 Asejo (electrician), Roland Olivar (latheman), Valeriano Mijas4 (driver), Jose Noval (welder), Felimon Lagbao (mechanic), Pedro Roche (head welder), and Justiniano Sollano (carpenter). Their contracts indicate the particular project they are assigned, the duration of their employment and their daily wage.1wphi1.nt In February 1989, the above-named workers joined petitioner union as members. Accordingly, petitioner union filed a petition for certification election with the regional office of the labor department. Respondent company opposed the petition on the ground that the workers were project employees and therefore not qualified to form part of the rank and file collective bargaining unit. Not for long, the Med-Arbiter dismissed the petition for certification election. On appeal, the Secretary of Labor and Employment reversed the Med-Arbiter's decision and ordered the immediate holding of a certification election. Meanwhile, the national president of petitioner union sent a demand letter to respondent company seeking the payment of wage differentials to some affected union members. As said demand was unheeded, petitioner union and the concerned workers filed a complaint for payment of wage differentials and other benefits before the Regional Office of the Department of Labor and Employment. Shortly thereafter, respondent company terminated the employment of aforementioned workers owing to the completion of its projects or the expiration of workers' contracts. Respondent company explained the circumstances surrounding the separation of the workers from the service as follows: (1) The Contract No. 2AIPD-C-10 Second Agusan Irrigation Project of NIA wherein some of the herein complainants were assigned was already 98% completed when complaints were filed.

With the near completion of the contract, services of the following complainants were no longer needed: (a) Gerundio Asejo (b) Victorio Lunzaga (c) Ramon R. Tabada (d) Alfredo E. Julet (sic) (e) Julito C. Macabodbod (2) In the case of Contract No. 2AIPD-C-11-second Agusan Irrigation Project of NIA, the following complainants were terminated because of the 95% completion of the phase of the project and expiration of their contract of employment: (a) Remsy B. Asensi (b) Rolando G. Olivar (c) Edgar A. Juezan (d) Rodolfo G. Monteclaro (e) Valeriano S. Meyas (sic) (f) Jose F. Noval (g) Pedro M. Roche (3) In Contract Package R11 1/209, Davao del Norte, the contracts of employment of Armand T. Acero and Felimon J. Dagbao (sic) Jr. expired. (4) In the Widening and Improvement of Rafael Castillo St., Davao City Project, where complainant Teodoro Tabio was assigned, he was terminated because he went on absent without leave (AWOL) while Lordito Tatad's contract of employment expired.5 However, the affected workers claim that they were dismissed because of their union activities. In view of the alleged illegal dismissals and harassment by their employer, the workers staged a strike on May 17, 1989. Upon complaint of respondent company, Labor Arbiter Newton Sancho declared said strike illegal and decreed further that Victorio Lunzaga, Alfred Jalet, Julito Macabodbod, Ramon Tabada and Remsy Asensi, who had participated in the strike, were deemed to have lost their employment status.

On appeal, the National Labor Relations Commission affirmed said decision. Petitioner union then elevated the matter to this Court by way of petition for certiorari which was eventually dismissed.6 Meanwhile, the aggrieved workers filed with the Regional Arbitration Branch of the NLRC their individual complaints against private respondent company for illegal dismissal, unfair labor practice, underpayment of wages, 13th month pay, holiday pay and overtime pay. They also sought reinstatement with back wages. The cases were consolidated and assigned to Labor Arbiter Nicolas Sayon for arbitration. However, noting that a similar case had been filed before the regional office of the labor department, the labor arbiter refrained from resolving the issue of underpayment of monetary benefits. He also found the charge of unfair labor practice untenable. But, on the charge of illegal dismissal, he ruled on October 31, 1989, as follows: WHEREFORE in view of the foregoing, judgment is hereby rendered declaring the dismissal of the following complainants illegal; namely: 1. Victorio C. Lunzaga 2. Julito C. Macabodbod 3. Alfredo E. Jalet 4. Gerundio F. Asejo 5. Ramon R. Tabada

Respondent ALGON Engineering Construction Corporation and Alex Gonzales and Edith Yap, are hereby ordered to reinstate the above-named complainants to their former positions without loss of seniority rights plus six months backwages based on their latest salary rate at the time of their dismissal, which is P65.00 per day equivalent to monthly rate of P1,700.83, a total of P10,204.99 per complainant or in the total amount of P51,024.95. The case of illegal dismissal filed by Armand Acero, Lordito Tatad, Teodoro Tabio, Ramon Olivar, Valeriano Miyas, Jose Noval, Felimon Lagbao, Pedro Roche, Remsy Asensi, Rodolfo Monteclaro, Edgar Juesan and Justiniano Sollano are hereby ordered dismissed for lack of merit. SO ORDERED.7 Petitioners and private respondents separately appealed the Labor Arbiter's ruling to the National Labor Relations Commission. Pending appeal, Edgar Juesan, Lordito Tatad and Ramon Tabada filed their respective duly sworn affidavits of desistance and motions to withdraw their complaints and money claims against private respondents. Said motions were seasonably granted.

On May 17, 1991, the NLRC promulgated its resolution modifying the decision of Labor Arbiter Nicolas Sayon. It held that the labor arbiter erred in not resolving the issue of underpayment of wages because not all of the original complainants filed the same money claims with the labor department.8 Thus, it awarded monetary benefits to qualified workers. The NLRC disposed of the case as follows: Accordingly, the appealed decision is hereby modified as follows: 1. Respondent ALGON Engineering Construction Corporation is hereby ordered to pay the complainants hereinafter enumerated, the following sums: WAGE DIFFERENTIALS: 2. The complaints of Edgar Juezon (sic), Lordito Tadtad and Ramon Tabada are hereby dismissed as prayed for by said complainants. 3. The complainants for illegal dismissal filed by Victorio Lunzaga (Lonzaga) and Alfredo Jalet (Jalit) are hereby dismissed for having been rendered moot and academic by Our decision in Case No. RAB-11-05-00352-89. 4. The complaints of Macabodbod and Asejo for illegal dismissal are hereby DISMISSED for lack of merit. 5. The charge of unfair labor practice is hereby dismissed for lack of merit. SO ORDERED.9 As noted by the Solicitor General, private respondents filed their motion for reconsideration, which was denied.10 We find, however, that herein petitioners did not move for reconsideration, as the petition did not so indicate and none appears on the records before us. Filing a petition for certiorari under Rule 65 without first moving for reconsideration of the assailed resolution generally warrants the petition's outright dismissal. As we consistently held in numerous cases,11 a motion for reconsideration by a concerned party is indispensable for it affords the NLRC an opportunity to rectify errors or mistakes it might have committed before resort to the courts can be had. It is settled that certiorari will lie only if there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law against acts of public respondents.12 Here, the plain and adequate remedy expressly provided by law was a motion for reconsideration of the impugned resolution, based on palpable or patent errors, to be made under oath and filed within ten (10) days from receipt of the questioned resolution of the NLRC, a procedure which is jurisdictional.13 Further, it should be stressed that without a motion for reconsideration seasonably filed within the ten-day reglementary period, the questioned order, resolution or decision of NLRC, becomes final and executory after ten (10) calendar days from receipt

