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G.R. No.

141717

April 14, 2004

PHILIPS SEMICONDUCTORS (PHILS.), INC., petitioner, vs. ELOISA FADRIQUELA, respondent.

DECISION

CALLEJO, SR., J.: Before us is a petition for review of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 52149 and its Resolution dated January 26, 2000 denying the motion for reconsideration therefrom. The Case for the Petitioner The petitioner Philips Semiconductors (Phils.), Inc. is a domestic corporation engaged in the production and assembly of semiconductors such as power devices, RF modules, CATV modules, RF and metal transistors and glass diods. It caters to domestic and foreign corporations that manufacture computers, telecommunications equipment and cars. Aside from contractual employees, the petitioner employed 1,029 regular workers. The employees were subjected to periodic performance appraisal based on output, quality, attendance and work attitude.2 One was required to obtain a performance rating of at least 3.0 for the period covered by the performance appraisal to maintain good standing as an employee. On May 8, 1992, respondent Eloisa Fadriquela executed a Contract of Employment with the petitioner in which she was hired as a production operator with a daily salary of P118. Her initial contract was for a period of three months up to August 8, 1992,3 but was extended for two months when she garnered a performance rating of 3.15.4 Her contract was again renewed for two months or up to December 16, 1992,5 when she received a performance rating of 3.8.6 After the expiration of her third contract, it was extended anew, for three months,7 that is, from January 4, 1993 to April 4, 1993. After garnering a performance rating of 3.4,8 the respondents contract was extended for another three months, that is, from April 5, 1993 to June 4, 1993.9 She, however, incurred five absences in the month of April, three absences in the month of May and four absences in the month of June.10 Line supervisor Shirley F. Velayo asked the respondent why she incurred the said absences, but the latter failed to explain her side. The respondent was warned that if she offered no valid justification for her absences, Velayo would have no other recourse but to recommend the nonrenewal of her contract. The respondent still failed to respond, as a consequence of which her performance rating declined to 2.8. Velayo recommended to the petitioner that the respondents employment be terminated due to habitual absenteeism,11 in accordance with the Company Rules and Regulations.12 Thus, the respondents contract of employment was no longer renewed. The Complaint of the Respondent

The respondent filed a complaint before the National Capital Region Arbitration Branch of the National Labor Relations Commission (NLRC) for illegal dismissal against the petitioner, docketed as NLRC Case No. NCR-07-04263-93. She alleged, inter alia, that she was illegally dismissed, as there was no valid cause for the termination of her employment. She was not notified of any infractions she allegedly committed; neither was she accorded a chance to be heard. According to the respondent, the petitioner did not conduct any formal investigation before her employment was terminated. Furthermore, considering that she had rendered more than six months of service to the petitioner, she was already a regular employee and could not be terminated without any justifiable cause. Moreover, her absences were covered by the proper authorizations.13 On the other hand, the petitioner contended that the respondent had not been dismissed, but that her contract of employment for the period of April 4, 1993 to June 4, 1993 merely expired and was no longer renewed because of her low performance rating. Hence, there was no need for a notice or investigation. Furthermore, the respondent had already accumulated five unauthorized absences which led to the deterioration of her performance, and ultimately caused the non-renewal of her contract.14 The Ruling of the Labor Arbiter and the NLRC On June 26, 1997, the Labor Arbiter rendered a decision dismissing the complaint for lack of merit, thus: IN THE LIGHT OF ALL THE FOREGOING, the complaint is hereby dismissed for lack of merit. The respondent is, however, ordered to extend to the complainant a send off award or financial assistance in the amount equivalent to one-month salary on ground of equity.15 The Labor Arbiter declared that the respondent, who had rendered less than seventeen months of service to the petitioner, cannot be said to have acquired regular status. The petitioner and the Philips Semiconductor Phils., Inc., Workers Union had agreed in their Collective Bargaining Agreement (CBA) that a contractual employee would acquire a regular employment status only upon completion of seventeen months of service. This was also reflected in the minutes of the meeting of April 6, 1993 between the petitioner and the union. Further, a contractual employee was required to receive a performance rating of at least 3.0, based on output, quality of work, attendance and work attitude, to qualify for contract renewal. In the respondents case, she had worked for the petitioner for only twelve months. In the last extension of her employment contract, she garnered only 2.8 points, below the 3.0 required average, which disqualified her for contract renewal, and regularization of employment. The Labor Arbiter also ruled that the respondent cannot justifiably complain that she was deprived of her right to notice and hearing because her line supervisor had asked her to explain her unauthorized absences. Accordingly, these dialogues between the respondent and her line supervisor can be deemed as substantial compliance of the required notice and investigation. The Labor Arbiter declared, however, that the respondent had rendered satisfactory service for a period of one year, and since her infraction did not involve moral turpitude, she was entitled to one months salary. Aggrieved, the respondent appealed to the NLRC, which, on September 16, 1998, issued a Resolution affirming the decision of the Labor Arbiter and dismissing the appeal. The NLRC explained that the respondent was a contractual employee whose period of employment was fixed in the successive contracts of employment she had executed with the petitioner. Thus, upon the expiration of her contract, the respondents employment automatically ceased. The respondents employment was not terminated; neither was she dismissed.

The NLRC further ruled that as a contractual employee, the respondent was bound by the stipulations in her contract of employment which, among others, was to maintain a performance rating of at least 3.0 as a condition for her continued employment. Since she failed to meet the said requirement, the petitioner was justified in not renewing her contract. The respondent filed a motion for reconsideration of the resolution, but on January 12, 1999, the NLRC resolved to deny the same. The Case Before the Court of Appeals Dissatisfied, the respondent filed a petition for certiorari under Rule 65 before the Court of Appeals, docketed as CA-G.R. SP No. 52149, for the reversal of the resolutions of the NLRC. On October 11, 1999, the appellate court rendered a decision reversing the decisions of the NLRC and the Labor Arbiter and granting the respondents petition. The CA ratiocinated that the bases upon which the NLRC and the Labor Arbiter founded their decisions were inappropriate because the CBA and the Minutes of the Meeting between the union and the management showed that the CBA did not cover contractual employees like the respondent. Thus, the seventeenth-month probationary period under the CBA did not apply to her. The CA ruled that under Article 280 of the Labor Code, regardless of the written and oral agreements between an employee and her employer, an employee shall be deemed to have attained regular status when engaged to perform activities which are necessary and desirable in the usual trade or business of the employer. Even casual employees shall be deemed regular employees if they had rendered at least one year of service to the employer, whether broken or continuous. The CA noted that the respondent had been performing activities that were usually necessary and desirable to the petitioners business, and that she had rendered thirteen months of service. It concluded that the respondent had attained regular status and cannot, thus, be dismissed except for just cause and only after due hearing. The appellate court further declared that the task of the respondent was hardly specific or seasonal. The periods fixed in the contracts of employment executed by the respondent were designed by the petitioner to preclude the respondent from acquiring regular employment status. The strict application of the contract of employment against the respondent placed her at the mercy of the petitioner, whose employees crafted the said contract. According to the appellate court, the petitioners contention that the respondents employment on "as the need arises" basis was illogical. If such stance were sustained, the court ruled, then no employee would attain regular status even if employed by the petitioner for seventeen months or more. The CA held that the respondents sporadic absences upon which her dismissal was premised did not constitute valid justifiable grounds for the termination of her employment. The tribunal also ruled that a less punitive penalty would suffice for missteps such as absenteeism, especially considering that the respondent had performed satisfactorily for the past twelve months. The CA further held that, contrary to the ruling of the Labor Arbiter, the dialogues between the respondent and the line supervisor cannot be considered substantial compliance with the requirement of notice and investigation. Thus, the respondent was not only dismissed without justifiable cause; she was also deprived of her right to due process. The petitioner filed a motion for reconsideration of the decision but on January 26, 2000, the CA issued a resolution denying the same. The Case Before the Court

The petitioner filed the instant petition and raised the following issues for the courts resolution: (a) whether or not the respondent was still a contractual employee of the petitioner as of June 4, 1993; (b) whether or not the petitioner dismissed the respondent from her employment; (c) if so, whether or not she was accorded the requisite notice and investigation prior to her dismissal; and, (d) whether or not the respondent is entitled to reinstatement and full payment of backwages as well as attorneys fees. On the first issue, the petitioner contends that the policy of hiring workers for a specific and limited period on an "as needed basis," as adopted by the petitioner, is not new; neither is it prohibited. In fact, according to the petitioner, the hiring of workers for a specific and limited period is a valid exercise of management prerogative. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual course of business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. Hence, there is nothing essentially contradictory between a definite period of employment and the nature of the employees duties. According to the petitioner, it had to resort to hiring contractual employees for definite periods because it is a semiconductor company and its business is cyclical in nature. Its operation, production rate and manpower requirements are dictated by the volume of business from its clients and the availability of the basic materials. It produces the products upon order of its clients and does not allow such products to be stockpiled. Peak loads due to cyclical demands increase the need for additional manpower for short duration. Thus, the petitioner often experiences short-term surges in labor requirements. The hiring of workers for a definite period to supplement the regular work force during the unpredictable peak loads was the most efficient, just and practical solution to the petitioners operating needs. The petitioner contends that the CA misapplied the law when it insisted that the respondent should be deemed a regular employee for having been employed for more than one year. The CA ignored the exception to this rule, that the parties to an employment contract may agree otherwise, particularly when the same is established by company policy or required by the nature of work to be performed. The employer has the prerogative to set reasonable standards to qualify for regular employment, as well as to set a reasonable period within which to determine such fitness for the job. According to the petitioner, the conclusion of the CA that the policy adopted by it was intended to circumvent the respondents security of tenure is without basis. The petitioner merely exercised a right granted to it by law and, in the absence of any evidence of a wrongful act or omission, no wrongful intent may be attributed to it. Neither may the petitioner be penalized for agreeing to consider workers who have rendered more than seventeen months of service as regular employees, notwithstanding the fact that by the nature of its business, the petitioner may enter into specific limited contracts only for the duration of its clients peak demands. After all, the petitioner asserts, the union recognized the need to establish such training and probationary period for at least six months for a worker to qualify as a regular employee. Thus, under their CBA, the petitioner and the union agreed that contractual workers be hired as of December 31, 1992. The petitioner stresses that the operation of its business as a semiconductor company requires the use of highly technical equipment which, in turn, calls for certain special skills for their use. Consequently, the petitioner, in the exercise of its best technical and business judgment, has set a standard of performance for workers as well as the level of skill, efficiency, competence and production which the workers must pass to qualify as a regular employee. In rating the performance of the worker, the following appraisal factors are considered by the respondent company as essential: (1) output (40%), (2) quality (30%), (3) attendance (15%), and (4) work attitude (15%). The

rate of 3.0 was set as the passing grade. As testified to by the petitioners Head of Personnel Services, Ms. Cecilia C. Mallari: A workers efficiency and productivity can be established only after he has rendered service using Philips equipment over a period of time. A worker has to undergo training, during which time the worker is taught the manufacturing process and quality control. After instructions, the worker is subjected to written and oral examinations to determine his fitness to continue with the training. The orientation and initial training lasts from three to four weeks before the worker is assigned to a specific work station. Thereafter, the workers efficiency and skill are monitored. Among the factors considered (before a contractual employee becomes a regular employee) are output, quality, attendance, and work attitude, which includes cooperation, discipline, housekeeping and inter-office employee relationship. These factors determine the workers efficiency and productivity.16 The Courts Ruling In ruling for the respondent, the appellate court applied Article 280 of the Labor Code of the Philippines, as amended, which reads: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral argument of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph; Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. The appellate court held that, in light of the factual milieu, the respondent was already a regular employee on June 4, 1993. Thus: It is apparent from the factual circumstances of this case that the period of employment has been imposed to preclude acquisition of tenurial security by petitioner. It bears stressing that petitioners original contract of employment, dated May 8, 1992 to August 8, 1992, had been extended through several contracts one from October 13, 1992 to December 16, 1992, another from January 7, 1993 to April 4, 1993, and, lastly, from April 5, 1993 to June 4, 1993. The fact that the petitioner had rendered more than one year of service at the time of his (sic) dismissal only shows that she is performing an activity which is usually necessary and desirable in private respondents business or trade. The work of petitioner is hardly "specific" or "seasonal." The petitioner is, therefore, a regular employee of private respondent, the provisions of their contract of employment notwithstanding. The private respondents

prepared employment contracts placed petitioner at the mercy of those who crafted the said contract.17 We agree with the appellate court. Article 280 of the Labor Code of the Philippines was emplaced in our statute books to prevent the circumvention by unscrupulous employers of the employees right to be secure in his tenure by indiscriminately and completely ruling out all written and oral agreements inconsistent with the concept of regular employment defined therein. The language of the law manifests the intent to protect the tenurial interest of the worker who may be denied the rights and benefits due a regular employee because of lopsided agreements with the economically powerful employer who can maneuver to keep an employee on a casual or temporary status for as long as it is convenient to it.18 In tandem with Article 281 of the Labor Code, Article 280 was designed to put an end to the pernicious practice of making permanent casuals of our lowly employees by the simple expedient of extending to them temporary or probationary appointments, ad infinitum.19 The two kinds of regular employees under the law are (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.20 The primary standard to determine a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer.21 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 of the employer. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists.22 The law does not provide the qualification that the employee must first be issued a regular appointment or must be declared as such before he can acquire a regular employee status.23 In this case, the respondent was employed by the petitioner on May 8, 1992 as production operator. She was assigned to wirebuilding at the transistor division. There is no dispute that the work of the respondent was necessary or desirable in the business or trade of the petitioner.24 She remained under the employ of the petitioner without any interruption since May 8, 1992 to June 4, 1993 or for one (1) year and twenty-eight (28) days. The original contract of employment had been extended or renewed for four times, to the same position, with the same chores. Such a continuing need for the services of the respondent is sufficient evidence of the necessity and indispensability of her services to the petitioners business.25 By operation of law, then, the respondent had attained the regular status of her employment with the petitioner, and is thus entitled to security of tenure as provided for in Article 279 of the Labor Code which reads: 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. The respondents re-employment under contracts ranging from two to three months over a period of one year and twenty-eight days, with an express statement that she may be reassigned at the discretion of the petitioner and that her employment may be terminated at any time upon notice, was

but a catch-all excuse to prevent her regularization. Such statement is contrary to the letter and spirit of Articles 279 and 280 of the Labor Code. We reiterate our ruling in Romares v. NLRC:26 Succinctly put, in rehiring petitioner, employment contracts ranging from two (2) to three (3) months with an express statement that his temporary job/service as mason shall be terminated at the end of the said period or upon completion of the project was obtrusively a convenient subterfuge utilized to prevent his regularization. It was a clear circumvention of the employees right to security of tenure and to other benefits. It, likewise, evidenced bad faith on the part of PILMICO. The limited period specified in petitioners employment contract having been imposed precisely to circumvent the constitutional guarantee on security of tenure should, therefore, be struck down or disregarded as contrary to public policy or morals. To uphold the contractual arrangement between PILMICO and petitioner would, in effect, permit the former to avoid hiring permanent or regular employees by simply hiring them on a temporary or casual basis, thereby violating the employees security of tenure in their jobs.27 Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of security of tenure and free them from the bondage of uncertainty of tenure woven by some employers into their contracts of employment. The guarantee is an act of social justice. When a person has no property, his job may possibly be his only possession or means of livelihood and those of his dependents. When a person loses his job, his dependents suffer as well. The worker should therefor be protected and insulated against any arbitrary deprivation of his job.28 We reject the petitioners general and catch-all submission that its policy for a specific and limited period on an "as the need arises" basis is not prohibited by law or abhorred by the Constitution; and that there is nothing essentially contradictory between a definite period of employment and the nature of the employees duties. The petitioners reliance on our ruling in Brent School, Inc. v. Zamora29 and reaffirmed in subsequent rulings is misplaced, precisely in light of the factual milieu of this case. In the Brent School, Inc. case, we ruled that the Labor Code does not outlaw employment contracts on fixed terms or for specific period. We also ruled that the decisive determinant in "term employment" should not be the activity that the employee is called upon to perform but the day certain agreed upon by the parties for the commencement and termination of their employment relationship. However, we also emphasized in the same case that where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals. In the Romares v. NLRC case, we cited the criteria under which "term employment" cannot be said to be in circumvention of the law on security of tenure, namely: 1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or 2) It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter.30 None of these criteria has been met in this case. Indeed, in Pure Foods Corporation v. NLRC,31 we sustained the private respondents averments therein, thus:

[I]t could not be supposed that private respondents and all other so-called "casual" workers of [the petitioner] KNOWINGLY and VOLUNTARILY agreed to the 5-month employment contract. Cannery workers are never on equal terms with their employers. Almost always, they agree to any terms of an employment contract just to get employed considering that it is difficult to find work given their ordinary qualifications. Their freedom to contract is empty and hollow because theirs is the freedom to starve if they refuse to work as casual or contractual workers. Indeed, to the unemployed, security of tenure has no value. It could not then be said that petitioner and private respondents "dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter.32 We reject the petitioners submission that it resorted to hiring employees for fixed terms to augment or supplement its regular employment "for the duration of peak loads" during short-term surges to respond to cyclical demands; hence, it may hire and retire workers on fixed terms, ad infinitum, depending upon the needs of its customers, domestic and international. Under the petitioners submission, any worker hired by it for fixed terms of months or years can never attain regular employment status. However, the petitioner, through Ms. Cecilia C. Mallari, the Head of Personnel Services of the petitioner, deposed that as agreed upon by the Philips Semiconductor (Phils.), Inc. Workers Union and the petitioner in their CBA, contractual employees hired before December 12, 1993 shall acquire regular employment status after seventeen (17) months of satisfactory service, continuous or broken: 5. Q: What was the response of Philips regular employees to your hiring of contractual workers in the event of peak loads? A: Philips regular rank-and-file employees, through their exclusive bargaining agent, the Philips Semiconductors (Phils.), Inc. Workers Union ("Union"), duly recognized the right of Philips, in its best business judgment, to hire contractual workers, and excluded these workers from the bargaining unit of regular rank-and-file employees. Thus, it is provided under the Collective Bargaining Agreement, dated May 16, 1993, between Philips and the Union that: ARTICLE I UNION RECOGNITION "Section 1. Employees Covered: The Company hereby recognizes the Union as the exclusive bargaining representative of the following regular employees in the Factory at Las Pias, Metro Manila: Janitors, Material Handlers, Store helpers, Packers, Operators, QA Inspectors, Technicians, Storekeepers, Production Controllers, Inventory Controllers, Draftsmen, Machinists, Sr. Technician, Sr. QA Inspectors, Controllers, Sr. Draftsmen, and Servicemen, except probationary and Casual/Contractual Employees, all of whom do not belong to the bargaining unit." A copy of the CBA, dated May 16, 1993, was attached as Annex "1" to Philips Position Paper, dated August 30, 1993. 6. Q: May a contractual employee become a regular employee of the Philips? A: Yes. Under the agreement, dated April 6, 1993, between the Union and Philips, contractual workers hired before 12 December 1993, who have rendered seventeen months of satisfactory service, whether continuous or broken, shall be given regular status. The

service rendered by a contractual employee may be broken depending on production needs of Philips as explained earlier. A copy of the Minutes of the Meeting ("Minutes," for brevity), dated April 6, 1993, evidencing the agreement between Philips and the Union has been submitted as Annex "2" of Philips Position Paper.33 In fine, under the CBA, the regularization of a contractual or even a casual employee is based solely on a satisfactory service of the employee/worker for seventeen (17) months and not on an "as needed basis" on the fluctuation of the customers demands for its products. The illogic of the petitioners incongruent submissions was exposed by the appellate court in its assailed decision, thus: The contention of private respondent that petitioner was employed on "as needed basis" because its operations and manpower requirements are dictated by the volume of business from its client and the availability of the basic materials, such that when the need ceases, private respondent, at its option, may terminate the contract, is certainly untenable. If such is the case, then we see no reason for private respondent to allow the contractual employees to attain their regular status after they rendered service for seventeen months. Indubitably, even after the lapse of seventeen months, the operation of private respondent would still be dependent on the volume of business from its client and the availability of basic materials. The point is, the operation of every business establishment naturally depends on the law of supply and demand. It cannot be invoked as a reason why a person performing an activity, which is usually desirable and necessary in the usual business, should be placed in a wobbly status. In reiteration, the relation between capital and labor is not merely contractual. It is so impressed with public interest that labor contracts must yield to the common good. While at the start, petitioner was just a mere contractual employee, she became a regular employee as soon as she had completed one year of service. It is not difficult to see that to uphold the contractual arrangement between private respondent and petitioner would, in effect, be to permit employers to avoid the necessity of hiring regular or permanent employees. By hiring employees indefinitely on a temporary or casual status, employers deny their right to security of tenure. This is not sanctioned by law. 34 Even then, the petitioners reliance on the CBA is misplaced. For, as ratiocinated by the appellate court in its assailed decision: Obviously, it is the express mandate of the CBA not to include contractual employees within its coverage. Such being the case, we see no reason why an agreement between the representative union and private respondent, delaying the regularization of contractual employees, should bind petitioner as well as other contractual employees. Indeed, nothing could be more unjust than to exclude contractual employees from the benefits of the CBA on the premise that the same contains an exclusionary clause while at the same time invoke a collateral agreement entered into between the parties to the CBA to prevent a contractual employee from attaining the status of a regular employee. This cannot be allowed. The CBA, during its lifetime, constitutes the law between the parties. Such being the rule, the aforementioned CBA should be binding only upon private respondent and its regular employees who were duly represented by the bargaining union. The agreement embodied in the "Minutes of Meeting" between the representative union and private respondent, providing

that contractual employees shall become regular employees only after seventeen months of employment, cannot bind petitioner. Such a provision runs contrary to law not only because contractual employees do not form part of the collective bargaining unit which entered into the CBA with private respondent but also because of the Labor Code provision on regularization. The law explicitly states that an employee who had rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee. The period set by law is one year. The seventeen months provided by the "Minutes of Meeting" is obviously much longer. The principle is well settled that the law forms part of and is read into every contract without the need for the parties expressly making reference to it. 35 On the second and third issues, we agree with the appellate court that the respondent was dismissed by the petitioner without the requisite notice and without any formal investigation. Given the factual milieu in this case, the respondents dismissal from employment for incurring five (5) absences in April 1993, three (3) absences in May 1993 and four (4) absences in June 1993, even if true, is too harsh a penalty. We do agree that an employee may be dismissed for violation of reasonable regulations/rules promulgated by the employer. However, we emphasized in PLDT v. NLRC36 that: Dismissal is the ultimate penalty that can be meted to an employee. Where a penalty less punitive would suffice, whatever missteps may have been committed by the worker ought not to be visited with a consequence so severe such as dismissal from employment. For, the Constitution guarantees the right of workers to "security of tenure." The misery and pain attendant to the loss of jobs then could be avoided if there be acceptance of the view that under certain circumstances of the case the workers should not be deprived of their means of livelihood.37 Neither can the conferences purportedly held between the respondent and the line supervisor be deemed substantial compliance with the requirements of notice and investigation. We are in full accord with the following ratiocinations of the appellate court in its assailed decision: As to the alleged absences, we are convinced that the same do not constitute sufficient ground for dismissal. Dismissal is just too stern a penalty. No less than the Supreme Court mandates that where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe. (Meracap v. International Ceramics Manufacturing Co., Inc., 92 SCRA 412 [1979]). Besides, the fact that petitioner was repeatedly given a contract shows that she was an efficient worker and, therefore, should be retained despite occasional lapses in attendance. Perfection cannot, after all, be demanded. (Azucena, The Labor Code, Vol. II, 1996 ed., [p.] 680) Finally, we are convinced that it is erroneous for the Commission to uphold the following findings of the Labor Arbiter, thus: "Those dialogues of the complainant with the Line Supervisor, substantially, stand for the notice and investigation required to comply with due process. The complainant did not avail of the opportunity to explain her side to justify her shortcomings, especially, on absences. She cannot now complain about deprivation of due process." Of course, the power to dismiss is a formal prerogative of the employer. However, this is not without limitations. The employer is bound to exercise caution in terminating the services of his employees. Dismissals must not be arbitrary and capricious. Due process must be

observed in dismissing an employee because it affects not only his position but also his means of livelihood. Employers should respect and protect the rights of their employees which include the right to labor. (Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc., 90 SCRA 391 [1979]) To rule that the mere dialogue between private respondent and petitioner sufficiently complied with the demands of due process is to disregard the strict mandate of the law. A conference is not a substitute for the actual observance of notice and hearing. (Pepsi Cola Bottling Co., Inc. v. National Labor Relations Commission, 210 SCRA 277 [1992]) The failure of private respondent to give petitioner the benefit of a hearing before she was dismissed constitutes an infringement on her constitutional right to due process of law and not to be denied the equal protection of the laws. The right of a person to his labor is deemed to be his property within the meaning of the constitutional guarantee. This is his means of livelihood. He cannot be deprived of his labor or work without due process of law. (Batangas Laguna Tayabas Bus Co. v. Court of Appeals, 71 SCRA 470 [1976]) All told, the court concludes that petitioners dismissal is illegal because, first, she was dismissed in the absence of a just cause, and second, she was not afforded procedural due process. In pursuance of Article 279 of the Labor Code, we deem it proper to order the reinstatement of petitioner to her former job and the payment of her full backwages. Also, having been compelled to come to court to protect her rights, we grant petitioners prayer for attorneys fees.38 IN LIGHT OF ALL THE FOREGOING, the assailed decision of the appellate court in CA-G.R. SP No. 52149 is AFFIRMED. The petition at bar is DENIED. Costs against the petitioner. SO ORDERED.

G.R. No. 70705 August 21, 1989 MOISES DE LEON, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and LA TONDE;A INC., respondents. Amorito V. Canete for petitioner. Pablo R. Cruz for private respondent.

FERNAN, C.J.:

This petition for certiorari seeks to annul and set aside: (1) the majority decision dated January 28, 1985 of the National Labor Relations Commission First Division in Case No. NCR- 83566-83, which reversed the Order dated April 6,1984 of Labor Arbiter Bienvenido S. Hernandez directing the reinstatement of petitioner Moises de Leon by private respondent La Tonde;a Inc. with payment of backwages and other benefits due a regular employee; and, (2) the Resolution dated March 21, 1985 denying petitioner's motion for reconsideration. It appears that petitioner was employed by private respondent La Tonde;a Inc. on December 11, 1981, at the Maintenance Section of its Engineering Department in Tondo, Manila. 1 His work consisted mainly of painting company building and equipment, and other odd jobs relating to maintenance. He was paid on a daily basis through petty cash vouchers. In the early part of January, 1983, after a service of more than one (1) year, petitioner requested from respondent company that lie be included in the payroll of regular workers, instead of being paid through petty cash vouchers. Private respondent's response to this request was to dismiss petitioner from his employment on January 16, 1983. Having been refused reinstatement despite repeated demands, petitioner filed a complaint for illegal dismissal, reinstatement and payment of backwages before the Office of the Labor Arbiter of the then Ministry now Department of Labor and Employment. Petitioner alleged that he was dismissed following his request to be treated as a regular employee; that his work consisted of painting company buildings and maintenance chores like cleaning and operating company equipment, assisting Emiliano Tanque Jr., a regular maintenance man; and that weeks after his dismissal, he was re-hired by the respondent company indirectly through the VitasMagsaysay Village Livelihood Council, a labor agency of respondent company, and was made to perform the tasks which he used to do. Emiliano Tanque Jr. corroborated these averments of petitioner in his affidavit. 2 On the other hand, private respondent claimed that petitioner was not a regular employee but only a casual worker hired allegedly only to paint a certain building in the company premises, and that his work as a painter terminated upon the completion of the painting job. On April 6, 1984, Labor Arbiter Bienvenido S. Hernandez rendered a decision 3 finding the complaint meritorious and the dismissal illegal; and ordering the respondent company to reinstate petitioner with full backwages and other benefits. Labor Arbiter Hernandez ruled that petitioner was not a mere casual employee as asserted by private respondent but a regular employee. He concluded that the dismissal of petitioner from the service was prompted by his request to be included in the list of regular employees and to be paid through the payroll and is, therefore, an attempt to circumvent the legal obligations of an employer towards a regular employee. Labor Arbiter Hernandez found as follows:
After a thorough examination of the records of the case and evaluation of the evidence and versions of the parties, this Office finds and so holds that the dismissal of complainant is illegal. Despite the impressive attempt of respondents to show that the complainant was hired as casual and for the work on particular project, that is the repainting of Mama Rosa Building, which particular work of painting and repainting is not pursuant to the regular business of the company, according to its theory, we find differently. Complainant's being hired on casual basis did not dissuade from the cold fact that such painting of the building and the painting and repainting of the equipment and tools and other things belonging to the company and the odd jobs assigned to him to be performed when he had no painting and repainting works related to maintenance as a maintenance man are necessary and desirable to the better operation of the business

company. Respondent did not even attempt to deny and refute the corroborating statements of Emiliano Tanque Jr., who was regularly employed by it as a maintenance man doing same jobs not only of painting and repainting of building, equipment and tools and machineries or machines if the company but also other odd jobs in the Engineering and Maintenance Department that complainant Moises de Leon did perform the same odd jobs and assignments as were assigned to him during the period de Leon was employed for more than one year continuously by Id respondent company. We find no reason not to give credit and weight to the affidavit and statement made therein by Emiliano Tanque Jr. This strongly confirms that complainant did the work pertaining to the regular business in which the company had been organized. Respondent cannot be permitted to circumvent the law on security of tenure by considering complainant as a casual worker on daily rate basis and after working for a period that has entitled him to be regularized that he would be automatically terminated. ... .4

On appeal, however, the above decision of the Labor Arbiter was reversed by the First Division of the National Labor Relations Commission by virtue of the votes of two members 5 which constituted a majority. Commissioner Geronimo Q. Quadra dissented, voting "for the affirmation of the wellreasoned decision of the Labor Arbiter below." 6 The motion for reconsideration was denied. Hence, this recourse. Petitioner asserts that the respondent Commission erred and gravely abuse its discretion in reversing the Order of the Labor Arbiter in view of the uncontroverted fact that the tasks he performed included not only painting but also other maintenance work which are usually necessary or desirable in the usual business of private respondent: hence, the reversal violates the Constitutional and statutory provisions for the protection of labor. The private respondent, as expected, maintains the opposite view and argues that petitioner was hired only as a painter to repaint specifically the Mama Rosa building at its Tondo compound, which painting work is not part of their main business; that at the time of his engagement, it was made clear to him that he would be so engaged on a casual basis, so much so that he was not required to accomplish an application form or to comply with the usual requisites for employment; and that, in fact, petitioner was never paid his salary through the regular payroll but always through petty cash vouchers. 7 The Solicitor General, in his Comment, recommends that the petition be given due course in view of the evidence on record supporting petitioner's contention that his work was regular in nature. In his view, the dismissal of petitioner after he demanded to be regularized was a subterfuge to circumvent the law on regular employment. He further recommends that the questioned decision and resolution of respondent Commission be annulled and the Order of the Labor Arbiter directing the reinstatement of petitioner with payment of backwages and other benefits be upheld. 8 After a careful review of the records of this case, the Court finds merit in the petition as We sustain the position of the Solicitor General that the reversal of the decision of the Labor Arbiter by the respondent Commission was erroneous. The law on the matter is Article 281 of the Labor Code which defines regular and casual employment as follows: Art. 281. Regular and casual employment. The provisions of a written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific

project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. This provision reinforces the Constitutional mandate to protect the interest of labor. Its language evidently manifests the intent to safeguard the tenurial interest of the worker who may be denied the rights and benefits due a regular employee by virtue of lopsided agreements with the economically powerful employer who can maneuver to keep an employee on a casual status for as long as convenient. Thus, contrary agreements notwithstanding, an employment is deemed regular when the activities performed by the employee are usually necessary or desirable in the usual business or trade of the employer. Not considered regular are the so-called "project employment" 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 9 and seasonal employment which by its nature is only desirable for a limited period of time. However, any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity he performed and while such activity actually exists. The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists. In the case at bar, the respondent company, which is engaged in the business of manufacture and distillery of wines and liquors, claims that petitioner was contracted on a casual basis specifically to paint a certain company building and that its completion rendered petitioner's employment terminated. This may have been true at the beginning, and had it been shown that petitioner's activity was exclusively limited to painting that certain building, respondent company's theory of casual employment would have been worthy of consideration. However, during petitioner's period of employment, the records reveal that the tasks assigned to him included not only painting of company buildings, equipment and tools but also cleaning and oiling machines, even operating a drilling machine, and other odd jobs assigned to him when he had no painting job. A regular employee of respondent company, Emiliano Tanque Jr., attested in his affidavit that petitioner worked with him as a maintenance man when there was no painting job. It is noteworthy that, as wisely observed by the Labor Arbiter, the respondent company did not even attempt to negate the above averments of petitioner and his co- employee. Indeed, the respondent company did not only fail to dispute this vital point, it even went further and confirmed its veracity when it expressly admitted in its comment that, "The main bulk of work and/or activities assigned to

petitioner was painting and other related activities. Occasionally, he was instructed to do other odd things in connection with maintenance while he was waiting for materials he would need in his job or when he had finished early one assigned to him. 10 The respondent Commission, in reversing the findings of the Labor Arbiter reasoned that petitioner's job cannot be considered as necessary or desirable in the usual business or trade of the employer because, "Painting the business or factory building is not a part of the respondent's manufacturing or distilling process of wines and liquors. 11 The fallacy of the reasoning is readily apparent in view of the admitted fact that petitioner's activities included not only painting but other maintenance work as well, a fact which even the respondent Commission, like the private respondent, also expressly recognized when it stated in its decision that, 'Although complainant's (petitioner) work was mainly painting, he was occasionally asked to do other odd jobs in connection with maintenance work. 12 It misleadingly assumed that all the petitioner did during his more than one year of employment was to paint a certain building of the respondent company, whereas it is admitted that he was given other assignments relating to maintenance work besides painting company building and equipment. It is self-serving, to say the least, to isolate petitioner's painting job to justify the proposition of casual employment and conveniently disregard the other maintenance activities of petitioner which were assigned by the respondent company when he was not painting. The law demands that the nature and entirety of the activities performed by the employee be considered. In the case of petitioner, the painting and maintenance work given him manifest a treatment consistent with a maintenance man and not just a painter, for if his job was truly only to paint a building there would have been no basis for giving him other work assignments In between painting activities. It is not tenable to argue that the painting and maintenance work of petitioner are not necessary in respondent's business of manufacturing liquors and wines, just as it cannot be said that only those who are directly involved in the process of producing wines and liquors may be considered as necessary employees. Otherwise, there would have been no need for the regular Maintenance Section of respondent company's Engineering Department, manned by regular employees like Emiliano Tanque Jr., whom petitioner often worked with. Furthermore, the petitioner performed his work of painting and maintenance activities during his employment in respondent's business which lasted for more than one year, until early January, 1983 when he demanded to be regularized and was subsequently dismissed. Certainly, by this fact alone he is entitled by law to be considered a regular employee. And considering further that weeks after his dismissal, petitioner was rehired by the company through a labor agency and was returned to his post in the Maintenance Section and made to perform the same activities that he used to do, it cannot be denied that as activities as a regular painter and maintenance man still exist. It is of no moment that petitioner was told when he was hired that his employment would only be casual, that he was paid through cash vouchers, and that he did not comply with regular employment procedure. Precisely, the law overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining position needs the support of the State. That determines whether a certain employment is regular or casual is not the will and word of the employer, to which the desperate worker often accedes, much less the procedure of hiring the employee or the manner of paying his salary. It is the nature of the activities performed in relation to the particular business or trade considering all circumstances, and in some cases the length of time of its performance and its continued existence.

Finally, considering its task to give life and spirit to the Constitutional mandate for the protection of labor, to enforce and uphold our labor laws which must be interpreted liberally in favor of the worker in case of doubt, the Court cannot understand the failure of the respondent Commission to perceive the obvious attempt on the part of the respondent company to evade its obligations to petitioner by dismissing the latter days after he asked to be treated as a regular worker on the flimsy pretext that his painting work was suddenly finished only to rehire him indirectly weeks after his dismissal and assign him to perform the same tasks he used to perform. The devious dismissal is too obvious to escape notice. The inexplicable disregard of established and decisive facts which the Commission itself admitted to be so, in justifying a conclusion adverse to the aggrieved laborer clearly spells a grave abuse of discretion amounting to lack of jurisdiction. WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the National Labor Relations Commission are hereby annulled and set aside. The Order of Labor arbiter Bienvenido S. Hernandez dated April 6, 1984 is reinstated. Private respondent is ordered to reinstate petitioner as a regular maintenance man and to pay petitioner 1) backwages equivalent to three years from January 16,1983, in accordance with the Aluminum Wage Orders in effect for the period covered, 2) ECOLA 3) 13th Month Pay, 4) and other benefits under pertinent Collective Bargaining Agreements, if any. SO ORDERED.