thereof.14 Moreover, even if procedural lapses were to be set aside, we find no cogent reason sufficient to justify a departure from public respondent's decision, as hereafter elucidated. In this recourse, petitioners impute the following errors on the part of public respondent: [I] THAT THE HONORABLE COMMISSION ERRED IN HOLDING THAT THE DISMISSAL OF FIVE COMPLAINANTS WERE JUSTIFIED IN VIEW OF THE FACT THAT THEIR COMPLAINT HAVE BEEN RENDERED MOOT AND ACADEMIC BY ITS DECISION IN CASE NO. RAB-05-00353-89. [II] THAT HONORABLE COMMISSION AGAIN ERRED IN DISMISSING THE COMPLAINT OF THE COMPLAINANTS MACABODBOD AND ASEJO FOR LACK OF MERIT. [III] THE HONORABLE COMMISSION SERIOUSLY ERRED IN AFFIRMING THE DECISION OF THE LABOR ARBITER DISMISSING PETITIONER'S CHARGE OF UNFAIR LABOR PRACTICE AGAINST THE RESPONDENT CORPORATION. [IV] QUESTION OF LAW.15 In petitions for certiorari under Rule 65 of the Rules of Court, it may be noted that "want of jurisdiction" and "grave abuse of discretion,"16 and not merely reversible error, are the proper grounds for review. The respondent acts without jurisdiction if he does not have the legal authority to decide a case. There is excess of jurisdiction if the respondent, having the power to determine the case, oversteps his lawful authority. And there is grave abuse of discretion where the respondent acts in a capricious, whimsical, arbitrary or despotic manner, in effect equivalent to lack of jurisdiction.17 Here, petitioners neither assail the jurisdiction of public respondent nor attribute any grave abuse of discretion on the part of the labor tribunal. Necessarily, this petition must fail, for lack of substantial requisites under Rule 65. Nevertheless, if only to cast aside all doubts for the benefit of the concerned workers, we assayed into the merits of the case. As properly stated by the Solicitor General, the point of inquiry here is whether petitioners are regular or project employees of respondent company. The Labor Code defines regular, project and casual employees as follows: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which

are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. And employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. (Emphasis supplied.) Thus, regular employees are those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer even if the parties enter into an agreement stating otherwise.18 In contrast, project employees are those whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee, or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.19 Furthermore, Policy Instruction No. 20,20 which was in force during the period of petitioners' employment, stated: Project employees are those employed in connection with a particular construction project. Nonproject (regular) employees are those employed by a construction company without reference to any particular project. Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the company is not required to obtain clearance from the Secretary of Labor in connection with such termination. What is required of the company is report to the nearest Public Employment Office for statistical purposes. In the case at bar, the contracts of employment of the petitioners attest to the fact that they had been hired for specific projects, and their employment was coterminous with the completion of the project for which they had been hired. Said contracts expressly provide that the workers' tenure of employment would depend on the duration of any phase of the project or the completion of the awarded government construction projects in any of their planned phases. Further, petitioners were informed in advance that said project or undertaking for which they were hired would end on a stated or determinable date. Besides, public respondent noted that respondent company regularly submitted reports of termination of services of project workers to the regional office of the labor department as required under Policy Instruction No. 20. This compliance with the reportorial requirement confirms that petitioners were project employees.

Considering that petitioners were project employees, whose nature of employment they were fully informed about, at the time of their engagement, related to a specific project, work or undertaking, their employment legally ended upon completion of said project. The termination of their employment could not be regarded as illegal dismissal. WHEREFORE, the instant petition is DISMISSED, and the assailed RESOLUTION of respondent NLRC dated May 17, 1991, is AFFIRMED.1wphi1.nt No pronouncement as to costs. SO ORDERED. Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 164156 September 26, 2006

ABS-CBN BROADCASTING CORPORATION, petitioner, vs. MARLYN NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE LERASAN, respondents. DECISION CALLEJO, SR., J.: Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 76582 and the Resolution denying the motion for reconsideration thereof. The CA affirmed the Decision2 and Resolution3 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000762-2001 (RAB Case No. VII-10-1661-2001) which likewise affirmed, with modification, the decision of the Labor Arbiter declaring the respondents Marlyn Nazareno, Merlou Gerzon, Jennifer Deiparine and Josephine Lerasan as regular employees. The Antecedents Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a network of television and radio stations, whose operations revolve around

the broadcast, transmission, and relay of telecommunication signals. It sells and deals in or otherwise utilizes the airtime it generates from its radio and television operations. It has a franchise as a broadcasting company, and was likewise issued a license and authority to operate by the National Telecommunications Commission. Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees identification cards and were required to work for a minimum of eight hours a day, including Sundays and holidays. They were made to perform the following tasks and duties: a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of respondent ABS-CBN; b) Coordinate, arrange personalities for air interviews; c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports; d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints; e) Assist, anchor program interview, etc; and f) Record, log clerical reports, man based control radio.4 Their respective working hours were as follows: Name Time No. of Hours 1. Marlene Nazareno 4:30 A.M.-8:00 A.M. 7 8:00 A.M.-12:00 noon 2. Jennifer Deiparine 4:30 A.M.-12:00M.N. (sic) 7 3. Joy Sanchez 1:00 P.M.-10:00 P.M.(Sunday) 9 hrs. 9:00 A.M.-6:00 P.M. (WF) 9 hrs. 4. Merlou Gerzon 9:00 A.M.-6:00 P.M. 9 hrs.5 The PAs were under the control and supervision of Assistant Station Manager Dante J. Luzon, and News Manager Leo Lastimosa.

On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period from December 11, 1996 to December 11, 1999. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.6 On July 20, 2000, petitioner, through Dante Luzon, issued a Memorandum informing the PAs that effective August 1, 2000, they would be assigned to non-drama programs, and that the DYAB studio operations would be handled by the studio technician. Thus, their revised schedule and other assignments would be as follows: Monday Saturday 4:30 A.M. 8:00 A.M. Marlene Nazareno. Miss Nazareno will then be assigned at the Research Dept. From 8:00 A.M. to 12:00 4:30 P.M. 12:00 MN Jennifer Deiparine Sunday 5:00 A.M. 1:00 P.M. Jennifer Deiparine 1:00 P.M. 10:00 P.M. Joy Sanchez Respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo Lastimosa. On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC. The Labor Arbiter directed the parties to submit their respective position papers. Upon respondents failure to file their position papers within the reglementary period, Labor Arbiter Jose G. Gutierrez issued an Order dated April 30, 2001, dismissing the complaint without prejudice for lack of interest to pursue the case. Respondents received a copy of the Order on May 16, 2001.7 Instead of re-filing their complaint with the NLRC within 10 days from May 16, 2001, they filed, on June 11, 2001, an Earnest Motion to Refile Complaint with Motion to Admit Position Paper and Motion to Submit Case For Resolution.8 The Labor Arbiter granted this motion in an Order dated June 18, 2001, and forthwith admitted the position paper of the complainants. Respondents made the following allegations: 1. Complainants were engaged by respondent ABS-CBN as regular and full-time employees for a continuous period of more than five (5) years with a monthly salary rate of Four Thousand (P4,000.00) pesos beginning 1995 up until the filing of this complaint on November 20, 2000.

Machine copies of complainants ABS-CBN Employees Identification Card and salary vouchers are hereto attached as follows, thus: I. Jennifer Deiparine: Exhibit "A" - ABS-CBN Employees Identification Card Exhibit "B", - ABS-CBN Salary Voucher from Nov. Exhibit "B-1" & 1999 to July 2000 at P4,000.00 Exhibit "B-2" Date employed: September 15, 1995 Length of service: 5 years & nine (9) months II. Merlou Gerzon - ABS-CBN Employees Identification Card Exhibit "C" Exhibit "D" Exhibit "D-1" & Exhibit "D-2" - ABS-CBN Salary Voucher from March 1999 to January 2001 at P4,000.00 Date employed: September 1, 1995 Length of service: 5 years & 10 months III. Marlene Nazareno Exhibit "E" - ABS-CBN Employees Identification Card Exhibit "E" - ABS-CBN Salary Voucher from Nov. Exhibit "E-1" & 1999 to December 2000 Exhibit :E-2" Date employed: April 17, 1996 Length of service: 5 years and one (1) month

IV. Joy Sanchez Lerasan Exhibit "F" - ABS-CBN Employees Identification Card Exhibit "F-1" - ABS-CBN Salary Voucher from Aug. Exhibit "F-2" & 2000 to Jan. 2001 Exhibit "F-3" Exhibit "F-4" - Certification dated July 6, 2000 Acknowledging regular status of Complainant Joy Sanchez Lerasan Signed by ABS-CBN Administrative Officer May Kima Hife Date employed: April 15, 1998 Length of service: 3 yrs. and one (1) month9 Respondents insisted that they belonged to a "work pool" from which petitioner chose persons to be given specific assignments at its discretion, and were thus under its direct supervision and control regardless of nomenclature. They prayed that judgment be rendered in their favor, thus: WHEREFORE, premises considered, this Honorable Arbiter is most respectfully prayed, to issue an order compelling defendants to pay complainants the following: 1. One Hundred Thousand Pesos (P100,000.00) each and by way of moral damages; 2. Minimum wage differential; 3. Thirteenth month pay differential; 4. Unpaid service incentive leave benefits; 5. Sick leave; 6. Holiday pay; 7. Premium pay;

8. Overtime pay; 9. Night shift differential. Complainants further pray of this Arbiter to declare them regular and permanent employees of respondent ABS-CBN as a condition precedent for their admission into the existing union and collective bargaining unit of respondent company where they may as such acquire or otherwise perform their obligations thereto or enjoy the benefits due therefrom. Complainants pray for such other reliefs as are just and equitable under the premises.10 For its part, petitioner alleged in its position paper that the respondents were PAs who basically assist in the conduct of a particular program ran by an anchor or talent. Among their duties include monitoring and receiving incoming calls from listeners and field reporters and calls of news sources; generally, they perform leg work for the anchors during a program or a particular production. They are considered in the industry as "program employees" in that, as distinguished from regular or station employees, they are basically engaged by the station for a particular or specific program broadcasted by the radio station. Petitioner asserted that as PAs, the complainants were issued talent information sheets which are updated from time to time, and are thus made the basis to determine the programs to which they shall later be called on to assist. The program assignments of complainants were as follows: a. Complainant Nazareno assists in the programs: 1) Nagbagang Balita (early morning edition) 2) Infor Hayupan 3) Arangkada (morning edition) 4) Nagbagang Balita (mid-day edition) b. Complainant Deiparine assists in the programs: 1) Unzanith 2) Serbisyo de Arevalo 3) Arangkada (evening edition) 4) Balitang K (local version) 5) Abante Subu 6) Pangutana Lang

c. Complainant Gerzon assists in the program: 1) On Mondays and Tuesdays: (a) Unzanith (b) Serbisyo de Arevalo (c) Arangkada (evening edition) (d) Balitang K (local version) (e) Abante Sugbu (f) Pangutana Lang 2) On Thursdays Nagbagang Balita 3) On Saturdays (a) Nagbagang Balita (b) Info Hayupan (c) Arangkada (morning edition) (d) Nagbagang Balita (mid-day edition) 4) On Sundays: (a) Siesta Serenata (b) Sunday Chismisan (c) Timbangan sa Hustisya (d) Sayri ang Lungsod (e) Haranahan11 Petitioner maintained that PAs, reporters, anchors and talents occasionally "sideline" for other programs they produce, such as drama talents in other productions. As program employees, a PAs engagement is coterminous with the completion of the program, and may be extended/renewed provided that the program is on-going; a PA may also be assigned to new

programs upon the cancellation of one program and the commencement of another. As such program employees, their compensation is computed on a program basis, a fixed amount for performance services irrespective of the time consumed. At any rate, petitioner claimed, as the payroll will show, respondents were paid all salaries and benefits due them under the law.12 Petitioner also alleged that the Labor Arbiter had no jurisdiction to involve the CBA and interpret the same, especially since respondents were not covered by the bargaining unit. On July 30, 2001, the Labor Arbiter rendered judgment in favor of the respondents, and declared that they were regular employees of petitioner; as such, they were awarded monetary benefits. The fallo of the decision reads: WHEREFORE, the foregoing premises considered, judgment is hereby rendered declaring the complainants regular employees of the respondent ABS-CBN Broadcasting Corporation and directing the same respondent to pay complainants as follows: I - Merlou A. Gerzon P12,025.00 II - Marlyn Nazareno 12,025.00 III - Jennifer Deiparine 12,025.00 IV - Josephine Sanchez Lerazan 12,025.00 _________ P48,100.00 plus ten (10%) percent Attorneys Fees or a TOTAL aggregate amount of PESOS: FIFTY TWO THOUSAND NINE HUNDRED TEN (P52,910.00). Respondent Veneranda C. Sy is absolved from any liability. SO ORDERED.13 However, the Labor Arbiter did not award money benefits as provided in the CBA on his belief that he had no jurisdiction to interpret and apply the agreement, as the same was within the jurisdiction of the Voluntary Arbitrator as provided in Article 261 of the Labor Code. Respondents counsel received a copy of the decision on August 29, 2001. Respondent Nazareno received her copy on August 27, 2001, while the other respondents received theirs on September 8, 2001. Respondents signed and filed their Appeal Memorandum on September 18, 2001. For its part, petitioner filed a motion for reconsideration, which the Labor Arbiter denied and considered as an appeal, conformably with Section 5, Rule V, of the NLRC Rules of Procedure. Petitioner forthwith appealed the decision to the NLRC, while respondents filed a partial appeal.