G.R. No. 148492

May 9, 2003

BUENAVENTURA C. MAGSALIN & COCA-COLA BOTTLERS PHILS., INC., petitioners, vs. NATIONAL ORGANIZATION OF WORKING MEN (N.O.W.M.), RODOLFO MELGAR, ARNEL DELOS SANTOS, SILVERIO MINDAJAO, RUBEN NAVALES, BOBBY AUSTERO, RAYMUNDO GAUDICOS, CHRISTOPHER PERALTA, GIOVANI DELA CRUZ, JOSELITO OCCIDENTAL, AMADO BODASAN, FREDERIK MAGALINO, CHITO OCCIDENTAL, ALEXANDER DELOS SANTOS, DEONIL MESA, OLIVER VILLAFLOR, ROBERTO TUMONBA, RODRIGO ANGELES, ROMMEL ABAD, FELIX AVENIDO, ARMANDO AMOR, FREDERICK DE GUZMAN, CEA CARMELO, MARIANO CAETE, ALBERTO ANTONES, ROMEO BASQUINAS, ROGELIO MALINIS, EDMUNDO BAYOS, RAMIL REVADO, JOEL PIATA, OSCAR MALINAY, ROBERT REYES, JIMMY REYES, RETCHEL HAUTEA, VICTORINO TORRALBA, NOEL RUBAI, RENATO DE OCAMPO, JESUS NOZON, JOEL MALINIS, REYNALDO GREGORY, MICHAEL RUBIA, JOSELITO VILLANUEVA, LEONARDO MONDINA, EDUARDO BELLA, WILFREDO BELLA, ALBERTO MAGTIBAY, MIGUEL CUESTA, JOSE MARCOS RODRIGUEZ III, HERMINIO ROFLO, ERNIE CHAVEZ, NELSON LOGRONIO, LEONILO GALAPIN, REY PANGILINAN, LARRY JAVIER, MATIAS ARBUES, RONILO AUSTERO, ADEMAR ESTUITA, EDWIN DE LEON, RANDY DE CHAVEZ,respondents. VITUG, J.:

Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondent workers as "sales route helpers" for a limited period of five months. After five months, respondent workers were employed by petitioner company on a day-to-day basis. According to petitioner company, respondent workers were hired to substitute for regular sales route helpers whenever the latter would be unavailable or when there would be an unexpected shortage of manpower in any of its work places or an unusually high volume of work. The practice was for the workers to wait every morning outside the gates of the sales office of petitioner company. If thus hired, the workers would then be paid their wages at the end of the day. Ultimately, respondent workers asked petitioner company to extend to them regular appointments. Petitioner company refused. On 07 November 1997, twenty-three (23) of the "temporary" workers (herein respondents) filed with the National Labor Relations Commission (NLRC) a complaint for the regularization of their employment with petitioner company. The complaint was amended a number of times to include other complainants that ultimately totaled fifty-eight (58) workers. Claiming that petitioner company meanwhile terminated their services, respondent workers filed a notice of strike and a complaint for illegal dismissal and unfair labor practice with the NLRC. On 01 April 1998, the parties agreed to submit the controversy, including the issue raised in the complaint for regularization of employment, for voluntary arbitration. On 18 May 1998, the voluntary arbitrator rendered a decision dismissing the complaint on the thesis that respondents (then complainants) were not regular employees of petitioner company. Respondent workers filed with the Court of Appeals a petition for review under Rule 43 of the Rules of Civil Procedure assailing the decision of the voluntary arbitrator, therein contending that "1. The Voluntary Arbitrator committed errors in finding that petitioners voluntarily and knowingly agreed to be employed on a day-to-day basis; and "2. The Voluntary Arbitrator committed errors in finding that petitioners' dismissal was valid."1 In its decision of 11 August 2000, the Court of Appeals reversed and set aside the ruling of the voluntary arbitrator, it concluded "WHEREFORE, the assailed decision of the Voluntary Arbitrator is hereby REVERSED and SET ASIDE and anew one is entered: "1. Declaring petitioners as regular employees of Coca-Cola Bottlers Phils., Inc. and their dismissal from employment as illegal; "2. Ordering respondent Coca-Cola Bottlers Phils., Inc. to reinstate petitioners to their former positions with full backwages, inclusive of allowances that petitioners had been receiving during their employment and 13th month pay, computed from the date of their termination up to the time of their actual reinstatement (Paramount Vinyl Product Corp. vs. NLRC, 190 SCRA 526)."2 Petitioner company's motion for reconsideration was denied in a resolution, dated 21 May 2001, of the appellate court. The focal issues revolve around the matter of whether or not the nature of work of respondents in the company is of such nature as to be deemed necessary and desirable in the usual business or trade of petitioner that could qualify them to be regular employees.

The basic law on the case is Article 280 of the Labor Code. Its pertinent provisions read: "Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. "An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists." Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinks in the country. Respondent workers have long been in the service of petitioner company. Respondent workers, when hired, would go with route salesmen on board delivery trucks and undertake the laborious task of loading and unloading softdrink products of petitioner company to its various delivery points. Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a "regular" worker's 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.3 The argument of petitioner that its usual business or trade is softdrink manufacturing and that the work assigned to respondent workers as sales route helpers so involves merely "postproduction activities," one which is not indispensable in the manufacture of its products, scarcely can be persuasive. If, as so argued by petitioner company, only those whose work are directly involved in the production of softdrinks may be held performing functions necessary and desirable in its usual business or trade, there would have then been no need for it to even maintain regular truck sales route helpers. The nature of the work performed must be viewed from a perspective of the business or trade in its entirety4 and not on a confined scope. The repeated rehiring of respondent workers and the continuing need for their services clearly attest to the necessity or desirability of their services in the regular conduct of the business or trade of petitioner company. The Court of Appeals has found each of respondents to have worked for at least one year with petitioner company. While this Court, in Brent School, Inc. vs. Zamora,5 has upheld the

legality of a fixed-term employment, it has done so, however, with a stern admonition that where from the circumstances it is apparent that the period has been imposed to preclude the acquisition of tenurial security by the employee, then it should be struck down as being contrary to law, morals, good customs, public order and public policy. The pernicious practice of having employees, workers and laborers, engaged for a fixed period of few months, short of the normal six-month probationary period of employment, and, thereafter, to be hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be countenanced. The fact that respondent workers have agreed to be employed on such basis and to forego the protection given to them on their security of tenure, demonstrate nothing more than the serious problem of impoverishment of so many of our people and the resulting unevenness between labor and capital. A contract of employment is impressed with public interest. The provisions of applicable statutes are deemed written into the contract, and "the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other."6 With respect to the "Release, Waiver and Quitclaim" executed by thirty-six (36) of the original complainants, namely, Rommel Abad, Armando Amor, Bobby Austero, Felix Avenido, Amado Badasan, Edmundo Bayos, Eduardo Bella, Jr., Mariano Caete, Carmelo Cea, Ernie Chavez, Randy Dechaves, Frederick De Guzman, Renato De Ocampo, Ademar Estuita, Leonilo Galapin, Raymund Gaudicos, Retchel Hautea, Larry Javier, Nelson Logrinio, Alberto Magtibay, Frederick Magallano, Rogelio Malinis, Rodolfo Melgar, Silverio Mindajao, Leonardo Mondina, Ruben Navales, Rey Pangilinan, Christopher Peralta, Jimmy Reyes, Herminio Roflo, Michael Rubia, Noel Rubia, Roberto Tumomba, Oliver Villaflor, and Joselito Villanueva, this Court finds the execution of the same to be in order. During the pendency of the appeal with the Court of Appeals, these thirty-six (36) complainants individually executed voluntarily a release, waiver and quitclaim and received from petitioner company the amount of fifteen thousand (P15,000.00) pesos each. The amount accords with the disposition of the case by the voluntary arbitrator thusly: "WHEREFORE, above premises considered, the herein complaint is hereby DISMISSED for lack of merit. "However, we cannot completely negate the fact that complainants did and do actually render services to the Company. It is with this in mind and considering the difficulty the complainants may face in looking for another job in case they are no longer re-engaged that we direct the company to pay complainants Fifteen Thousand Pesos each (P15,000.00) as financial assistance. It is however understood that the financial assistance previously extended by the Company to some of the complainants shall be deducted from the financial assistance herein awarded."7 The receipt of the amount awarded by the voluntary arbitrator, as well as the execution of a release, waiver and quitclaim, is, in effect, an acceptance of said decision. There is nothing on record which could indicate that the execution thereof by thirty-six (36) of the respondent workers has been attended by fraud or deceit. While quitclaims executed by employees are commonly frowned upon as being contrary to public policy and are ineffective to bar claims for the full measure of their legal rights, there are, however, legitimate waivers that represent a voluntary and reasonable settlement of laborers' claims which should be so respected by the Court as the law between the parties.8 Where the person making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as being a valid and binding undertaking. "Dire necessity" is not an acceptable ground for annulling the release, when it is not shown that the employee has been forced to execute it.9

WHEREFORE, the questioned decision of the Court of Appeals, in CA-G.R. SP No. 47872 is hereby AFFIRMED with MODIFICATION in that the "Release, Waiver and Quitclaim" executed by the thirtysix (36) individual respondents are hereby declared VALID and LEGAL. SO ORDERED.

G.R. No. 149440

January 28, 2003

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE SEGURA, petitioners, vs. NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE, respondents. PANGANIBAN, J.: Although the employers have shown that respondents performed work that was seasonal in nature, they failed to prove that the latter worked only for the duration of one particular season. In fact, petitioners do not deny that these workers have served them for several years already. Hence, they are regular not seasonal employees. The Case Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the February 20, 2001 Decision of the Court of Appeals 1 (CA) in CA-GR SP No. 51033. The dispositive part of the Decision reads: "WHEREFORE, premises considered, the instant special civil action for certiorari is hereby DENIED." 2 On the other hand, the National Labor Relations Commission (NLRC) Decision, 3 upheld by the CA, disposed in this wise: "WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new one entered declaring complainants to have been illegally dismissed. Respondents are hereby ORDERED to reinstate complainants except Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva to their previous position and to pay full backwages from September 1991 until reinstated. Respondents being guilty of unfair labor practice are further ordered to pay complainant union the sum of P10,000.00 as moral damages and P5,000.00 as exemplary damages." 4

The Facts The facts are summarized in the NLRC Decision as follows: "Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused to work and/or were choosy in the kind of jobs they wanted to perform, the records is replete with complainants' persistence and dogged determination in going back to work. "Indeed, it would appear that respondents did not look with favor workers' having organized themselves into a union. Thus, when complainant union was certified as the collective bargaining representative in the certification elections, respondents under the pretext that the result was on appeal, refused to sit down with the union for the purpose of entering into a collective bargaining agreement. Moreover, the workers including complainants herein were not given work for more than one month. In protest, complainants staged a strike which was however settled upon the signing of a Memorandum of Agreement which stipulated among others that: 'a) The parties will initially meet for CBA negotiations on the 11th day of January 1991 and will endeavor to conclude the same within thirty (30) days. 'b) The management will give priority to the women workers who are members of the union in case work relative . . . or amount[ing] to gahit and [dipol] arises. 'c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week. 'd) The management will provide fifteen (15) wagons for the workers and that existing workforce prior to the actual strike will be given priority. However, in case the said workforce would not be enough, the management can hire additional workers to supplement them. 'e) The management will not anymore allow the scabs, numbering about eighteen (18) workers[,] to work in the hacienda; and 'f) The union will immediately lift the picket upon signing of this agreement.' "However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its commitment to sit down and bargain collectively. Instead, respondent employed all means including the use of private armed guards to prevent the organizers from entering the premises. "Moreover, starting September 1991, respondents did not any more give work assignments to the complainants forcing the union to stage a strike on January 2, 1992. But due to the conciliation efforts by the DOLE, another Memorandum of Agreement was signed by the complainants and respondents which provides: 'Whereas the union staged a strike against management on January 2, 1992 grounded on the dismissal of the union officials and members; 'Whereas parties to the present dispute agree to settle the case amicably once and for all;

'Now therefore, in the interest of both labor and management, parties herein agree as follows: '1. That the list of the names of affected union members hereto attached and made part of this agreement shall be referred to the Hacienda payroll of 1990 and determine whether or not this concerned Union members are hacienda workers; '2. That in addition to the payroll of 1990 as reference, herein parties will use as guide the subjects of a Memorandum of Agreement entered into by and between the parties last January 4, 1990; '3. That herein parties can use other employment references in support of their respective claims whether or not any or all of the listed 36 union members are employees or hacienda workers or not as the case may be; '4. That in case conflict or disagreement arises in the determination of the status of the particular hacienda workers subject of this agreement herein parties further agree to submit the same to voluntary arbitration; '5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby created to be composed of three representatives each and is given five working days starting Jan. 23, 1992 to resolve the status of the subject 36 hacienda workers. (Union representatives: Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.)" "Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed as follows: 'The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko based on who received their 13th month pay. The following are deemed not considered employees: 1. Luisa Rombo 2. Ramona Rombo 3. Bobong Abrega 4. Boboy Silva 'The name Orencio Rombo shall be verified in the 1990 payroll. 'The following employees shall be reinstated immediately upon availability of work: 1. Jose Dagle 2. Rico Dagle 3. Ricardo Dagle 4. Jesus Silva 5. Fernando Silva 6. Ernesto Tejares 7. Alejandro Tejares 8. Gaudioso Rombo 9. Martin Alas-as Jr. 10. Cresensio Abrega 11. Ariston Eruela Sr. 12. Ariston Eruela Jr.'

"When respondents again reneged on its commitment; complainants filed the present complaint. "But for all their persistence, the risk they had to undergo in conducting a strike in the face of overwhelming odds, complainants in an ironic twist of fate now find themselves being accused of 'refusing to work and being choosy in the kind of work they have to perform'." 5 (Citations omitted) Ruling of the Court of Appeals The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on leave during the off-season and were therefore still employed by petitioners. Moreover, the workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal. The appellate court found neither "rhyme nor reason in petitioner's argument that it was the workers themselves who refused to or were choosy in their work." As found by the NLRC, the record of this case is "replete with complainants' persistence and dogged determination in going back to work." 6 The CA likewise concurred with the NLRC's finding that petitioners were guilty of unfair labor practice. Hence this Petition. 7 Issues Petitioners raise the following issues for the Court's consideration: "A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal workers, were regular employees, contrary to the clear provisions of Article 280 of the Labor Code, which categorically state that seasonal employees are not covered by the definition of regular employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual employees who have served for at least one year. "B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, . . . and relying instead on rulings which are not directly applicable to the case at bench, viz, Philippine Tobacco, Bacolod-Murcia, and Gaco, . . . "C Whether or not the Court of Appeals committed grave abuse of discretion in upholding the NLRC's conclusion that private respondents were illegally dismissed, that petitioner[s were] guilty of unfair labor practice, and that the union be awarded moral and exemplary damages." 8 Consistent with the discussion in petitioners' Memorandum, we shall take up Items A and B as the first issue and Item C as the second. The Court's Ruling The Petition has no merit. First Issue:

Regular Employment At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for review on certiorari of CA decisions. 9 Questions of fact are not entertained. 10 The Court is not a trier of facts and, in labor cases, this doctrine applies with greater force. 11 Factual questions are for labor tribunals to resolve. 12 In the present case, these have already been threshed out by the NLRC. Its findings were affirmed by the appellate court. Contrary to petitioners' contention, the CA did not err when it held that respondents were regular employees. Article 280 of the Labor Code, as amended, states: "Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. "An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exist." (Italics supplied) For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. The evidence proves the existence of the first, but not of the second, condition. The fact that respondents with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of regular employment is applicable. In Abasolo v. National Labor Relations Commission, 13 the Court issued this clarification: "[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in which this Court held: "The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual trade or business of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.

xxx

xxx

xxx

". . . [T]he fact that [respondents] do not work continuously for one whole year but only for the duration of the . . . season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but merely considered on leave until re-employed." 14 The CA did not err when it ruled that Mercado v. NLRC 15 was not applicable to the case at bar. In the earlier case, the workers were required to perform phases of agricultural work for a definite period of time, after which their services would be available to any other farm owner. They were not hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase thereof. On the other hand, herein respondents, having performed the same tasks for petitioners every season for several years, are considered the latter's regular employees for their respective tasks. Petitioners' eventual refusal to use their services even if they were ready, able and willing to perform their usual duties whenever these were available and hiring of other workers to perform the tasks originally assigned to respondents amounted to illegal dismissal of the latter. The Court finds no reason to disturb the CA's dismissal of what petitioners claim was their valid exercise of a management prerogative. The sudden changes in work assignments reeked of bad faith. These changes were implemented immediately after respondents had organized themselves into a union and started demanding collective bargaining. Those who were union members were effectively deprived of their jobs. Petitioners' move actually amounted to unjustified dismissal of respondents, in violation of the Labor Code. "Where there is no showing of clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized cause." 16 In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed above, are regular employees. Second Issue: Unfair Labor Practice The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows: "Indeed, from respondents' refusal to bargain, to their acts of economic inducements resulting in the promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to come in, and the dismissal of union officials and members, one cannot but conclude that respondents did not want a union in their haciendaa clear interference in the right of the workers to self-organization." 17 We uphold the CA's affirmation of the above findings. Indeed, factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality. Their findings are binding on the Supreme Court. 18 Verily, their conclusions are accorded great weight upon appeal, especially when supported by substantial evidence. 19 Consequently, the Court is not duty-bound to delve into the accuracy of their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any rational basis." 20

The finding of unfair labor practice done in bad faith carries with it the sanction of moral and exemplary damages."21 WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners. SO ORDERED.

G.R. No. 110524

July 29, 2002

DOUGLAS MILLARES and ROGELIO LAGDA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, TRANS-GLOBAL MARITIME AGENCY, INC. and ESSO INTERNATIONAL SHIPPING CO., LTD. respondents. RESOLUTION KAPUNAN, J.: On March 14, 2000, the Court promulgated its decision in the above-entitled case, ruling in favor of the petitioners. The dispositive portion reads, as follows: WHEREFORE, premises considered, the assailed Decision, dated June 1, 1993, of the National Labor Relations Commission is hereby REVERSED and SET ASIDE and a new judgment is hereby rendered ordering the private respondents to: (1) Reinstate petitioners Millares and Lagda to their former positions without loss of seniority rights, and to pay full backwages computed from the time of illegal dismissal to the time of actual reinstatement; (2) Alternatively, if reinstatement is not possible, pay petitioners Millares and Lagda separation pay equivalent to one month's salary for every year of service; and, (3) Jointly and severally pay petitioners One Hundred Percent (100%) of their total credited contributions as provided under the Consecutive Enlistment Incentive Plan. SO ORDERED.1 A motion for reconsideration was consequently filed2 by the private respondents to which petitioners filed an Opposition thereto.3

In a Minute Resolution dated June 28, 2000, the Court resolved to deny the motion for reconsideration with finality.4 Subsequently, the Filipino Association for Mariners Employment, Inc. (FAME) filed a Motion for Leave to Intervene and to Admit a Motion for Reconsideration in Intervention. Private respondents, meanwhile, also filed a Motion for Leave to File a Second Motion for Reconsideration of our decision. In both motions, the private respondents and FAME respectively pray in the main that the Court reconsider its ruling that "Filipino seafarers are considered regular employees within the context of Article 280 of the Labor Code." They claim that the decision may establish a precedent that will adversely affect the maritime industry. The Court resolved to set the case for oral arguments to enable the parties to present their sides. To recall, the facts of the case are, as follows: Petitioner Douglas Millares was employed by private respondent ESSO International Shipping Company LTD. (Esso International, for brevity) through its local manning agency, private respondent Trans-Global Maritime Agency, Inc. (Trans-Global, for brevity) on November 16, 1968 as a machinist. In 1975, he was promoted as Chief Engineer which position he occupied until he opted to retire in 1989. He was then receiving a monthly salary of US $1,939.00. On June 13, 1989, petitioner Millares applied for a leave of absence for the period July 9 to August 7, 1989. In a letter dated June 14, 1989, Michael J. Estaniel, President of private respondent Trans-Global, approved the request for leave of absence. On June 21, 1989, petitioner Millares wrote G.S. Hanly, Operations Manager of Exxon International Co., (now Esso International) through Michael J. Estaniel, informing him of his intention to avail of the optional retirement plan under the Consecutive Enlistment Incentive Plan (CEIP) considering that he had already rendered more than twenty (20) years of continuous service. On July 13, 1989 respondent Esso International, through W.J. Vrints, Employee Relations Manager, denied petitioner Millares' request for optional retirement on the following grounds, to wit: (1) he was employed on a contractual basis; (2) his contract of enlistment (COE) did not provide for retirement before the age of sixty (60) years; and (3) he did not comply with the requirement for claiming benefits under the CEIP, i.e., to submit a written advice to the company of his intention to terminate his employment within thirty (30) days from his last disembarkation date. On August 9, 1989, petitioner Millares requested for an extension of his leave of absence from August 9 to 24, 1989. On August 19, 1989, Roy C. Palomar, Crewing Manager, Ship Group A, Trans-global, wrote petitioner Millares advising him that respondent Esso International "has corrected the deficiency in its manpower requirement specifically in the Chief Engineer rank by promoting a First Assistant Engineer to this position as a result of (his) previous leave of absence which expired last August 8, 1989. The adjustment in said rank was required in order to meet manpower schedules as a result of (his) inability." On September 26, 1989, respondent Esso International, through H. Regenboog, Personnel Administrator, advised petitioner Millares that in view of his absence without leave, which is equivalent to abandonment of his position, he had been dropped from the roster of crew members effective September 1, 1989.

On the other hand, petitioner Lagda was employed by private respondent Esso International as wiper/oiler in June 1969. He was promoted as Chief Engineer in 1980, a position he continued to occupy until his last COE expired on April 10, 1989. He was then receiving a monthly salary of US$1,939.00. On May 16, 1989, petitioner Lagda applied for a leave of absence from June 19, 1989 up to the whole month of August 1989. On June 14, 1989, respondent Trans-Global's President, Michael J. Estaniel, approved petitioner Lagda's leave of absence from June 22, 1989 to July 20, 1989 and advised him to report for re-assignment on July 21, 1989. On June 26, 1989, petitioner Lagda wrote a letter to G.S. Stanley, Operations Manager of respondent Esso International, through respondent Trans-Global's President Michael J. Estaniel, informing him of his intention to avail of the optional early retirement plan in view of his twenty (20) years continuous service in the complaint. On July 13, 1989, respondent Trans-global denied petitioner Lagda's request for availment of the optional early retirement scheme on the same grounds upon which petitioner Millares request was denied. On August 3, 1989, he requested for an extension of his leave of absence up to August 26, 1989 and the same was approved. However, on September 27, 1989, respondent Esso International, through H. Regenboog, Personnel Administrator, advised petitioner Lagda that in view of his "unavailability for contractual sea service," he had been dropped from the roster of crew members effective September 1, 1989. On October 5, 1989, petitioners Millares and Lagda filed a complaint-affidavit, docketed as POEA (M) 89-10-9671, for illegal dismissal and non-payment of employee benefits against private respondents Esso International and Trans-Global, before the POEA.5 On July 17, 1991, the POEA rendered a decision dismissing the complaint for lack of merit. On appeal to the NLRC, the decision of the POEA was affirmed on June 1, 1993 with the following disquisition: The first issue must be decided in the negative. Complainants-appellants, as seamen and overseas contract workers are not covered by the term "regular employment" as defined under Article 280 of the Labor Code. The POEA, which is tasked with protecting the rights of the Filipino workers for overseas employment to fair and equitable recruitment and employment practices and to ensure their welfare, prescribes a standard employment contract for seamen on board ocean-going vessels for a fixed period but in no case to exceed twelve (12) months (Part 1, Sec. C). This POEA policy appears to be in consonance with the international maritime practice. Moreover, the Supreme Court in Brent School, Inc. vs. Zamora, 181 SCRA 702, had held that a fixed term is essential and natural appurtenance of overseas employment contracts to which the concept of regular employment with all that it implies is not applicable, Article 280 of the Labor Code notwithstanding. There is, therefore, no reason to disturb the POEA Administrator's finding that complainants-appellants were hired on a contractual basis and for a definite period. Their employment is thus governed by the contracts they sign each time they are re-hired and is terminated at the expiration of the contract period.6 Undaunted, the petitioners elevated their case to this Court7 and successfully obtained the favorable action, which is now vehemently being assailed.

At the hearing on November 15, 2000, the Court defined the issues for resolution in this case, namely: I. ARE PETITIONERS REGULAR OR CONTRACTUAL EMPLOYEES WHOSE EMPLOYMENTS ARE TERMINATED EVERYTIME THEIR CONTRACTS OF EMPLOYMENT EXPIRE? II. ASSUMING THAT PETITIONERS ARE REGULAR EMPLOYEES, WERE THEY DISMISSED WITHOUT JUST CAUSE SO AS TO BE ENTITLED TO REINSTATEMENT AND BACKWAGES, INCLUDING PAYMENT OF 100% OF THEIR TOTAL CREDITED CONTRIBUTIONS TO THE CONSECUTIVE ENLISTMENT INCENTIVE PLAN (CEIP)? III. DOES THE PROVISION OF THE POEA STANDARD CONTRACT FOR SEAFARERS ON BOARD FOREIGN VESSELS (SEC. C., DURATION OF CONTRACT) PRECLUDE THE ATTAINMENT BY SEAMEN OF THE STATUS OF REGULAR EMPLOYEES? IV. DOES THE DECISION OF THE COURT IN G.R. NO. 110524 CONTRAVENE INTERNATIONAL MARITIME LAW, ALLEGEDLY PART OF THE LAW OF THE LAND UNDER SECTION 2, ARTICLE II OF THE CONSTITUTION? V. DOES THE SAME DECISION OF THE COURT CONSTITUTE A DEPARTURE FROM ITS RULING INCOYOCA VS. NLRC (G.R. NO. 113658, March 31, 1995)?8 In answer to the private respondents' Second Motion for Reconsideration and to FAME's Motion for Reconsideration in Intervention, petitioners maintain that they are regular employees as found by the Court in the March 14, 2000 Decision. Considering that petitioners performed activities which are usually necessary or desirable in the usual business or trade of private respondents, they should be considered as regular employees pursuant to Article 280, Par. 1 of the Labor Code.9 Other justifications for this ruling include the fact that petitioners have rendered over twenty (20) years of service, as admitted by the private respondents;10 that they were recipients of Merit Pay which is an express acknowledgment by the private respondents that petitioners are regular and not just contractual employees;11 that petitioners were registered under the Social Security System (SSS). The petitioners further state that the case of Coyoca v. NLRC12 which the private respondents invoke is not applicable to the case at bar as the factual milieu in that case is not the same. Furthermore, private respondents' fear that our judicial pronouncement will spell the death of the manning industry is far from real. Instead, with the valuable contribution of the manning industry to our economy, these seafarers are supposed to be considered as "Heroes of the Republic" whose rights must be protected.13 Finally, the first motion for reconsideration has already been denied with finality by this Court and it is about time that the Court should write finis to this case. The private respondents, on the other hand, contend that: (a) the ruling holding petitioners as regular employees was not in accord with the decision in Coyoca v. NLRC, 243 SCRA 190; (b) Art. 280 is not applicable as what applies is the POEA Rules and Regulations Governing Overseas Employment; (c) seafarers are not regular employees based on international maritime practice; (d) grave consequences would result on the future of seafarers and manning agencies if the ruling is not reconsidered; (e) there was no dismissal committed; (f) a dismissed seafarer is not entitled to back wages and reinstatement, that being not allowed under the POEA rules and the Migrant Workers Act; and, (g) petitioners are not entitled to claim the total amount credited to their account under the CEIP.14

Meanwhile, Intervenor Filipino Association of Mariners Employment (FAME) avers that our decision, if not reconsidered, will have negative consequences in the employment of Filipino Seafarers overseas which, in turn, might lead to the demise of the manning industry in the Philippines. As intervenor FAME puts it: xxx 7.1 Foreign principals will start looking for alternative sources for seafarers to man their ships. AS reported by the BIMCO/ISF study, "there is an expectancy that there will be an increasing demand for (and supply of) Chinese seafarers, with some commentators suggesting that this may be a long-term alternative to the Philippines." Moreover, "the political changes within the former Eastern Bloc have made new sources of supply available to the international market." Intervenor's recent survey among its members shows that 50 Philippine manning companies had already lost some 6,300 slots to other Asian, East Europe and Chinese competition for the last two years; 7.2 The Philippine stands to lose an annual foreign income estimated at U.S. DOLLARS TWO HUNDRED SEVENTY FOUR MILLION FIVE HUNDRED FORTY NINE THOUSAND (US$ 274,549,000.00) from the manning industry and another US DOLLARS FOUR BILLION SIX HUNDRED FIFTY MILLION SEVEN HUNDRED SIX THOUSAND (US$ 4,650,760,000.00) from the land-based sector if seafarers and equally situated land-based contract workers will be declared regular employees; 7.3 Some 195,917 (as of 1998) deployed overseas Filipino seafarers will be rendered jobless should we lose the market; 7.4 Some 360 manning agencies (as of 30 June 2000) whose principals may no longer be doing business with them will close their shops; 7.5 The contribution to the Overseas Worker's Welfare Administration by the sector, which is USD 25.00 per contract and translates to US DOLLARS FOUR MILLION (US$ 4,000,000.00)annually, will be drastically reduced. This is not to mention the processing fees paid to POEA, Philippine Regulatory Commission (PRC), Department of Foreign Affairs (DFA) and Maritime Industry Authority (MARINA) for the documentation of these seafarers; 7.6 Worst, some 195,917 (as of 1998) families will suffer socially and economically, as their breadwinners will be rendered jobless; and 7.7 It will considerably slow down the government's program of employment generation, considering that, as expected foreign employers will now avoid hiring Filipino overseas contract workers as they will become regular employees with all its concomitant effects.15 Significantly, the Office of the Solicitor General, in a departure from its original position in this case, has now taken the opposite view. It has expressed its apprehension in sustaining our decision and has called for a re-examination of our ruling.16 Considering all the arguments presented by the private respondents, the Intervenor FAME and the OSG, we agree that there is a need to reconsider our position with respect to the status of seafarers which we considered as regular employees under Article 280 of the Labor Code. We, therefore, partially grant the second motion for reconsideration.

In Brent School Inc. v. Zamora,17 the Supreme Court stated that Article 280 of the Labor Code does not apply to overseas employment. In the light of the foregoing description of the development of the provisions of the Labor Code bearing on term or fixed-period employment that the question posed in the opening paragraph of this opinion should now be addressed. Is it then the legislative intention to outlaw stipulations in employment contracts laying down a definite period therefor? Are such stipulations in essence contrary to public policy and should not on this account be accorded legitimacy? On the other hand, there is the gradual and progressive elimination of references to term or fixed-period employment in the Labor Code, and the specific statement of the rule that: 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 employee is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph; provided that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the validity and propriety of contracts and obligations with a fixed or definite period, and imposes no restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it specific, goods or services, except the general admonition against stipulations contrary to law, morals, good customs, public order or public policy. Under the Civil code, therefore, and as a general proposition, fixed-term employment contracts are not limited, as they are under the present Labor Code, to those by natural seasonal or for specific projects with predetermined dates of completion; they also include those to which the parties by free choice have assigned a specific date of termination. Some familiar examples may be cited of employment contract which may be neither for seasonal work nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the engagement, the concept of regular employment with all that it implies does not appear ever to have been applied. Article 280 of the Labor Code notwithstanding also appointments to the positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity without which no reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy Instructions. No. 8 of the Minister of Labor implicitly recognize that certain company officials may be elected for what would amount to fix periods, at the expiration of which they would have to stand down, in providing that these officials, xxx may lose their jobs as president, executive vice-president or vice-president, etc. because the stockholders or the board of directors for one reason or another did not reelect them.

There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregard as contrary to public policy, morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise, where the reason for the law does not exists, e.g., where it is indeed the employee himself who insists upon a period or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non, would an agreement fixing a period be essentially evil or illicit, therefore anathema? Would such an agreement come within the scope of Article 280 which admittedly was enacted "to prevent the circumvention of the right of the employee to be secured in xxx his employment As it is evident from even only the three examples already given that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate within his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping of the head. It is a salutary principle in statutory construction that there exists a valid presumption that undesirable consequences were never intended by a legislative measure, and that a construction of which the statute is fairly susceptible is favored, which will avoid all objectionable, mischievous, indefensible, wrongful, evil, and injurious consequences." Nothing is better settled than that courts are not to give words a meaning which would lead to absurd or unreasonable consequences. That is a principle that goes back to In re Allen decided on October 27, 1902, where it was held that a literal interpretation is to be rejected if it would be unjust or lead to absurd results. That is a strong argument against its adoption. The words of Justice Laurel are particularly apt. Thus: "the appellants would lead to an absurdity is another argument for rejecting it." xxx We have, here, then a case where the true intent of the law is clear that calls for the application of the cardinal rule of statutory construction that such intent of spirit must prevail over the letter thereof, for whatever is within the spirit of a statute is within the statute, since adherence to the letter would result in absurdity, injustice and contradictions and would defeat the plain and vital purpose of the statute. Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out; agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or

improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences. Again, in Pablo Coyoca v. NLRC,18 the Court also held that a seafarer is not a regular employee and is not entitled to separation pay. His employment is governed by the POEA Standard Employment Contract for Filipino Seamen. x x x. In this connection, it is important to note that neither does the POEA standard employment contract for Filipino seamen provide for such benefits. As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing Overseas Employment and the said Rules do not provide for separation or termination pay. What is embodied in petitioner's contract is the payment of compensation arising from permanent partial disability during the period of employment. We find that private respondent complied with the terms of contract when it paid petitioner P42,315.00 which, in our opinion, is a reasonable amount, as compensation for his illness. Lastly, petitioner claims that he eventually became a regular employee of private respondent and thus falls within the purview of Articles 284 and 95 of the Labor Code. In support of this contention, petitioner cites the case of Worth Shipping Service, Inc., et al. v. NLRC, et al., wherein we held that the crew members of the shipping company had attained regular status and thus, were entitled to separation pay. However, the facts of said case differ from the present. In Worth, we held that the principal and agent had "operational control and management" over the MV Orient Carrier and thus, were the actual employers of their crew members. From the foregoing cases, it is clear that seafarers are considered contractual employees. They can not be considered as regular employees under Article 280 of the Labor Code. Their employment is governed by the contracts they sign everytime they are rehired and their employment is terminated when the contract expires. Their employment is contractually fixed for a certain period of time. They fall under the exception of Article 280 whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of 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 We need not depart from the rulings of the Court in the two aforementioned cases which indeed constitute stare decisis with respect to the employment status of seafarers. Petitioners insist that they should be considered regular employees, since they have rendered services which are usually necessary and desirable to the business of their employer, and that they have rendered more than twenty(20) years of service. While this may be true, the Brent case has, however, held that there are certain forms of employment which also require the performance of usual and desirable functions and which exceed one year but do not necessarily attain regular employment status under Article 280.20 Overseas workers including seafarers fall under this type of employment which are governed by the mutual agreements of the parties. In this jurisdiction and as clearly stated in the Coyoca case, Filipino seamen are governed by the Rules and Regulations of the POEA. The Standard Employment Contract governing the employment

of All Filipino seamen on Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C specifically provides that the contract of seamen shall be for a fixed period. And in no case should the contract of seamen be longer than 12 months. It reads: Section C. Duration of Contract The period of employment shall be for a fixed period but in no case to exceed 12 months and shall be stated in the Crew Contract. Any extension of the Contract period shall be subject to the mutual consent of the parties. Moreover, it is an accepted maritime industry practice that employment of seafarers are for a fixed period only. Constrained by the nature of their employment which is quite peculiar and unique in itself, it is for the mutual interest of both the seafarer and the employer why the employment status must be contractual only or for a certain period of time. Seafarers spend most of their time at sea and understandably, they can not stay for a long and an indefinite period of time at sea.21 Limited access to shore society during the employment will have an adverse impact on the seafarer. The national, cultural and lingual diversity among the crew during the COE is a reality that necessitates the limitation of its period.22 Petitioners make much of the fact that they have been continually re-hired or their contracts renewed before the contracts expired (which has admittedly been going on for twenty (20) years). By such circumstance they claim to have acquired regular status with all the rights and benefits appurtenant to it. Such contention is untenable. Undeniably, this circumstance of continuous re-hiring was dictated by practical considerations that experienced crew members are more preferred. Petitioners were only given priority or preference because of their experience and qualifications but this does not detract the fact that herein petitioners are contractual employees. They can not be considered regular employees. We quote with favor the explanation of the NLRC in this wise: xxx The reference to "permanent" and "probationary" masters and employees in these papers is a misnomer and does not alter the fact that the contracts for enlistment between complainants-appellants and respondent-appellee Esso International were for a definite periods of time, ranging from 8 to 12 months. Although the use of the terms "permanent" and "probationary" is unfortunate, what is really meant is "eligible for-re-hire". This is the only logical conclusion possible because the parties cannot and should not violate POEA's requirement that a contract of enlistment shall be for a limited period only; not exceeding twelve (12)months.23 From all the foregoing, we hereby state that petitioners are not considered regular or permanent employees under Article 280 of the Labor Code. Petitioners' employment have automatically ceased upon the expiration of their contracts of enlistment (COE). Since there was no dismissal to speak of, it follows that petitioners are not entitled to reinstatement or payment of separation pay or backwages, as provided by law. With respect to the benefits under the Consecutive Enlistment Incentive Plan (CEIP), we hold that the petitioners are still entitled to receive 100% of the total amount credited to him under the CEIP. Considering that we have declared that petitioners are contractual employees, their compensation and benefits are covered by the contracts they signed and the CEIP is part and parcel of the contract.