In its appeal, petitioner alleged the following: 1. That the Labor Arbiter erred in reviving or re-opening this case which had long been dismissed without prejudice for more than thirty (30) calendar days; 2. That the Labor Arbiter erred in depriving the respondent of its Constitutional right to due process of law; 3. That the Labor Arbiter erred in denying respondents Motion for Reconsideration on an interlocutory order on the ground that the same is a prohibited pleading; 4. That the Labor Arbiter erred when he ruled that the complainants are regular employees of the respondent; 5. That the Labor Arbiter erred when he ruled that the complainants are entitled to 13th month pay, service incentive leave pay and salary differential; and 6. That the Labor Arbiter erred when he ruled that complainants are entitled to attorneys fees.14 On November 14, 2002, the NLRC rendered judgment modifying the decision of the Labor Arbiter. The fallo of the decision reads: WHEREFORE, premises considered, the decision of Labor Arbiter Jose G. Gutierrez dated 30 July 2001 is SET ASIDE and VACATED and a new one is entered ORDERING respondent ABS-CBN Broadcasting Corporation, as follows: 1. To pay complainants of their wage differentials and other benefits arising from the CBA as of 30 September 2002 in the aggregate amount of Two Million Five Hundred, Sixty-One Thousand Nine Hundred Forty-Eight Pesos and 22/100 (P2,561,948.22), broken down as follows: a. Deiparine, Jennifer - P 716,113.49 b. Gerzon, Merlou - 716,113.49 c. Nazareno, Marlyn - 716,113.49 d. Lerazan, Josephine Sanchez - 413,607.75 Total - P 2,561,948.22 2. To deliver to the complainants Two Hundred Thirty-Three (233) sacks of rice as of 30 September 2002 representing their rice subsidy in the CBA, broken down as follows: a. Deiparine, Jennifer - 60 Sacks b. Gerzon, Merlou - 60 Sacks

c. Nazareno, Marlyn - 60 Sacks d. Lerazan, Josephine Sanchez - 53 Sacks Total 233 Sacks; and 3. To grant to the complainants all the benefits of the CBA after 30 September 2002. SO ORDERED.15 The NLRC declared that the Labor Arbiter acted conformably with the Labor Code when it granted respondents motion to refile the complaint and admit their position paper. Although respondents were not parties to the CBA between petitioner and the ABS-CBN Rank-and-File Employees Union, the NLRC nevertheless granted and computed respondents monetary benefits based on the 1999 CBA, which was effective until September 2002. The NLRC also ruled that the Labor Arbiter had jurisdiction over the complaint of respondents because they acted in their individual capacities and not as members of the union. Their claim for monetary benefits was within the context of Article 217(6) of the Labor Code. The validity of respondents claim does not depend upon the interpretation of the CBA. The NLRC ruled that respondents were entitled to the benefits under the CBA because they were regular employees who contributed to the profits of petitioner through their labor. The NLRC cited the ruling of this Court in New Pacific Timber & Supply Company v. National Labor Relations Commission.16 Petitioner filed a motion for reconsideration, which the NLRC denied. Petitioner thus filed a petition for certiorari under Rule 65 of the Rules of Court before the CA, raising both procedural and substantive issues, as follows: (a) whether the NLRC acted without jurisdiction in admitting the appeal of respondents; (b) whether the NLRC committed palpable error in scrutinizing the reopening and revival of the complaint of respondents with the Labor Arbiter upon due notice despite the lapse of 10 days from their receipt of the July 30, 2001 Order of the Labor Arbiter; (c) whether respondents were regular employees; (d) whether the NLRC acted without jurisdiction in entertaining and resolving the claim of the respondents under the CBA instead of referring the same to the Voluntary Arbitrators as provided in the CBA; and (e) whether the NLRC acted with grave abuse of discretion when it awarded monetary benefits to respondents under the CBA although they are not members of the appropriate bargaining unit. On February 10, 2004, the CA rendered judgment dismissing the petition. It held that the perfection of an appeal shall be upon the expiration of the last day to appeal by all parties, should there be several parties to a case. Since respondents received their copies of the decision on September 8, 2001 (except respondent Nazareno who received her copy of the decision on August 27, 2001), they had until September 18, 2001 within which to file their Appeal Memorandum. Moreover, the CA declared that respondents failure to submit their position paper on time is not a ground to strike out the paper from the records, much less dismiss a complaint.

Anent the substantive issues, the appellate court stated that respondents are not mere project employees, but regular employees who perform tasks necessary and desirable in the usual trade and business of petitioner and not just its project employees. Moreover, the CA added, the award of benefits accorded to rank-and-file employees under the 1996-1999 CBA is a necessary consequence of the NLRC ruling that respondents, as PAs, are regular employees. Finding no merit in petitioners motion for reconsideration, the CA denied the same in a Resolution17 dated June 16, 2004. Petitioner thus filed the instant petition for review on certiorari and raises the following assignments of error: 1. THE HONORABLE COURT OF APPEALS ACTED WITHOUT JURISDICTION AND GRAVELY ERRED IN UPHOLDING THE NATIONAL LABOR RELATIONS COMMISSION NOTWITHSTANDING THE PATENT NULLITY OF THE LATTERS DECISION AND RESOLUTION. 2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC FINDING RESPONDENTS REGULAR EMPLOYEES. 3. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC AWARDING CBA BENEFITS TO RESPONDENTS.18 Considering that the assignments of error are interrelated, the Court shall resolve them simultaneously. Petitioner asserts that the appellate court committed palpable and serious error of law when it affirmed the rulings of the NLRC, and entertained respondents appeal from the decision of the Labor Arbiter despite the admitted lapse of the reglementary period within which to perfect the same. Petitioner likewise maintains that the 10-day period to appeal must be reckoned from receipt of a partys counsel, not from the time the party learns of the decision, that is, notice to counsel is notice to party and not the other way around. Finally, petitioner argues that the reopening of a complaint which the Labor Arbiter has dismissed without prejudice is a clear violation of Section 1, Rule V of the NLRC Rules; such order of dismissal had already attained finality and can no longer be set aside. Respondents, on the other hand, allege that their late appeal is a non-issue because it was petitioners own timely appeal that empowered the NLRC to reopen the case. They assert that although the appeal was filed 10 days late, it may still be given due course in the interest of substantial justice as an exception to the general rule that the negligence of a counsel binds the client. On the issue of the late filing of their position paper, they maintain that this is not a ground to strike it out from the records or dismiss the complaint. We find no merit in the petition.

We agree with petitioners contention that the perfection of an appeal within the statutory or reglementary period is not only mandatory, but also jurisdictional; failure to do so renders the assailed decision final and executory and deprives the appellate court or body of the legal authority to alter the final judgment, much less entertain the appeal. However, this Court has time and again ruled that in exceptional cases, a belated appeal may be given due course if greater injustice may occur if an appeal is not given due course than if the reglementary period to appeal were strictly followed.19 The Court resorted to this extraordinary measure even at the expense of sacrificing order and efficiency if only to serve the greater principles of substantial justice and equity.20 In the case at bar, the NLRC did not commit a grave abuse of its discretion in giving Article 22321 of the Labor Code a liberal application to prevent the miscarriage of justice. Technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties.22 We have held in a catena of cases that technical rules are not binding in labor cases and are not to be applied strictly if the result would be detrimental to the workingman.23 Admittedly, respondents failed to perfect their appeal from the decision of the Labor Arbiter within the reglementary period therefor. However, petitioner perfected its appeal within the period, and since petitioner had filed a timely appeal, the NLRC acquired jurisdiction over the case to give due course to its appeal and render the decision of November 14, 2002. Case law is that the party who failed to appeal from the decision of the Labor Arbiter to the NLRC can still participate in a separate appeal timely filed by the adverse party as the situation is considered to be of greater benefit to both parties.24 We find no merit in petitioners contention that the Labor Arbiter abused his discretion when he admitted respondents position paper which had been belatedly filed. It bears stressing that the Labor Arbiter is mandated by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without technicalities of law or procedure, all in the interest of due process.25 Indeed, as stressed by the appellate court, respondents failure to submit a position paper on time is not a ground for striking out the paper from the records, much less for dismissing a complaint.26 Likewise, there is simply no truth to petitioners assertion that it was denied due process when the Labor Arbiter admitted respondents position paper without requiring it to file a comment before admitting said position paper. The essence of due process in administrative proceedings is simply an opportunity to explain ones side or an opportunity to seek reconsideration of the action or ruling complained of. Obviously, there is nothing in the records that would suggest that petitioner had absolute lack of opportunity to be heard.27 Petitioner had the right to file a motion for reconsideration of the Labor Arbiters admission of respondents position paper, and even file a Reply thereto. In fact, petitioner filed its position paper on April 2, 2001. It must be stressed that Article 280 of the Labor Code was encoded in our statute books to hinder the circumvention by unscrupulous employers of the employees right to security of tenure by indiscriminately and absolutely ruling out all written and oral agreements inharmonious with the concept of regular employment defined therein.28 We quote with approval the following pronouncement of the NLRC:

The complainants, on the other hand, contend that respondents assailed the Labor Arbiters order dated 18 June 2001 as violative of the NLRC Rules of Procedure and as such is violative of their right to procedural due process. That while suggesting that an Order be instead issued by the Labor Arbiter for complainants to refile this case, respondents impliedly submit that there is not any substantial damage or prejudice upon the refiling, even so, respondents suggestion acknowledges complainants right to prosecute this case, albeit with the burden of repeating the same procedure, thus, entailing additional time, efforts, litigation cost and precious time for the Arbiter to repeat the same process twice. Respondents suggestion, betrays its notion of prolonging, rather than promoting the early resolution of the case. Although the Labor Arbiter in his Order dated 18 June 2001 which revived and re-opened the dismissed case without prejudice beyond the ten (10) day reglementary period had inadvertently failed to follow Section 16, Rule V, Rules Procedure of the NLRC which states: "A party may file a motion to revive or re-open a case dismissed without prejudice within ten (10) calendar days from receipt of notice of the order dismissing the same; otherwise, his only remedy shall be to re-file the case in the arbitration branch of origin." the same is not a serious flaw that had prejudiced the respondents right to due process. The case can still be refiled because it has not yet prescribed. Anyway, Article 221 of the Labor Code provides: "In any proceedings before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process." The admission by the Labor Arbiter of the complainants Position Paper and Supplemental Manifestation which were belatedly filed just only shows that he acted within his discretion as he is enjoined by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process. Indeed, the failure to submit a position paper on time is not a ground for striking out the paper from the records, much less for dismissing a complaint in the case of the complainant. (University of Immaculate Conception vs. UIC Teaching and Non-Teaching Personnel Employees, G.R. No. 144702, July 31, 2001). "In admitting the respondents position paper albeit late, the Labor Arbiter acted within her discretion. In fact, she is enjoined by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without technicalities of law or procedure, all in the interest of due process". (Panlilio vs. NLRC, 281 SCRA 53). The respondents were given by the Labor Arbiter the opportunity to submit position paper. In fact, the respondents had filed their position paper on 2 April 2001. What is material in the compliance of due process is the fact that the parties are given the opportunities to submit position papers.

"Due process requirements are satisfied where the parties are given the opportunities to submit position papers". (Laurence vs. NLRC, 205 SCRA 737). Thus, the respondent was not deprived of its Constitutional right to due process of law.29 We reject, as barren of factual basis, petitioners contention that respondents are considered as its talents, hence, not regular employees of the broadcasting company. Petitioners claim that the functions performed by the respondents are not at all necessary, desirable, or even vital to its trade or business is belied by the evidence on record. Case law is that this Court has always accorded respect and finality to the findings of fact of the CA, particularly if they coincide with those of the Labor Arbiter and the National Labor Relations Commission, when supported by substantial evidence.30 The question of whether respondents are regular or project employees or independent contractors is essentially factual in nature; nonetheless, the Court is constrained to resolve it due to its tremendous effects to the legions of production assistants working in the Philippine broadcasting industry. We agree with respondents contention that where a person has rendered at least one year of service, regardless of the nature of the activity performed, or where the work is continuous or intermittent, the employment is considered regular as long as the activity exists, the reason being that a customary appointment is not indispensable before one may be formally declared as having attained regular status. Article 280 of the Labor Code provides: ART. 280. REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. In Universal Robina Corporation v. Catapang,31 the Court reiterated the test in determining whether one is a regular employee: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.32

As elaborated by this Court in Magsalin v. National Organization of Working Men:33 Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a "regular" workers security of tenure, however, can hardly be doubted. In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The standard, supplied by 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 and its relation to the general scheme under which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the particular business or trade. But, although the work to be performed is only for a specific project or seasonal, where a person thus engaged has been performing the 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 or desirability of that activity to the business or trade of the employer. The employment of such person is also then deemed to be regular with respect to such activity and while such activity exists.34 Not considered regular employees are "project employees," the completion or termination of which is more or less determinable at the time of employment, such as those employed in connection with a particular construction project, and "seasonal employees" whose employment by its nature is only desirable for a limited period of time. Even then, any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity performed and while such activity actually exists. It is of no moment that petitioner hired respondents as "talents." The fact that respondents received pre-agreed "talent fees" instead of salaries, that they did not observe the required office hours, and that they were permitted to join other productions during their free time are not conclusive of the nature of their employment. Respondents cannot be considered "talents" because they are not actors or actresses or radio specialists or mere clerks or utility employees. They are regular employees who perform several different duties under the control and direction of ABS-CBN executives and supervisors. Thus, there are two kinds of regular employees under the law: (1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which they are employed.35 The law overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining situation necessitates the succor of the State. What determines whether a certain employment is regular or otherwise is not the will or word of the employer, to which the worker oftentimes acquiesces, much less the procedure of hiring the employee or the manner of paying the salary or the actual time spent at work. It is the character of the activities performed in relation to the particular trade or business taking into account all the circumstances, and in some cases the length of time of its performance and its continued existence.36 It is obvious that one

year after they were employed by petitioner, respondents became regular employees by operation of law.37 Additionally, respondents cannot be considered as project or program employees because no evidence was presented to show that the duration and scope of the project were determined or specified at the time of their engagement. Under existing jurisprudence, project could refer to two distinguishable types of activities. First, a project may refer to a particular job or undertaking that is within the regular or usual business of the employer, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. Second, the term project may also refer to a particular job or undertaking that is not within the regular business of the employer. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times.38 The principal test is whether or not the project employees were assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employees were engaged for that project.39 In this case, it is undisputed that respondents had continuously performed the same activities for an average of five years. Their assigned tasks are necessary or desirable in the usual business or trade of the petitioner. The persisting need for their services is sufficient evidence of the necessity and indispensability of such services to petitioners business or trade.40 While length of time may not be a sole controlling test for project employment, it can be a strong factor to determine whether the employee was hired for a specific undertaking or in fact tasked to perform functions which are vital, necessary and indispensable to the usual trade or business of the employer.41 We note further that petitioner did not report the termination of respondents employment in the particular "project" to the Department of Labor and Employment Regional Office having jurisdiction over the workplace within 30 days following the date of their separation from work, using the prescribed form on employees termination/ dismissals/suspensions.42 As gleaned from the records of this case, petitioner itself is not certain how to categorize respondents. In its earlier pleadings, petitioner classified respondents as program employees, and in later pleadings, independent contractors. Program employees, or project employees, are different from independent contractors because in the case of the latter, no employer-employee relationship exists. Petitioners reliance on the ruling of this Court in Sonza v. ABS-CBN Broadcasting Corporation43 is misplaced. In that case, the Court explained why Jose Sonza, a well-known television and radio personality, was an independent contractor and not a regular employee: A. Selection and Engagement of Employee ABS-CBN engaged SONZAS services to co-host its television and radio programs because of SONZAS peculiar skills, talent and celebrity status. SONZA contends that the "discretion used