The CEIP was formulated to entice seamen to stay long in the company. As the name implies, the program serves as an incentive for the employees to renew their contracts with the same company for as long as their services were needed. For those who remained loyal to them, they were duly rewarded with this additional remuneration under the CEIP, if eligible. While this is an act of benevolence on the part of the employer, it can not, however, be denied that this is part of the benefits accorded to the employees for services rendered. Such right to the benefits is vested upon them upon their eligibility to the program. The CEIP provides that an employee becomes covered under the Plan when he completes thirty-six (36) months or an equivalent of three (3) years of credited service with respect to employment after June 30, 1973.24 Upon eligibility, an amount shall be credited to his account as it provides, among others: III. Distribution of Benefits A. Retirement, Death and Disability When the employment of an employee terminates because of his retirement, death or permanent and total disability, a percentage of the total amount credited to his account will be distributed to him (or his eligible survivor(s) in accordance with the following: Reason for Termination a) Attainment of mandatory retirement age of 60. b) Permanent and total disability, while under contract, that is not due to accident or misconduct. c) Permanent and total disability, while under contract, that is due to accident, and not due to misconduct. xxx B. Voluntary Termination When an employee voluntary terminates his employment with at least 36 months of credited service without any misconduct on his part, 18 percent of the total amount credited to his account, plus an additional of one percent for each month (up to a maximum of 164 months of credited service in excess of 36, will be distributed to him provided (1) the employee has completed his last Contract of Enlistment and (2) employee advises the company in writing, within 30 days, from his last disembarkation date, of his intention to terminate his employment. (To advise the Company in writing means that the original letter must be sent to the Company's agent in the Philippines, a copy sent to the Company in New York). xxx C. Other Terminations Percentage 100% 100%

100%

When the employment of an employee is terminated by the Company for a reason other than one in A and B above, without any misconduct on his part, a percentage of the total amount credited to his account will be distributed to him in accordance with the following. Credited Service 36 months 48 " 60 " Percentage 50% 75% 100%

When the employment of an employee is terminated due to his poor-performance, misconduct, unavailability, etc., or if employee is not offered re-engagement for similar reasons, no distribution of any portion of employee's account will ever be made to him (or his eligible survivor[s]). It must be recalled that on June 21, 1989, Millares wrote a letter to his employer informing his intention to avail of the optional retirement plan under the CEIP considering that he has rendered more than twenty (20) years of continuous service. Lagda, likewise, manifested the same intention in a letter dated June 26, 1989. Private respondent, however, denied their requests for benefits under the CEIP since: (1) the contract of enlistment (COE) did not provide for retirement before 60 years of age; and that (2) petitioners failed to submit a written notice of their intention to terminate their employment within thirty (30) days from the last disembarkation date pursuant to the provision on Voluntary Termination of the CEIP. Petitioners were eventually dropped from the roster of crew members and on grounds of "abandonment" and "unavailability for contractual sea service", respectively, they were disqualified from receiving any benefits under the CEIP.25 In our March 14, 2000 Decision, we, however, found that petitioners Millares and Lagda were not guilty of "abandonment" or "unavailability for contractual sea service," as we have stated: The absence of petitioners was justified by the fact that they secured the approval of private respondents to take a leave of absence after the termination of their last contracts of enlistment. Subsequently, petitioners sought for extensions of their respective leaves of absence. Granting arguendo that their subsequent requests for extensions were not approved, it cannot be said that petitioners were unavailable or had abandoned their work when they failed to report back for assignment as they were still questioning the denial of private respondents of their desire to avail of the optional early retirement policy, which they believed in good faith to exist.26 Neither can we consider petitioners guilty of poor performance or misconduct since they were recipients of Merit Pay Awards for their exemplary performances in the company. Anent the letters dated June 21, 1989 (for Millares) and June 26, 1989 (for Lagda) which private respondent considered as belated written notices of termination, we find such assertion specious. Notwithstanding, we could conveniently consider the petitioners eligible under Section III-B of the CEIP (Voluntary Termination), but this would, however, award them only a measly amount of benefits which to our mind, the petitioners do not rightfully deserve under the facts and circumstances of the case. As the CEIP provides: III. Distribution of Benefits xxx

E. Distribution of Accounts When an employee terminates under conditions that would qualify for a distribution of more than one specified in A, B or C above, the largest single amount, only, will be distributed. Since petitioners' termination of employment under the CEIP do not fall under Section III-A (Retirement, Death and Disability) or Section III-B (Voluntary Termination), nor could they be they be considered under the second paragraph of Section III-C, as earlier discussed; it follows that their termination falls under the first paragraph of Section III-C for which they are entitled to 100% of the total amount credited to their accounts. The private respondents can not now renege on their commitment under the CEIP to reward deserving and loyal employees as the petitioners in this case. In taking cognizance of private respondent's Second Motion for Reconsideration, the Court hereby suspends the rules to make them comformable to law and justice and to subserve an overriding public interest. IN VIEW OF THE FOREGOING, the Court Resolved to Partially GRANT Private Respondent's Second Motion for Reconsideration and Intervenor FAMES' Motion for Reconsideration in Intervention. The Decision of the National Labor Relations Commission dated June 1, 1993 is hereby REINSTATED with MODIFICATION. The Private Respondents, Trans-Global Maritime Agency, Inc. and Esso International Shipping Co., Ltd. are hereby jointly and severally ORDERED to pay petitioners One Hundred Percent (100%) of their total credited contributions as provided under the Consecutive Enlistment Incentive Plan(CEIP). SO ORDERED.

G.R. No. 119253 April 10, 1997 AMOR CONTI and LEOPOLDO CRUZ, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (Third Division), CORFARM HOLDINGS CORPORATION, CARLITO J. RABANG and CIPRIANO Q. BARAYANG, respondents.

PADILLA, J.: In this petition for certiorari under Rule 65 of the Rules of Court, petitioners Amor Conti and Leopoldo Cruz seek to annul 1) the decision, dated 24 November 1994, of the National Labor Relations Commission (NLRC) in NLRC-NCR-CA-007367-94 (NCR 00-02-00834-93) entitled "Amor Conti and Leopoldo Cruz v. Corfarm Holdings Corporation, et. al", setting aside the labor arbiter's

decision, dated 20 June 1994, declaring that herein petitioners were illegally dismissed from employment, and, 2) the resolution, dated 26 January 1995, denying petitioners' motion for reconsideration of said NLRC decision. Private respondent Corfarm Holdings Corporation (Corfarm, for brevity) is a duly organized domestic corporation that operates and manages the Manila Electric Company (MERALCO) Commissary for the benefit of MERALCO employees. Private respondents Carlito J. Rabang and Cipriano Q. Barayang are the President and Vice President, respectively, of said corporation. Petitioner Amor Conti was employed by respondent Corfarm as cashier on 2 February 1991. Petitioner Leopoldo Cruz was employed by the same respondent corporation as a warehouseman on 16 May 1991. Both Amor Conti and Leopoldo Cruz were subsequently promoted to the positions of Head of Commissary and Store Supervisor, respectively. In their respective employment contracts with Corfarm, it was stipulated that their employment shall be coterminous with the effectivity of the contract executed by and between Corfarm and MERALCO for the management of the latter's commissary (hereinafter referred to as the "management contract"). On 31 December 1992, said management contract between Corfarm and MERALCO expired. However, Corfarmcontinued to operate the MERALCO commissary despite the non-renewal of said contract. On 13 January 1993, petitioners received a memorandum, dated 12 January 1993, from private respondents terminating their services effective on said date, allegedly for two reasons: 1) the expiration of their employment contracts, these being coterminous with the management contract between Corfarm and MERALCO, and; 2) the on-going evaluation of their past performances, and investigation of the internal auditor of Corfarm of certain anomalous transactions involving them (petitioners). On 2 February 1993, petitioners filed with the arbitration branch of the NLRC a complaint for illegal dismissal against private respondents. On 20 June 1994, Labor Arbiter Facundo L. Leda rendered a decision, the dispositive part of which reads: Wherefore, decision is hereby rendered declaring the complainants to have been illegally dismissed and the respondents ordered to reinstate them immediately to their former or substantially equivalent positions and to pay them jointly and severally, the total amount of One Hundred Thirty-three Thousand Four Hundred Sixty Pesos and 70/100 (P133,460.70) representing backwages and attorney's fees.
So ordered. 1

Private respondents appealed the aforementioned decision of the labor arbiter. On 24 November 1994, the NLRC promulgated a decision setting aside the labor arbiter's order and dismissing herein petitioners' complaint for lack of merit. Petitioners filed a motion for reconsideration of the NLRC decision, which motion was denied in a resolution dated 26 January 1995. Hence, this petition where petitioners allege that public respondent NLRC gravely abused its discretion in 1) reversing the labor arbiter's decision finding the petitioners' dismissal to have been illegal for lack of due notice and hearing as required by law, and; 2) "in ignoring the documents and testimony contained in the record which support the labor arbiter's decision finding the petitioners without fault on the alleged acts attributed to them." We find merit in this petition.

At the outset, it will be noted that the Office of the Solicitor General (OSG), in its "Manifestation and Motion in lieu of Comment", dated 19 June 1995, agreed with the findings of the labor arbiter that the petitioners were illegally dismissed, and prayed of this Court that the questioned NLRC decision dated 24 November 1994 and resolution dated 26 January 1995, be set aside. Petitioners contend that they were denied due process when they were dismissed without a written notice (specifying the particular charges constituting the grounds for their dismissal), and a hearing, as required by law. They further contend that the memorandum dated 11 January 1993, supposedly issued by Corfarm to petitioners directing them "to explain why they should not be dismissed for alleged acts of negligence and carelessness" was never received by them. Besides, said memorandum did not specify the particular acts or omissions of petitioners. It merely stated that based on the results of the investigation conducted by Corfarm's internal audit staff, petitioners were found to have been negligent in the performance of their duties. Petitioners' contentions are meritorious. This Court has consistently held that the twin requirements of notice and hearing constitute essential elements of due process in the dismissal of employees. 2 As to the requirement of notice, it has been held that the employer must furnish the worker with two written notices before termination of employment can be legally effected: (a) notice which apprises the employee of the particular acts or omissions for which his dismissal is sought, and, (b) subsequent notice which informs the employee of the employer's decision to dismiss him. 3 With regard to the requirement of a hearing, this Court has held that the essence of due process is simply an opportunity to be heard, 4 and not that an actual hearing should always and indispensably be held. 5 In the case at bar, neither notice nor hearing was afforded the petitioners. The records show that respondent Cipriano Barayang (Corfarm Vice-President), in his testimony, admitted that petitioners were not given written notice of the specific charges against them, but were only orally informed thereof. 6 Furthermore, the records show that the audit report which contained the alleged acts or omissions of petitioners were submitted to respondent Carlito Rabang (Corfarm President) only on 13 January 1993, notably the very same date when petitioners were dismissed. 7 Thus, the testimony of one Salvador Ayes (Internal Auditor ofCorfarm) reads as follows: xxx xxx xxx Atty Espinas: Did you know whether the President confronted these two persons? Witness: I know that the two persons were confronted. Atty Espinas: When? Witness: On January 11. Atty Espinas: With this audit report dated January 13? Witness: No, not with the audit report.

Atty Espinas: I was asking with this audit report dated January 13, where [sic] they confronted with that audit report .
Witness: No, they were not confronted. 8

Since petitioners were not furnished with a copy of said audit report prior to their dismissal, they were thus not given an opportunity to refute the findings stated therein. 9 It is logical that, as petitioners contend, their dismissal was without cause, since the private respondents failed to substantiate their allegations of negligence and carelessness (in the procurement of certain supplies) on the part of petitioners. Indeed, the records show that private respondents failed to controvert petitioner's testimony that they were never apprised of any policy on procurement; nor their testimony that the questioned orders were first checked by the auditor, the accountant, and respondent Vice President Barayang himself; nor petitioners' allegation that no payment could be made without the signatures of the above-mentioned officers. Thus, the labor arbiter correctly ruled that:
In fine, the evidence adduced tend to show that the complainants have not committed any irregularity to warrant their dismissal . . . 10

In order that the willful disobedience (herein interpreted to include negligence in carrying out company policies) by the employee may constitute a just cause for terminating his employment, the orders, regulations, or instructions of the employer or his representative must be: 1) reasonable and lawful, 2) sufficiently known to the employee; and 3) in connection with the duties which the employee has been engaged to discharge 11 (emphasis supplied). And then, assuming arguendo that petitioners had indeed violated a company policy, still, this cannot justify so harsh a penalty as dismissal. It has been held that the dismissal of an employee due to an alleged violation of a company policy, where it was found that the violation was acquiesced in by said employee's immediate superiors and the policy violated had not always been adhered to by the management is an act not amounting to a breach of trust; therefore, it is not a justification for said employee's dismissal. 12 (emphasis supplied). In the case at bar, petitioner Amor Conti, during her direct examination, testified that since the time of her employment with Corfarm, no written policies governed their purchasing activity, nor was she required to prepare a canvass sheet for every purchase. Furthermore, as earlier noted, the fact that said questioned purchase orders had been approved and signed by petitioners' immediate superiors, including respondent Barayang himself, remains uncontroverted. Therefore, respondents' allegations of negligence and violation of company policy, made without substantial proof, cannot justify the dismissal of petitioners. On the other hand, respondents contend that the termination of petitioners' services was likewise due to the expiration of their respective employment contracts, these being coterminous with the management contract between Corfarm and MERALCO which supposedly expired on 31 December 1992. This contention is untenable, as the evidence clearly shows otherwise During his direct examination, respondent Barayang testified that even without the formal renewal of the contract between Corfarm and MERALCO, Corfarm continued to operate the latter's commissary. Thus, xxx xxx xxx

Atty. Espinas In the memorandum of January 12, 1993 address(ed) to the complainant Conti, you stated that the contract between MERALCO and CHC was expired [sic] on December 31, 1992? Witness: That's right. Atty Espinas Has this contract renewed after December 12, 1992? (sic). Witness It has not been renewed. Atty. Espinas: But are you still operating the commissary?
Witness: We are still operating the commissary. 13

Therefore, the labor arbiter correctly ruled that: Evidence adduced from the records and during the formal hearings show that the contract between respondent Corfarm and MERALCO for the management of the MERALCO Commissary has been extended, albeit without formal renewal. Thus, the allegation of respondents that the employment of both complainants, being coterminous with said management contract, had already expired is completely false. The termination memo addressed to both complainants dated Jan. 12, 1993 stated in part, to wit: considering that said contract expired on Dec. 31, 1992 and has not been officially renewed, your employment with CHC is considered terminated effective the same date.
It is very obvious that the respondents are resorting to a trial and error method in determining what would justify an otherwise illegal dismissal of herein complainants because while the above-quoted portion of the termination memo indicated that the complainants were deemed terminated as of December 31, 1992, the truth of the matter is that the complainants were still employed as of January 12, 1993 and that the effectivity of the termination of their employment as indicated in the handwritten notes in both memo to complainants was Jan. 13, 1993. 14

The settled rule is that factual findings of labor officials are conclusive and binding on the Supreme Court when supported by substantial. 15 Here, the labor arbiter relied not only on documentary evidence, but on the testimonies of witnesses taken during the formal hearings; and since he had the advantage of personally observing the deportment of witnesses while they were testifying, 16 his findings thereon should not only be accorded great respect, but also given the stamp of finality absent any arbitrariness in the process of their deduction from the evidence adduced. 17 Considering therefore, the validity of the labor arbiter's finding that the management contract between MERALCOand Corfarm has been extended, i.e., it continues to have force and effect, it necessarily follows that petitioners' respective employment contracts with Corfarm likewise remain in force.

There is thus merit in petitioners' contention that they have become regular employees of respondent Corfarm. Accordingly, they are entitled to security of tenure guaranteed by the Constitution and the Labor Code. Article 280 of the Labor Code, in part, provides: The provisions of written agreement to the contrary notwithstanding, and regardless of the oral agreement of the parties, an employment shall be deemed 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, . . . Provided, That, any employee who has rendered at least one year of service whether such service is continuous or broken, shall be considered as a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. (emphasis supplied) In the case at bar, petitioners had been employed with private respondent Corfarm since 1991. They had been discharging their functions as head of commissary and store supervisor, respectively, for more than one (1) year. Under the law therefore, they are deemed regular employees and thus entitled to security of tenure, as provided in Article 279 of the 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 (1) year, even if the performance is not continuous but 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 of his employer. Hence, the employment is also considered regular, but only with respect to such activity, and while such activity exists. 18 The law does not provide the qualification that the employee must first be issued a regular appointment or must first be formally declared as such before he can acquire a regular employee statues. Obviously, where the law does not distinguish, no distinction should be drawn. 19 Under the above circumstances, the private respondents may mot terminate the services of petitioners except for just cause or when authorized under the Labor Code. This Court has held that it is not difficult to see that to uphold, in all cases, the contractual arrangement between the employer and employee would in effect to be to permit employers to avoid the necessity of hiring regular or permanent employees indefinitely, by hiring them on a temporary or casual status, thus denying them security of tenure in this jobs. 20 WHEREFORE, based on the foregoing, the decision of public respondent National Labor Relations Commission in NLRC-NCR-CA No. 007367-94 (NCR 00-02-00834-93) dated 24 November 1994 is hereby SET ASIDE and the decision of Labor Arbiter Facundo L. Leda, dated 20 June 1994, finding petitioners to have been illegally dismissed, is REINSTATED with the modification that full backwages, to be computed from the date of dismissal up to the time of their actual reinstatement, without any deductions, be awarded to petitioners. 21 SO ORDERED.

G.R. No. 86408 February 15, 1990 BETA ELECTRIC CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER CRESENCIO INIEGO, BETA ELECTRIC EMPLOYEES ASSOCIATION, and LUZVIMINDA PETILLA, respondents. Ermitao, Asuncion, Manzano & Associates for petitioner. Leonardo C. Fernandez for private respondents.

SARMIENTO, J.: The petitioner questions the decision of the National Labor Relations Commission affirming the judgment of the labor arbiter reinstating the private respondent with backwages. The petitioner hired the private respondent as clerk typist III 1 effective December 15, 1986 until January 16, 1987.2 On January 16, 1987, the petitioner gave her an extension up to February 15, 1987. 3 On February 15, 1987, it gave her another extension up to March 15, 1987. 4 On March 15, 1987, it gave her a further extension until April 30, 1987. 5 On May 1, 1987, she was given until May 31, 1987. 6 On June 1, 1987, she was given up to June 30, 1987. 7 Her appointments were covered by corresponding written contracts. 8 On June 22, 1987, her services were terminated without notice or investigation. On the same day, she went to the labor arbiter on a complaint for illegal dismissal. As the court has indicated, both the labor arbiter and the respondent National Labor Relations Commission ruled for her. The Court likewise rules in her favor. The petitioner argues mainly that the private respondent's appointment was temporary and hence she may be terminated at will.

That she had been hired merely on a "temporary basis" "for purposes of meeting the seasonal or peak demands of the business," 9 and as such, her services may lawfully be terminated "after the accomplishment of [her] task"10 is untenable. The private respondent was to all intents and purposes, and at the very least, a probationary employee, who became regular upon the expiration of six months. Under Article 281 of the Labor Code, a probationary employee is "considered a regular employee" if he has been "allowed to work after [the] probationary period." 11 The fact that her employment has been a contract-to-contract basis can not alter the character of employment, because contracts can not override the mandate of law. Hence, by operation of law, she has become a regular employee. In the case at bar, the private employee was employed from December 15, 1986 until June 22, 1987 when she was ordered laid off. Her tenure having exceeded six months, she attained regular employment. The petitioner can not rightfully say that since the private respondent's employment hinged from contract to contract, it was ergo, "temporary", depending on the term of each agreement. Under the Labor Code, an employment may only be said to be "temporary" "where [it] has been fixed for a specific undertaking the completion of 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." 12 Quite to the contrary, the private respondent's work, that of "typist-clerk" is far from being "specific" or "seasonal", but rather, one, according to the Code, "where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business." 13 And under the Code, where one performs such activities, he is a regular employee, "[t]he provisions of written agreement to the contrary notwithstanding . . . 14 It is true that in Biboso v. Victorias Milling Company, Inc., 15 we recognized the validity of contractual stipulations as to the duration of employment, we can not apply it here because clearly, the contractto-contract arrangement given to the private respondent was but an artifice to prevent her from acquiring security of tenure and to frustrate constitutional decrees. The petitioner can not insist that the private respondent had been hired "for a specific undertaking i.e. to handle the backlogs brought about by the seasonal increase in the volume of her work." 16 The fact that she had been employed purportedly for the simple purpose of unclogging the petitioner's files does not make such an undertaking "specific" from the standpoint of law because in the first place, it is "usually necessary or desirable in the usual business or trade of the employer," 17 a development which disqualifies it outrightly as a "specific undertaking", and in the second place, because a "specific undertaking" is meant, in its ordinary acceptation, a special type of venture or project whose duration is coterminous with the completion of the project, 18 e.g., project work. It is not the case in the proceeding at bar. WHEREFORE, the petition is DISMISSED. The private respondent is ordered REINSTATED with backwages equivalent to three years with no qualification or deductions. SO ORDERED.

G.R. No. 109902 August 2, 1994 ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others, namely: ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE, EDUARD H. FOOKSON, JR., ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR S. BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B. DANDASAN, and GERRY I. FETALVERO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL CORPORATION (NSC), respondents. Leonard U. Sawal for petitioners. Saturnino Mejorada for private respondent.

FELICIANO, J.: In this Petition for Certiorari, petitioners assail the Resolution of the National Labor Relations Commission ("NLRC") dated 8 January 1993 which declared petitioners to be project employees of private respondent National Steel Corporation ("NSC"), and the NLRC's subsequent Resolution of 15 February 1993, denying petitioners' motion for reconsideration. Petitioners plead that they had been employed by respondent NSC in connection with its Five Year Expansion Program (FAYEP I & II) 1 for varying lengths of time when they were separated from NSC's service: Employee Date Nature of Separated Employed Employment
1. Alan Barinque 5-14-82 Engineer 1 8-31-91 2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92 3. Edgar Bontuyan 11-03-82 Chairman to present 4. Osias Dandasan 9-21-82 Utilityman 1991 5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92 6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91 7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized 8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91 9. Russell Gacus 1-30-85 Engineer 1 6-30-92 10. Jose Garguena 3-02-81 Warehouseman to present 11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91 12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992 13. Romeo Sarona 2-26-83 Machine Operator 8-31-91 2

On 5 July 1990, petitioners filed separate complaints for unfair labor practice, regularization and monetary benefits with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City. The complaints were consolidated and after hearing, the Labor Arbiter in a Decision dated 7 June 1991, declared petitioners "regular project employees who shall continue their employment as such for as long as such [project] activity exists," but entitled to the salary of a regular employee pursuant to the provisions in the collective bargaining agreement. It also ordered payment of salary differentials. 3 Both parties appealed to the NLRC from that decision. Petitioners argued that they were regular, not project, employees. Private respondent, on the other hand, claimed that petitioners are project employees as they were employed to undertake a specific project NSC's Five Year Expansion Program (FAYEP I & II). The NLRC in its questioned resolutions modified the Labor Arbiter's decision. It affirmed the Labor Arbiter's holding that petitioners were project employees since they were hired to perform work in a specific undertaking the Five Years Expansion Program, the completion of which had been determined at the time of their engagement and which operation was not directly related to the business of steel manufacturing. The NLRC, however, set aside the award to petitioners of the same benefits enjoyed by regular employees for lack of legal and factual basis. Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed to show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of the NLRC in rendering its questioned resolutions of 8 January 1993 and 15 February 1993. The law on the matter is Article 280 of the Labor Code which reads in full: Art. 280. Regular and Casual Employment The provisions of the written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, and employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year 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. (Emphasis supplied) Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are "necessary, desirable and work-related to private respondent's main business, steel-making"; and (ii) they have rendered service for six (6) or more years to private respondent NSC. 4 The basic issue is thus whether or not petitioners are properly characterized as "project employees" rather than "regular employees" of NSC. This issue relates, of course, to an important consequence: the services of project employees are co-terminous with the project and may be terminated upon the end or completion of the project for which they were hired. 5 Regular employees, in contract, are

legally entitled to remain in the service of their employer until that service is terminated by one or another of the recognized modes of termination of service under the Labor Code. 6 It is evidently important to become clear about the meaning and scope of the term "project" in the present context. The "project" for the carrying out of which "project employees" are hired would ordinarily have some relationship to the usual business of the employer. Exceptionally, the "project" undertaking might not have an ordinary or normal relationship to the usual business of the employer. In this latter case, the determination of the scope and parameeters of the "project" becomes fairly easy. It is unusual (but still conceivable) for a company to undertake a project which has absolutely no relationship to the usual business of the company; thus, for instance, it would be an unusual steel-making company which would undertake the breeding and production of fish or the cultivation of vegetables. From the viewpoint, however, of the legal characterization problem here presented to the Court, there should be no difficulty in designating the employees who are retained or hired for the purpose of undertaking fish culture or the production of vegetables as "project employees," as distinguished from ordinary or "regular employees," so long as the duration and scope of the project were determined or specified at the time of engagement of the "project employees." 7 For, as is evident from the provisions of Article 280 of the Labor Code, quoted earlier, the principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time the employees were engaged for that project. In the realm of business and industry, we note that "project" could refer to one or the other of at least two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. The typical example of this first type of project is a particular construction job or project of a construction company. A construction company ordinarily carries out two or more discrete identifiable construction projects: e.g., a twenty-five- storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined and made known to the employees at the time of employment, are properly treated as "project employees," and their services may be lawfully terminated at completion of the project. The term "project" could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times. The case at bar presents what appears to our mind as a typical example of this kind of "project." NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate end in view of expanding the volume and increasing the kinds of products that it may offer for sale to the public. The Five Year Expansion Program had a number of component projects: e.g., (a) the setting up of a "Cold Rolling Mill Expansion Project"; (b) the establishment of a "Billet Steel-Making Plant" (BSP); (c) the acquisition and installation of a "Five Stand TDM"; and (d) the "Cold Mill Peripherals Project." 8 Instead of contracting out to an outside or independent contractor the tasks of constructing the buildings with related civil and electrical works that would house the new machinery and equipment, the installation of the newly acquired mill or plant machinery and equipment and thecommissioning of such machinery and equipment, NSC opted to execute and carry out its Five Yeear Expansion Projects "in house," as it were, by administration. The carrying out of the Five Year Expansion Program (or more precisely, each of its component projects) constitutes a distinct undertaking identifiable from the ordinary business and activity of NSC. Each

component project, of course, begins and ends at specified times, which had already been determined by the time petitioners were engaged. We also note that NSC did the work here involved the construction of buildings and civil and electrical works, installation of machinery and equipment and the commissioning of such machinery only for itself. Private respondent NSC was not in the business of constructing buildings and installing plant machinery for the general business community, i.e., for unrelated, third party, corporations. NSC did not hold itself out to the public as a construction company or as an engineering corporation. Which ever type of project employment is found in a particular case, a common basic requisite is that the designation of named employees as "project employees" and their assignment to a specific project, are effected and implemented in good faith, and not merely as a means of evading otherwise applicable requirements of labor laws. Thus, the particular component projects embraced in the Five Year Expansion Program, to which petitioners were assigned, were distinguishable from the regular or ordinary business of NSC which, of course, is the production or making and marketing of steel products. During the time petitioners rendered services to NSC, their work was limited to one or another of the specific component projects which made up the FAYEP I and II. There is nothing in the record to show that petitioners were hired for, or in fact assigned to, other purposes, e.g., for operating or maintaining the old, or previously installed and commissioned, steel-making machinery and equipment, or for selling the finished steel products. We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the petitioners were indeed "project employees:" It is well established by the facts and evidence on record that herein 13 complainants were hired and engaged for specific activities or undertaking the period of which has been determined at time of hiring or engagement. It is of public knowledge and which this Commission can safely take judicial notice that the expansion program (FAYEP) of respondent NSC consist of various phases [of] project components which are being executed or implemented independently or simultaneously from each other . . . In other words, the employment of each "project worker" is dependent and coterminous with the completion or termination of the specific activity or undertaking [for which] he was hired which has been pre-determined at the time of engagement. Since, there is no showing that they (13 complainants) were engaged to perform work-related activities to the business of respondent which is steel-making, there is no logical and legal sense of applying to them the proviso under the second paragraph of Article 280 of the Labor Code, as amended. xxx xxx xxx
The present case therefore strictly falls under the definition of "project employees" on paragraph one of Article 280 of the Labor Code, as amended. Moreover, it has been held that the length of service of a project employee is not the controlling test of employment tenure but whether or not "the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee". (See Hilario Rada v. NLRC, G.R. No. 96078, January 9, 1992; and Sandoval Shipping, Inc. v. NLRC, 136 SCRA 674 (1985). 9

Petitioners next claim that their service to NSC of more than six (6) years should qualify them as regular employees. We believe this claim is without legal basis. The simple fact that the employment

of petitioners as project employees had gone beyond one (1) year, does not detract from, or legally dissolve, their status as project employees. 10 The second paragraph of Article 280 of the Labor Code, quoted above, providing that an employee who has served for at least one (1) year, shall be considered a regular employee, relates to casual employees, not to project employees. In the case of Mercado, Sr. vs. National Labor Relations Commission, 11 this Court ruled that the proviso in the second paragraph of Article 280 relates only to casual employees and is not applicable to those who fall within the definition of said Article's first paragraph, i.e., project employees. The familiar grammatical rule is that a proviso is to be construed with reference to the immediately preceding part of the provision to which it is attached, and not to other sections thereof, unless the clear legislative intent is to restrict or qualify not only the phrase immediately preceding the proviso but also earlier provisions of the statute or even the statute itself as a whole. No such intent is observable in Article 280 of the Labor Code, which has been quoted earlier. ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby DISMISSED for lack of merit. The Resolutions of the NLRC dated 8 January 1993 and 15 February 1993 are hereby AFFIRMED. No pronouncement as to costs. SO ORDERED.

G.R. Nos. 96608-09 May 20, 1991 TUCOR INDUSTRIES, INC. and PATRICK BOLL, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, FLORENCIO BASCO, REGINO DAYRIT, FLORANIO GARCIA, JESUS CANLAS, ABEL DAVID, REYNALDO INFANTE, EDISON TAPANG, LARRY ENRIQUEZ, REY SALALILA and PACIFICO C. DIZON, respondents. Abad, Leano & Associates for petitioners. Herminio Z. Canlas for private respondents.

GANCAYCO, J.:p The issue of whether private respondents are regular or casual employees is the center of this controversy. Petitioner is a corporation principally engaged in the moving and storage of various goods owned by military personnel residing within the United States military facilities in the Philippines. On various

dates herein private respondents were hired as packers, drivers and utilitymen/carpenters. They signed uniform company-prepared master employment contracts, the terms and conditions of which are as follows: a. You agree to be employed on "As Needed" basis and to the principle of "no work, no pay." This is so because of the very nature of the business of Tucor Moving and Storage wherein the volume of work handled by the Company varies from day to day and from project to project. b. Other than salaries actually earned, you as a daily-hired worker, shall not be entitled to any of the benefits enjoyed by the permanent employees of the Company. xxx xxx xxx e. Due to the nature of our business, you agree to undergo periodic security screening, which can include the polygraph examination, the result of which shall be used as basis for, among others, the issuance or renewal of Base Pass, Company ID and/or handling of confidential documents or high-value items whenever necessary or applicable.
f. You agree to undergo investigation, to include the polygraph at the discretion of the Company, when you are implicated in any irregularity involving classified information, supplies, materials and equipment of the Company or its clients. 1

In a memorandum-letter dated July 17, 1989, the Chief of Traffic Management of Clark Air Base reminded all agents, including petitioner of the base policy that "(E)mployees who already have passes in their possession and who fail the polygraph . . ." administered by an acknowledged security company will be required to return their passes. On the same day petitioner terminated the employment of private respondents by sending them separate identical notices of termination, as follows: You are well aware that your employment with Tucor Industries, Inc. is on "as needed basis" per your Master Employment Contract. You are also well-aware that your work assignment is within Clark Air Base and for this purpose, you should be equipped with a Base Pass duly issued by the American authorities. We are sorry to inform you that after an intensive and extensive investigation conducted as a result of numerous reports of missing items from shipments, your Base Pass was not cleared by the American authorities. For this reason, the Company could not avail of your services.
In view of the foregoing, we regret to inform you that the Company could no longer retain you under its employ as a consequence of the denial of the Base authorities to clear and grant you the Base Pass. 2

All of private respondents had continuously been employed by petitioner for more than a year before the services were terminated. On August 2, 1989, private respondents, except Pacifico Dizon, filed a complaint for illegal dismissal against petitioner with the Regional Arbitration Branch No. 5 of the National Labor Relations Commission (NLRC) in San Fernando, Pampanga, Private respondent Dizon filed a complaint later. The case was heard and the parties submitted their respective position papers On August 7, 1989, the Executive Labor Arbiter rendered a decision, the dispositive part of which reads as follows:

WHEREFORE, judgment is hereby rendered against respondent Tucor Industries, Inc., directing it: 1. To pay the backwages of the complainants in the total amount of P205,457.56;
2. To reinstate complainants without loss of seniority rights and other privileges upon receipt of this Decision or reinstate them in payroll, in both instance at least at par with the minimum wage. 3

Petitioners appealed therefrom to public respondent NLRC. On September 14, 1990, the appeal was dismissed for lark of merit and the challenged decision of the Executive Labor Arbiter was affirmed in toto. A motion for reconsideration thereof filed by petitioner was denied in a resolution dated November 20, 1990. Hence, this petition for certiorari and prohibition with prayer for the issuance of a writ of preliminary injunction and restraining order. The petition raises the following assigned errors: I THAT THE PUBLIC RESPONDENT A QUO GRAVELY ABUSED ITS DISCRETION, IN A MANNER AMOUNTING TO EXCESS OF JURISDICTION, IN ERRONEOUSLY CONCLUDING THAT HEREIN PRIVATE RESPONDENTS CAN BE CONSIDERED AS REGULAR EMPLOYEES OF PETITIONER COMPANY. II THAT THE PUBLIC RESPONDENT GRAVELY ABUSE ITS DISCRETION WHEN IT AFFIRMED THE HONORABLE LABOR ARBITER'S FINDING THAT THE TERMINATION OF THE PRIVATE RESPONDENTS FROM THEIR EMPLOYMENT BY HEREIN PETITIONER COMPANY CONSTITUTES ILLEGAL DISMISSAL. III
THAT THE PUBLIC RESPONDENT FAILED TO CONSIDER THE PECULIARITY OF THE FACTS AND SITUATION IN THE CASE AT HAND IN A MANNER AMOUNTING TO GRAVE ABUSE OF DISCRETION, WHEN IT REVIEWED THAT LABOR ARBITER'S RULING. 4

Acting on the petition, the Court, on January 21, 1991, without giving due course to the same, required the respondents to comment thereon within ten (10) days from notice thereof and issued a temporary restraining order enjoining the respondent Commission from enforcing its resolutions until further orders. Petitioners filed a bond in the amount of P100,000.00 as required. The petition is devoid of merit. Petitioners contend that private respondents cannot be considered as its regular employees inasmuch as the employment of the latter was contractual in nature; that they were deemed hired for a specific or a fixed undertaking on an "as needed basis," the efficacy of said contract being coterminous with or dependent upon the company and its clients. Article 280 of the Labor Code, as amended, provides as follows:

Art. 280. Regular and casual employment.The provisions of a written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or 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.(Emphasis supplied.) Policy Instructions No. 12 of the Ministry of Labor and Employment provides that PD 850 has refined the concept of regular and casual employment. What determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desirable to the main business of the employer, then the employment is regular;if not, then the employment is casual. . . (Emphasis supplied.) An examination of the contract of employment does not show that private respondents were hired for a "specific project or undertaking" nor was the completion or termination of the alleged project for which private respondents were hired determined at the start of the employment. The term "specific project or undertaking" under Article 280 of the Labor Code contemplates an activity which was commonly or habitually performed or such type of work which is not done on a daily basis but only for a specific duration of time or until the completion of the project. The services employed are thus necessary or desirable in the employer's usual business only for the period of time it takes to complete the project. Without the performance of such services on a regular basis, the employer's main business is not expected to grind to a halt. In the case at bar, private respondents were assigned to do carpentry work, packing and driving, activities which are usually necessary and desirable in petitioners' usual business and which thus had to be done on a regular basis. The fact that private respondents had rendered more than one year of service at the time of their dismissal overturns the petitioner's allegation that private respondents were hired for a specific or a fixed undertaking for a limited period of time. The company-prepared master employment contracts placed the private respondents at the mercy of those who crafted the said contract. The work of the private respondents is hardly "specific" or "seasonal." Such is one instance under the Code "where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business." 5 Private respondents are therefore regular employees of petitioner the provisions of their contract of employment notwithstanding. They are entitled to security of tenure. The contention of the petitioners that private respondents were employed on "as needed basis" and under the principle of "no work, no pay" and that when such needs cease, petitioners, at their option may terminate their contract, is certainly untenable.

Verily, the relation between capital and labor is not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. 6 The alleged non-renewal of the base passes of private respondents by the Clark Air Base authorities seems to be a mere ploy to dismiss private respondents from employment. No evidence was adduced as to the alleged investigation conducted by petitioner. There is no indication whether or not private respondents were subjected to polygraph tests for the possible renewal of their passes. At any rate, inasmuch as private respondents were engaged in the activities which are usual and necessary in usual business or trade of petitioner company, they are regular employees entitled to security of tenure, the provision of the written agreement to the contrary notwithstanding. Their dismissal without just cause in this case and without appropriate investigation is certainly illegal. WHEREFORE, the petition is DISMISSED for lack of merit. The temporary restraining order issued by this Court on January 21, 1991 is hereby lifted, with costs against petitioners. SO ORDERED.

G.R. No. 120969 January 22, 1998 ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) composed of Presiding Commissioner RAUL T. AQUINO, Commissioner ROGELIO I. RAYALA and Commissioner VICTORIANO R. CALAYCAY (Ponente), VIC DEL ROSARIO and VIVA FIMS, respondents.

DAVIDE, JR., J.: By way of this special civil action for certiorari under Rule 65 of the Rules of Court, petitioners seek to annul the 10 February 1995 Decision 1 of the National Labor Relations Commission (hereafter NLRC), and its 6 April 1995 Resolution 2 denying the motion to reconsider the former in NLRC-NCRCA No. 006195-94. The decision reversed that of the Labor Arbiter in NLRC-NCR-Case No. 00-0703994-92. The parties present conflicting sets of facts. Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on 18 July 1989 as part of the filming crew with a salary of P375.00 per week. About four months later, he was designated Assistant Electrician with a weekly salary of P400.00, which was increased to

P450.00 in May 1990. In June 1991, he was promoted to the rank of Electrician with a weekly salary of P475.00, which was increased to P539.00 in September 1991. Petitioner Paulino Enero, on his part, claims that private respondents employed him in June 1990 as a member of the shooting crew with a weekly salary of P375.00, which was increased to P425.00 in May 1991, then to P475.00 on 21 December 1991. 3 Petitioners' tasks consisted of loading, unloading and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to Viva Films' warehouse, assisting in the "fixing" of the lighting system, and performing other tasks that the cameraman and/or director may assign. 4 Sometime in May 1992, petitioners sought the assistance of their supervisors, Mrs. Alejandria Cesario, to facilitate their request that private respondents adjust their salary in accordance with the minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree to increase their salary only if they signed a blank employment contract. As petitioners refused to sign, private respondents forced Enero to go on leave in June 1992, then refused to take him back when he reported for work on 20 July 1992. Meanwhile, Maraguinot was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June 1992. He was again asked to sign a blank employment contract, and when he still refused, private respondents terminated his services on 20 July 1992. 5 Petitioners thus sued for illegal dismissal 6 before the Labor Arbiter. On the other hand, private respondents claim that Viva Films (hereafter VIVA) is the trade name of Viva Productions, Inc., and that it is primarily engaged in the distribution and exhibition of movies but not in the business of making movies; in the same vein, private respondent Vic del Rosario is merely an executive producer,i.e., the financier who invests a certain sum of money for the production of movies distributed and exhibited by VIVA. 7 Private respondents assert that they contract persons called "producers" also referred to as "associate producers" 8 to "produce" or make movies for private respondents; and contend that petitioners are project employees of the association producers who, in turn, act as independent contractors. As such, there is no employer-employee relationship between petitioners and private respondents. Private respondents further contend that it was the associate producer of the film "Mahirap Maging Pogi," who hired petitioner Maraguinot. The movie shot from 2 July up to 22 July 1992, and it was only then that Maraguinot was released upon payment of his last salary, as his services were no longer needed. Anent petitioner Enero, he was hired for the movie entitled "Sigaw ng Puso," later retired "Narito and Puso." He went on vacation on 8 June 1992, and by the time he reported for work on 20 July 1992, shooting for the movie had already been completed. 9 After considering both versions of the facts, the Labor Arbiter found as follows: On the first issue, this Office rules that complainants are the employees of the respondents. The producer cannot be considered as an independent contractor but should be considered only as a labor-only contractor and as such, acts as a mere agent of the real employer, the herein respondent. Respondents even failed to name and specify who are the producers. Also, it is an admitted fact that the complainants received their salaries from the respondents. The case cited by the respondents,Rosario Brothers, Inc. vs. Ople, 131 SCRA 72 does not apply in this case.

It is very clear also that complainants are doing activities which are necessary and essential to the business of the respondents, that of movie-making. Complainant Maraguinot worked as an electrician while complainant Enero worked as a crew [member]. 10

Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as follows: WHEREFORE, judgment is hereby rendered declaring that complainants were illegally dismissed. Respondents are hereby ordered to reinstate complainant to their former positions without loss [of] seniority rights and pay their backwages starting July 21, 1992 to December 31, 1993 temporarily computed in the amount of P38,000.00 for complainant Paulino Enero and P46,000.00 for complainant Alejandro Maraguinot, Jr. and thereafter until actually reinstated.
Respondents are ordered to pay also attorney's fees equivalent to ten (10%) and/or P8,400.00 on top of the award. 11

Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No. 006195-94). In its decision 12 of 10 February 1995, the NLRC found the following circumstances of petitioners' work "clearly established:" 1. Complainants [petitioners herein] were hired for specific movie projects and their employment wasco-terminus with each movie project the completion/termination of which are pre-determined, such fact being made known to complainants at the time of their engagement. xxx xxx xxx 2 Each shooting unit works on one movie project at a time. And the work of the shooting units, which work independently from each other, are not continuous in nature but depends on the availability of movie projects. 3. As a consequence of the non-continuous work of the shooting units, the total working hours logged by complainants in a month show extreme variations. . . For instance, complainant Maraguinot worked for only 1.45 hours in June 1991 but logged a total of 183.25 hours in January 1992. Complainant Enero logged a total of only 31.57 hours in September 1991 but worked for 183.35 hours the next month, October 1991. 4. Further shown by respondents is the irregular work schedule of complainants on a daily basis. Complainant Maraguinot was supposed to report on 05 August 1991 but reported only on 30 August 1991, or a gap of 25 days. Complainant Enero worked on 10 September 1991 and his next scheduled working day was 28 September 1991, a gap of 18 days. 5. The extremely irregular working days and hours of complainants' work explain the lump sum payment for complainants' services for each movie project. Hence, complainants were paid a standard weekly salary regardless of the number of working days and hours they logged in. Otherwise, if the principle of "no work no

pay" was strictly applied, complainants' earnings for certain weeks would be very negligible. 6. Respondents also alleged that complainants were not prohibited from working with such movie companies like Regal, Seiko and FPJ Productions whenever they are not working for the independent movie producers engaged by respondents . . . This allegation was never rebutted by complainants and should be deemed admitted. The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances, taken together, indicated that complainants (herein petitioners) were "project employees." After their motion for reconsideration was denied by the NLRC in its Resolution 13 of 6 April 1995, petitioners filed the instant petition, claiming that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in: (1) finding that petitioners were project employees; (2) ruling that petitioners were not illegally dismissed; and (3) reversing the decision of the Labor Arbiter. To support their claim that they were regular (and not project) employees of private respondents, petitioners cited their performance of activities that were necessary or desirable in the usual trade or business of private respondents and added that their work was continuous, i.e., after one project was completed they were assigned to another project. Petitioners thus considered themselves part of a work pool from which private respondents drew workers for assignment to different projects. Petitioners lamented that there was no basis for the NLRC's conclusion that they were project employees, while the associate producers were independent contractors; and thus reasoned that as regular employees, their dismissal was illegal since the same was premised on a "false cause," namely, the completion of a project, which was not among the causes for dismissal allowed by the Labor Code. Private respondents reiterate their version of the facts and stress that their evidence supports the view that petitioners are project employees; point to petitioners' irregular work load and work schedule; emphasize the NLRC's finding that petitioners never controverted the allegation that they were not prohibited from working with other movie companies; and ask that the facts be viewed in the context of the peculiar characteristics of the movie industry. The Office of the Solicitor General (OSG) is convinced that this petition is improper since petitioners raise questions of fact, particularly, the NLRC's finding that petitioners were project employees, a finding supported by substantial evidence; and submits that petitioners' reliance on Article 280 of the Labor Code to support their contention that they should be deemed regular employees is misplaced, as said section "merely distinguishes between two types of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits." The OSG likewise rejects petitioners' contention that since they were hired not for one project, but for a series of projects, they should be deemed regular employees. Citing Mamansag v. NLRC, 14 the OSG asserts that what matters is that there was a time-frame for each movie project made known to petitioners at the time of their hiring. In closing, the OSG disagrees with petitioners' claim that the NLRC's classification of the movie producers as independent contractors had no basis in fact and in law, since, on the contrary, the NLRC "took pains in explaining its basis" for its decision. As regards the propriety of this action, which the Office of the Solicitor General takes issue with, we rule that a special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one who complains that the NLRC acted in total disregard of evidence material to or decisive of the controversy. 15 In the instant case, petitioners allege that the NLRC's conclusions have no basis in fact and in law, hence the petition may not be dismissed on procedural or jurisdictional grounds.

The judicious resolution of this case hinges upon, first, the determination of whether an employeremployee relationship existed between petitioners and private respondents or any one of private respondents. If there was none, then this petition has no merit; conversely, if the relationship existed, then petitioners could have been unjustly dismissed. A related question is whether private respondents are engaged in the business of making motion pictures. Del Rosario is necessarily engaged in such business as he finances the production of movies. VIVA, on the other hand, alleges that it does not "make" movies, but merely distributes and exhibits motion pictures. There being no further proof to this effect, we cannot rely on this selfserving denial. At any rate, and as will be discussed below, private respondents' evidence even supports the view that VIVA is engaged in the business of making movies. We now turn to the critical issues. Private respondents insist that petitioners are project employees of associate producers who, in turn, act as independent contractors. It is settled that the contracting out of labor is allowed only in case of job contracting. Section 8, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code describes permissible job contracting in this wise: Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business. Assuming that the associate producers are job contractors, they must then be engaged in the business of making motion pictures. As such, and to be a job contractor under the preceding description, associate producers must have tools, equipment, machinery, work premises, and other materials necessary to make motion pictures. However, the associate producers here have none of these. Private respondents' evidence reveals that the movie-making equipment are supplied to the producers and owned by VIVA. These include generators, 16 cables and wooden platforms, 17 cameras and "shooting equipment;" 18 in fact, VIVA likewise owns the trucks used to transport the equipment. 19 It is thus clear that the associate producer merely leases the equipment from VIVA. 20Indeed, private respondents' Formal Offer of Documentary Evidence stated one of the purposes of Exhibit "148" as:
To prove further that the independent Producers rented Shooting Unit No. 2 from Viva to finish their films. 21

While the purpose of Exhibits "149," "149-A" and "149-B" was:


[T]o prove that the movies of Viva Films were contracted out to the different independent Producers who rented Shooting Unit No. 3 with a fixed budget and time-frame of at least 30 shooting days or 45 days whichever comes first. 22

Private respondent further narrated that VIVA's generators broke down during petitioners' last movie project, which forced the associate producer concerned to rent generators, equipment and crew from another company. 23 This only shows that the associate producer did not have substantial capital nor investment in the form of tools, equipment and other materials necessary for making a movie. Private respondents in effect admit that their producers, especially petitioners' last producer, are not engaged in permissible job contracting. If private respondents insist that the associate producers are labor contractors, then these producers can only be "labor-only" contractors, defined by the Labor Code as follows: Art. 106. Contractor or subcontractor. . . . There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. A more detailed description is provided by Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code: Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and (2) The workers recruited and placed by such person are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed. (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. (c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers.

As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere agent or intermediary of the direct employer. But even by the preceding standards, the associate producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. In the instant case, it was Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA, who recruited crew members from an "available group of free-lance workers which includes the complainants Maraguinot and Enero." 24 And in their Memorandum, private respondents declared that the associate producer "hires the services of . . . 6) camera crew which includes (a) cameraman; (b) the utility crew; (c) the technical staff; (d) generator man and electrician; (e) clapper; etc. . . . ." 25 This clearly showed that the associate producers did not supply the workers required by the movie project. The relationship between VIVA and its producers or associate producers seems to be that of agency, 26 as the latter make movies on behalf of VIVA, whose business is to "make" movies. As such, the employment relationship between petitioners and producers is actually one between petitioners and VIVA, with the latter being the direct employer. The employer-employee relationship between petitioners and VIVA can further be established by the "control test." While four elements are usually considered in determining the existence of an employment relationship, namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control of the employee's conduct, the most important element is the employer's control of the employee's conduct, not only as to the result of the work to be done but also as to the means and methods to accomplish the same. 27 These four elements are present here. In their position paper submitted to the Labor Arbiter, private respondents narrated the following circumstances: [T]he PRODUCER has to work within the limits of the budget he is given by the company, for as long as the ultimate finish[ed] product is acceptable to the company ... The ensure that qualify films are produced by the PRODUCER who is an independent contractor, the company likewise employs a Supervising PRODUCER, a Project accountant and a Shooting unit supervisor. The Company's Supervising PRODUCER is Mr. Eric Cuatico, the Project accountant varies from time to time, and the Shooting Unit Supervisor is Ms. Alejandria Cesario. The Supervising PRODUCER acts as the eyes and ears of the company and of the Executive Producer to monitor the progress of the PRODUCER's work accomplishment. He is there usually in the field doing the rounds of inspection to see if there is any problem that the PRODUCER is encountering and to assist in threshing out the same so that the film project will be finished on schedule. He supervises about 3 to 7 movie projects simultaneously [at] any given time by coordinating with each film "PRODUCER". The Project Accountant on the other hand assists the PRODUCER in monitoring the actual expenses incurred because the company wants to insure that any additional budget requested by the PRODUCER is really justified and warranted especially when there is a change of original plans to suit the tast[e] of the company on how a certain scene must be presented to make the film more interesting and more commercially viable. (emphasis supplied). VIVA's control is evident in its mandate that the end result must be a "quality film acceptable to the company." The means and methods to accomplish the result are likewise controlled by VIVA, viz., the movie project must be finished within schedule without exceeding the budget, and additional expenses must be justified; certain scenes are subject to change to suit the taste of the company;

and the Supervising Producer, the "eyes and ears" of VIVA and del Rosario, intervenes in the moviemaking process by assisting the associate producer in solving problems encountered in making the film. It may not be validly argued then that petitioners are actually subject to the movie director's control, and not VIVA's direction. The director merely instructs petitioners on how to better comply with VIVA's requirements to ensure that a quality film is completed within schedule and without exceeding the budget. At bottom, the director is akin to a supervisor who merely oversees the activities of rankand-file employees with control ultimately resting on the employer. Moreover, appointment slips 28 issued to all crew members state: During the term of this appointment you shall comply with the duties and responsibilities of your position as well as observe the rules and regulations promulgated by your superiors and by Top Management. The words "supervisors" and "Top Management" can only refer to the "supervisors" and "Top Management" of VIVA. By commanding crew members to observe the rules and regulations promulgated by VIVA, the appointment slips only emphasize VIVA's control over petitioners. Aside from control, the element of selection and engagement is likewise present in the instant case and exercised by VIVA. A sample appointment slip offered by private respondents "to prove that members of the shooting crew except the driver are project employees of the Independent Producers" 29 reads as follows: VIVA PRODUCTIONS, INC. 16 Sct. Albano St. Diliman, Quezon City PEDRO NICOLAS Date: June 15, 1992

APPOINTMENT SLIP You are hereby appointed as SOUNDMAN for the film project entitled "MANAMBIT". This appointment shall be effective upon the commencement of the said project and shall continue to be effective until the completion of the same. For your services you shall receive the daily/weekly/monthly compensation of P812.50. During the term of this appointment you shall comply with the duties and responsibilities of your position as well as observe the rules and regulations promulgated by your superiors and by Top Management. V e r y

t r u l y y o u r s , ( a n i l l e g i b l e s i g n a t u r e ) CONFORME: _________________ Name of appointee Signed in the presence of: ___________________ Notably, nowhere in the appointment slip does it appear that it was the producer or associate producer who hired the crew members; moreover, it is VIVA's corporate name which appears on the heading of the appointment slip. What likewise tells against VIVA is that it paid petitioners' salaries as evidenced by vouchers, containing VIVA's letterhead, for that purpose. 30

All the circumstances indicate an employment relationship between petitioners and VIVA alone, thus the inevitable conclusion is that petitioners are employees only of VIVA. The next issue is whether petitioners were illegally dismissed. Private respondents contend that petitioners were project employees whose employment was automatically terminated with the completion of their respective projects. Petitioners assert that they were regular employees who were illegally dismissed. It may not be ignored, however, that private respondents expressly admitted that petitioners were part of a work pool; 31 and, while petitioners were initially hired possibly as project employees, they had attained the status of regular employees in view if VIVA's conduct. A project employee or a member of a work pool may acquire the status of a regular employee when the following concur: 1) There is a continuous rehiring of project employees even after cessation of a project; 32 and 2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer. 33 However, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment. 34 In the instant case, the evidence on record shows that petitioner Enero was employed for a total of two (2) years and engaged in at least eighteen (18) projects, while petitioner Maraguinot was employed for some three (3) years and worked on at least twenty-three (23) projects. 35 Moreover, as petitioners' tasks involved, among other chores, the loading, unloading and
FILM DATE STARTED 1/3/90 1/26/90 2/13/90 3/12/90 4/6/90 4/4/90 6/26/90 8/10/90 9/6/90 10/25/90 12/9/90 DATE COMPLETED 2/16/90 3/11/90 3/29/90 4/3/90 5/20/90 5/18/90 10/20/90 9/23/90 10/20/90 12/8/90 1/22/91 ASSOCIATE PRODUCER MARIVIC ONG EDITH MANUEL M. ONG E. MANUEL M. ONG JUN CHING E. MANUEL E. MANUEL JUN CHING SANDY STA. MARIA SANDY S

LOVE AT FIRST SIGHT PAIKOT-IKOT ROCKY & ROLLY PAIKOT-IKOT (addl. 1/2) ROCKY & ROLLY (2nd contract) NARDONG TOOTHPICK BAKIT KAY TAGAL NG SANDALI BAKIT KAY TAGAL (2nd contract) HINUKAY KO NA ANG LIBINGAN MO MAGING SINO KA MAN M. SINO KA MAN (2nd contract)

NOEL JUICO NOEL JUICO (2nd contract) ROBIN GOOD UTOL KONG HOODLUM # 1 KAPUTOL NG ISANG AWIT DARNA DARNA (addl. 1/2) MAGNONG REHAS M. REHAS (2nd contract) HIRAM NA MUKHA HIRAM (2nd contract) KAHIT AKO'Y BUSABOS SIGAW NG PUSO SIGAW (addl. 1/2) NGAYON AT KAILANMAN

1/29/91 3/15/91 5/7/91 6/23/91 8/18/91 10/4/91 11/20/91 12/13/91 1/28/92 3/15/92 5/1/92 5/28/92 7/1/92 8/15/92 9/6/92

3/14/90 4/6/91 6/20/91 8/6/91 10/2/91 11/18/91 12/12/91 1/27/92 3/12/92 4/29/92 6/14/92 7/7/92 8/4/92 9/5/92 10/20/92

JUN CHING JUN CHING M. ONG JUN CHING SANDY S. E. MANUEL E. MANUEL BOBBY GRIMALT B. GRIMALT M. ONG M. ONG JERRY OHARA M. ONG M. ONG SANDY STA. MARIA

While Maraguinot was a member of Shooting Unit III, which made the following movies (Annex "4-A" of Respondents' Position Paper; OR, 29):
FILM GUMAPANG KA SA LUSAK PETRANG KABAYO LUSAK (2nd contract) P. KABAYO (Addl 1/2 contract) BADBOY BADBOY (2nd contract) ANAK NI BABY AMA A.B. AMA (addl 1/2) A.B. AMA (addl 2nd 1/2) BOYONG MANALAC HUMANAP KA NG PANGET H. PANGET(2nd contract) B. MANALAC (2nd contract) ROBIN GOOD (2nd contract) PITONG GAMOL DATE DATE ASSOCIATE PRODUCER STARTED COMPLETED 1/27/90 3/12/90 JUN CHING 2/19/90 3/14/90 4/21/90 6/15/90 7/30/90 9/2/90 10/17/90 11/9/90 11/30/90 1/20/91 3/10/91 5/22/91 7/7/91 8/30/91 4/4/90 RUTH GRUTA 4/27/90 JUN CHING 5/13/90 RUTH GRUTA 7/29/90 EDITH MANUEL 8/21/90 E. MANUEL 10/16/90 RUTH GRUTA 11/8/90 RUTH GRUTA 12/1/90 R. GRUTA 1/14/91 MARIVIC ONG 3/5/91 EDITH MANUEL 4/23/91 E. MANUEL 7/5/91 M. ONG 8/20/91 M. ONG 10/13/91 M. ONG

P. GAMOL (2nd contract) GREASE GUN GANG ALABANG GIRLS (1/2 contract) BATANG RILES UTOL KONG HOODLUM (part 2) UTOL (addl. 1/2 contract) MANDURUGAS (2nd contract) MAHIRAP MAGING POGI

10/14/91 12/28/91 3/4/92 3/9/92 3/22/92 5/7/92 5/25/92 7/2/92

11/27/91 M. ONG 2/10/92 E. MANUEL 3/26/92 M. ONG 3/30/92 BOBBY GRIMALT 5/6/92 B. GRIMALT 5/29/92 B. GRIMALT 7/8/92 JERRY OHARA 8/15/92 M. ONG

arranging of movie equipment in the shooting area as instructed by the cameramen, returning the equipment to the Viva Films' warehouse, and assisting in the "fixing" of the lighting system, it may not be gainsaid that these tasks were vital, necessary and indispensable to the usual business or trade of the employer. As regards the underscored phrase, it has been held that this is ascertained by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety.36 A recent pronouncement of this Court anent project or work pool employees who had attained the status of regular employees proves most instructive: The denial by petitioners of the existence of a work pool in the company because their projects were not continuous is amply belied by petitioners themselves who admit that: . . . A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report of a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the same time enables the workers to attain the status of regular employees. Clearly, the continuous rehiring of the same set of employees within the framework of the Lao Group of Companies is strongly indicative that private respondents were an integral part of a work pool from which petitioners drew its workers for its various projects. In a final attempt to convince the Court that private respondents were indeed project employees, petitioners point out that the workers were not regularly maintained in the payroll and were free to offer their services to other companies when there were no on-going projects. This argument however cannot defeat the workers' status of regularity. We apply by analogy the vase of Industrial-Commercial-Agricultural Workers Organization v. CIR [16 SCRA 526, 567-568 (1966)] which deals with regular seasonal employees. There we held: . . .
Truly, the cessation of construction activities at the end of every project is a foreseeable suspension of work.Of course, no compensation can be demanded from the employer because the stoppage of operations at the end of a project and before the start of a new one is regular and expected by both parties to the labor relations . Similar to the case of regular seasonal employees, the employment relation is not severed by merely being suspended. [citing Manila Hotel Co. v. CIR, 9 SCRA 186 (1963)] The employees are, strictly speaking, not separated from services but merely on leave of absence without pay until they are reemployed. Thus we cannot affirm the argument that non-payment of

salary or non-inclusion in the payroll and the opportunity to seek other employment denote project employment. 37 (emphasis supplied)

While Lao admittedly involved the construction industry, to which Policy Instruction No. 20/Department Order No. 19 38 regarding work pools specifically applies, there seems to be no impediment to applying the underlying principles to industries other than the construction industry. 39 Neither may it be argued that a substantial distinction exists between the projects undertaken in the construction industry and the motion picture industry. On the contrary, the raison d' etre of both industries concern projects with a foreseeable suspension of work. At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty to re-hire a project employee even after completion of the project for which he was hired. The import of this decision is not to impose a positive and sweeping obligation upon the employer to rehire project employees. What this decision merely accomplishes is a judicial recognition of the employment status of a project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by the employer of project or work pool employees who perform tasks necessary or desirable to the employer's usual business or trade. Let it not be said that this decision "coddles" labor, for as Lao has ruled, project or work pool employees who have gained the status of regular employees are subject to the "no work-no pay" principle, to repeat: A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the same time enables the workers to attain the status of regular employees. The Court's ruling here is meant precisely to give life to the constitutional policy of strengthening the labor sector,40 but, we stress, not at the expense of management. Lest it be misunderstood, this ruling does not mean that simply because an employee is a project or work pool employee even outside the construction industry, he is deemed, ipso jure, a regular employee. All that we hold today is that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired 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. To rule otherwise would allow circumvention of labor laws in industries not falling within the ambit of Policy Instruction No. 20/Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by project or work pool employees who have already gained the status of regular employees by the employer's conduct. In closing then, as petitioners had already gained the status of regular employees, their dismissal was unwarranted, for the cause invoked by private respondents for petitioners' dismissal, viz.: completion of project, was not, as to them, a valid cause for dismissal under Article 282 of the Labor Code. As such, petitioners are now entitled to back wages and reinstatement, without loss of seniority rights and other benefits that may have accrued. 41 Nevertheless, following the principles of "suspension of work" and "no pay" between the end of one project and the start of a new one, in computing petitioners' back wages, the amounts corresponding to what could have been earned during the periods from the date petitioners were dismissed until their reinstatement when petitioners' respective Shooting Units were not undertaking any movie projects, should be deducted.

Petitioners were dismissed on 20 July 1992, at a time when Republic Act No. 6715 was already in effect. Pursuant to Section 34 thereof which amended Section 279 of the Labor Code of the Philippines and Bustamante v. NLRC,42 petitioners are entitled to receive full back wages from the date of their dismissal up to the time of their reinstatement, without deducting whatever earnings derived elsewhere during the period of illegal dismissal, subject however, to the above observations. WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations Commission in NLRC NCR CA No. 006195-94 dated 01 February 1995, as well as its Resolution dated 6 April 1995, are hereby ANNULLED and SET ASIDE for having been rendered with grave abuse of discretion, and the decision of the Labor Arbiter in NLRC NCR Case No. 00-0703994-92 is REINSTATED, subject, however, to the modification above mentioned in the computation of back wages. No pronouncement as to costs. SO ORDERED.

G.R. No. 100333 March 13, 1997 HILARIO MAGCALAS, PROSPERO MARINDA, CELSO GAMALO, EPIFANIO OMEGA, VIRGILIO CAMPOS, ANTONIO LLAGAS, BERNARD BENDANILLO, SHALDYAUTENCIO, CIRIACO REYES, JUANITO DE LEON, EDMUNDO GUZMAN, ALFREDO SANTOS, BENEDICTO DAGCUTAN, NORBIE LOPENA, ISMAEL ALONZO, ELMER BALETA, GENITO DALMERO, and CESAR LEDESMA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and KOPPEL, INC., respondents.

PANGANIBAN, J.: May regular employment be restricted to a definite or fixed term? Upon the expiration of such term, may the employment be deemed terminated upon payment of separation pay? The respondent NLRC answered these questions in the affirmative but the labor arbiter held otherwise that such termination constituted illegal dismissal, thereby entitling the petitioners to reinstatement, backwages and attorney's fees. This divergence of position between the NLRC and the labor arbiter will now be ruled upon by this Court as it resolves this petition for certiorari challenging the Decision 1 and Resolution 2 of public respondent 3 promulgated on April 5, 1991, and May 13, 1991, respectively. The Decision of public

respondent reversed that of the labor arbiter while the Resolution denied the motion for reconsideration. The dispositive portion of the impugned Decision reads: 4 WHEREFORE, premises considered, the appealed decision is hereby set aside, and a new judgment is entered, ordering the respondent to pay separation pay to herein complainants, as explained above. On the other hand, the dispositive portion of the reversed decision of the labor arbiter 5 reads: 6 WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered, ordering the respondent to reinstate all the individual complainants named in the above entitled case to their former positions without loss of seniority rights and privileges, and to pay them backwages from the time of their dismissal/termination to their actual reinstatement, plus attorney's fee equivalent to Ten Percent (10%) of the total monetary award; the claim for legal interest is dismissed for lack of merit. The Facts The facts are set out in the decision of the labor arbiter, as follows: 7 In their basic complaint and counter position paper, the complainants alleged (inter alia) that they were all regular employees of the respondent company, having rendered continuous services in various capacities, ranging from leadman, tinsmith, tradeshelper to general clerk; that the respondent has been engaged in the business of installing air conditioning (should be air-conditioning) and refrigeration equipment in its different projects and jobsites where the complainants have been assigned; that the complainants have worked for a number of years, the minimum of which was one and a half years and the maximum (was) eight years under several supervisors; that on August 30, 1988, they were dismissed (en masse) without prior notice and investigation, and that their dismissals were effected for no other cause than their persistent demands for payment of money claims (as) mandated by law. On the other hand, the respondents interposed the defense of contract/project employment and averred the following statement of facts in support thereof: The respondent company is engaged in the business of manufacturing and installation of air(-)conditioning and refrigeration equipments (sic). The manufacturing aspect of its operation is handled by its regular employees, while the installation aspect, by reason of its intermittence, is carried out by its project or contract employees. The installation of the air(-)conditioning equipment at the Asian Development Bank Building and (the) Interbank building was awarded to the respondent herein. The complainants herein were among the contract employees hired by the respondent to install the air(-)conditioning equipment at the Asian Development Bank and Interbank projects. Their specific assignments were as follows: Name Position Project

1. HILARIO MAGCALAS Leadman Asian Dev. Bank 2. PROSPERO MARINDA Tinsmith Asian Dev. Bank 3. VIRGILIO CAMPOS Tradeshelper " " " 4. ANTONIO LLAGAS " " " " 5. BERNARD BENDANILLO " " " " 6. ISMAEL ALONZO " " " " 7. SHALDY AUTENCIO " " " " 8. CIRIACO REYES " Interbank 9. CELSO GAMALO " " 10. EPIFANIO OMEGA " " 11. EDMUNDO GUZMAN " " 12. ALFREDO SANTOS " " 13. JUANITO DE LEON " " 14. BENEDICTO DAGCUTAN " " 15. ELMER BALETA " " 16. GENITO DALMERO " " 17. CESAR LEDESMA Tinsmith " 18. NOR(B)IE LOPENA General Clerk " The aforesaid employees were engaged to work on (sic) the installation projects until August 31, 1988, when their task was expected to be completed. This is evidenced by their respective employment contracts, copies of which are hereto attached as ANNEXES 1 to 18. With the completion of their task on August 31, 1988 in their respective installation projects, the employment of the complainants (ipso facto) expired as they had no more work to do. They now claim that they were illegally dismissed. Reply by the respondent and rejoinder by the complainants were subsequently filed, after which the case was considered as submitted for decision based on the pleadings and evidences (sic) on record. As earlier stated, public respondent reversed the decision of the labor arbiter favorable to herein petitioners. Hence, this petition for certiorari. The Issues Petitioners raise and argue the following issues in their Memorandum: 8 (a) whether (p)etitioners (were) regular workers under the contemplation of Art. 280 of the Labor Code; and, (b) whether (p)etitioners' termination and/or cessation of their employments on August 30th, (sic) 1988 were justified under the contemplation of Art. 279 of the Labor Code as amended. Petitioners contend that they were regular employees because "(t)he job of installing an(d)/or repairing its manufactured units and equipments (sic) to its different customers are not merely adjunct but are necessary activities of (p)rivate (r)espondent's daily business operations." 9 They maintain that their employment is regular because of "the nature of the activities (they)

performed," 10 regardless of the stipulation in their job contracts. Petitioners argue that the phrase "specific project or undertaking" in Article 280 of the Labor Code means "special type of venture or undertaking" that is not "usually necessary or desirable in the employer's business operation and activities". 11 Petitioners add that doubts as to their employment status must be resolved in their favor. 12 The Solicitor General ("Sol. Gen."), invoking the case of Orbos vs. Civil Service Commission, 13 sided with petitioners. He argues that "(t)o say that petitioners (were) regular employees and yet subject to a definite or fixed term is incongruous, inconsistent, or illogical. . . . . Indeed, a worker is either regular or casual; (i)f he is employed only for a specific project or undertaking, then he is considered a casual employee and may be dismissed at the time of the completion of the project." 14 Besides, the "(r)ecords cannot deny that petitioners worked continuously, without a single day of interruption, in not just one, but on the various jobsites assigned to them. Some of them have even worked continuously for eight (8) years, without any stoppage." 15 Even admitting that petitioners were project employees, the Sol. Gen. states that "no iota of proof was ever presented by private respondent to refute petitioners' claim that the ADB and Interbank projects were still in operation when they were terminated or, vice-versa, to support its claim that these projects were already terminated." 16 On the other hand, private respondent contends that certiorari is not proper in this case. "The findings and conclusions of fact and law of the respondent NLRC are supported by substantial evidence and were not arrived at arbitrarily." 17 It adds that "petitioners were project or contract workers who were hired whenever private respondent was able to obtain sub-contracts for the installation of air(-)conditioning and ventilation system or refrigeration equipment in construction or building projects . . . . They were last hired in the Asian Development Bank and Interbank air(-)conditioning and ventilation system projects which were completely turned over in August 1989 and (on) November 13, 1989, respectively. (Please see Annexes '2' and '3' hereof). 18 Because of the position taken by the Sol. Gen., public respondent filed its own Comment. It argues that "the factual findings of respondent Commission (were) based on substantial evidence and supported by the clear letter of the law as well as pertinent jurisprudence on the matter." 19 Thus, public respondent contends that the petition should be dismissed and the challenged judgment should be upheld as a proper exercise of the powers conferred upon it by law. 20 Public respondent ruled against petitioners thus: 21 A cursory reading of the Collective Bargaining Agreement between the respondent company and the Koppel Employees Association shows that it recognized Contract Employees as one of the three categories of employees in the Company. Article IV, Section 1, of the said Collective Bargaining Agreement defines a "Contract Employee" as "one hired on individual employment contract basis to perform work on specific projects or as indicated in his contract of employment. The duration of such employment is determined by and indicated in his contract of employment." (Record, page 49) Article 280 of the Labor Code provides: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an 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 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. (Emphasis supplied) The above provision is intended for all industries except the construction industry. Policy Instruction No. 20 was precisely promulgated for the reason that the problems of regularity of employment in the construction industry has continued to plague it. The policy implements the exception to Article 280 of the Labor Code. (Magante v. NLRC, 185 SCRA 21) Complainant herein were engaged by the respondent to handle the installation of air(-)conditioning and refrigeration equipments (sic) in the construction projects at the Asian Development Bank and Interbank buildings. As the nature and character of their work is necessary or desirable of (sic) the usual business of the respondent, which is to manufacture and install air(-) conditioning and refrigeration equipments (sic) in buildings, complainants' jobs can be categorized as regular workers (should be work) but subject to a definite or fixed term. But their services were not terminated at the end of the project or contract. As the ADB and Interbank projects have been completed, their lay-off has resulted in the termination of their employment for lack of work; hence, they are entitled to separation pay equivalent to one month pay or onehalf month pay for every year of service, whichever is greater, and a fraction of six months or more to be considered as one year. The Court's Ruling We find for petitioners. First Issue: Are Petitioners Regular Workers? In certiorari proceedings under Rule 65, this Court does not, as a rule, evaluate the sufficiency of evidence upon which the labor arbiter and public respondent based their determinations. The inquiry is limited essentially to whether or nor said public respondent acted without or in excess of its jurisdiction or with grave abuse of discretion. 22 However, where the findings of the NLRC are contrary to those of the tribunal below, the Court in the exercise of its equity jurisdiction may wade into and reevaluate such findings, 23 as in the present instance. In this case, Public Respondent NLRC did not sufficiently indicate the evidentiary basis for its reversal of the labor arbiter's decision. After citing provisions in the collective bargaining agreement (CBA) concerning contract workers and Policy Instruction No. 20, public respondent correctly stated that petitioners were performing work necessary or desirable in the usual business of private respondent. From this undisputed fact, the NLRC jumped to strange and strained inferences. First, it held that the employment of the petitioners was subject to fixed terms. It then leapt to the nonsequitur conclusion that petitioners were project employees. Going further, it held that they were entitled to separation pay, overlooking that under the very law it invoked, "project employees are not entitled to termination pay." 24 This convolution of facts and law cannot reverse the decision of the labor arbiter which is grounded on documentary evidence submitted by the parties. Indeed, an examination of the assailed Decision reveals that public respondent failed to back up its conclusions with substantial evidence, or that which a reasonable mind may accept as adequate to