by respondent in specifically selecting and hiring complainant over other broadcasters of possibly similar experience and qualification as complainant belies respondents claim of independent contractorship." Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but would have hired him through its personnel department just like any other employee. In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We must consider all the circumstances of the relationship, with the control test being the most important element. B. Payment of Wages ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts that this mode of fee payment shows that he was an employee of ABSCBN. SONZA also points out that ABS-CBN granted him benefits and privileges "which he would not have enjoyed if he were truly the subject of a valid job contract." All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-CBNs employee, there would be no need for the parties to stipulate on benefits such as "SSS, Medicare, x x x and 13th month pay which the law automatically incorporates into every employer-employee contract. Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship. SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZAS unique skills, talent and celebrity status not possessed by ordinary employees. Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such huge talent fees for his services. The power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an independent contractual relationship. The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee accruing under the Agreement.44 In the case at bar, however, the employer-employee relationship between petitioner and respondents has been proven.

First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was required from them because they were merely hired through petitioners personnel department just like any ordinary employee. Second. The so-called "talent fees" of respondents correspond to wages given as a result of an employer-employee relationship. Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship. Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and respondents are highly dependent on the petitioner for continued work. Fourth. The degree of control and supervision exercised by petitioner over respondents through its supervisors negates the allegation that respondents are independent contractors. The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor.45 The Court will peruse beyond any such agreement to examine the facts that typify the parties actual relationship.46 It follows then that respondents are entitled to the benefits provided for in the existing CBA between petitioner and its rank-and-file employees. As regular employees, respondents are entitled to the benefits granted to all other regular employees of petitioner under the CBA.47 We quote with approval the ruling of the appellate court, that the reason why production assistants were excluded from the CBA is precisely because they were erroneously classified and treated as project employees by petitioner: x x x The award in favor of private respondents of the benefits accorded to rank-and-file employees of ABS-CBN under the 1996-1999 CBA is a necessary consequence of public respondents ruling that private respondents as production assistants of petitioner are regular employees. The monetary award is not considered as claims involving the interpretation or implementation of the collective bargaining agreement. The reason why production assistants were excluded from the said agreement is precisely because they were classified and treated as project employees by petitioner. As earlier stated, it is not the will or word of the employer which determines the nature of employment of an employee but the nature of the activities performed by such employee in relation to the particular business or trade of the employer. Considering that We have clearly found that private respondents are regular employees of petitioner, their exclusion from the said CBA on the misplaced belief of the parties to the said agreement that they are project employees, is therefore not proper. Finding said private respondents as regular employees and not as mere project employees, they must be accorded the benefits due under the said Collective Bargaining Agreement. A collective bargaining agreement is a contract entered into by the union representing the employees and the employer. However, even the non-member employees are entitled to the

benefits of the contract. To accord its benefits only to members of the union without any valid reason would constitute undue discrimination against non-members. A collective bargaining agreement is binding on all employees of the company. Therefore, whatever benefits are given to the other employees of ABS-CBN must likewise be accorded to private respondents who were regular employees of petitioner.48 Besides, only talent-artists were excluded from the CBA and not production assistants who are regular employees of the respondents. Moreover, under Article 1702 of the New Civil Code: "In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer." IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 76582 are AFFIRMED. Costs against petitioner. SO ORDERED. Panganiban, C.J., Chairperson, Ynares-Santiago, Austria-Martinez, Chico-Nazario, J.J., concur. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 167045 August 29, 2008

COCOMANGAS HOTEL BEACH RESORT and/or SUSAN MUNRO, petitioners, vs. FEDERICO F. VISCA, JOHNNY G. BAREDO, RONALD Q. TIBUS, RICHARD G. VISCA and RAFFIE G. VISCA, respondents. DECISION AUSTRIA-MARTINEZ, J.: Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision1 dated July 30, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 78620 which reversed and set aside the Resolution dated February 27, 2003 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000714-2000; and the CA Resolution2 dated February 2, 2005 which denied petitioners' Motion for Reconsideration. The present controversy stemmed from five individual complaints3 for illegal dismissal filed on June 15, 1999 by Federico F. Visca (Visca), Johnny G. Barredo, Ronald Q. Tibus, Richard G. Visca and Raffie G. Visca (respondents) against Cocomangas Hotel Beach

Resort and/or its owner-manager, Susan Munro (petitioners) before Sub-Regional Arbitration Branch No. VI of the National Labor Relations Commission (NLRC) in Kalibo, Aklan. In their consolidated Position Paper,4 respondents alleged that they were regular employees of petitioners, with designations and dates of employment as follows: Name Federico F. Visca Johnny G. Barredo Ronald Q. Tibus Richard G. Visca Raffie G. Visca Designation Foreman Carpenter Mason Carpenter Mason/Carpenter Date Employed October 1, 1987 April 23, 1993 November 9, 1996 April 1988 March 27, 1993

tasked with the maintenance and repair of the resort facilities; on May 8, 1999, Maria Nida Iigo-Taala, the Front Desk Officer/Sales Manager, informed them not to report for work since the ongoing constructions and repairs would be temporarily suspended because they caused irritation and annoyance to the resort's guests; as instructed, they did not report for work the succeeding days; John Munro, husband of petitioner Susan Munro, subsequently visited respondent foreman Visca and informed him that the work suspension was due to budgetary constraints; when respondent Visca later discovered that four new workers were hired to do respondents' tasks, he confronted petitioner Munro who explained that respondents' resumption of work was not possible due to budgetary constraints; when not less than ten workers were subsequently hired by petitioners to do repairs in two cottages of the resort and two workers were retained after the completion without respondents being allowed to resume work, they filed their individual complaints for illegal dismissal. In addition to reinstatement with payment of full backwages, respondents prayed for payment of premium pay for rest day, service incentive leave pay, 13th month pay, and cost-of-living allowance, plus moral and exemplary damages and attorney's fees. In their Position Paper,5 petitioners denied any employer-employee relationship with respondents and countered that respondent Visca was an independent contractor who was called upon from time to time when some repairs in the resort facilities were needed and the other respondents were selected and hired by him. On June 30, 2000, the Labor Arbiter (LA) rendered a Decision6 dismissing the complaint, holding that respondent Visca was an independent contractor and the other respondents were hired by him to help him with his contracted works at the resort; that there was no illegal dismissal but completion of projects; that respondents were project workers, not regular employees. On August 9, 2000, respondents filed a Memorandum of Appeal7 with the NLRC. No comment thereon was filed by the petitioners.