justify a conclusion. This quantum of evidence is required to establish a fact in cases before administrative and quasi-judicial bodies. 25 Thus, a mere provision in the CBA recognizing contract employment does not sufficiently establish that petitioners were ipso facto contractual or project employees. In the same vein, the invocation of Policy No. 20 governing the employment of project employees in the construction industry does not, by itself, automatically classify private respondent as part of the construction industry and entitle it to dismiss petitioners at the end of each project. These facts cannot be presumed; they must be supported by substantial evidence. On the other hand, private respondent did not even allege, much less did it seek to prove, that petitioners had been hired on a project-to-project basis during the entire length of their employment. Rather, it merely sought to establish that petitioners had been hired to install the air-conditioning equipment at Asian Development Bank and Interbank and that they were legally dismissed upon the conclusion of these projects. Private respondent did not even traverse, and public respondent did not controvert, the labor arbiter's finding that petitioners were continuously employed without interruption, from the date of their hiring up to the date of their dismissal, in spite of the alleged completion of the so-called projects in which they had been hired. 26 The undisputed finding of the labor arbiter on this continuous employment of petitioners is worth quoting: 27 (T)he record discloses that the complainants worked not only in one special project, either at the Asian Development Bank or the Interbank building, as the evidence of the respondent tends to prove, but also variably in other projects/jobsites contracted by Koppel Incorporated: such as the PNB on Roxas Boulevard, Manila; MIA now NAIA; PICC; and San Miguel Complex on Ortigas Avenue, Pasig, Metro Manila. Some of them, after their tour of duty on these different jobsites were reassigned to the respondent's plant at Koppel Compound, Para()aque, Metro Manila, as shown by the individual complainants(') affidavits attached to their position paper. A close examination of the record further reveals that the "special projects" at the Asian Development Bank and Interbank to which the complainants were last assigned by the respondent were still in operation before their alleged termination from employment. Under these factual milieu, we believe that they had been engaged to work and perform activities which were necessary and desirable in the air(-) conditioning and refrigeration installation/repair business of the respondent employer, especially where, as in this case, the very nature of such trade indicates that it can hardly fall under the exception of Policy Instruction No. 20 which applies only to the construction industry. For this reason, and considering the facts narrated in the complainants(') sworn statements were neither disputed nor refuted by contrary evidence by the respondent, it becomes apparent and increasing(ly) clear that indeed they would and ought to be classified as regular employees. . . . (Emphasis supplied.) Petitioners were hired on different dates. Some of them worked for eight (8) years, while others for only one and a half (1 1/2) years. Private respondent, on the other hand, insisted that petitioners were hired on per-project basis. Private respondent, however, did not present any evidence to show the termination of the employment contracts at the end of each project. Only before public respondent and in this petition did private respondent allege, through a photocopy of an affidavit 28 of Mr. Jose Lecaros, the General Manager of Koppel, Inc., that the Asian Development Bank and the Interbank projects had been completed. This affidavit as well as the other annexes 29cannot be given weight in this petition because this Court is not a trier of facts. In any case, private respondent had

not proved, by the said affidavit, that the termination of each project had invariably resulted in the dismissal of its alleged project employees. Regular employees cannot at the same time be project employees. Article 280 of the Labor Code states that regular employees are those whose work is necessary or desirable to the usual business of the employer. The two exceptions following the general description of regular employees refer to either project or seasonal employees. It has been ruled in the case of ALU-TUCP vs. National Labor Relations Commission that: 30 In the realm of business and industry, we note that "project" could refer to one or the other of at least two (2) distinguishable types of activities. Firstly, a project could refer to particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. The typical example of this first type of project is a particular construction job or project of a construction company. A construction company ordinarily carries out two or more discrete (should be distinct) identifiable construction projects: e.g., a twenty-five-storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined and made known to the employees at the time of employment, are properly treated as "project employees," and their services may be lawfully terminated at completion of the project." (Emphasis supplied). The employment of seasonal employees, on the other hand, legally ends upon completion of the project or the season, thus: 31 Clearly, therefore, petitioners being project employees, or to use the correct term, seasonal employees, their employment legally ends upon completion of the project or the season. The termination of their employment cannot and should not constitute an illegal dismissal. In terms of terminating employment, this Court has already distinguished project from regular employees, to wit: 32
The basic issue is thus whether or not petitioners are properly characterized as "project employees" rather than "regular employees" of NSC. This issue relates, of course, to an important consequence: the services of project employees are co-terminous with the project and may be terminated upon the end or completion of the project for which they were hired. 33 Regular employees, in contrast, are legally entitled to remain in the service of their employer until that service is terminated by one or another of the recognized modes of termination of service under the Labor Code. 34

The overwhelming fact of petitioners' continuous employment as found by the labor arbiter ineludibly shows that the petitioners were regular employees. On the other hand, we find that substantial evidence, applicable laws and jurisprudence do not support the ruling in the assailed Decision that petitioners were project employees. The Court here reiterates the rule that all doubts, uncertainties, ambiguities and insufficiencies should be resolved in favor of labor. It is a well-entrenched doctrine that in illegal dismissal cases, the employer has the burden of proof. This burden was not discharged in the present case.

Second Issue: Is Ground for Dismissal Valid? As regular employees, petitioners' employment cannot be terminated at the whim of the employer. For a dismissal of an employee to be valid, two requisites must be met: (1) the employee is afforded due process, meaning, he is given notice of the cause of his dismissal and an adequate opportunity to be heard and to defend himself; and (2) the dismissal is for a valid cause as indicated in Article 282 35 of the Labor Code. 36 The services of petitioners were purportedly terminated at the end of the ADB and Interbank projects, but this could not have been a valid cause for, as discussed above, they were regular and not project employees. Thus, the Court does not hesitate to conclude that petitioners were illegally dismissed. As a consequence of their illegal termination, petitioners are entitled to reinstatement and backwages in accordance with the Labor Code. The backwages however are to be computed only for three years from August 30, 1988, the date of their dismissal, without deduction or qualification. Where the illegal dismissal transpired before the effectivity of RA 6715, 37 or before March 21, 1989, the award of backwages in favor of the dismissed employees is limited to three (3) years without deduction or qualification. 38 WHEREFORE, premises considered, the petition is GRANTED. The assailed Decision and Resolution are REVERSED and SET ASIDE and the decision of the labor arbiter is REINSTATED, with backwages to be computed as above discussed. No costs. SO ORDERED.

G.R. No. 170181

June 26, 2008

HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD., HAK KON KIM and/or JHUNIE ADAJAR,petitioners, vs. FELICITO IBAEZ, ALIGWAS CAROLINO, ELMER GACULA, ENRIQUE DAGOTDOT AND RUEL CALDA,respondents. DECISION CHICO-NAZARIO, J.: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision,1 dated 28 July 2005, rendered by the Court of Appeals, reversing the Decision,2 promulgated by the National Labor Relations Commission (NLRC) on 7 May 2004. The Court of Appeals, in its assailed Decision, declared that respondents are regular employees who

were illegally dismissed by petitioner Hanjin Heavy Industries and & Construction Company, Limited (HANJIN). Petitioner HANJIN is a foreign company duly registered with the Securities and Exchange Commission to engage in the construction business in the Philippines. Petitioners Hak Kon Kim and Jhunie Adajar were employed as Project Director and Supervisor, respectively, by HANJIN. On 11 April 2002, respondents Felicito Ibaez, Aligwas Carolino, Elmer Gacula, Enrique Dagotdot, Ruel Calda, and four other co-workers filed a complaint before the NLRC, docketed as NLRC Case No. RAB-IV-04-15515-02-RI, for illegal dismissal with prayer for reinstatement and full backwages against petitioners. In their Position Paper dated 29 July 2002, respondents alleged that HANJIN hired them for various positions on different dates, hereunder specified: Position Felicito Ibaez Elmer Gacula Enrique Dagotdot Aligwas Carolino Ruel Calda Tireman Crane Operator Welder Welder Warehouseman Date of Employment 7 March 2000 1992 1995 September 1994 26 January 19963

Respondents stated that their tasks were usual and necessary or desirable in the usual business or trade of HANJIN. Respondents additionally averred that they were employed as members of a work pool from which HANJIN draws the workers to be dispatched to its various construction projects; with the exception of Ruel Calda, who as a warehouseman was required to work in HANJIN's main office.4 Among the various construction projects to which they were supposedly assigned, respondents named the North Harbor project in 1992-1994; Manila International Port in 1994-1996; Batangas Port in 1996-1998; the Batangas Pier, and La Mesa Dam.5 On 15 April 2002, Hanjin dismissed respondents from employment. Respondents claimed that at the time of their dismissal, HANJIN had several construction projects that were still in progress, such as Metro Rail Transit (MRT) II and MRT III, and continued to hire employees to fill the positions vacated by the respondents.6 Petitioners denied the respondents' allegations. They maintained that respondents were hired as project employees for the construction of the LRT/MRT Line 2 Package 2 and 3 Project. HANJIN and respondents purportedly executed contracts of employment, in which it was clearly stipulated that the respondents were to be hired as project employees for a period of only three months, but that the contracts may be renewed, to wit: Article II TERM OF AGREEMENT This Agreement takes effect xxx for the duration of three (3) months and shall be considered automatically renewed in the absence of any Notice of Termination by the EMPLOYER to the PROJECT EMPLOYEE. ThisAGREEMENT automatically terminates at the completion of the project or any particular phase thereof,depending upon the progress of the project.7 However, petitioners failed to furnish the Labor Arbiter a copy of said contracts of employment.

Petitioners asserted that respondents were duly informed of HANJIN's policies, rules and regulations, as well as the terms of their contracts. Copies of the employees' rules and regulations were posted on the bulletin boards of all HANJIN campsite offices.8 Petitioners further emphasized that prior to 15 April 2002, Hak Kon Kim, HANJIN's Project Director, notified respondents of the company's intention to reduce its manpower due to the completion of the LRT/MRT Line 2 Package 2 and 3 Project. Respondents were among the project employees who were thereafter laid off, as shown in the Establishment Termination Report filed by HANJIN before the Department of Labor and Employment (DOLE) Regional Office (IV) in Cainta, Rizal on 11 April 2002.9 Finally, petitioners insist that in accordance with the usual practice of the construction industry, a completion bonus was paid to the respondents.10 To support this claim, they offered as evidence payroll records for the period 4 April 2002 to 20 April 2002, with the words "completion bonus" written at the lower left corner of each page.11 Petitioners attached copies of the Quitclaims,12 executed by the respondents, which uniformly stated that the latter received all wages and benefits that were due them and released HANJIN and its representatives from any claims in connection with their employment. These Quitclaims also contained Clearance Certificates which confirmed that the employees concerned were cleared of all accountabilities at the close of the working hours on 15 April 2002. In their Reply13 dated 27 August 2002, respondents vehemently refuted having signed any written contract stating that they were project employees. The Labor Arbiter found merit in the respondents' complaint and declared that they were regular employees who had been dismissed without just and valid causes and without due process. It ruled that HANJIN's allegation that respondents were project employees was negated by its failure to present proof thereof. It also noted that a termination report should be presented after the completion of every project or a phase thereof and not just the completion of one of these projects. The Labor Arbiter further construed the number of years that respondents rendered their services for HANJIN as an indication that respondents were regular, not project, employees.14 The Labor Arbiter ordered in its Decision, dated 30 April 2003, that: WHEREFORE, premises considered, judgment is hereby rendered as follows; 1) Declaring respondent HANJIN HEAVY INDUSTRIES & CONSTRUCTION CO. LTD. guilty of illegal dismissal >2) Ordering respondent to reinstate all the complainants to positions previously occupied by them with full backwages from the time compensation was withheld from them up to date of actual reinstatement in the following amount (as of date of this decision): 1. Felicito Ibaez 2. Elmer A. Gacula 3. Rizalino De Vera 4. Enrique Dagotdot 5. Carolino Aligwas 6. Ruel Calda 7. Roldan Lanojan 8. Pascual Caranguian P 88,020.83 88,020.83 88,020.83 88,020.83 88,020.83 88,020.83 88,020.83 88,020.83

9. Carmelito Dalumangcad Total

88,020.83 P792, 187.47

3) In lieu of reinstatement, respondent is ordered to pay complainants their separation pay in the following sum: Felicito Ibaez Elmer A. Gacula Rizaliano De Vera Enrique Dagotdot Carolino Aligwas Ruel Calda Roldan Lanojan Pascual Caranguian Carmelito Dalumangcad Total P 19,500.00 71,500.00 19,500.00 52,000.00 58,500.00 45,500.00 19,500.00 26,000.00 78,000.00 P390,000.00

4) Ordering respondent to pay each complainant P50,000.00 for moral damages and P30,000.00 as exemplary damages, or the total sum of P450,000.00 and P270,000.00, respectively; and 5) Ordering respondent to pay complainants litigation expenses in the sum of P30,000.00 All other claims are DISMISSED for lack of merit.15 Petitioners filed an appeal before the NLRC. In their Notice of Appeal/Memorandum Appeal16 dated 5 July 2003, petitioners discarded their earlier claim that respondents signed employment contracts, unequivocally informing them of their status as project employees. Nonetheless, they still contended that the absence of respondents' contracts of employment does not vest the latter with regular status. The NLRC reversed the Labor Arbiter's Decision dated 30 April 2003, and pronounced that the respondents were project employees who were legally terminated from employment.17 The NLRC gave probative value to the Termination Report submitted by HANJIN to the DOLE, receipts signed by respondents for their completion bonus upon phase completion, and the Quitclaims executed by the respondents in favor of HANJIN. The NLRC also observed that the records were devoid of any proof to support respondents' allegation that they were employed before 1997, the time when construction work on the MRT started. Lastly, it overruled the Labor Arbiter's award of moral and exemplary damages.18 The dispositive part of the Decision dated 7 May 2004 of the NLCR states that: WHEREFORE, in view of the foregoing, the decision subject of appeal is hereby REVERSED and SET ASIDE and a new one is entered DISMISSING complainants' complaint for lack of merit.19 On appeal, the Court of Appeals reversed the NLRC Decision, dated 7 May 2004. The appellate court looked with disfavor at the change in HANJIN's initial position before the Labor Arbiter-from its initial argument that respondents executed employment contracts; to its modified argument during its appeal before the NLRC-that respondents could still be categorized as project workers despite the absence of contracts of employment. Additionally, it adjudged the Termination Report as

inconclusive proof that respondents were project employees. Emphasizing that the employer had the burden of proving the legality of the dismissal, the appellate court ruled that respondents were regular employees and upheld the Labor Arbiter's finding that they were illegally dismissed. The Court of Appeals, however, adopted the NLRC's deletion of the award of damages.20 The decretal portion of the Decision of the Court of Appeals reads: UPON THE VIEW WE TAKE OF THIS CASE, THUS, the challenged decision and resolution of the NLRC must be, as they hereby are, REVERSED and SET ASIDE. The decision of the Labor Arbiter is herebyREINSTATED relative to the award to petitioners of full backwages, separation pay in lieu of reinstatement, and litigation expenses, but not with respect to the awards for moral damages or for exemplary damages, both of which are hereby DELETED. Without costs in this instance.21 Hence, the present Petition, in which the following issues are raised: I WHETHER OR NOT THE FINDINGS OF THE HONORABLE COURT OF APPEALS ARE MERE CONCLUSIONS WITHOUT DELVING INTO THE RECORDS OF THE CASE AND EXAMINE (sic) FOR ITSELF THE QUESTIONED FINDINGS OF THE LABOR ARBITER AND THE NATIONAL LABOR RELATIONS COMMISSION CONTRARY TO THE RULING IN THE CASE OF AGABON VS. NLRC, ET. AL. 442 SCRA 573. II WHETHER OR NOT THE HONORABLE COURT OF APPEALS MANIFESTLY OVERLOOKED CERTAIN RELEVANT FACTS WHICH, IF PROPERLY CONSIDERED, WOULD RESULT IN A DIFFERENT CONCLUSION. III WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING THE PERTINENT PROVISIONS OF POLICY INSTRUCTIONS NO. 20, AS AMENDED BY DEPARTMENT ORDER NO. 19 SERIES OF 1993 IN RELATION TO ARTICLE 280 OF THE LABOR CODE IN CONSIDERING WHETHER OR NOT RESPONDENTS ARE PROJECT EMPLOYEES. IV THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS WERE ILLEGALLY DISMISSED.22 The Petition is without merit. As a general rule, the factual findings of the Court of Appeals are binding upon the Supreme Court. One exception to this rule is when the factual findings of the former are contrary to those of the trial court or the lower administrative body, as the case may be. The main question that needs to be settled-whether respondents were regular or project employees-is factual in nature. Nevertheless, this Court is obliged to resolve it due to the incongruent findings of the NLRC and those of the Labor Arbiter and the Court of Appeals. 23

Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee" thus: Article 280. Regular and Casual Employment-The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year 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.) From the foregoing provision, the principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular employees" is whether or not the project employees were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project.24 In a number of cases, 25 the Court has held that the length of service or the re-hiring of construction workers on a project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a natural consequence of the fact that experienced construction workers are preferred. Employees who are hired for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of which has been determined and made known to the employees at the time of the employment, are properly treated as project employees and their services may be lawfully terminated upon the completion of a project.26 Should the terms of their employment fail to comply with this standard, they cannot be considered project employees. In Abesco Construction and Development Corporation v. Ramirez,27 which also involved a construction company and its workers, this Court considered it crucial that the employees were informed of their status as project employees: The principal test for determining whether employees are "project employees" or "regular employees" is whether they are assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time they are engaged for that project. Such duration, as well as the particular work/service to be performed, is defined in an employment agreement and is made clear to the employees at the time of hiring. In this case, petitioners did not have that kind of agreement with respondents. Neither did they inform respondents of the nature of the latters' work at the time of hiring. Hence, for failure of petitioners to substantiate their claim that respondents were project employees, we are constrained to declare them as regular employees. In Caramol v. National Labor Relations Commission,28 and later reiterated in Salinas, Jr. v. National Labor Relations Commission,29 the Court markedly stressed the importance of the employees' knowing consent to being engaged as project employees when it clarified that "there is no question that stipulation on employment contract providing for a fixed period of employment such as `project-to-project' contract is valid provided the period was agreed upon knowingly and

voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent x x x." During the proceedings before the Labor Arbiter, the petitioners' failure to produce respondents' contracts of employment was already noted, especially after they alleged in their pleadings the existence of such contracts stipulating that respondents' employment would only be for the duration of three months, automatically renewed in the absence of notice, and terminated at the completion of the project. Respondents denied having executed such contracts with HANJIN. In their appeal before the NLRC until the present, petitioners now claim that due to a lapse in management procedure, no such employment contracts were executed; nonetheless, the absence of a written contract does not remove respondents from the ambit of being project employees.30 While the absence of a written contract does not automatically confer regular status, it has been construed by this Court as a red flag in cases involving the question of whether the workers concerned are regular or project employees. In Grandspan Development Corporation v. Bernardo31 and Audion Electric Co., Inc. v. National Labor Relations Commission,32 this Court took note of the fact that the employer was unable to present employment contracts signed by the workers, which stated the duration of the project. In another case, Raycor v. Aircontrol Systems, Inc. v. National Labor Relations Commission,33 this Court refused to give any weight to the employment contracts offered by the employers as evidence, which contained the signature of the president and general manager, but not the signatures of the employees. In cases where this Court ruled that construction workers repeatedly rehired retained their status as project employees, the employers were able to produce employment contracts clearly stipulating that the workers' employment was coterminous with the project to support their claims that the employees were notified of the scope and duration of the project.34 Hence, even though the absence of a written contract does not by itself grant regular status to respondents, such a contract is evidence that respondents were informed of the duration and scope of their work and their status as project employees. In this case, where no other evidence was offered, the absence of an employment contract puts into serious question whether the employees were properly informed at the onset of their employment status as project employees. It is doctrinally entrenched that in illegal dismissal cases, the employer has the burden of proving with clear, accurate, consistent and convincing evidence that a dismissal was valid.35 Absent any other proof that the project employees were informed of their status as such, it will be presumed that they are regular employees in accordance with Clause 3.3(a) of Department Order No. 19, Series of 1993, which states that: a) Project employees whose aggregate period of continuous employment in a construction company is at least one year shall be considered regular employees, in the absence of a "day certain" agreed upon by the parties for the termination of their relationship. Project employees who have become regular shall be entitled to separation pay. A "day" as used herein, is understood to be that which must necessarily come, although it may not be known exactly when. This means that where the final completion of a project or phase thereof is in fact determinable and the expected completion is made known to the employee, such project employee may not be considered regular, notwithstanding the oneyear duration of employment in the project or phase thereof or the one-year duration of two or more employments in the same project or phase of the project. (Emphasis provided.) Petitioners call attention to the fact that they complied with two of the indicators of project employment, as prescribed under Section 2.2(e) and (f) of Department Order No. 19, Series of 1993,

entitled Guidelines Governing the Employment of Workers in the Construction Industry, issued by the DOLE: 2.2 Indicators of project employment. - Either one or more of the following circumstances, among others, may be considered as indicators that an employee is a project employee. (a) The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable. (b) Such duration, as well as the specific work/service to be performed, is defined in an employment agreement and is made clear to the employee at the time of hiring. (c) The work/service performed by the employee is in connection with the particular project/undertaking for which he is engaged. (d) The employee, while not employed and awaiting engagement, is free to offer his services to any other employer. (e) The termination of his employment in the particular project/undertaking is reported to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work, using the prescribed form on employees' terminations/dismissals/suspensions. (f) An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies. (Emphasis provided.) Petitioners argue that the Termination Report filed before the DOLE Regional Office (IV) in Cainta, Rizal on 11 April 2002 signifies that respondents' services were engaged merely for the LRT/MRT Line 2 Package 2 and 3 Project. Given the particular facts established in this case, petitioners' argument fails to persuade this Court. Petitioners were not able to offer evidence to refute or controvert the respondents' claim that they were assigned to various construction projects, particularly the North Harbor Project in 1992-1994; Manila International Port in 1994-1996; Batangas Port in 1996-1998; the Batangas Pier; and La Mesa Dam.36 Had respondents' allegations been false, petitioners could simply present as evidence documents and records in their custody to disprove the same, i.e., payroll for such projects or termination reports, which do not bear respondents' names. Petitioners, instead, chose to remain vague as to the circumstances surrounding the hiring of the respondents. This Court finds it unusual that petitioners cannot even categorically state the exact year when HANJIN employed respondents. It also bears to note that petitioners did not present other Termination Reports apart from that filed on 11 April 2002. The failure of an employer to file a Termination Report with the DOLE every time a project or a phase thereof is completed indicates that respondents were not project employees.37 Employers cannot mislead their employees, whose work is necessary and desirable in the former's line of business, by treating them as though they are part of a work pool from which workers could be continually drawn and then assigned to various projects and thereafter denied regular status at any time by the expedient act of filing a Termination Report. This would constitute a practice in which an employee is unjustly precluded from acquiring security of tenure, contrary to public policy, morals, good customs and public order.38

In this case, only the last and final termination of petitioners was reported to the DOLE. If respondents were actually project employees, petitioners should have filed as many Termination Reports as there were construction projects actually finished and for which respondents were employed. Thus, a lone Termination Report filed by petitioners only upon the termination of the respondents' final project, and after their previous continuous employment for other projects, is not only unconvincing, but even suspicious. Petitioners insist that the payment to the respondents of a completion bonus indicates that respondents were project employees. To support their claim, petitioners presented payroll records for the period 4 April 2002 to 20 April 2002, with the words "completion bonus" written at the lower left corner of each page.39 The amount paid to each employee was equivalent to his fifteen-day salary. Respondents, however, deny receiving any such amount. Assuming that petitioners actually paid respondents a completion bonus, petitioners failed to present evidence showing that they undertook to pay respondents such a bonus upon the completion of the project, as provided under Section 2.2(f) of Department Order No. 19, Series of 1993.40 Petitioners did not even allege how the "completion bonus" was to be computed or the conditions that must be fulfilled before it was to be given. A completion bonus, if paid as a mere afterthought, cannot be used to determine whether or not the employment was regular or merely for a project. Otherwise, an employer may defeat the workers' security of tenure by paying them a completion bonus at any time it is inclined to unjustly dismiss them. Department Order No. 19, Series of 1993, provides that in the absence of an undertaking that the completion bonus will be paid to the employee, as in this case, the employee may be considered a non-project employee, to wit: 3.4 Completion of the project. Project employees who are separated from work as a result of the completion of the project or any phase thereof in which they are employed are entitled to the pro-rata completion bonus if there is an undertaking by for the grant of such bonus. An undertaking by the employer to pay a completion bonus shall be an indicator that an employee is a project employee. Where there is no such undertaking, the employee may be considered a non-project employee. The pro-rata completion bonus may be based on the industry practice which is at least the employee's one-half (1/2) month salary for every 12 months of service and may be put into effect for any project bid (in case of bid projects) or tender submitted (in case of negotiated projects) thirty (30) days from the date of issuances of these Guidelines. (Emphasis supplied.) Furthermore, after examining the payroll documents submitted by petitioners, this Court finds that the payments termed as "completion bonus" are not the completion bonus paid in connection with the termination of the project. First of all, the period from 4 April 2002 to 20 April 2002, as stated in the payrolls, bears no relevance to a completion bonus. A completion bonus is paid in connection with the completion of the project, and is not based on a fifteen-day period. Secondly, the amount paid to each employee as his completion bonus was uniformly equivalent to his fifteen-day wages, without consideration of the number of years of service rendered. Section 3.4 of Department Order No. 19, Series of 1993, provides that based on industry practice, the completion bonus is at least the employee's one-half month salary for every twelve months of service. Finally, the Quitclaims which the respondents signed cannot bar them from demanding what is legally due them as regular employees. As a rule, quitclaims and waivers or releases are looked upon with disfavor and frowned upon as contrary to public policy. They are thus ineffective to bar claims for the full measure of a worker's legal rights, particularly when the following conditions are applicable: 1) where there is clear proof that the waiver was wangled from an unsuspecting or

gullible person, or (2) where the terms of settlement are unconscionable on their face.41To determine whether the Quitclaims signed by respondents are valid, one important factor that must be taken into account is the consideration accepted by respondents; the amount must constitute a reasonable settlement equivalent to the full measure of their legal rights.42 In this case, the Quitclaims signed by the respondents do not appear to have been made for valuable consideration. Respondents, who are regular employees, are entitled to backwages and separation pay and, therefore, the Quitclaims which they signed cannot prevent them from seeking claims to which they are entitled.43 Due to petitioners' failure to adduce any evidence showing that petitioners were project employees who had been informed of the duration and scope of their employment, they were unable to discharge the burden of proof required to establish that respondents' dismissal was legal and valid. Furthermore, it is a well-settled doctrine that if doubts exist between the evidence presented by the employer and that by the employee, the scales of justice must be tilted in favor of the latter.44 For these reasons, respondents are to be considered regular employees of HANJIN. Finally, in the instant case, records failed to show that HANJIN afforded respondents, as regular employees, due process prior to their dismissal, through the twin requirements of notice and hearing. Respondents were not served notices informing them of the particular acts for which their dismissal was sought. Nor were they required to give their side regarding the charges made against them. Certainly, the respondents' dismissal was not carried out in accordance with law and was, therefore, illegal.45 IN VIEW OF THE FOREGOING, the instant Petition is DENIED. This Court AFFIRMS the assailed Decision of the Court of Appeals in CA-G.R. SP No. 87474, promulgated on 28 July 2005, declaring that the respondents are regular employees who have been illegally dismissed by Hanjin Heavy Industries & Construction Company, Limited, and are, therefore, entitled to full backwages, separation pay, and litigation expenses. Costs against the petitioners. SO ORDERED.

G.R. No. 120064 August 15, 1997 FERDINAND PALOMARES and TEODULO MUTIA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, (5TH DIVISION) and NATIONAL STEEL CORPORATION,respondents.

ROMERO, J.:

The issue presented before this Court is whether or not petitioners should be considered regular employees of respondent corporation. Petitioners Ferdinand Palomares and Teodulo Mutia were hired by respondent National Steel Corporation (NSC) by virtue of contracts of employment for its Five Year Expansion Program or FYEP, Phase I and II-4, for varying lengths of time, as follows: Mr. FERDINAND L. PALOMARES: DATES PROJECT NATURE POSITION/ REMARKS OF WORK DEPARTMENT 10-03-84 to Project Fixed- Clerk Typist Expiration of 03-03-85 Undertaking Period Office Svcs. Contract Clerical jobs at Employment Mar 3, 1985 Office Svcs. 03-04-85 to Project Project- Control Expiration of 09-04-85 Undertaking: Based Clerk/Off. Contract Five-Year-Ex- Employment Services Sept 4, 1985 pansion Projects 09-05-85 to Project -do- Control Termination of 01-15-87 Undertaking: Clerk/Admin.- Contract Clerical jobs Club House-Off Jan. 15, 1987 related to Services dispatching of service vehicles 09-11-87 to Project -do- Production Expiration of 02-10-88 Undertaking: Recorder/ Contract Temporary pro- Accounting Feb 10, 1988 duction recording jobs at 5-Stand Project 02-13-88 to Project -do- Accountant I 07-13-88 Undertaking: Construction To handle cost Accounting monitoring, records keeping and reporting of FYEP II Proj. 07-14-88 to Project Project- Accountant I 08-14-90 Undertaking: Based Project To handle cost Employment Accounting, monitoring, FYEP Controlrecords keeping lership and reporting of FYEP II Projects 08-15-90 to -do- -do- Accountant II Currently 10-14-94 Project Working Accounting, FYEP Proj. Controllership

Mr. TEODULO A. MUTIA: 11-04-85 to Project Project- Audit Aide/ Termination of 03-04-86 Undertaking: Based Internal Audit Contract Attesting of Employment Mar 4, 1986 shipment through National Marine 04-05-86 to Project -do- Monitoring Expiration of 05-15-87 Undertaking: Aide/Ship- Contract Monitoring works breaking Opns May 15, 1987 for ship-breaking of MS. ASEAN KNOWLEDGE and MV ASEAN INDEPENDENCE
09-11-87 to Project -do- Production Expiration of 02-10-88 Undertaking: Recorder/ Contract Temporary job of Accounting Feb 10, 1988 Production Recording at 5 Stand TDM Project 02-13-88 to Project -do- Accountant Expiration of 12-14-88 Undertaking: I/Acctg. & Contract To handle Cost Finance- Dec 14, 1988 monitoring, Construction records keeping Accounting and reporting of FYEP II Project 12-15-88 to -do- -do- Accountant & Currently 08-14-90 Project Accoun- Working ting FYEP Controllership 08-15-90 to Project Project- Accountant II, Currently 1 10-14-94 Undertaking: Based Project Working To handle cost Employment Accounting/ monitoring, FYEP Proj. records keeping Controllership and reporting of FYEP II Projects

Petitioners, along with other employees, filed a consolidated petition for regularization, wage differential, CBA coverage and other benefits. 2 In his decision dated April 29, 1992, Labor Arbiter Nicodemus G. Palangan ordered the dismissal of the complaint with respect to 26 complainants but ruled in favor of petitioners. Palomares, Mutia and four other complainants were adjudged as regular employees of respondent corporation. The dispositive portion of his decision reads: WHEREFORE, premises considered, the petition for regularization as well as the monetary benefits of the above-named complainants are hereby ordered DISMISSED for lack of merit except six complainants stated below. However, the respondent shall not terminate their services while the activities they performed still exist, and to give them preference provided they are qualified in cases of vacancies when the expansion program becomes operational. For the complainants who were terminated during the pendency of these cases the respondent is hereby ordered to pay them separation pay equivalent to one month salary for

those who have rendered one or two years of service and three months salary for those who have served the company for at least 5 years. For complainants Edgardo Pongase, Aquiles Colita, Lolinio Solatorio, Ferdinand Palomares, Teodulo Mutia, and Rodolfo Leopoldo, this office consider (sic) them as regular employees for reason that the activities they performed are regular, and necessary in the usual trade or course of business of the company. Respondent is likewise ordered to pay these regular employees their salary differential to be computed three years back from the filing of these complaints. All other claims are hereby ordered dismissed.
SO ORDERED. 3 (Emphasis added)

On appeal, the NLRC reversed the findings of the Labor Arbiter in a decision dated November 23, 1994. Respondent Commission held that petitioners were project employees and that their assumption of regular jobs were mainly due to peakloads or the absence of regular employees during the latter's temporary leave. 4 After their motion for reconsideration was denied on March 30, 1995, 5 petitioners filed this petition. The Court finds that petitioners failed to show any grave abuse of discretion on the part of the NLRC in rendering its questioned decision and resolutions of November 23, 1994 and March 30, 1995, respectively. Petitioners argue that as regards functions and duration of work, contracted employees should, by operation of law, be considered regular employees. Respondent NSC, on the other hand, maintains that petitioners are mere project employees, engaged to work on the latter's Five-Year Expansion Projects (FYEP), Phases I and II-A, hence, dismissible upon the expiration of every particular project. Article 280 of the Labor Code, the law on the subject of regular employment, reads: The provisions of the written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. (Emphasis added). The principal test for determining whether an employee is a project employee and not a regular employee is whether he was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time he was engaged for that project. 6

It is quite evident that petitioners were employed for a specific project or projects undertaken by respondent corporation. The component projects of the latter's Five Year Expansion Program include the setting up of a Cold Rolling Mill Expansion Project, establishing a Billet Steel-Making Plant, installation of a Five Stand TDM and Cold Mill Peripherals Project. In the case of ALU-TUCP v. NLRC, we held that the same Five Year Expansion Program (or more precisely, each of its component projects) constitutes a distinct undertaking identifiable from the ordinary business and activity of NSC, which is the production and marketing of steel products. 7 Further:
Each component project, of course, begins and ends at specified times, which had already been determined by the time petitioners were engaged. We also note that NSC did the work here involved the construction of buildings and civil and electrical works, installation of machinery and equipment and the commissioning of such machinery only for itself . Private respondent NSC was not in the business of constructing buildings and installing plant machinery for the general business community, i.e., for unrelated, third party, corporations. NSC did not hold itself out to the public as a construction company or as an engineering corporation. (Emphasis supplied.) 8

Respondent corporation's FYEP I was to cover years 1982 to 1988; the FYEP II to cover the years 1989 to 1994: and FYEP III to cover succeeding years. The NLRC added that FYEP III has not vet materialized due to financial and political difficulties. 9 Mutia was initially assigned in the shipbreaking operations of the NSC. This venture consists of land and sea operations the latter consisting of breaking salvaged vessels into chunks, while the landbased operation consists of cutting these chunks into small and meltable sizes. The metal scraps are consequently utilized to produce billets at NSC's Billet Steel-Making Plant (BSP), a completely new installation, and one of the component projects in the FYEP. Unfortunately, the operation was found to be an unreliable source of scrap metals due to scarcity of vessels for salvaging, higher cost of operations and unsuitable raw material mix. It was permanently phased out sometime in November 1986. 10 Consequently, Mutia was transferred to other component projects of FYEP. Palomares' assertion, on the other hand, that he was hired even before the FYEP began is misleading. He was actually employed on October 3, 1984, long after the FYEP began its preparatory stages m 1982. Two years from FYEP's inception, NSC found itself in need of more project workers. It was in this factual context that Palomares was engaged in 1984 as clerk typist detailed at the Office Services department of NSC. The records show that petitioners were hired to work on projects for FYEP I and II-A. On account of the expiration of their contracts of employment and/or project completion, petitioners were terminated from their employment. They were, however, rehired for other component projects of the FYEP because they were qualified. Thus, the Court is convinced that petitioners were engaged only to augment the workforce of NSC for its aforesaid expansion program. In the case of Philippine National Oil Company Energy Development Corporation v. NLRC, we set forth the criteria for fixed contracts of employment which do not circumvent security of tenure, to wit: (1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or (2) It satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter. 11

Where, from the circumstances, it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy, morals, good customs or public order. 12 In the case at bar, however, there is nothing in the records which reveal an attempt to frustrate petitioners' security of tenure. The fact that petitioners were required to render services necessary or desirable in the operation of NSC's business for a specified duration did not in any way impair the validity of their contracts of employment which stipulated a fixed duration therefor. It should be noted that there were intervals 13 in petitioners' respective employment contracts with NSC, thus bolstering the latter's position that, indeed, petitioners are project employees. Since its work depends on availability of such contracts or projects, necessarily the employment of its work force is not permanent but co-terminous with the projects to which they are assigned and from whose payrolls they are paid. It would be extremely burdensome for their employer to retain them as permanent employees and pay them wages even if there are no projects to work on. 14 The fact that petitioners worked for NSC under different project employment contracts for several years cannot be made a basis to consider them as regular employees, for they remain project employees regardless of the number of projects in which they have worked. 15 Even if, as admitted by the parties, petitioners were repeatedly and successively re-hired on the basis of a contact of employment for more than one year, they cannot be considered regularized. Length of service is not the controlling determinant of the employment tenure of a project employee. 16 As stated earlier, it is based on whether or not the employment has been fixed for a specific project or undertaking, the completion of which has been determined at the time of the engagement of the employee. Furthermore, the second paragraph of Article 280, providing that an employee who has rendered service for at least one (1) year, shall be considered a regular employee, pertains to casual employees and not to project employees such as petitioners. 17 Regulation of manpower by the company clearly falls within management prerogative. 18 Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives, 19 subject to the constitutional requirement for the protection of labor and the promotion of social justice which tilts the scales of justice, whenever there is doubt, in favor of the worker. 20 In the case at bar, we conclude that NSC acted within the parameters of a valid exercise of management prerogative. WHEREFORE, the instant petition is DISMISSED. The decision and resolution of the National Labor Relations Commission dated November 23, 1994 and March 23, 1995, respectively, are AFFIRMED. SO ORDERED.

G.R. No. 114734

March 31, 2000

VIVIAN Y. IMBUIDO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, INTERNATIONAL INFORMATION SERVICES, INC. and GABRIEL LIBRANDO, respondents. BUENA, J.: This special civil action for certiorari seeks to set aside the Decision1 of the National Labor Relations Commission (NLRC) promulgated on September 27, 1993 and its Order dated January 11, 1994, which denied petitioner's motion for reconsideration. Petitioner was employed as a data encoder by private respondent International Information Services, Inc., a domestic corporation engaged in the business of data encoding and keypunching, from August 26, 1988 until October 18, 1991 when her services were terminated. From August 26, 1988 until October 18, 1991, petitioner entered into thirteen (13) separate employment contracts with private respondent, each contract lasting only far a period of three (3) months. Aside from the basic hourly rate, specific job contract number and period of employment, each contract contains the following terms and conditions: a. This Contract is for a specific project/job contract only and shall be effective for the period covered as above-mentioned unless sooner terminated when the job contract is completed earlier or withdrawn by client, or when employee is dismissed for just and lawful causes provided by law. The happening of any of these events will automatically terminate this contract of employment. b. Subject shall abide with the Company's rules and regulations for its employees attached herein to form an integral part hereof. c. The nature of your job may require you to render overtime work with pay so as not to disrupt the Company's commitment of scheduled delivery dates made on said job contract.2 In September 1991, petitioner and twelve (12) other, employees of private respondent allegedly agreed to the filing of a petition for certification election involving the rank-and-file employees of private respondent.3 Thus, on October 8, 1991, Lakas Manggagawa sa Pilipinas (LAKAS) filed a petition for certification election with the Bureau of Labor Relations (BLR), docketed as NCR-OD-M9110-128.4 Subsequently, on October 18, 1991, petitioner received a termination letter from Edna Kasilag, Administrative Officer of private respondent, allegedly "due to low volume of work."5 Thus, on May 25, 1992, petitioner filed a complaint for illegal dismissal with prayer for service incentive leave pay and 13th month differential pay, with the National Labor Relations Commission, National Capital Region, Arbitration Branch, docketed as NLRC-NCR Case No. 05-02912-92.6 In her position paper dated August 3, 1992 and filed before labor arbiter Raul T. Aquino, petitioner alleged that her employment was terminated not due to the alleged low volume of work but because she "signed a petition for certification election among the rank and file employees of respondents," thus charging private respondent with committing unfair labor practices. Petitioner further complained of non-payment of service incentive leave benefits and underpayment of 13th month pay.7

On the other hand, private respondent, in its position paper filed on July 16, 1992, maintained that it had valid reasons to terminate petitioner's employment and disclaimed any knowledge of the existence or formation of a union among its rank-and-file employees at the time petitioner's services were terminated.8 Private respondent stressed that its business ". . . relies heavily on companies availing of its services. Its retention by client companies with particular emphasis on data encoding is on a project to project basis,"9 usually lasting for a period of "two (2) to five (5) months." Private respondent further argued that petitioner's employment was for a "specific project with a specified period of engagement." According to private respondent, ". . . the certainty of the expiration of complainant's engagement has been determined at the time of their (sic) engagement (until 27 November 1991) or when the project is earlier completed or when the client withdraws," as provided in the contract. 10 "The happening of the second event [completion of the project] has materialized, thus, her contract of employment is deemed terminated per the Brent School ruling." 11 Finally, private respondent averred that petitioner's "claims for non-payment of overtime time (sic) and service incentive leave [pay] are without factual and legal basis." 12 In a decision dated August 25, 1992, labor arbiter Raul T. Aquino, ruled in favor of petitioner, and accordingly ordered her reinstatement without loss of seniority rights and privileges, and the payment of backwages and service incentive leave pay. The dispositive part of the said decision reads: WHEREFORE, responsive to the foregoing, judgment is hereby rendered ordering respondents to immediately reinstate complainant [petitioner herein] as a regular employee to her former position without loss of seniority rights and privileges and to pay backwages from the time of dismissal up to the date of this decision, the same to continue until complainant ['s] [petitioner herein] actual reinstatement from (sic) the service. Respondents are likewise ordered to pay complainant [petitioner herein] service incentive leave pay computed as follows: Backwages: 10/18/91 - 8/25/92 = 10.23 mos. P118.00 x 26 x 10.23 mos. = P31, 385.64 Service Incentive Leave Pay 1989 = P89.00 x 5 days = P445.00 1990 = 106 x 5 days = 1991 = 118 x 5 days = P530.00 P590.00 P 1,565.00 Total P 32,950.64 ==========

SO ORDERED. 13

In his decision, the labor arbiter found petitioner to be a regular employee, ruling that "[e]ven if herein complainant [petitioner herein] had been obstensively (sic) hired for a fixed period or for a specific undertaking, she should be considered as [a] regular employee of the respondents in conformity with the provisions (sic) laid down under Article 280 of the Labor Code," 14 after finding that ". . . [i]t is crystal clear that herein complainant [petitioner herein] performed a job which are (sic) usually necessary or desirable in the usual business of respondent [s]." 15The labor arbiter further denounced ". . . the purpose behind the series of contracts which respondents required complainant to execute as a condition of employment was to evade the true intent and spirit of the labor laws for the workingmen . . . ." 16 Furthermore, the labor arbiter concluded that petitioner was illegally dismissed because the alleged reason for her termination, that is, low volume of work, is "not among the just causes for termination recognized by law," 17 hence, he ordered her immediate reinstatement without loss of seniority rights and with full backwages. With regard to the service incentive leave pay, the labor arbiter decided ". . . to grant the same for failure of the respondents to fully controvert said claims." 18 Lastly, the labor arbiter rejected petitioner's claim for 13th month pay ". . . since complainant [petitioner herein] failed to fully substantiate and argued (sic) the same." 19 On appeal, the NLRC reversed the decision of the labor arbiter in a decision 20 promulgated on September 27, 1993, the dispositive part of which reads: WHEREFORE, the appealed decision is hereby set aside. The complaint for illegal dismissal is hereby dismissed for being without merit. Complainant's [petitioner herein] claim for service incentive leave pay is hereby remanded for further arbitration. SO ORDERED. 21 The NLRC ruled that "[t]here is no question that the complainant [petitioner herein], viewed in relation to said Article 280 of the [Labor] Code, is a regular employee judging from the function and/or work for which she was hired. . . . But this does not necessarily mean that the complainant [petitioner herein] has to be guaranteed a tenurial security beyond the period for which she was hired." 22 The NLRC held that ". . . the complainant [petitioner herein], while hired as a regular worker, is statutorily guaranteed, in her tenurial security, only up to the time the specific project for which she was hired is completed." 23 Hence, the NLRC concluded that "[w]ith the specific project "at RCBC 014" admittedly completed, the complainant [petitioner herein] has therefore no valid basis in charging illegal dismissal for her concomittant (sic) dislocation." 24 In an Order dated January 11, 1994, the NLRC denied petitioner's motion for reconsideration. 25 In this petition for certiorari, petitioner, for and in her behalf, argues that (1) the public respondent "committed grave abuse of discretion when it ignored the findings of Labor Arbiter Raul Aquino based on the evidence presented directly before him, and when it made findings of fact that are contrary to or not supported by evidence," 26 (2) "[p]etitioner was a "regular employee," NOT a "project employee" as found by public respondent NLRC," 27 (3) "[t]he termination of petition (sic) was tainted with unfair labor practice," 28 and (4) the public respondent "committed grave abuse of discretion in remanding the awarded service incentive leave pay for further arbitration." 29 The petition is impressed with merit. We agree with the findings of the NLRC that petitioner is a project employee. The principal test for determining whether an employee is a project employee or a regular employee is whether the project employee was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employee was engaged for that project. 30 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. 31 In the instant case, petitioner was engaged to perform activities which were usually necessary or desirable in the usual business or trade of the employer, as admittedly, petitioner worked as a data encoder for private respondent, a corporation engaged in the business of data encoding and keypunching, and her employment was fixed for a specific project or undertaking the completion or termination of which had been determined at the time of her engagement, as may be observed from the series of employment contracts 32 between petitioner and private respondent, all of which contained a designation of the specific job contract and a specific period of employment.
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However, even as we concur with the NLRC's findings that petitioner is a project employee, we have reached a different conclusion. In the recent case of Maraguinot, Jr. vs. NLRC, 33 we held that "[a] project employee or a member of a work pool may acquire the status of a regular employee when the following concur: 1) There is a continuous rehiring of project employees even after [the] cessation of a project; 34 and 2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer. 35 The evidence on record reveals that petitioner was employed by private respondent as a data encoder, performing activities which are usually necessary or desirable in the usual business or trade of her employer, continuously for a period of more than three (3) years, from August 26, 1988 to October 18, 1991 36 and contracted for a total of thirteen (13) successive projects. We have previously ruled that "[h]owever, the length of time during which the employee was continuously rehired is not controlling, but merely serves as a badge of regular employment." 37 Based on the foregoing, we conclude that petitioner has attained the status of a regular employee of private respondent. At this point, we reiterate with emphasis that: xxx xxx xxx

At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty to re-hire a project employee even after completion of the project for which he was hired. The import of this decision is not to impose a positive and sweeping obligation upon the employer to re-hire project employees. What this decision merely accomplishes is a judicial recognition of the employment status of a project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by the employer of project or work pool employees who perform tasks necessary or desirable to the employer's usual business or trade. Let it not be said that this decision "coddles" labor, for as Lao 38 has ruled, project or work pool employees who have gained the status of regular employees are subject to the "no work-no pay" principle, to repeat: A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the same time enables the workers to attain the status of regular employees.

The Court's ruling here is meant precisely to give life to the constitutional policy of strengthening the labor sector, but, we stress, not at the expense of management. Lest it be misunderstood, this ruling does not mean that simply because an employee is a project or work pool employee even outside the construction industry, he is deemed, ipso jure, a regular employee. All that we hold today is that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired 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. To rule otherwise would allow circumvention of labor laws in industries not falling within the ambit of Policy Instruction No. Policy Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by project or work pool employees who have already gained the status of regular employees by the employer's conduct. 39 (emphasis supplied) Being a regular employee, petitioner is entitled to security of tenure and could only be dismissed for a just or authorized cause, as provided in Article 279 of the Labor Code, as amended: 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. The alleged causes of petitioner's dismissal (low volume of work and belatedly, completion of project) are not valid causes for dismissal under Articles 282 and 283 of the Labor Code. Thus, petitioner is entitled to reinstatement without loss of seniority rights and other privileges, and to her full backwages, inclusive of allowances, and to her other benefits or their monetary equivalent computed from the time her compensation was withheld from her up to the time of her actual reinstatement. However, complying with the principles of "suspension of work" and "no work, no pay" between the end of one project and the start of a new one, in computing petitioner's backwages, the amounts corresponding to what could have been earned during the periods from the date petitioner was dismissed until her reinstatement when private respondent was not undertaking any project, should be deducted.
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With regard to petitioner's claim for service incentive leave pay, we agree with the labor arbiter that petitioner is entitled to service incentive leave pay, as provided in Article 95 of the Labor Code, which reads: Art. 95 - Right to service incentive leave (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. xxx xxx xxx

Having already worked for more than three (3) years at the time of her unwarranted dismissal, petitioner is undoubtedly entitled to service incentive leave benefits, computed from 1989 until the date of her actual reinstatement. As we ruled in the recent case of Fernandez vs. NLRC, 40 "[s]ince a service incentive leave is clearly demandable after one year of service - whether continuous or broken - or its equivalent period, and it is one of the "benefits" which would have accrued if an employee was not otherwise illegally dismissed, it

is fair and legal that its computation should be up to the date of reinstatement as provided under Section [Article] 279 of the Labor Code, as amended, which reads: Art. 279. Security of Tenure. - 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 is withheld from him up to the time of his actual reinstatement." (emphasis supplied). WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations Commission in NLRC NCR CA No. 003845-92 dated September 27, 1993, as well as its Order dated January 11, 1994, are hereby ANNULLED and SET ASIDE for having been rendered with grave abuse of discretion, and the decision of the Labor Arbiter in NLRC NCR Case No. 0502912-92 is REINSTATED with MODIFICATION as above-stated, with regard to computation of back wages and service incentive leave pay.
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SO ORDERED.

G.R. No. 74004. August 10, 1989 A.M. ORETA & CO., INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and SIXTO GRULLA JR., respondents. Siguion Reyna, Montecillo & Ongsiako for petitioner

MEDIALDEA, J.: This is a petition for certiorari under Rule 65 of the Rules of Court seeking annulment of the resolution of the respondents National Labor Relations Commission dated January 17, 1986 (p. 24, rollo) in BES Case no. 8-1371 entitled , "SIXTO GRULLA, JR., Complainant, versus A.M. ORETA & COMPANY INC. and/or ENGINEERING CONSTRUCTION & INDUSTRIAL DEVELOPMENT CO. (ENDECO), Respondents", affirming the decision of the Philippine Overseas Employment Administration (POEA) awarding to private respondents herein Sixto Grulla the salaries corresponding to the unexpired portion of his employment contract. The antecedent facts are as follows:

Private respondent Grulla was engaged by Engineering Construction and Industrial Development Company (ENDECO) through A.M. Oreta and Co., Inc., as a carpenter in its projects in Jeddah, Saudi Arabia. The contract of employment, which was entered into June 11, 1980 was for a period of twelve (12) months. Respondent Grulla left the Philippines for Jeddah, Saudi Arabia on August 5, 1980. On August 15, 1980, Grulla met an accident which fractured his lumbar vertebra while working at the jobsite. He was rushed to the New Jeddah Clinic and was confined there for twelve (12) days. On August 27, 1980, Grulla was discharged from the hospital and was told that he could resume his normal duties after undergoing physical therapy for two weeks. On September 18, 1980, respondent Grulla reported back to his Project Manager and presented to the latter a medical certificate declaring the former already fit for work. Since then, he started working again until he received a notice of termination of his employment on October 9, 1980. In December, 1981, respondent Grulla filed a complaint for illegal dismissal, recovery of medical benefits, unpaid wages for the unexpired ten (10) months of his contract and the sum of P1,000.00 as reimbursement of medical expenses against A.M. Oreta and Company, Inc., and Engineering Construction and Industrial Development Co. (ENDECO) with the Philippine Overseas Employment Administration (POEA).
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The petitioner A.M. Oreta and Company, Inc and ENDECO filed their answer and alleged that the contract of employment entered into between petitioners and Grulla provides, as one of the grounds for termination, violations of the rules and regulations promulgated by the contractor; and that Grulla was dismissed because he has not performed his duties satisfactorally within the probationary period of three months. On August 8, 1985, the POEA rendered a decision (pp. 97-107, Rollo) the dispositive portion of which states, inter alia: In view of the foregoing, this Office finds and so holds that complainants dismissal was illegal and warrants the award of his wages for the unexpired portion of the contract. 2. Anent the complainant's claim for medical expenses, this Office finds the same well-taken. Respondent did not deny either specifically or generally said claim. Hence, it is deemed admitted. Wherefore, judgment is hereby rendered ordering repondents A.M. Oreta and Company, Inc , and its foreign principal Engineering Construction and Industrial Development Company (ENDECO) jointly and severally to pay the complainant within ten (10) days from receipt of this Order the sum of THREE THOUSAND SEVEN HUNDRED U.S. DOLLARS (U.S.$ 3,700.00) or its equivalent at the time of payment representing complainant's salaries for the unexpired portion of his contract for ten (10) months and the sum of ONE THOUSAND PESOS ( P1,00.00 ) representing reimbursement of medical expenses. Respondent is likewise ordered to pay attorney's fees equivalent to ten (10%) percent of total award SO ORDERED.

Petitioner appealed from the adverse decision to respondent Commission. On January 17, 1986, respondent Commission dismissed the appeal for lack of merit and affirmed in toto the decision of the POEA. On April 1, 1986, the instant petition was filed on the ground that the respondent Commission commited grave abuse of discretion in affirming the decision of the POEA. A temporary restraining order was issued by this court on April 23, 1986, enjoining the respondents from enforcing the questioned resolution of the respondent Commission. The issue to be resolved in the instant case are whether or not the employment of respondent Grulla was illegaly terminated by the petitioner; and whether or not the respondent Grulla is entitled to salaries corresponding to the unexpired portion of his employment contract. Petitioner contends that the respondent Grulla was validly dismissed because the latter was still a probationary employee; and that his dismissal was justified on the basis of his unsatisfactory performance of his job during the probationary period. This contention has no merit. Article 280 (formerly Article 281) of the Labor Code, as amended, provides: Article 280. Regular and Casual Employment The provisions of written agreement to the contrary not withstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desireable in the usual business or trade of 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 engagement of the employment or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph:Provided, that any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. It may be well to cite at this point Policy Instructions No. 12 of the then Minister of Labor (Now Secretary of Labor and Employment) which provides: PD 850 has defined the concept of regular and casual employment. What determines regularity or casualness is not employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desireable to the main business of the employer, the employment is regular. . . Petitioner admitted that respondent Grulla was employed in the company as carpenter for a period of twelve (12) months before he was dismissed on October 9, 1980. A perusal of the employment contract reveals that although the period of employment of respondent Grulla is twelve (12) months, the contract is renewable subject to future agreements of the parties. It is clear from the employment contract that the respondent Grulla was hired by the company as a regular employee and not just mere probationary employee. On the matter of probationary employment, the law in point is Article 281 (formerly 282) of the Labor Code which provides in part:

Art. 281 Probationary Employment . . .The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. (Italics supplied) The law is clear to the effect that in all cases involving employees engaged on probationary period basis, the employer shall make known to the employee at the time he is hired, the standards by which he will qualify as a regular employee. Nowhere in the employment contract executed between petitioner company and respondent Grulla is there a stipulation that the latter shall undergo a probationary period for three months before he can qualify as a regular employee. There is also no evidence on record showing that the respondent Grulla has been appraised of his probationary status and the requirements which he should comply in order to be a regular employee. In the absence of this requisites, there is justification in concluding that respondent Grulla was a regular employee at the time he was dismissed by petitioner. As such, he is entitled to security of tenure during his period of employment and his services cannot be terminated except for just and authorized causes enumerated under the Labor Code and under the employment contract. Granting, in gratia argumenti, that respondent is a probationary employee, he cannot, likewise, be removed except for cause during the period of probation. Although a probationary or temporary employee has limited tenure, he still enjoys security of tenure. During his tenure of employment or before his contract expires, he cannot be removed except for cause as provided by law (Euro-Linea Phils., Inc. v. NLRC, No. L-75782, December 1, 1987, 156 SCRA 78; Manila Hotel Corporation v. NLRC, No. L-53453, January 22, 1986, 141 SCRA 169).
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Article 282 of the Labor Code sets forth the following just causes for which an employer may terminate an employment, namely: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other cause analogous to the foregoing The alleged ground of unsatisfactory performance relied upon by petitioner for dismissing respondent Grulla is not one of the just causes for dismissal provided in the Labor Code. Neither is it included among the grounds for termination of employment under Article VII of the contract of employment executed by petitioner company and respondent Grulla (p. 18, Rollo). Moreover, petitioner has failed to show proof of the particular acts or omissions constituting the unsatisfactory performance of Grulla of his duties, which was allegedly due to his poor physical state after the accident. Contrary to petitioner's claims, records show that the medical certificate issued by the hospital where respondent Grulla was confined as a result of the accident, clearly and positively

stated that Grulla was already physically fit for work after he was released from the hospital (p. 102, Rollo).
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Anent the respondent Commission's finding of lack of due process in the dismissal of Grulla, the petitioner claims that notice and hearing are important only if the employee is not aware of the problems affecting his employment; that the same is not true in the instant case where respondent Grulla knew all along that he could no longer effectively perform his job due to his physical condition. We find that this contention has no legal basis. The twin requirements of notice and hearing constitute essential elements of due process in cases of employee dismissal: the requirement of notice is intended to inform the employee concerned of the employer's intent to dismiss and the reason for the proposed dismissal, while the requirement of hearing affords the employee an opportunity to answer his employer's charges against him and accordingly to defend himself therefrom before dismissal is effected. Neither of these requirements can be dispensed with without running afoul of the due process requirement of the Constitution (Century Textile Mills, Inc., et al. v. NLRC, et al., G.R. No. 77859, May 25,1988). In the case at bar, respondent Grulla was not, in any manner, notified of the charges against him before he was outrightly dismissed. Neither was any hearing or investigation conducted by the company to give the respondent a chance to be heard concerning the alleged unsatisfactory performance of his work. In view of the foregoing, the dismissal of respondent Grulla violated the security of tenure under the contract of employment which specifically provides that the contract term shall be for a period of twelve (12) calendar months. Consequently the respondent Grulla should be paid his salary for the unexpired portion of his contract of employment which is ten (10) months (See Cuales v. NLRC, et al., No. L-57379 April 28, 1983, 121 SCRA 812). The findings of the POEA and the respondent Commission that the respondent Grulla is entitled to salaries in the amount of US$ 3,700.00 or its equivalent in Philippine currency for the unexpired portion of his contract and the sum of P1,000.00 as reimbursement of medical expenses bear great weight. Well-established is the principle that findings of administrative agencies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality. Judicial review by this Court on labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the labor officer or office based his or its determination but are limited to issues of jurisdiction or grave abuse of discretion (Special Events and Central Shipping Office Workers Union v. San Miguel Corporation, Nos. L-51002-06, May 30, 1983, 122 SCRA 557). In the instant case, the assailed Resolution of the respondent Commission is not tainted with arbitrariness that would amount to grave abuse of discretion or lack of jurisdiction and therefore, We find no reason to disturb the same. ACCORDINGLY, premises considered, the instant petition is dismissed for lack of merit and the resolution of the respondent Commission dated January 17, 1986 is hereby AFFIRMED. The temporary restraining order issued on April 23, 1986 is lifted. SO ORDERED.

G.R. No. L-77629 May 9, 1990 KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVISM AND NATIONALISMORGANIZED LABOR ASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE (KILUSANOLALIA), ROQUE JIMENEZ, MARIO C. RONGALEROS and OTHERS, petitioners, vs. HON. FRANKLIN M. DRILON, KIMBERLY-CLARK PHILIPPINES, INC., RODOLFO POLOTAN, doing business under the firm name "Rank Manpower Co." and UNITED KIMBERLY-CLARK EMPLOYEES UNION-PHILLIPPINE TRANSPORT AND GENERAL WORKERS ORGANIZATION (UKCEU-PTGWO), respondents. KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVITISM AND NATIONALISM-OLALIA (KILUSAN-OLALIA), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, MANUEL AGUILAR, MA. ESTRELLA ALDA, CAPT. REY L. LANADA, COL. VIVENCIO MANAIG and KIMBERLY-CLARK PHILIPPINES, INC., respondents.

REGALADO, J.: Before us are two consolidated petitions for certiorari filed by the above-named petitioner union (hereinafter referred to as KILUSAN-OLALIA, for conciseness) and individual complainants therein, to wit (a) G.R. 77629, which seeks to reverse and set aside the decision, dated November 13, 1986, 1 and the resolution, dated January 9, 1987, 2 respectively handed down by the two former Ministers of Labor, both rendered in BLR Case No. NS-5-164-86; and (b) G.R. No. 78791, which prays for the reversal of the resolutions of the National Labor Relations Commission, dated May 25, 1987 3 and June 19,1987 4 issued in Injunction Case No. 1442 thereof. Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed a three-year collective bargaining agreement (CBA) with United Kimberly-Clark Employees Union-Philippine Transport and General Workers' Organization (UKCEU-PTGWO) which expired on June 30, 1986. Within the 60-day freedom period prior to the expiration of and during the negotiations for the renewal of the aforementioned CBA, some members of the bargaining unit formed another union called "Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor Association in Line Industries and Agriculture (KILUSAN-OLALIA)." On April 21, 1986, KILUSAN-OLALIA filed a petition for certification election in Regional Office No. IV, Ministry of Labor and Employment (MOLE), docketed as Case No. RO4-OD-M-41586. 5 KIMBERLY and (UKCEU-PTGWO) did not object to the holding of a certification election but objected to the inclusion of the so-called contractual workers whose employment with KIMBERLY was coursed through an independent contractor, Rank Manpower Company (RANK for short), as among the qualified voters.

Pending resolution of the petition for certification election by the med-arbiter, KILUSAN-OLALIA filed a notice of strike on May 7, 1986 with the Bureau of Labor Relations, docketed as BLR Case No. NS-5-164-86, 6 charging KIMBERLY with unfair labor practices based on the following alleged acts: (1) dismissal of union members (KILUSAN-OLALIA); (2) non-regularization of casuals/contractuals with over six months service; (3) non-implementation of appreciation bonus for 1982 and 1983; (4) non-payment of minimum wages; (5) coercion of employees; and (6) engaging in CBA negotiations despite the pendency of a petition for certification election. This was later amended to withdraw the charge of coercion but to add, as new charges, the dismissal of Roque Jimenez and the nonpayment of backwages of the reinstated Emerito Fuentes . 7 Conciliation proceedings conducted by the bureau proved futile, and KILUSAN-OLALIA declared a strike at KIMBERLY's premises in San Pedro, Laguna on May 23, 1986. On May 26, 1986, KIMBERLY petitioned MOLE to assume jurisdiction over the labor dispute. On May 30, 1986, finding that the labor dispute would adversely affect national interest, then Minister Augusto S. Sanchez issued an assumption order, the dispositive portion whereof reads:
Wherefore, premises considered, immediately upon receipt of this order, the striking union and its members are hereby enjoined to lift the picket and remove all obstacles to the free ingress to and egress from the company premises and to return to work, including the 28 contractual workers who were dismissed; likewise, the company is directed to resume its operations immediately thereafter and to accept all the employees back under the same terms and conditions of employment prevailing prior to the industrial action. Further, all issues in the notice of strike, as amended, are hereby assumed in this assumption order, except for the representation issue pending in Region IV in which the Med-Arbiter is also enjoined to decide the same the soonest possible time. 8

In obedience to said assumption order, KILUSAN-OLALIA terminated its strike and picketing activities effective June 1, 1986 after a compliance agreement was entered into by it with KIMBERLY. 9 On June 2, 1986, Med-Arbiter Bonifacio 1. Marasigan, who was handling the certification election case (RO4-OD-M-4-1586), issued an order 10 declaring the following as eligible to vote in the certification election, thus: 1. The regular rank-and-file laborers/employees of the respondent company consisting of 537 as of May 14, 1986 should be considered qualified to vote; 2. Those casuals who have worked at least six (6) months as appearing in the payroll months prior to the filing of the instant petition on April 21, 1986; and 3. Those contractual employees who are allegedly in the employ of an independent contractor and who have also worked for at least six (6) months as appearing in the payroll month prior to the filing of the instant petition on April 21, 1986. During the pre-election conference, 64 casual workers were challenged by KIMBERLY and (UKCEU-PTGWO) on the ground that they are not employees, of KIMBERLY but of RANK. It was agreed by all the parties that the 64 voters shall be allowed to cast their votes but that their ballots shall be segregated and subject to challenge proceedings. The certification election was conducted on July I., 1986, with the following results: 11 1. KILUSAN-OLALIA = 246 votes

2. (UKCEU-PTGWO) = 266 votes 3. NO UNION = 1 vote 4. SPOILED BALLOTS = 4 votes 5. CHALLENGED BALLOTS = 64 votes TOTAL 581 votes On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a "Protest and Motion to Open and Count Challenged Votes" 12 on the ground that the 64 workers are employees of KIMBERLY within the meaning of Article 212(e) of the Labor Code. On July 7, 1986, KIMBERLY filed an opposition to the protest and motion, asserting that there is no employer-employee relationship between the casual workers and the company, and that the med-arbiter has no jurisdiction to rule on the issue of the status of the challenged workers which is one of the issues covered by the assumption order. The med-arbiter opted not to rule on the protest until the issue of regularization has been resolved by MOLE. 13 On November 13, 1986, then Minister Sanchez rendered a decision in BLR Case No. NS-5-16486, 14 the disposition wherein is summarized as follows: 1. The service contract for janitorial and yard maintenance service between KIMBERLY and RANK was declared legal; 2. The other casual employees not performing janitorial and yard maintenance services were deemed labor-only contractual and since labor-only contracting is prohibited, such employees were held to have attained the status of regular employees, the regularization being effective as of the date of the decision; 3. UKCEU-PTGWO having garnered more votes than KILUSAN-OLALIA was certified as the exclusive bargaining representative of KIMBERLY's employees; 4. The reinstatement of 28 dismissed KILUSAN-OLALIA members was ordered; 5. Roque Jimenez was ordered reinstated without backwages, the period when he was out of work being considered as penalty for his misdemeanor; 6. The decision of the voluntary arbitrator ordering the reinstatement of Ermilo Fuentes with backwages was declared as already final and unappealable; and 7. KIMBERLY was ordered to pay appreciation bonus for 1982 and 1983. On November 25, 1986, KIMBERLY flied a motion for reconsideration with respect to the regularization of contractual workers, the appreciation bonus and the reinstatement of Roque Jimenez. 15 In a letter dated November 24, 1986, counsel for KILUSAN-OLALIA demanded from KIMBERLY the implementation of the November 13, 1986 decision but only with respect to the regularization of the casual workers. 16

On December 11, 1986, KILUSAN-OLALIA filed a motion for reconsideration questioning the authority of the Minister of Labor to assume jurisdiction over the representation issue. In the meantime, KIMBERLY and UKCEU-PTGWO continued with the negotiations on the new collective bargaining agreement (CBA), no restraining order or junctive writ having been issued, and on December 18, 1986, a new CBA was concluded and ratified by 440 out of 517 members of the bargaining unit. 17 In an order dated January 9, 1987, former Labor Minister Franklin Drilon denied both motions for reconsideration filed by KIMBERLY and KILUSAN-OLALIA. 18 On March 10, 1987, the new CBA executed between KIMBERLY and UKCEU-PTGWO was signed. On March 16, 1987, KILUSAN-OLALIA filed a petition for certiorari in this Court docketed as G.R. No. 77629, seeking to set aside the aforesaid decision, dated November 13, 1986, and the order, dated January 9, 1987, rendered by the aforesaid labor ministers. On March 25, 1987, this Court issued in G.R. No. 77629 a temporary restraining order, enjoining respondents from enforcing and/or carrying out the decision and order above stated, particularly that portion (1) recognizing respondent UKCEU-PTGWO as the exclusive bargaining representative of all regular rank-and-file employees in the establishment of respondent company, (2) enforcing and/or implementing the alleged CBA which is detrimental to the interests of the members of the petitioner union, and (3) stopping respondent company from deducting monthly dues and other union assessments from the wages of all regular rank-and-file employees of respondent company and from remitting the said collection to respondent UKCEU-PTGWO issued in BLR Case No. NS-5-16486, entitled, "In Re: Labor Dispute at Kimberly-Clark Philippines, Inc.," of the Department of Labor and Employment, Manila, 19 In its comment, 20 respondent company pointed out certain events which took place prior to the filing of the petition in G.R. No. 77629, to wit: 1. The company and UKCEU-PTGWO have concluded a new collective bargaining agreement which had been ratified by 440 out of 517 members of the bargaining unit; 2. The company has already granted the new benefits under the new CBA to all its regular employees, including members of petitioner union who, while refusing to ratify the CBA nevertheless readily accepted the benefits arising therefrom; 3. The company has been complying with the check-off provision of the CBA and has been remitting the union dues to UKCEU-PTGWO 4. The company has already implement the decision of November 13, 1986 insofar as the regularization of contractual employees who have rendered more than one (1) year of service as of the filing of the Notice of Strike on May 7, 1986 and are not engaged in janitorial and yard maintenance work, are concerned 5. Rank Manpower Company had already pulled out, reassigned or replaced the contractual employees engaged in janitorial and yard maintenance work, as well as those with less than one year service; and 6. The company has reinstated Roque Jimenez as of January 11, 1987.

In G.R. No. 78791, the records 21 disclose that on May 4, 1987, KILUSAN-OLALIA filed another notice of strike with the Bureau of Labor Relations charging respondent company with unfair labor practices. On May 8, 1987, the bureau dismissed and considered the said notice as not filed by reason of the pendency of the representation issue before this Court in G.R. No. 77629. KILUSANOLALIA moved to reconsider said order, but before the bureau could act on said motion, KILUSANOLALIA declared a strike and established a picket on respondent company's premises in San Pedro, Laguna on May 17, 1987. On May 18, 1987, KIMBERLY filed a petition for injunction with the National Labor Relations Commission (NLRC), docketed as Injunction Case No. 1442. A supplement to said petition was filed on May 19, 1987. On May 26, 1987, the commission en banc issued a temporary restraining order (TRO) on the basis of the ocular inspection report submitted by the commission's agent, the testimonies of KIMBERLY's witnesses, and pictures of the barricade. KILUSAN-OLALIA moved to dissolve the TRO on the ground of lack of jurisdiction. Immediately after the expiration of the first TRO on June 9, 1987, the striking employees returned to their picket lines and reestablished their barricades at the gate. On June 19, 1987, the commission en banc issued a second TRO. On June 25, 1987, KILUSAN-OLALIA filed another petition for certiorari and prohibition with this Court, docketed as G.R. No. 78791, questioning the validity of the temporary restraining orders issued by the NLRC on May 26, 1987 and June 19, 1987. On June 29, 1987, KILUSAN-OLALIA filed in said case an urgent motion for a TRO to restrain NLRC from implementing the questioned orders. An opposition, as well as a reply thereto, were filed by the parties. Meanwhile, on July 3, 1987, KIMBERLY filed in the NLRC an urgent motion for the issuance of a writ of preliminary injunction when the strikers returned to the strike area after the second TRO expired. After due hearing, the commission issued a writ of preliminary injunction on July 14, 1987, after requiring KIMBERLY to post a bond in the amount of P20,000.00. Consequently, on July 17, 1987, KILUSAN-OLALIA filed in G.R. No. 78791 a second urgent motion for the issuance of a TRO by reason of the issuance of said writ of preliminary injunction, which motion was opposed by KIMBERLY. Thereafter, in its memorandum 22 filed on December 28, 1989 and in its motion for early resolution 23 filed on February 28, 1990, both in G.R. No. 78791, KILUSAN-OLALIA alleged that it had terminated its strike and picketing activities and that the striking employees had unconditionally offered to return to work, although they were refused admission by KIMBERLY. By reason of this supervening development, the petition in G.R. No. 78791, questioning the propriety of the issuance of the two temporary restraining orders and the writ of injunction therein, has been rendered moot and academic. In G.R. No. 77629, the petition of KILUSAN-OLALIA avers that the respondent Secretary of Labor and/or the former Minister of Labor have acted with grave abuse of discretion and/or without jurisdiction in (1) ruling on the issue of bargaining representation and declaring respondent UKCEUPTGWO as the collective bargaining representative of all regular rank-and-file employees of the respondent company; (2) holding that petitioners are not entitled to vote in the certification election; (3) considering the regularization of petitioners (who are not janitors and maintenance employees) to be effective only on the date of the disputed decision; (4) declaring petitioners who are assigned janitorial and yard maintenance work to be employees of respondent RANK and not entitled to be regularized; (5) not awarding to petitioners differential pay arising out of such illegal work scheme; and (6) ordering the mere reinstatement of petitioner Jimenez.