On August 29, 2002, the NLRC rendered a Decision,8 setting aside the Decision of the LA and ordering the payment to respondents of backwages computed from May 8, 1999 to July 31, 2002, 13th month pay and service incentive leave pay for three years, in addition to 10% attorney's fees. The dispositive portion of the NLRC Decision reads: WHEREFORE, the decision dated June 30, 2000 of the Labor Arbiter is VACATED and SET ASIDE and a new decision rendered declaring the Illegal Dismissal of the complainant (sic) and ordering respondent Susan Munro to pay the complainants the following: 1. Federico F. Visca 2. Johnny G. Barredo 3. Ronald Q. Tibus 4. Richard C. Visca 5. Raffie C. Visca 6. Attorney's fees (10%) Total Award P 288,816.53 P 211,058.47 P 175,774.00 P 200,977.85 P 211,058.47 P1,087,685.32 P 108,768.53 P1,196,453.859

Petitioners failed to convince the NLRC that respondent Visca was not an independent contractor and the other respondents were selected and hired by him. The NLRC held that respondents were regular employees of petitioners since all the factors determinative of employer-employee relationship were present and the work done by respondents was clearly related to petitioners' resort business. It took into account the following: (a) respondent Visca was reported by petitioners as an employee in the Quarterly Social Security System (SSS) report; (b) all of the respondents were certified to by petitioner Munro as workers and even commended for their satisfactory performance; (c) respondents were paid their holiday and overtime pay; and (d) respondents had been continuously in petitioners' employ from three to twelve years and were all paid by daily wage given weekly. On November 18, 2002, petitioners filed a Motion for Reconsideration, arguing that respondents were project employees.10 Petitioners also filed a Supplemental to their Motion for Reconsideration.11 No opposition or answer to petitioners' motion for reconsideration and supplement was filed by respondents despite due notice.12 On February 27, 2003, the NLRC made a complete turnabout from its original decision and issued a Resolution13 dismissing the complaint, holding that respondents were not regular employees but project employees, hired for a short period of time to do some repair jobs in petitioners' resort business. Nonetheless, it ordered payment of P10,000.00 to each complainant as financial assistance. Respondents then filed a Petition for Certiorari14 with the CA raising three issues for resolution: (a) whether or not the respondents were project employees of petitioners; (b) whether or not the

respondents' dismissal from work was based on valid grounds; (c) whether or not the NLRC had sufficient basis to overturn its own decision despite its overwhelming findings that respondents were illegally dismissed. On July 30, 2004, the CA rendered its assailed Decision,15 the dispositve portion of which reads: WHEREFORE, in view of the foregoing, judgment is hereby rendered by us REVERSING and SETTING ASIDE the NLRC Resolution dated February 28, 2003, REINSTATING the NLRC Decision dated August 29, 2000 [sic], and ORDERING the private respondents to pay damages in the amount of P50,000.00. The instant case is hereby REMANDED to the 4th Division NLRC, Cebu City for the purpose of UPDATING the award promulgated in its Decision dated August 29, 2000 [sic]. SO ORDERED.16 The CA held respondents were regular employees, not project workers, since in the years that petitioners repeatedly hired respondents' services, the former failed to set, even once, specific periods when the employment relationship would be terminated; that the repeated hiring of respondents established that the services rendered by them were necessary and desirable to petitioners' resort business; at the least, respondents were regular seasonal employees, hired depending on the tourist season and when the need arose in maintaining petitioners' resort for the benefit of guests. In addition to the amounts granted by the NLRC in its August 29, 2002 Decision, the CA awarded respondents P50,000.00 as damages, since their termination was attended by bad faith, in that petitioners not only gave respondents the run-around but also blatantly hired others to take respondents' place despite their claim that the so-called temporary stoppage of work was due to budgetary constraints. On August 18, 2004, petitioners filed a Motion for Reconsideration,17 but it was denied by the CA in a Resolution18 dated February 2, 2005. Petitioners then filed the present petition19 on the following grounds: I THE HONORABLE COURT OF APPEALS ERRED IN GIVING DUE COURSE TO THE SPECIAL CIVIL ACTION UNDER RULE 65 NOTWITHSTANDING THE FACT THAT RESPONDENTS HAVE FAILED TO PROVE THE GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION THAT WOULD ALLOW THE NULLIFICATION OF THE ASSAILED RESOLUTION OF THE NATIONAL LABOR RELATIONS COMMISSION. II

THE HONORABLE COURT OF APPEALS ERRED IN REVERSING AND SETTING ASIDE THE RESOLUTION DATED FEBRUARY 27, 2003 AND REINSTATING THE DECISION DATED AUGUST 29, 2002 RENDERED BY THE NATIONAL LABOR RELATIONS COMMISSION.20 Petitioners argue that the CA erred in giving due course to respondents' petition, since respondents failed to recite specifically how the NLRC abused its discretion, an allegation essentially required in a petition for certiorari under Rule 45 of the Rules of Court; the three issues raised by respondents in their petition before the CA required appreciation of the evidence presented below and are therefore errors of judgment, not of jurisdiction; that the factual findings of the LA and the NLRC on the lack of employer-employee relationship between petitioners and respondents should be accorded not only respect but finality. On the other hand, respondents contend that the issues raised by the petitioners call for reevaluation of the evidence presented by the parties, which is not proper in petitions for review under Rule 45 of the Rules of Court; in any case, they argue that they have amply established that they are regular employees of petitioners, since their jobs as carpenters, which include the repairs of furniture, motor boats, cottages and windbreakers, are not at all foreign to the business of maintaining a beach resort. The petition is bereft of merit. The extent of judicial review by certiorari of decisions or resolutions of the NLRC, as exercised previously by this Court and now by the CA, is described in Zarate, Jr. v. Olegario,21 thus: The rule is settled that the original and exclusive jurisdiction of this Court to review a decision of respondent NLRC (or Executive Labor Arbiter as in this case) in a petition for certiorari under Rule 65 does not normally include an inquiry into the correctness of its evaluation of the evidence. Errors of judgment, as distinguished from errors of jurisdiction, are not within the province of a special civil action for certiorari, which is merely confined to issues of jurisdiction or grave abuse of discretion. It is thus incumbent upon petitioner to satisfactorily establish that respondent Commission or executive labor arbiter acted capriciously and whimsically in total disregard of evidence material to or even decisive of the controversy, in order that the extraordinary writ of certiorari will lie. By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, and it must be shown that the discretion was exercised arbitrarily or despotically. For certiorari to lie, there must be capricious, arbitrary and whimsical exercise of power, the very antithesis of the judicial prerogative in accordance with centuries of both civil law and common law traditions.22 (Emphasis supplied) The CA, therefore, can take cognizance of a petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, committed grave abuse of discretion by capriciously, whimsically, or arbitrarily disregarding evidence which is material to or decisive of the controversy. The CA cannot make this determination without looking into the evidence presented by the parties. The appellate court needs to evaluate the materiality or significance of