The issue of jurisdiction actually involves a question of whether or not former Minister Sanchez committed a grave abuse of discretion amounting to lack of jurisdiction in declaring respondent UKCEU-PTGWO as the certified bargaining representative of the regular employees of KIMBERLY, after ruling that the 64 casual workers, whose votes are being challenged, were not entitled to vote in the certification election. KILUSAN-OLALIA contends that after finding that the 64 workers are regular employees of KIMBERLY, Minister Sanchez should have remanded the representation case to the med-arbiter instead of declaring UKCEU-PTGWO as the winner in the certification election and setting aside the med-arbiter's order which allowed the 64 casual workers to cast their votes. Respondents argue that since the issues of regularization and representation are closely interrelated and that a resolution of the former inevitably affects the latter, it was necessary for the former labor minister to take cognizance of the representation issue; that no timely motion for reconsideration or appeal was made from his decision of November 13, 1986 which has become final and executory; and that the aforesaid decision was impliedly accepted by KILUSAN-OLALIA when it demanded from KIMBERLY the issuance of regular appointments to its affected members in compliance with said decision, hence petitioner employees are now stopped from questioning the legality thereof. We uphold the authority of former Minister Sanchez to assume jurisdiction over the issue of the regularization of the 64 casual workers, which fact is not even disputed by KILUSAN-OLALIA as may be gleaned from its request for an interim order in the notice of strike case (BLR-NS-5-164-86), asking that the regularization issue be immediately resolved. Furthermore, even the med-arbiter who ordered the holding of the certification election refused to resolve the protest on the ground that the issue raised therein correctly pertains to the jurisdiction of the then labor minister. No opposition was offered by KILUSAN-OLALIA. We hold that the issue of regularization was properly addressed to the discretion of said former minister. However, the matter of the controverted pronouncement by former Minister Sanchez, as reaffirmed by respondent secretary, regarding the winner in the certification election presents a different situation. It will be recalled that in the certification election, UKCEU-PTGWO came out as the winner, by garnering a majority of the votes cast therein with the exception of 64 ballots which were subject to challenge. In the protest filed for the opening and counting of the challenged ballots, KILUSANOLALIA raised the main and sole question of regularization of the 64 casual workers. The medarbiter refused to act on the protest on the ground that the issue involved is within the jurisdiction of the then Minister of Labor. KILUSAN-OLALIA then sought an interim order for an early resolution on the employment status of the casual workers, which was one of the issues included in the notice of strike filed by KILUSAN-OLALIA in BLR Case No. NS-5-164-86. Consequently, Minister Sanchez rendered the questioned decision finding that the workers not engaged in janitorial and yard maintenance service are regular employees but that they became regular only on the date of his decision, that is, on November 13, 1986, and, therefore, they were not entitled to vote in the certification election. On the basis of the results obtained in the certification election, Minister Sanchez declared UKCEU-PTGWO as the winner. The pivotal issue, therefore, is when said workers, not performing janitorial or yard maintenance service, became regular employees of KIMBERLY. We find and so hold that the former labor minister gravely abused his discretion in holding that those workers not engaged in janitorial or yard maintenance service attained the status of regular

employees only on November 13, 1986, which thus deprived them of their constitutionally protected right to vote in the certification election and choose their rightful bargaining representative. The Labor Code defines who are regular employees, as follows: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary not withstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or under the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph:Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. The law thus provides for 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. The individual petitioners herein who have been adjudged to be regular employees fall under the second category. These are the mechanics, electricians, machinists machine shop helpers, warehouse helpers, painters, carpenters, pipefitters and masons It is not disputed that these workers have been in the employ of KIMBERLY for more than one year at the time of the filing of the Petition for certification election by KILUSANOLALIA. Owing to their length of service with the company, these workers became regular employees, by operation of law, one year after they were employed by KIMBERLY through RANK. While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers and compliance with such other operating procedures as may be adopted by the employer, it is more in keeping with the intent and spirit of the law to rule that the status of regular employment attaches to the casual worker on the day immediately after the end of his first year of service. To rule otherwise, and to instead make their regularization dependent on the happening of some contingency or the fulfillment of certain requirements, is to impose a burden on the employee which is not sanctioned by law. That the first stated position is the situation contemplated and sanctioned by law is further enhanced by the absence of a statutory limitation before regular status can be acquired by a casual employee. The law is explicit. As long as the employee has rendered at least one year of service, he becomes a regular employee with respect to the activity in which he is employed. The law does not provide the qualification that the employee must first be issued a regular appointment or must first be formally declared as such before he can acquire a regular status. Obviously, where the law does not distinguish, no distinction should be drawn. The submission that the decision of November 13, 1986 has become final and executory, on the grounds that no timely appeal has been made therefrom and that KILUSAN-OLALIA has impliedly acceded thereto, is untenable.

Rule 65 of the Rules of Court allows original petitions for certiorari from decisions or orders of public respondents provided they are filed within a reasonable time. We believe that the period from January 9, 1987, when the motions for reconsideration separately filed by KILUSAN-OLALIA and KIMBERLY were denied, to March 16, 1987, when the petition in G.R. No. 77629 was filed, constitutes a reasonable time for availing of such recourse. We likewise do not subscribe to the claim of respondents that KILUSAN-OLALIA has impliedly accepted the questioned decision by demanding compliance therewith. In the letter of KILUSANOLALIA dated November 24, 1986 24 addressed to the legal counsel of KIMBERLY, it is there expressly and specifically pointed out that KILUSAN-OLALIA intends to file a motion for reconsideration of the questioned decision but that, in the meantime, it was demanding the issuance of regular appointments to the casual workers who had been declared to be regular employees. The filing of said motion for reconsideration of the questioned decision by KILUSAN-OLALIA, which was later denied, sustains our position on this issue and denies the theory of estoppel postulated by respondents. On the basis of the foregoing circumstances, and as a consequence of their status as regular employees, those workers not perforce janitorial and yard maintenance service were performance entitled to the payment of salary differential, cost of living allowance, 13th month pay, and such other benefits extended to regular employees under the CBA, from the day immediately following their first year of service in the company. These regular employees are likewise entitled to vote in the certification election held in July 1, 1986. Consequently, the votes cast by those employees not performing janitorial and yard maintenance service, which form part of the 64 challenged votes, should be opened, counted and considered for the purpose of determining the certified bargaining representative. We do not find it necessary to disturb the finding of then Minister Sanchez holding as legal the service contract executed between KIMBERLY and RANK, with respect to the workers performing janitorial and yard maintenance service, which is supported by substantial and convincing evidence. Besides, we take judicial notice of the general practice adopted in several government and private institutions and industries of hiring a janitorial service on an independent contractor basis. Furthermore, the occasional directives and suggestions of KIMBERLY are insufficient to erode primary and continuous control over the employees of the independent contractor. 25 Lastly, the duties performed by these workers are not independent and integral steps in or aspects of the essential operations of KIMBERLY which is engaged in the manufacture of consumer paper products and cigarette paper, hence said workers cannot be considered regular employees. The reinstatement of Roque Jimenez without backwages involves a question of fact best addressed to the discretion of respondent secretary whose finding thereon is binding and conclusive upon this Court, absent a showing that he committed a grave abuse in the exercise thereof. WHEREFORE, judgment is hereby rendered in G.R. No. 77629: 1. Ordering the med-arbiter in Case No. R04-OD-M-4-15-86 to open and count the 64 challenged votes, and that the union with the highest number of votes be thereafter declared as the duly elected certified bargaining representative of the regular employees of KIMBERLY; 2. Ordering KIMBERLY to pay the workers who have been regularized their differential pay with respect to minimum wage, cost of living allowance, 13th month pay, and benefits provided for under the applicable collective bargaining agreement from the time they became regular employees.

All other aspects of the decision appealed from, which are not so modified or affected thereby, are hereby AFFIRMED. The temporary restraining order issued in G.R. No. 77629 is hereby made permanent. The petition filed in G.R. No. 78791 is hereby DISMISSED. SO ORDERED.

G.R. No. 149011

June 28, 2005

SAN MIGUEL CORPORATION, petitioner vs. PROSPERO A. ABALLA, BONNY J. ABARING, EDWIN M. ADLA-ON, ALVIN C. ALCALDE, CELANIO D. ARROLLADO, EDDIE A. ARROLLADO, REYNALDO T. ASONG, RENE A. ASPERA, JOEL D. BALATERIA, JOSEPH D. BALATERIA, JOSE JOLLEN BALLADOS, WILFREDO B. BASAS, EDWIN E. BEATINGO, SONNY V. BERONDO, CHRISTOPHER D. BRIONES, MARLON D. BRIONES, JOEL C. BOOC, ENRIQUE CABALIDA, DIOSCORO R. CAHINOD, ERNESTO P. CAHINOD, RENANTE S. CAHINOD, RUDERICK R. CALIXTON, RONILO C. CALVEZ, PANCHO CAETE, JUNNY CASTEL, JUDY S. CELESTE, ROMEO CHUA, DANILO COBRA, ARMANDO C. DEDOYCO, JOEY R. DELA CRUZ, JOHN D. DELFIN, RENELITO P. DEON, ARNEL C. DE PEDRO, ORLANDO DERDER, CLIFFORD A. DESPI, RAMIE A. DESPI, SR., VICTOR A. DESPI, ROLANDO L. DINGLE, ANTONIO D. DOLORFINO, LARRY DUMA-OP, NOEL DUMOL, CHITO L. DUNGOG, RODERICK C. DUQUEZA, ROMMEL ESTREBOR, RIC E. GALPO, MANSUETO GILLE, MAXIMO L. HILA-US, GERARDO J. JIMENEZ, ROBERTLY Y. HOFILEA, ROBERTO HOFILEA, VICENTE INDENCIO, JONATHAN T. INVENTOR, PETER PAUL T. INVENTOR, JOEBERT G. LAGARTO, RENATO LAMINA, ALVIN LAS POBRES, ALBERT LAS POBRES, LEONARD LEMONCHITO, JERRY LIM, JOSE COLLY S. LUCERO, ROBERTO E. MARTIL, HERNANDO MATILLANO, VICENTE M. MATILLANO, TANNY C. MENDOZA, WILLIAM P. NAVARRO, WILSON P. NAVARRO, LEO A. OLVIDO, ROBERTO G. OTERO, BIENVENIDO C. PAROCHILIN, REYNALDO C. PAROCHILIN, RICKY PALANOG, BERNIE O. PILLO, ALBERTO O. PILLO, JOE-MARIE S. PUGNA, EDWIN G. RIBON, RAUL A. RUBIO, HENRY S. SAMILLANO, EDGAR SANTIAGO, ROLAND B. SANTILLANA, ROLDAN V. SAYAM, JOSEPH S. SAYSON, RENE SUARNABA, ELMAR TABLIGAN, JERRY D. TALITE, OSCAR TALITE, WINIFREDO TALITE, CAMILO N. TEMPOROSA, JOSE TEMPOROSA, RANDY TINGALA, TRISTAN A. TINGSON, ROGELIO TOMESA, DIONISE A. TORMIS, ADELINO C. UNTAL, FELIX T. UNTAL, RONILO E. VISTA, JOAN C. VIYO and JOSE JOFER C. VIYO and the COURT OF APPEALS, respondents. DECISION CARPIO-MORALES, J.:

Petitioner San Miguel Corporation (SMC), represented by its Assistant Vice President and Visayas Area Manager for Aquaculture Operations Leopoldo S. Titular, and Sunflower Multi-Purpose Cooperative (Sunflower), represented by the Chairman of its Board of Directors Roy G. Asong, entered into a one-year Contract of Services1 commencing on January 1, 1993, to be renewed on a month to month basis until terminated by either party. The pertinent provisions of the contract read: 1. The cooperative agrees and undertakes to perform and/or provide for the company, on a non-exclusive basis for a period of one year the following services for the Bacolod Shrimp Processing Plant: A. Messengerial/Janitorial B. Shrimp Harvesting/Receiving C. Sanitation/Washing/Cold Storage2 2. To carry out the undertaking specified in the immediately preceding paragraph, the cooperative shall employ the necessary personnel and provide adequate equipment, materials, tools and apparatus, to efficiently, fully and speedily accomplish the work and services undertaken by the cooperative. xxx 3. In consideration of the above undertaking the company expressly agrees to pay the cooperative the following rates per activity: A. Messengerial/Janitorial Monthly Fixed Service Charge of: Nineteen Thousand Five Hundred Pesos Only (P19,500.00) B. Harvesting/Shrimp Receiving. Piece rate of P0.34/kg. Or P100.00 minimum per person/activity whichever is higher, with provisions as follows: P25.00 Fixed Fee per person Additional meal allowance P15.00 every meal time in case harvest duration exceeds one meal. This will be pre-set every harvest based on harvest plan approved by the Senior Buyer. C. Sanitation/Washing and Cold Storage P125.00/person for 3 shifts. One-half of the payment for all services rendered shall be payable on the fifteenth and the other half, on the end of each month. The cooperative shall pay taxes, fees, dues and other impositions that shall become due as a result of this contract. The cooperative shall have the entire charge, control and supervision of the work and services herein agreed upon. xxx 4. There is no employer-employee relationship between the company and the cooperative, or the cooperative and any of its members, or the company and any members of the cooperative. The cooperative is an association of self-employed members, an independent contractor, and an entrepreneur. It is subject to the control and direction of the company only

as to the result to be accomplished by the work or services herein specified, and not as to the work herein contracted. The cooperative and its members recognize that it is taking a business risk in accepting a fixed service fee to provide the services contracted for and its realization of profit or loss from its undertaking, in relation to all its other undertakings, will depend on how efficiently it deploys and fields its members and how they perform the work and manage its operations. 5. The cooperative shall, whenever possible, maintain and keep under its control the premises where the work under this contract shall be performed. 6. The cooperative shall have exclusive discretion in the selection, engagement and discharge of its member-workers or otherwise in the direction and control thereof. The determination of the wages, salaries and compensation of the member-workers of the cooperative shall be within its full control. It is further understood that the cooperative is an independent contractor, and as such, the cooperative agrees to comply with all the requirements of all pertinent laws and ordinances, rules and regulations. Although it is understood and agreed between the parties hereto that the cooperative, in the performance of its obligations, is subject to the control or direction of the company merely as a (sic) result to be accomplished by the work or services herein specified, and not as to the means and methods of accomplishing such result, the cooperative hereby warrants that it will perform such work or services in such manner as will be consistent with the achievement of the result herein contracted for. xxx 8. The cooperative undertakes to pay the wages or salaries of its member-workers, as well as all benefits, premiums and protection in accordance with the provisions of the labor code, cooperative code and other applicable laws and decrees and the rules and regulations promulgated by competent authorities, assuming all responsibility therefor. The cooperative further undertakes to submit to the company within the first ten (10) days of every month, a statement made, signed and sworn to by its duly authorized representative before a notary public or other officer authorized by law to administer oaths, to the effect that the cooperative has paid all wages or salaries due to its employees or personnel for services rendered by them during the month immediately preceding, including overtime, if any, and that such payments were all in accordance with the requirements of law. xxx 12. Unless sooner terminated for the reasons stated in paragraph 9 this contract shall be for a period of one (1) year commencing on January 1, 1993. Thereafter, this Contract will be deemed renewed on a month-to-month basis until terminated by either party by sending a written notice to the other at least thirty (30) days prior to the intended date of termination. xxx3 (Underscoring supplied) Pursuant to the contract, Sunflower engaged private respondents to, as they did, render services at SMCs Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod City. The contract was deemed renewed by the parties every month after its expiration on January 1, 1994 and private respondents continued to perform their tasks until September 11, 1995.

In July 1995, private respondents filed a complaint before the NLRC, Regional Arbitration Branch No. VI, Bacolod City, praying to be declared as regular employees of SMC, with claims for recovery of all benefits and privileges enjoyed by SMC rank and file employees. Private respondents subsequently filed on September 25, 1995 an Amended Complaint4 to include illegal dismissal as additional cause of action following SMCs closure of its Bacolod Shrimp Processing Plant on September 15, 19955 which resulted in the termination of their services. SMC filed a Motion for Leave to File Attached Third Party Complaint6 dated November 27, 1995 to implead Sunflower as Third Party Defendant which was, by Order7 of December 11, 1995, granted by Labor Arbiter Ray Alan T. Drilon. In the meantime, on September 30, 1996, SMC filed before the Regional Office at Iloilo City of the Department of Labor and Employment (DOLE) a Notice of Closure8 of its aquaculture operations effective on even date, citing serious business losses. By Decision of September 23, 1997, Labor Arbiter Drilon dismissed private respondents complaint for lack of merit, ratiocinating as follows: We sustain the stand of the respondent SMC that it could properly exercise its management prerogative to contract out the preparation and processing aspects of its aquaculture operations. Judicial notice has already been taken regarding the general practice adopted in government and private institutions and industries of hiring independent contractors to perform special services. xxx xxx Indeed, the law allows job contracting. Job contracting is permissible under the Labor Code under specific conditions and we do not see how this activity could not be legally undertaken by an independent service cooperative like the third-party respondent herein. There is no basis to the demand for regularization simply on the theory that complainants performed activities which are necessary and desirable in the business of respondent. It has been held that the definition of regular employees as those who perform activities which are necessary and desirable for the business of the employer is not always determinative because any agreement may provide for one (1) party to render services for and in behalf of another for a consideration even without being hired as an employee. The charge of the complainants that third-party respondent is a mere labor-only contractor is a sweeping generalization and completely unsubstantiated. xxx In the absence of clear and convincing evidence showing that third-party respondent acted merely as a labor only contractor, we are firmly convinced of the legitimacy and the integrity of its service contract with respondent SMC. In the same vein, the closure of the Bacolod Shrimp Processing Plant was a management decision purely dictated by economic factors which was (sic) mainly serious business losses. The law recognizes the right of the employer to close his business or cease his operations for bonafide reasons, as much as it recognizes the right of the employer to terminate the employment of any employee due to closure or cessation of business operations, unless the closing is for the purpose of circumventing the provisions of the law on security of tenure. The decision of respondent SMC to close its Bacolod Shrimp Processing Plant, due to serious business losses which has (sic) clearly been established, is a management prerogative which could hardly be interfered with.

xxx The closure did affect the regular employees and workers of the Bacolod Processing Plant, who were accordingly terminated following the legal requisites prescribed by law. The closure, however, in so far as the complainants are concerned, resulted in the termination of SMCs service contract with their cooperative xxx9(Underscoring supplied) Private respondents appealed to the NLRC. By Decision of December 29, 1998, the NLRC dismissed the appeal for lack of merit, it finding that third party respondent Sunflower was an independent contractor in light of its observation that "[i]n all the activities of private respondents, they were under the actual direction, control and supervision of third party respondent Sunflower, as well as the payment of wages, and power of dismissal."10 Private respondents Motion for Reconsideration11 having been denied by the NLRC for lack of merit by Resolution of September 10, 1999, they filed a petition for certiorari12 before the Court of Appeals (CA). Before the CA, SMC filed a Motion to Dismiss13 private respondents petition for non-compliance with the Rules on Civil Procedure and failure to show grave abuse of discretion on the part of the NLRC. SMC subsequently filed its Comment14 to the petition on March 30, 2000. By Decision of February 7, 2001, the appellate court reversed the NLRC decision and accordingly found for private respondents, disposing as follows: WHEREFORE, the petition is GRANTED. Accordingly, judgment is hereby RENDERED: (1) REVERSING and SETTING ASIDE both the 29 December 1998 decision and 10 September 1999 resolution of the National Labor Relations Commission (NLRC), Fourth Division, Cebu City in NLRC Case No. V-0361-97 as well as the 23 September 1997 decision of the labor arbiter in RAB Case No. 06-07-10316-95; (2) ORDERING the respondent, San Miguel Corporation, to GRANT petitioners: (a) separation pay in accordance with the computation given to the regular SMC employees working at its Bacolod Shrimp Processing Plant with full backwages, inclusive of allowances and other benefits or their monetary equivalent, from 11 September 1995, the time their actual compensation was withheld from them, up to the time of the finality of this decision; (b) differentials pays (sic) effective as of and from the time petitioners acquired regular employment status pursuant to the disquisition mentioned above, and all such other and further benefits as provided by applicable collective bargaining agreement(s) or other relations, or by law, beginning such time up to their termination from employment on 11 September 1995; and ORDERING private respondent SMC to PAY unto the petitioners attorneys fees equivalent to ten (10%) percent of the total award. No pronouncement as to costs. SO ORDERED.15 (Underscoring supplied) Justifying its reversal of the findings of the labor arbiter and the NLRC, the appellate court reasoned: Although the terms of the non-exclusive contract of service between SMC and [Sunflower] showed a clear intent to abstain from establishing an employer-employee relationship between SMC and [Sunflower] or the latters members, the extent to which the parties successfully realized this intent in

the light of the applicable law is the controlling factor in determining the real and actual relationship between or among the parties. xxx With respect to the power to control petitioners conduct, it appears that petitioners were under the direct control and supervision of SMC supervisors both as to the manner they performed their functions and as to the end results thereof. It was only after petitioners lodged a complaint to have their status declared as regular employees of SMC that certain members of [Sunflower] began to countersign petitioners daily time records to make it appear that they (petitioners) were under the control and supervision of [Sunflower] team leaders (rollo, pp. 523-527). xxx Even without these instances indicative of control by SMC over the petitioners, it is safe to assume that SMC would never have allowed the petitioners to work within its premises, using its own facilities, equipment and tools, alongside SMC employees discharging similar or identical activities unless it exercised a substantial degree of control and supervision over the petitioners not only as to the manner they performed their functions but also as to the end results of such functions. xxx xxx it becomes apparent that [Sunflower] and the petitioners do not qualify as independent contractors. [Sunflower] and the petitioners did not have substantial capital or investment in the form of tools, equipment, implements, work premises, et cetera necessary to actually perform the service under their own account, responsibility, and method. The only "work premises" maintained by [Sunflower] was a small office within the confines of a small "carinderia" or refreshment parlor owned by the mother of its chair, Roy Asong; the only equipment it owned was a typewriter (rollo, pp. 525525) and, the only assets it provided SMC were the bare bodies of its members, the petitioners herein (rollo, p. 523). In addition, as shown earlier, petitioners, who worked inside the premises of SMC, were under the control and supervision of SMC both as to the manner and method in discharging their functions and as to the resultsthereof. Besides, it should be taken into account that the activities undertaken by the petitioners as cleaners, janitors, messengers and shrimp harvesters, packers and handlers were directly related to the aquaculture business of SMC (See Guarin vs. NLRC, 198 SCRA 267, 273). This is confirmed by the renewal of the service contract from January 1993 to September 1995, a period of close to three (3) years. Moreover, the petitioners here numbering ninety seven (97), by itself, is a considerable workforce and raises the suspicion that the non-exclusive service contract between SMC and [Sunflower] was "designed to evade the obligations inherent in an employer-employee relationship" (See RhonePoulenc Agrochemicals Philippines, Inc. vs. NLRC, 217 SCRA 249, 259). Equally suspicious is the fact that the notary public who signed the by-laws of [Sunflower] and its [Sunflower] retained counsel are both partners of the local counsel of SMC (rollo, p. 9). xxx With these observations, no other logical conclusion can be reached except that [Sunflower] acted as an agent of SMC, facilitating the manpower requirements of the latter, the real employer of the

petitioners. We simply cannot allow these two entities through the convenience of a non-exclusive service contract to stipulate on the existence of employer-employee relation. Such existence is a question of law which cannot be made the subject of agreement to the detriment of the petitioners (Tabas vs. California Manufacturing, Inc., 169 SCRA 497, 500). xxx There being a finding of "labor-only" contracting, liability must be shouldered either by SMC or [Sunflower] or shared by both (See Tabas vs. California Manufacturing, Inc., supra, p. 502). SMC however should be held solelyliable for [Sunflower] became non-existent with the closure of the aquaculture business of SMC. Furthermore, since the closure of the aquaculture operations of SMC appears to be valid, reinstatement is no longer feasible. Consistent with the pronouncement in Bustamante, et al., vs. NLRC, G.R. No. 111651, 28 November 1996, petitioners are thus entitled to separation pay (in the computation similar to those given to regular SMC employees at its Bacolod Shrimp Processing Plant) "with full backwages, inclusive of allowances and other benefits or their monetary equivalent, from the time their actual compensation was withheld from them" up to the time of the finality of this decision. This is without prejudice to differentials pays (sic) effective as of and from the time petitioners acquired regular employment status pursuant to the discussion mentioned above, and all such other and further benefits as provided by applicable collective bargaining agreement(s) or other relations, or by law, beginning such time up to their termination from employment on 11 September 1995.16 (Emphasis and underscoring supplied) SMCs Motion for Reconsideration17 having been denied for lack of merit by Resolution of July 11, 2001, it comes before this Court via the present petition for review on certiorari assigning to the CA the following errors: I THE COURT OF APPEALS GRAVELY ERRED IN GIVING DUE COURSE AND GRANTING RESPONDENTS PATENTLY DEFECTIVE PETITION FOR CERTIORARI. IN DOING SO, THE COURT OF APPEALS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS. II THE COURT OF APPEALS GRAVELY ERRED IN RECOGNIZING ALL THE RESPONDENTS AS COMPLAINANTS IN THE CASE BEFORE THE LABOR ARBITER. IN DOING SO, THE COURT OF APPEALS DECIDED THIS CASE IN A MANNER NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT. III THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RESPONDENTS ARE EMPLOYEES OF SMC. IV

THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDNG (sic) THAT RESPONDENTS ARE NOT ENTITLED TO ANY RELIEF. THE CLOSURE OF THE BACOLOD SHRIMP PROCESSING PLANT WAS DUE TO SERIOUS BUSINESS LOSSES.18 (Underscoring supplied) SMC bewails the failure of the appellate court to outrightly dismiss the petition for certiorari as only three out of the ninety seven named petitioners signed the verification and certification against forum-shopping. While the general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs or petitioners in a case and the signature of only one of them is insufficient,19 this Court has stressed that the rules on forum shopping, which were designed to promote and facilitate the orderly administration of justice, should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective.20 Strict compliance with the provisions regarding the certificate of non-forum shopping merely underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded.21 It does not, however, thereby interdict substantial compliance with its provisions under justifiable circumstances.22 Thus in the recent case of HLC Construction and Development Corporation v. Emily Homes Subdivision Homeowners Association,23 this Court held: Respondents (who were plaintiffs in the trial court) filed the complaint against petitioners as a group, represented by their homeowners association president who was likewise one of the plaintiffs, Mr. Samaon M. Buat.Respondents raised one cause of action which was the breach of contractual obligations and payment of damages. They shared a common interest in the subject matter of the case, being the aggrieved residents of the poorly constructed and developed Emily Homes Subdivision. Due to the collective nature of the case, there was no doubt that Mr. Samaon M. Buat could validly sign the certificate of non-forum shopping in behalf of all his co-plaintiffs. In cases therefore where it is highly impractical to require all the plaintiffs to sign the certificate of non-forum shopping, it is sufficient, in order not to defeat the ends of justice, for one of the plaintiffs, acting as representative, to sign the certificate provided that xxx the plaintiffs share a common interest in the subject matter of the case or filed the case as a "collective," raising only one common cause of action or defense.24 (Emphasis and underscoring supplied) Given the collective nature of the petition filed before the appellate court by herein private respondents, raising one common cause of action against SMC, the execution by private respondents Winifredo Talite, Renelito Deon and Jose Temporosa in behalf of all the other private respondents of the certificate of non-forum shopping constitutes substantial compliance with the Rules.25 That the three indeed represented their co-petitioners before the appellate court is, as it correctly found, "subsequently proven to be true as shown by the signatures of the majority of the petitioners appearing in their memorandum filed before Us."26 Additionally, the merits of the substantive aspects of the case may also be deemed as "special circumstance" or "compelling reason" to take cognizance of a petition although the certification against forum shopping was not executed and signed by all of the petitioners.27 SMC goes on to argue that the petition filed before the CA is fatally defective as it was not accompanied by "copies of all pleadings and documents relevant and pertinent thereto" in contravention of Section 1, Rule 65 of the Rules of Court.28 This Court is not persuaded. The records show that private respondents appended the following documents to their petition before the appellate court: the September 23, 1997 Decision of the Labor Arbiter,29 their Notice of Appeal with Appeal Memorandum dated October 16, 1997 filed before the

NLRC,30 the December 29, 1998 NLRCD E C I S I O N,31 their Motion for Reconsideration dated March 26, 1999 filed with the NLRC32 and the September 10, 1999 NLRC Resolution.33 It bears stressing at any rate that it is the appellate court which ultimately determines if the supporting documents are sufficient to make out a prima facie case.34 It discerns whether on the basis of what have been submitted it could already judiciously determine the merits of the petition.35 In the case at bar, the CA found that the petition was adequately supported by relevant and pertinent documents. At all events, this Court has allowed a liberal construction of the rule on the accomplishment of a certificate of non-forum shopping in the following cases: (1) where a rigid application will result in manifest failure or miscarriage of justice; (2) where the interest of substantial justice will be served; (3) where the resolution of the motion is addressed solely to the sound and judicious discretion of the court; and (4) where the injustice to the adverse party is not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed.36 Rules of procedure should indeed be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be eschewed.37 SMC further argues that the appellate court exceeded its jurisdiction in reversing the decisions of the labor arbiter and the NLRC as "findings of facts of quasi-judicial bodies like the NLRC are accorded great respect and finality," and that this principle acquires greater weight and application in the case at bar as the labor arbiter and the NLRC have the same factual findings. The general rule, no doubt, is that findings of facts of an administrative agency which has acquired expertise in the particular field of its endeavor are accorded great weight on appeal.38 The rule is not absolute and admits of certain well-recognized exceptions, however. Thus, when the findings of fact of the labor arbiter and the NLRC are not supported by substantial evidence or their judgment was based on a misapprehension of facts, the appellate court may make an independent evaluation of the facts of the case.39 SMC further faults the appellate court in giving due course to private respondents petition despite the fact that the complaint filed before the labor arbiter was signed and verified only by private respondent Winifredo Talite; that private respondents position paper40 was verified by only six41 out of the ninety seven complainants; and that their Joint-Affidavit42 was executed only by twelve43 of the complainants. Specifically with respect to the Joint-Affidavit of private respondents, SMC asserts that it should not have been considered by the appellate court in establishing the claims of those who did not sign the same, citing this Courts ruling in Southern Cotabato Development and Construction, Inc. v. NLRC.44 SMCs position does not lie. A perusal of the complaint shows that the ninety seven complainants were being represented by their counsel of choice. Thus the first sentence of their complaint alleges: "xxx complainants, by counsel and unto this Honorable Office respectfully state xxx." And the complaint was signed by Atty. Jose Max S. Ortiz as "counsel for the complainants." Following Section 6, Rule III of the 1990 Rules of Procedure of the NLRC, now Section 7, Rule III of the 1999 NLRC Rules, Atty. Ortiz is presumed to be properly authorized by private respondents in filing the complaint.

That the verification wherein it is manifested that private respondent Talite was one of the complainants and was causing the preparation of the complaint "with the authority of my cocomplainants" indubitably shows that Talite was representing the rest of his co-complainants in signing the verification in accordance with Section 7, Rule III of the 1990 NLRC Rules, now Section 8, Rule 3 of the 1999 NLRC Rules, which states: Section 7. Authority to bind party. Attorneys and other representatives of parties shall have authority to bind their clients in all matters of procedure; but they cannot, without a special power of attorney or express consent, enter into a compromise agreement with the opposing party in full or partial discharge of a clients claim. (Underscoring supplied) As regards private respondents position paper which bore the signatures of only six of them, appended to it was an Authority/Confirmation of Authority45 signed by the ninety one others conferring authority to their counsel "to file RAB Case No. 06-07-10316-95, entitled Winifredo Talite et al. v. San Miguel Corporation presently pending before the sala of Labor Arbiter Ray Alan Drilon at the NLRC Regional Arbitration Branch No. VI in Bacolod City" and appointing him as their retained counsel to represent them in the said case. That there has been substantial compliance with the requirement on verification of position papers under Section 3, Rule V of the 1990 NLRC Rules of Procedure46 is not difficult to appreciate in light of the provision of Section 7, Rule V of the 1990 NLRC Rules, now Section 9, Rule V of the 1999 NLRC Rules which reads: Section 7. Nature of Proceedings. The proceedings before a Labor Arbiter shall be non-litigious in nature. Subject to the requirements of due process, the technicalities of law and procedure and the rules obtaining in the courts of law shall not strictly apply thereto. The Labor Arbiter may avail himself of all reasonable means to ascertain the facts of the controversy speedily, including ocular inspection and examination of well-informed persons. (underscoring supplied) As regards private respondents Joint-Affidavit which is being assailed in view of the failure of some complainants to affix their signatures thereon, this Court quotes with approval the appellate courts ratiocinations: A perusal of the Southern Cotabato Development Case would reveal that movant did not quote the whole text of paragraph 5 on page 865 of 280 SCRA. The whole paragraph reads: "Clearly then, as to those who opted to move for the dismissal of their complaints, or did not submit their affidavits nor appear during trial and in whose favor no other independent evidence was adduced, no award for back wages could have been validly and properly made for want of factual basis. There is no showing at all that any of the affidavits of the thirty-four (34) complainants were offered as evidence for those who did not submit their affidavits, or that such affidavits had any bearing at all on the rights and interest of the latter. In the same vein, private respondents position paper was not of any help to these delinquent complainants. The implication is that as long as the affidavits of the complainants were offered as evidence for those who did not submit theirs, or the affidavits were material and relevant to the rights and interest of the latter, such affidavits may be sufficient to establish the claims of those who did not give their affidavits. Here, a reading of the joint affidavit signed by twelve (12) of the ninety-seven (97) complainants (petitioners herein) would readily reveal that the affidavit was offered as evidence not only for the signatories therein but for all of the complainants. (These ninety-seven (97) individuals were

previously identified during the mandatory conference as the only complainants in the proceedings before the labor arbiter) Moreover, the affidavit touched on the common interest of all of the complainants as it supported their claim of the existence of an employer-employee relationship between them and respondent SMC. Thus, the said affidavit was enough to prove the claims of the rest of the complainants.47 (Emphasis supplied, underscoring in the original) In any event, SMC is reminded that the rules of evidence prevailing in courts of law or equity do not control proceedings before the Labor Arbiter. So Article 221 of the Labor Code enjoins: ART. 221. Technical rules not binding and prior resort to amicable settlement. In any proceeding 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. xxx As such, their application may be relaxed to serve the demands of substantial justice.48 On the merits, the petition just the same fails. SMC insists that private respondents are the employees of Sunflower, an independent contractor. On the other hand, private respondents assert that Sunflower is a labor-only contractor. Article 106 of the Labor Code provides: ART. 106. Contractor or subcontracting. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under the Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 18, distinguishes between legitimate and labor-only contracting:

Section 3. Trilateral Relationship in Contracting Arrangements. In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job, work or service. Section 5. Prohibition against labor-only contracting. Labor-only contracting Sis hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal, or ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. The foregoing provisions shall be without prejudice to the application of Article 248 (c) of the Labor Code, as amended. "Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out. The "right to control" shall refer to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. The test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only as to the results of the work.49 In legitimate labor contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the job contractor, only for the payment of the employees wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees.50 In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the laboronly contractor as if such employees had been directly employed by the principal employer.51 The Contract of Services between SMC and Sunflower shows that the parties clearly disavowed the existence of an employer-employee relationship between SMC and private respondents. The

language of a contract is not, however, determinative of the parties relationship; rather it is the totality of the facts and surrounding circumstances of the case.52 A party cannot dictate, by the mere expedient of a unilateral declaration in a contract, the character of its business, i.e., whether as labor-only contractor or job contractor, it being crucial that its character be measured in terms of and determined by the criteria set by statute.53 SMC argues that Sunflower could not have been issued a certificate of registration as a cooperative if it had no substantial capital.54 While indeed Sunflower was issued Certificate of Registration No. IL0-87555 on February 10, 1992 by the Cooperative Development Authority, this merely shows that it had at least P2,000.00 in paid-up share capital as mandated by Section 5 of Article 1456 of Republic Act No. 6938, otherwise known as the Cooperative Code, which amount cannot be considered substantial capitalization. What appears is that Sunflower does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises and other materials to qualify it as an independent contractor. On the other hand, it is gathered that the lot, building, machineries and all other working tools utilized by private respondents in carrying out their tasks were owned and provided by SMC. Consider the following uncontroverted allegations of private respondents in the Joint Affidavit: [Sunflower], during the existence of its service contract with respondent SMC, did not own a single machinery, equipment, or working tool used in the processing plant. Everything was owned and provided by respondent SMC. The lot, the building, and working facilities are owned by respondent SMC. The machineries and equipments (sic) like washer machine, oven or cooking machine, sizer machine, freezer, storage, and chilling tanks, push carts, hydrolic (sic) jack, tables, and chairs were all owned by respondent SMC. All the boxes, trays, molding pan used in the processing are also owned by respondent SMC. The gloves and boots used by the complainants were also owned by respondent SMC. Even the mops, electric floor cleaners, brush, hoose (sic), soaps, floor waxes, chlorine, liquid stain removers, lysol and the like used by the complainants assigned as cleaners were all owned and provided by respondent SMC. Simply stated, third-party respondent did not own even a small capital in the form of tools, machineries, or facilities used in said prawn processing xxx The alleged office of [Sunflower] is found within the confines of a small "carinderia" or "refreshment" (sic) owned by the mother of the Cooperative Chairman Roy Asong. xxx In said . . . office, the only equipment used and owned by [Sunflower] was a typewriter. 57 And from the job description provided by SMC itself, the work assigned to private respondents was directly relatedto the aquaculture operations of SMC. Undoubtedly, the nature of the work performed by private respondents in shrimp harvesting, receiving and packing formed an integral part of the shrimp processing operations of SMC. As for janitorial and messengerial services, that they are considered directly related to the principal business of the employer58 has been jurisprudentially recognized.