the evidence, which is alleged to have been capriciously, whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence on record.23 In Garcia v. National Labor Relations Commission,24 the Court elucidated on when certiorari can be properly resorted to, thus: [I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual findings complained of are not supported by the evidence on record. Earlier, in Gutib v. Court of Appeals, we emphasized thus: [I]t has been said that a wide breadth of discretion is granted a court of justice in certiorari proceedings. The cases in which certiorari will issue cannot be defined, because to do so would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the court that authority is not wanting to show that certiorari is more discretionary than either prohibition or mandamus. In the exercise of our superintending control over inferior courts, we are to be guided by all the circumstances of each particular case "as the ends of justice may require." So it is that the writ will be granted where necessary to prevent a substantial wrong or to do substantial justice. And in another case of recent vintage, we further held: In the review of an NLRC decision through a special civil action for certiorari, resolution is confined only to issues of jurisdiction and grave abuse of discretion on the part of the labor tribunal. Hence, the Court refrains from reviewing factual assessments of lower courts and agencies exercising adjudicative functions, such as the NLRC. Occasionally, however, the Court is constrained to delve into factual matters where, as in the instant case, the findings of the NLRC contradict those of the Labor Arbiter. In this instance, the Court in the exercise of its equity jurisdiction may look into the records of the case and re-examine the questioned findings. As a corollary, this Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary to arrive at a just decision of the case. The same principles are now necessarily adhered to and are applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated through a petition for certiorari; thus, we see no error on its part when it made anew a factual determination of the matters and on that basis reversed the ruling of the NLRC.25 (Emphasis supplied) Thus, pursuant to Garcia, the appellate court can grant a petition for certiorari when the factual findings complained of are not supported by the evidence on record; when it is necessary to prevent a substantial wrong or to do substantial justice; when the findings of the NLRC contradict those of the LA; and when necessary to arrive at a just decision of the case.26

In the present case, respondents alleged in its petition with the CA that the NLRCs conclusions had no basis in fact and in law, in that "it totally disregarded the evidence of the [respondents] and gave credence to the [petitioners'] asseverations which were in themselves insufficient to overturn duly established facts and conclusions."27 Consequently, the CA was correct in giving due course to the Petition for Certiorari, since respondents drew attention to the absence of substantial evidence to support the NLRC's complete turnabout from its original Decision dated August 29, 2002 finding that respondents were regular employees, to its subsequent Resolution dated February 27, 2003 classifying respondents as project employees. The next issue before the Court is whether the CA committed an error in reversing the NLRC Resolution dated February 27, 2003. The resolution of this issue principally hinges on the determination of the question whether respondents are regular or project employees. Generally, the existence of an employer-employee relationship is a factual matter that will not be delved into by this Court, since only questions of law may be raised in petitions for review.28 However, the Court is constrained to resolve the issue of whether respondents are regular or permanent employees due to the conflicting findings of fact of the LA, the NLRC and the CA, thus, necessitating a review of the evidence on record.29 The petitioners were ambivalent in categorizing respondents. In their Position Paper30 filed before the LA, petitioners classified respondent Visca as an independent contractor and the other respondents as his employees; while in their Motion for Reconsideration31 before the NLRC, petitioners treated respondents as project employees. Further, petitioners' position in their Motion for Reconsideration before the NLRC runs contrary to their earlier submission in their Position Paper before the LA. While initially advancing the absence of an employer-employee relationship, petitioners on appeal, sang a different tune, so to speak, essentially invoking the termination of the period of their employer-employee relationship. The NLRC should not have considered the new theory offered by the petitioners in their Motion for Reconsideration. As the object of the pleadings is to draw the lines of battle, so to speak, between the litigants and to indicate fairly the nature of the claims or defenses of both parties, a party cannot subsequently take a position contrary to, or inconsistent, with his pleadings.32 It is a matter of law that when a party adopts a particular theory and the case is tried and decided upon that theory in the court below, he will not be permitted to change his theory on appeal. The case will be reviewed and decided on that theory and not approached and resolved from a different point of view. To permit a party to change his theory on appeal will be unfair to the adverse party.33 At any rate, after a careful examination of the records, the Court finds that the CA did not err in finding that respondents were regular employees, not project employees. A project employee is one whose "employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season."34 Before an employee hired on a per-project basis can be dismissed, a

report must be made to the nearest employment office, of the termination of the services of the workers every time completes a project, pursuant to Policy Instruction No. 20.35 In the present case, respondents cannot be classified as project employees, since they worked continuously for petitioners from three to twelve years without any mention of a "project" to which they were specifically assigned. While they had designations as "foreman," "carpenter" and "mason," they performed work other than carpentry or masonry. They were tasked with the maintenance and repair of the furniture, motor boats, cottages, and windbreakers and other resort facilities. There is likewise no evidence of the project employment contracts covering respondents' alleged periods of employment. More importantly, there is no evidence that petitioners reported the termination of respondents' supposed project employment to the DOLE as project employees. Department Order No. 19, as well as the old Policy Instructions No. 20, requires employers to submit a report of an employees termination to the nearest public employment office every time his employment is terminated due to a completion of a project. Petitioners' failure to file termination reports is an indication that the respondents were not project employees but regular employees.36 This Court has held that an employment ceases to be coterminous with specific projects when the employee is continuously rehired due to the demands of employers business and re-engaged for many more projects without interruption.37 The Court is not persuaded by petitioners' submission that respondents' services are not necessary or desirable to the usual trade or business of the resort. The repeated and continuing need for their services is sufficient evidence of the necessity, if not indispensability, of their services to petitioners' resort business.38 In Maraguinot, Jr. v. National Labor Relations Commission,39 the Court ruled that "once a project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same 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 employee, pursuant to Article 280 of the Labor Code and jurisprudence."40 That respondents were regular employees is further bolstered by the following evidence: (a) the SSS Quarterly Summary of Contribution Payments41 listing respondents as employees of petitioners; (b) the Service Record Certificates stating that respondents were employees of petitioners for periods ranging from three to twelve years and all have given "very satisfactory performance";42 (c) petty cash vouchers43 showing payment of respondents' salaries and holiday and overtime pays. Thus, substantial evidence supported the CA finding that respondents were regular employees. Being regular employees, they were entitled to security of tenure, and their services may not be terminated except for causes provided by law. Article 27944 of the Labor Code, as amended, provides that an illegally dismissed employee shall be entitled to reinstatement, full backwages, inclusive of allowances, and to his other benefits or

their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. The Court notes that the NLRC, in its earlier Decision dated August 29, 2002 which was affirmed by the CA, computed the award for backwages from May 8, 1999 to July 31, 2002 only. It is evident that respondents backwages should not be limited to said period. The backwages due respondents must be computed from the time they were unjustly dismissed until actual reinstatement to their former positions. Thus, until petitioners implement the reinstatement aspect, its obligation to respondents, insofar as accrued backwages and other benefits are concerned, continues to accumulate. The fact that the CA failed to consider this when it affirmed the August 29, 2002 decision of the NLRC or that respondents themselves did not appeal the CA Decision on this matter, does not bar this Court from ordering its modification. While as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, this Court is imbued with sufficient authority and discretion to review matters, not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice.45 Besides, substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules.46 The computation of the award for backwages from the time compensation was withheld up to the time of actual reinstatement is a mere legal consequence of the finding that respondents were illegally dismissed by petitioners. WHEREFORE, the petition is DENIED. The assailed Decision dated July 30, 2004 and Resolution dated February 2, 2005 of the Court of Appeals in CA-G.R. SP No. 78620 are AFFIRMED with MODIFICATION that the award for backwages should be computed from the time compensation was withheld up to the time of actual reinstatement. Double costs against petitioners. SO ORDERED. Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, Reyes, JJ., concur.