Furthermore, Sunflower did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, SMC, its apparent role having been merely to recruit persons to work for SMC. Thus, it is gathered from the evidence adduced by private respondents before the labor arbiter that their daily time records were signed by SMC supervisors Ike Puentebella, Joemel Haro, Joemari Raca, Erwin Tumonong, Edison Arguello, and Stephen Palabrica, which fact shows that SMC exercised the power of control and supervision over its employees.59 And control of the premises in which private respondents worked was by SMC. These tend to disprove the independence of the contractor.60 More. Private respondents had been working in the aqua processing plant inside the SMC compound alongside regular SMC shrimp processing workers performing identical jobs under the same SMC supervisors.61 This circumstance is another indicium of the existence of a labor-only contractorship.62 And as private respondents alleged in their Joint Affidavit which did not escape the observation of the CA, no showing to the contrary having been proffered by SMC, Sunflower did not cater to clients other than SMC,63 and with the closure of SMCs Bacolod Shrimp Processing Plant, Sunflower likewise ceased to exist. This Courts ruling in San Miguel Corporation v. MAERC Integrated Services, Inc.64 is thus instructive. xxx Nor do we believe MAERC to have an independent business. Not only was it set up to specifically meet the pressing needs of SMC which was then having labor problems in its segregation division, none of its workers was also ever assigned to any other establishment, thus convincing us that it was created solely to service the needs of SMC. Naturally, with the severance of relationship between MAERC and SMC followed MAERCs cessation of operations, the loss of jobs for the whole MAERC workforce and the resulting actions instituted by the workers.65(Underscoring supplied) All the foregoing considerations affirm by more than substantial evidence the existence of an employer-employee relationship between SMC and private respondents. Since private respondents who were engaged in shrimp processing performed tasks usually necessary or desirable in the aquaculture business of SMC, they should be deemed regular employees of the latter66 and as such are entitled to all the benefits and rights appurtenant to regular employment.67 They should thus be awarded differential pay corresponding to the difference between the wages and benefits given them and those accorded SMCs other regular employees.
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Respecting the private respondents who were tasked with janitorial and messengerial duties, this Court quotes with approval the appellate courts ruling thereon: Those performing janitorial and messengerial services however acquired regular status only after rendering one-year service pursuant to Article 280 of the Labor Code. Although janitorial and messengerial services are considered directly related to the aquaculture business of SMC, they are deemed unnecessary in the conduct of its principal business; hence, the distinction (See Coca Cola Bottlers Phils., Inc. v. NLRC, 307 SCRA 131, 136-137 and Philippine Bank of Communications v. NLRC, supra, p. 359).68 The law of course provides for 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.69 As for those of private respondents who were engaged in janitorial and messengerial tasks, they fall under the second category and are thus entitled to differential pay and benefits extended to other SMC regular employees from the day immediately following their first year of service.70 Regarding the closure of SMCs aquaculture operations and the consequent termination of private respondents, Article 283 of the Labor Code provides: ART. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (Underscoring supplied) In the case at bar, a particular department under the SMC group of companies was closed allegedly due to serious business reverses. This constitutes retrenchment by, and not closure of, the enterprise or the company itself as SMC has not totally ceased operations but is still very much an on-going and highly viable business concern.71 Retrenchment is a management prerogative consistently recognized and affirmed by this Court. It is, however, subject to faithful compliance with the substantive and procedural requirements laid down by law and jurisprudence.72 For retrenchment to be considered valid the following substantial requirements must be met: (a) the losses expected should be substantial and not merely de minimis in extent; (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer; (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and (d) the alleged losses, if already incurred, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence.73 In the discharge of these requirements, it is the employer who has the onus, being in the nature of an affirmative defense.74 Normally, the condition of business losses is shown by audited financial documents like yearly balance sheets, profit and loss statements and annual income tax returns. The financial statements must be prepared and signed by independent auditors failing which they can be assailed as selfserving documents.75 In the case at bar, company losses were duly established by financial documents audited by Joaquin Cunanan & Co. showing that the aquaculture operations of SMCs Agribusiness Division accumulated losses amounting toP145,848,172.00 in 1992 resulting in the closure of its Calatrava Aquaculture Center in Negros Occidental,P11,393,071.00 in 1993 and P80,325,608.00 in 1994

which led to the closure of its San Fernando Shrimp Processing Plant in Pampanga and the Bacolod Shrimp Processing Plant in 1995. SMC has thus proven substantial business reverses justifying retrenchment of its employees. For termination due to retrenchment to be valid, however, the law requires that written notices of the intended retrenchment be served by the employer on the worker and on the DOLE at least one (1) month before the actual date of the retrenchment,76 in order to give employees some time to prepare for the eventual loss of their jobs, as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of termination.77 Private respondents, however, were merely verbally informed on September 10, 1995 by SMC Prawn Manager Ponciano Capay that effective the following day or on September 11, 1995, they were no longer to report for work as SMC would be closing its operations.78 Where the dismissal is based on an authorized cause under Article 283 of the Labor Code but the employer failed to comply with the notice requirement, the sanction should be stiff as the dismissal process was initiated by the employers exercise of his management prerogative, as opposed to a dismissal based on a just cause under Article 282 with the same procedural infirmity where the sanction to be imposed upon the employer should be tempered as the dismissal process was, in effect, initiated by an act imputable to the employee.79 In light of the factual circumstances of the case at bar, this Court awards P50,000.00 to each private respondent as nominal damages. The grant of separation pay as an incidence of termination of employment due to retrenchment to prevent losses is a statutory obligation on the part of the employer and a demandable right on the part of the employee. Private respondents should thus be awarded separation pay equivalent to at least one (1) month pay or to at least one-half month pay for every year of service, whichever is higher, as mandated by Article 283 of the Labor Code or the separation pay awarded by SMC to other regular SMC employees that were terminated as a result of the retrenchment, depending on which is most beneficial to private respondents. Considering that private respondents were not illegally dismissed, however, no backwages need be awarded. It is well settled that backwages may be granted only when there is a finding of illegal dismissal.80 The appellate court thus erred in awarding backwages to private respondents upon the authority of Bustamante v. NLRC,81 what was involved in that case being one of illegal dismissal. With respect to attorneys fees, in actions for recovery of wages or where an employee was forced to litigate and thus incurred expenses to protect his rights and interests,82 a maximum of ten percent (10%) of the total monetary award83 by way of attorneys fees is justifiable under Article 111 of the Labor Code,84 Section 8, Rule VIII, Book III of its Implementing Rules,85 and paragraph 7, Article 2208 of the Civil Code.86 Although an express finding of facts and law is still necessary to prove the merit of the award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly, as in this case.87 Absent any evidence showing that Sunflower has been dissolved in accordance with law, pursuant to Rule VIII-A, Section 1988 of the Omnibus Rules Implementing the Labor Code, Sunflower is held solidarily liable with SMC for all the rightful claims of private respondents.

WHEREFORE, the petition is DENIED. The assailed Decision dated February 7, 2001 and Resolution dated July 11, 2001 of the Court of Appeals are AFFIRMED with MODIFICATION. Petitioner San Miguel Corporation and Sunflower Multi-Purpose Cooperative are hereby ORDERED to jointly and severally pay each private respondent differential pay from the time they became regular employees up to the date of their termination; separation pay equivalent to at least one (1) month pay or to at least one-half month pay for every year of service, whichever is higher, as mandated by Article 283 of the Labor Code or the separation pay awarded by SMC to other regular SMC employees that were terminated as a result of the retrenchment, depending on which is most beneficial to private respondents; and ten percent (10%) attorneys fees based on the herein modified award. Petitioner San Miguel Corporation is further ORDERED to pay each private respondent the amount of P50,000.00, representing nominal damages for non-compliance with statutory due process. The award of backwages is DELETED. SO ORDERED.

G.R. No. 162472 July 28, 2005 KAY PRODUCTS, INC. and/or KAY LEE, Petitioners, vs. HONORABLE COURT OF APPEALS, KAY PRODUCTS EMPLOYEES UNION, MYRNA ABILA, FLORDELIZA MORANTE and FE REGIDOR, Respondents. DECISION CALLEJO, SR., J.: Before us is a petition for review on certiorari under Rule 45 of the Rules of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 73028 and its resolution denying the motion for reconsideration of its decision by petitioners Kay Products, Incorporated (KPI) and Kay Lee. The Antecedents The employees of KPI had a meeting for the purpose of forming a union within their workplace. Among those in attendance were Myrna Abila, Flordeliza Morante, Fe Regidor, Rowena Escuadro and Jeofrey del Valle, who were employed by KPI as factory sewers in June to August 1999.

When the management of KPI got wind of the employees plan to form a union, it called a meeting to announce that the said employees were to be transferred to an employment agency with which it had a manpower contract, the Gerrico Resources & Manpower Services, Inc. (GRMSI). Through a Memorandum2 dated July 13, 2000, KPI, through its president, Mr. Kay Y. Lee, promised that the employees would receive bigger and better benefits under GRMSI as regular employees thereof. On July 14, 2000, KPI directed all employees concerned to sign resignation letters preparatory to their employment with GRMSI. Thus, the employees submitted handwritten letters of resignation, and KPI took custody of their identification cards. The employees continued to report for work in the KPI factory but received less wages/salaries. On July 31, 2000, KPI issued a Memorandum3 to the employees, stating that GRMSI had been dissolved and that there was a need for them to sign separate contracts with RCVJ, another corporation with which KPI had a manpower contract. This time, some employees, including Abila, Morante, Regidor, Escuadro and Del Valle, refused to sign any contract with RCVJ. In the meantime, the employees of KPI were able to organize their union, the Kay Products Employees Union, and affiliated themselves to the Philippine Transport & General Workers Organization (PTGWO) on July 25, 2000.4 On August 25, 2000, seventy-three (73) employees, together with the Kay Products Employees Union-PTGWO, filed a Complaint5 with Regional Arbitration Branch No. IV of the Department of Labor and Employment (DOLE) against the petitioners. The employees claimed that the petitioners were guilty of unfair labor practice (ULP), underpayment of salaries and service incentive leave pay, and failure to classify them as regular employees. The case was docketed as NLRC Case No. RABIV-8-12829-00-L. On September 4, 2000, the employees were ordered to take a two-week leave from work without pay. The employees complained. When they tried to report for work after the two-week period, they were refused entry and were told that they had ceased to be KPI employees since they had resigned upon agreeing to be employed by GRMSI. On October 18, 2000, the employees and their union amended their complaint (docketed as NLRC Case No. RAB-IV-8-12829-00-L) to illegal dismissal.6 Only Abila, Morante, Regidor, Escuadro and Del Valle, who were able to sign and verify the amended complaint, remained as complainants. In their position paper,7 the complainants alleged, inter alia, that they were illegally dismissed; their dismissal was not grounded on any just and authorized cause under the law, and they were deprived of their right to due process. They also asserted that in interfering with their right to self-organization by deceitfully transferring them to an employment agency, KPI thereby engaged in ULP. They claimed that such acts were in violation of the principles enunciated under the Labor Code of the Philippines. The complainants further contended that they were coerced and intimidated into signing letters of resignation. Moreover, they were entitled to money claims, particularly 13th month pay, service incentive leave pay, vacation and sick leave pay from the time of their illegal dismissal until their reinstatement. On the other hand, the petitioners denied the material allegations of the complainants, and maintained that the latter voluntarily resigned from their work. They asserted that aside from the typewritten resignation letter, the complainants also wrote other letters in their own handwriting. They pointed out that the complainants voluntarily secured their clearances from KPI, transferred to RCVJ, and never went back to work. KPI asserted that it

never interfered with its workers right to self-organization or any of their plans to form any union. Hence, in view of their voluntary resignations, the complainants were not entitled to reinstatement, backwages, moral and exemplary damages, and attorneys fees. On September 28, 2001, the Labor Arbiter8 rendered his decision. The decretal portion reads as follows: WHEREFORE, premises considered, judgment is hereby rendered dismissing complainants charge for illegal dismissal and for ULP for lack of merit. However, in view of their implied admission of complainants entitlement thereto, respondent is hereby ordered to pay the corresponding 13th month pay and service incentive leave pay due the complainants herein. SO ORDERED.9 The Labor Arbiter declared that the complainants wrote their resignation letters in their own hand, and found no showing of force or intimidation in so doing. He declared that if there was, indeed, force or intimidation, the complainants ought to have made their real sentiments or opposition thereto on record by writing "under protest," "with reservations," or other words to that effect either below, beside, or somewhere near their signatures. Moreover, the fact that the contents of their resignation letters were dictated would not justify the conclusion that they had tendered their resignation against their will. On the contrary, the Labor Arbiter observed that this was more convenient on the part of the parties. On May 31, 2002, the National Labor Relations Commission (NLRC) Third Division rendered its Decision10affirming the Labor Arbiters decision and dismissing the appeal for lack of merit: WHEREFORE, premises considered, the appeal from the Decision dated September 28, 2001 is hereby DISMISSED for lack of merit and the Decision AFFIRMED. SO ORDERED.11 The NLRC declared that the complainants act of submitting resignation letters and accomplishing their respective clearances from KPI negated involuntariness. The NLRC also noted some inconsistencies in the amended complaint and the position paper of the complainants, viz.: Complainants alleged that they still worked for several months with respondent as regular employees thereof even after the execution of their resignation letter. This allegation of complainants deserves scant consideration. Records show that complainant[s] filed the instant case on August 25, 2000. It is worth stressing that complainant[s] failed to indicate in their complaint the date they were allegedly dismissed. (Records, p. 1) [T]hen, in their amended complaint (Records, p. 12) and position paper (Records, p. 18), they claimed that they were dismissed on September 4, 2000. If it is really true that they were dismissed on September 4, 2000, how come they charged respondents of illegal dismissal on August 25, 2000[?] These apparent inconsistencies of complainants only goes (sic) to show the weakness of their allegations.12 A motion for reconsideration was filed, which was denied for lack of merit.13 Private respondents Myrna Abila, Flordeliza Morante and Fe Regidor, thereafter, filed a petition for certiorari with the CA, assailing the decision and resolution of the NLRC. The appellate court rendered judgment on December 16, 2003, reversing the decision of the NLRC. The fallo of the decision reads:

WHEREFORE, judgment is hereby rendered: (1) REVERSING the assailed resolutions of public respondent with respect to its findings that petitioners were not illegally dismissed; and, (2) AFFIRMING the assailed resolutions of public respondent NLRC with respect to the petitioners charge for unfair labor practices. Without costs in this instance. SO ORDERED.14 The appellate court ruled that the private respondents were regular employees, since they were performing activities normally necessary or desirable in the usual business or trade of KPI for more than a year until their severance from work on September 4, 2000. The CA declared that as regular employees, their services could only be terminated for just and authorized causes under the Labor Code, as amended. The employees transfer to an employment agency put KPIs motive in question and gave credence to the allegation that the employees had been illegally terminated or dismissed. Anent the charge of unfair labor practice, the CA absolved the respondent therein of said charge. The KPI filed a motion for the reconsideration of the above decision, which the appellate court denied, as the arguments in support thereof had been duly addressed and resolved by it.15 In the present recourse, petitioners ascribe to the CA the following as errors: I THE PUBLIC RESPONDENT COMMITTED A SERIOUS ERROR OF LAW IN HOLDING PRIVATE RESPONDENTS RESIGNATIONS NOT VOLUNTARY DESPITE THEIR CONFIRMATION IN THEIR OWN HANDWRITING. II THE PUBLIC RESPONDENT COMMITTED A SERIOUS ERROR OF LAW IN DECLARING THAT PRIVATE RESPONDENTS DISMISSAL WAS ILLEGAL.16 The petitioners reiterated their claim that the private respondents were not coerced, threatened, or intimidated into filing their resignation letters. They claim that the CA erred in finding that the petitioners forced or intimidated the private respondents into signing blank sheets of paper which were used as their resignation letters. The petitioners contend that such finding is not supported by any evidence. They rely on the Labor Arbiters conclusion that if the private respondents had really been forced to render their resignation, they should have written "under protest," "with reservations" or other words to that effect near their signatures to show their real sentiments or opposition. Moreover, the fact that the private respondents waited for one (1) month and twelve (12) days, before filing their complaint with the DOLE, casts doubt on the integrity of their position. Anent the second issue, the petitioners argue that the CA erred in declaring that the private respondents had been illegally dismissed, and that there was nothing to support such conclusion. They contend that the appellate court disregarded the findings of the Labor Arbiter and the NLRC,

and instead should have accorded respect and finality to such findings, supported as they were by substantial evidence. The petitioners cited the cases of Pan Pacific Industrial Sales Co., Inc. v. NLRC,17 Aboitiz Shipping Corporation v. Dela Serna18 and Rabago v. NLRC,19where this Court held that findings of administrative agencies are accorded respect and even finality if they are supported by substantial evidence. Thus, the petitioners pray that the CA decision be reversed and set aside, and the decisions of the Labor Arbiter and the NLRC reinstated. On the other hand, the private respondents maintain that they were intimidated and coerced into signing their respective resignation letters and clearances, and that the findings of the Labor Arbiter and the NLRC were based on flimsy grounds. The private respondents claim that they had to secure clearances as they were needed for the release of whatever benefits due them. They maintain that the appellate court did not err in its finding that they were illegally dismissed. The petition is bereft of merit. Preliminarily, the remedy resorted to by the petitioners is a petition for review under Rule 45 of the Rules of Court, which allows only questions of law. Findings of fact of the lower courts are conclusive, except in the following instances: (1) when the findings are grounded entirely on speculation, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in making its findings the CA went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the respondents; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record.20 In the present case, the Labor Arbiter and the NLRC ruled that the private respondents voluntarily resigned their employment with petitioner KPI, in contrast to the appellate courts ruling that they did not. There is thus a need for the Court to ascertain which of the findings and conclusions are in accord with the evidence on record and the law. On the first issue, we affirm the encompassing and perceptive ruling of the appellate court: To be stressed in the fundamental premise that petitioners are regular employees of private respondents, having been performing activities which are normally necessary or desirable in the usual business or trade of the employer for more than a year already, until their severance from work on September 4, 2000. Undeniably, petitioners were regular employees at the time they allegedly voluntarily resigned on July 14, 2000. As such regular employees, the Labor Code grants petitioners security of tenure, which essentially means that their employer can not terminate their services except for just and authorized causes, as provided for under the Labor Code. Viewed in this light, private respondents act or action in transferring petitioners to a manpower agency (Gerrico Resources then later on to RCVJ) with the promise that they would receive the same benefits as regular employees, puts in question private respondents real motive. If anything, it gives currency to the belief that petitioners had been illegally terminated or dismissed from employment. Turning now to the question of the "voluntariness" of the resignation letters: We are inclined to agree with the petitioners that they were coerced, threatened or intimidated into signing blank sheets of paper which materialized into resignation letters, the contents of which were dictated by the Director and Personnel Manager of the respondent company. For to us, it is inconceivable that a worker who has already attained a regular status in his employment would opt to be transferred to another

employment agency, there to start work anew work that would relegate him to a mere casual laborer or employee. Obviously, petitioners were not given any other choice by management, but to agree to their transfer to Gerrico Resources, lest they lose their only means of livelihood. Considering that petitioners are ordinary sewers of respondent company, the fear of losing their jobs cannot but be a serious, legitimate concern. In Rance, et al. v. NLRC, it was held that when a person has no property, his job may possibly be his only possession or means of livelihood. Therefore, he should be protected against any arbitrary deprivation of his job. In the same spirit, Art. 280 of the Labor Code construes security of tenure as meaning that "the employer shall not terminate the services of an employee except for a just cause or when authorized by" the Code.21 The fact that petitioners in this case failed to indicate in their resignation letters the phrase "under protest" or "with reservations" is of no moment. To be stressed anew is the fact that petitioners were ordinary factory workers who could not and should not be expected to know the legal import or significance of some such phrase as "under protest" or "with reservations." Additionally, private respondents claim that petitioners voluntarily resigned is belied by the fact that the latter immediately filed a complaint for regularization with the NLRC upon their supposed transfer to the Gerrico Resources. We note that while petitioners were allegedly employed with Gerrico Resources, they continued working with respondent company and within the premises of respondent company for that matter. Hence, it came as no surprise that when they were disallowed entry into the premises of respondent company on September 4, 2000, they amended their complaint to one of illegal dismissal. Therefore, there is something askew in public respondents ratiocination that "Complainants alleged that they still worked for several months with respondent as regular employees thereof even after the execution of their resignation letter[s]. This allegation of complainants deserves scant consideration. Records show that complainant filed the instant case on August 25, 2000. It is worth stressing that complainant failed to indicate in their complaint the date they were allegedly dismissed. (Records, p. 1) Then, in their amended complaint (Records, p. 12) and position paper (Records, p. 18), they claimed that they were dismissed on September 4, 2000. If it is really true that they were dismissed on September 4, 2000, how come they charged respondents of illegal dismissal on August 25, 2000[?] These apparent inconsistencies of complainants only goes (sic) to show the weakness of their allegations. xxx" (underscoring supplied) For, stock can be taken of the fact that the complaint filed on August 25, 2000 was for "regularization," while that of September 4, 2000 was for "illegal dismissal" and "reinstatement." Notably, no date was indicated in the space provided for "Date Dismissed" in the complaint for August 25, 2000, precisely because petitioners were not yet dismissed then; rather, they were merely "transferred" to Gerrico Resources as contractual workers. In Molave Tours v. NLRC, resignation has been defined as "the voluntary act of an employee who 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." In the context of Section II, Rule XIV, Book V of the Revised Rules Implementing the Labor Code, resignation is a formal pronouncement or relinquishment of an office. It must be made with the deliberate animus or intention of relinquishing the office accompanied by an act of relinquishment. In the same case, it was also held that the voluntariness of a resignation is negated by the filing of a complaint for illegal dismissal. Declared the Court: "The fact that private respondent immediately filed a complaint for illegal dismissal against petitioner and repudiated his alleged resignation completely negated petitioners claim that respondent

Bolocon voluntarily resigned. By vigorously pursuing the litigation of his action against petitioner, private respondent clearly manifested that he has no intention of relinquishing his employment, which act is wholly incompatible to petitioners assertion that he voluntarily resigned. Neither was petitioner able to discharge the burden of proving that respondent Bolocons employment was validly terminated. Other than the mute words of Bolocons alleged letter of resignation, the rest of petitioners evidence failed to establish that Bolocon, indeed, voluntarily resigned. Worse, petitioner failed to refute private respondents allegation of force and intimidation in the execution of the letter of resignation by opting not to present the testimony of its personnel manager who could have contradicted Bolocons version of what actually transpired."22 The CA was correct in declaring that the private respondents had attained the status of regular employees of petitioner KPI. It must be stressed that at the time of their dismissal, they had been working for the petitioners for more than one (1) year. However, the CA failed to rule on whether the private respondents should be reinstated and paid backwages and other monetary benefits. While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers and compliance with such other operating procedures as may be adopted by the employer, it is more in keeping with the intent and spirit of the law to rule that the status of regular employment attaches to the casual worker on the day immediately after the end of his first year of service. To rule otherwise, and to instead make their regularization dependent on the happening of some contingency or the fulfillment of certain requirements, is to impose a burden on the employee which is not sanctioned by law.23 Article 280 of the Labor Code, as amended, provides as follows: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. As regular employees, the private respondents are entitled to security of tenure provided under the labor laws and may only be validly terminated from service upon compliance with the legal requisites for dismissal and considering that they were illegally dismissed, the private respondents should be reinstated, in accordance with the provision of the Labor Code, as amended, particularly Article 279, to wit: Article 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.24

Thus, the said provision provides that illegally dismissed employees are entitled to backwages plus other benefits computed from the time compensation was withheld up to the time of actual reinstatement. An illegally dismissed employee who, in contemplation of the law, never left his office, should be granted the compensation which rightfully belongs to him from the moment he was unduly deprived of it up to the time it was restored to him;25 the backwages to be awarded should not be diminished or reduced by earnings derived by the illegally dismissed employee elsewhere during the term of his illegal dismissal.26 In their amended complaint filed with the DOLE, the private respondents prayed for moral and exemplary damages, among others, but the CA failed to award the same. This Court has consistently accorded the working class a right to recover damages for dismissals tainted with bad faith. The award of such damages is based not on the Labor Code but on Article 2220 of the Civil Code.27 Indeed, moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good customs or public policy. Exemplary damages may be awarded if the dismissal is effected in a wanton, oppressive or malevolent manner.28 Bad faith on the part of petitioners may be gleaned from the fact that they transferred the private respondents to two (2) employment agencies just so they could evade their legal responsibility as employers to accord them the status and benefits of regular employees under the Labor Code. The dismissal, no doubt, was effected in a wanton, oppressive or malevolent manner as the private respondents were deprived of due process. Thus, the amount of P10,000.00 as moral damages andP5,000.00 as exemplary damages are hereby awarded to each private respondent.29 Petitioner Kay Lee, as the president, actively managed the business of KPI. In fact, she was the one who decided the private respondents transfer to the employment agencies, and signed the memoranda ordering such transfer, in bad faith, as earlier discussed. In labor cases, particularly, corporate directors and officers are solidarily liable with the corporation for the termination of employment of corporate employees done with malice or in bad faith.30In fact, in Naguiat v. NLRC,31 the Court held that the president of a corporation, who actively manages the business, falls within the meaning of an "employer" as contemplated by the Labor Code, and may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. Thus, in the present case, petitioners Kay Lee and KPI are jointly and severally liable for the latters obligations to the private respondents. IN VIEW OF THE FOREGOING DISQUISITIONS, the petition is hereby DENIED. The Court of Appeals Decision and Resolution in CA-G.R. SP No. 73028 are hereby AFFIRMED WITH MODIFICATION. Petitioners Kay Products, Inc. and Kay Lee are ORDERED to reinstate private respondents Myrna Abila, Flordeliza Morante and Fe Regidor, and to pay, jointly and severally, their full backwages without deductions from the time of dismissal to actual reinstatement; if reinstatement is no longer practicable or feasible, in lieu thereof, to pay, jointly and severally, separation pay of one (1) month salary for every year of their employment, with a fraction of at least six (6) months being considered as one (1) year. In addition thereto, petitioners are also hereby ordered, jointly and severally, to pay the amount of Ten Thousand Pesos (P10,000.00) as moral damages and Five Thousand Pesos (P5,000.00) as exemplary damages to each of the private respondents. SO ORDERED.

G.R. No. L-48494 February 5, 1990 BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners, vs. RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President, and DOROTEO R. ALEGRE, respondents. Quasha, Asperilla, Ancheta, Pea & Nolasco for petitioners. Mauricio G. Domogon for respondent Alegre.

NARVASA, J.: The question presented by the proceedings at bar 1 is whether or not the provisions of the Labor Code, 2 as amended, 3 have anathematized "fixed period employment" or employment for a term. The root of the controversy at bar is an employment contract in virtue of which Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. 4 The contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those contained in the original contract of July 18, 1971. 5 Some three months before the expiration of the stipulated period, or more precisely on April 20,1976, Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his services effective on July 16, 1976. The stated ground for the termination was "completion of contract, expiration of the definite period of employment." And a month or so later, on May 26, 1976, Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of contract." However, at the investigation conducted by a Labor Conciliator of said report of termination of his services, Alegre protested the announced termination of his employment. He argued that although his contract did stipulate that the same would terminate on July 17, 1976, since his services were necessary and desirable in the usual business of his employer, and his employment had lasted for five years, he had acquired the status of a regular employee and could not be removed except for valid cause. 6 The Regional Director considered Brent School's report as anapplication for clearance to terminate employment (not a report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent employee," to his former position without loss of seniority rights and with full back wages. The Director pronounced "the ground relied upon by the respondent (Brent) in terminating the services of the complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite oddly, as prohibited by Circular No. 8, series of 1969, of the Bureau of Private Schools. 7

Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded the case to the Secretary of Labor for review. 8 The latter sustained the Regional Director. 9 Brent appealed to the Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack of merit and affirmed the Labor Secretary's decision, ruling that Alegre was a permanent employee who could not be dismissed except for just cause, and expiration of the employment contract was not one of the just causes provided in the Labor Code for termination of services. 10 The School is now before this Court in a last attempt at vindication. That it will get here. The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. Indeed, the Code did not come into effect until November 1, 1974, some three years after the perfection of the employment contract, and rights and obligations thereunder had arisen and been mutually observed and enforced. At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity of term employment. It was impliedly but nonetheless clearly recognized by the Termination Pay Law, R.A. 1052, 11 as amended by R.A. 1787. 12 Basically, this statute provided that In cases of employment, without a definite period, in a commercial, industrial, or agricultural establishment or enterprise, the employer or the employee may terminate at any time the employment with just cause; or without just cause in the case of an employee by serving written notice on the employer at least one month in advance, or in the case of an employer, by serving such notice to the employee at least one month in advance or one-half month for every year of service of the employee, whichever is longer, a fraction of at least six months being considered as one whole year. The employer, upon whom no such notice was served in case of termination of employment without just cause, may hold the employee liable for damages. The employee, upon whom no such notice was served in case of termination of employment without just cause, shall be entitled to compensation from the date of termination of his employment in an amount equivalent to his salaries or wages corresponding to the required period of notice. There was, to repeat, clear albeit implied recognition of the licitness of term employment. RA 1787 also enumerated what it considered to be just causes for terminating an employment without a definite period, either by the employer or by the employee without incurring any liability therefor. Prior, thereto, it was the Code of Commerce which governed employment without a fixed period, and also implicitly acknowledged the propriety of employment with a fixed period. Its Article 302 provided that In cases in which the contract of employment does not have a fixed period, any of the parties may terminate it, notifying the other thereof one month in advance. The factor or shop clerk shall have a right, in this case, to the salary corresponding to said month.

The salary for the month directed to be given by the said Article 302 of the Code of Commerce to the factor or shop clerk, was known as the mesada (from mes, Spanish for "month"). When Article 302 (together with many other provisions of the Code of Commerce) was repealed by the Civil Code of the Philippines, Republic Act No. 1052 was enacted avowedly for the precise purpose of reinstating the mesada. Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on August 30,1950, itself deals with obligations with a period in section 2, Chapter 3, Title I, Book IV; and with contracts of labor and for a piece of work, in Sections 2 and 3, Chapter 3, Title VIII, respectively, of Book IV. No prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise deducible therefrom. It is plain then that when the employment contract was signed between Brent School and Alegre on July 18, 1971, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof Stipulations for a term were explicitly recognized as valid by this Court, for instance, in Biboso v. Victorias Milling Co., Inc., promulgated on March 31, 1977, 13 and J. Walter Thompson Co. (Phil.) v. NLRC, promulgated on December 29, 1983. 14 TheThompson case involved an executive who had been engaged for a fixed period of three (3) years. Bibosoinvolved teachers in a private school as regards whom, the following pronouncement was made: What is decisive is that petitioners (teachers) were well aware an the time that their tenure was for a limited duration. Upon its termination, both parties to the employment relationship were free to renew it or to let it lapse. (p. 254) Under American law 15 the principle is the same. "Where a contract specifies the period of its duration, it terminates on the expiration of such period." 16 "A contract of employment for a definite period terminates by its own terms at the end of such period." 17 The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (Presidential Decree No. 442), which went into effect on November 1, 1974. The Code contained explicit references to fixed period employment, or employment with a fixed or definite period. Nevertheless, obscuration of the principle of licitness of term employment began to take place at about this time Article 320, entitled "Probationary and fixed period employment," originally stated that the "termination of employment of probationary employees and those employed WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." The asserted objective to was "prevent the circumvention of the right of the employee to be secured in their employment as provided . . . (in the Code)." Article 321 prescribed the just causes for which an employer could terminate "an employment without a definite period." And Article 319 undertook to define "employment without a fixed period" in the following manner: 18 An employment shall be deemed to be without a definite period for purposes of this Chapter where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.

The question immediately provoked by a reading of Article 319 is whether or not a voluntary agreement on a fixed term or period would be valid where the employee "has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer." The definition seems a non sequitur. From the premise that the duties of an employee entail "activities which are usually necessary or desirable in the usual business or trade of the employer the" conclusion does not necessarily follow that the employer and employee should be forbidden to stipulate any period of time for the performance of those activities. There is nothing essentially contradictory between a definite period of an employment contract and the nature of the employee's duties set down in that contract as being "usually necessary or desirable in the usual business or trade of the employer." The concept of the employee's duties as being "usually necessary or desirable in the usual business or trade of the employer" is not synonymous with or identical to employment with a fixed term. Logically, the decisive determinant in term employment should not be the activities that the employee is called upon to perform, but the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be "that which must necessarily come, although it may not be known when." 19 Seasonal employment, and employment for a particular project are merely instances employment in which a period, where not expressly set down, necessarily implied. Of course, the term period has a definite and settled signification. It means, "Length of existence; duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a bound; conclusion; termination. A series of years, months or days in which something is completed. A time of definite length. . . . the period from one fixed date to another fixed date . . ." 20 It connotes a "space of time which has an influence on an obligation as a result of a juridical act, and either suspends its demandableness or produces its extinguishment." 21 It should be apparent that this settled and familiar notion of a period, in the context of a contract of employment, takes no account at all of the nature of the duties of the employee; it has absolutely no relevance to the character of his duties as being "usually necessary or desirable to the usual business of the employer," or not. Subsequently, the foregoing articles regarding employment with "a definite period" and "regular" employment were amended by Presidential Decree No. 850, effective December 16, 1975. Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the reference to persons "employed with a fixed period," and was renumbered (becoming Article 271). The article 22 now reads: . . . Probationary employment.Probationary employment shall not exceed six months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged in a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra) by (a) deleting mention of employment with a fixed or definite period, (b) adding a general exclusion clause declaring irrelevant written or oral agreements "to the contrary," and (c) making the provision treat exclusively of "regular" and "casual" employment. As revised, said article, renumbered 270, 23 now reads: . . . Regular and Casual Employment.The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an

employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be employed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to he casual if it is not covered by the preceding paragraph:provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. The first paragraph is identical to Article 319 except that, as just mentioned, a clause has been added, to wit: "The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties . . ." The clause would appear to be addressed inter alia to agreements fixing a definite period for employment. There is withal no clear indication of the intent to deny validity to employment for a definite period. Indeed, not only is the concept of regular employment not essentially inconsistent with employment for a fixed term, as above pointed out, Article 272 of the Labor Code, as amended by said PD 850, still impliedly acknowledged the propriety of term employment: it listed the "just causes" for which "an employer may terminate employment without a definite period," thus giving rise to the inference that if the employment be with a definite period, there need be no just cause for termination thereof if the ground be precisely the expiration of the term agreed upon by the parties for the duration of such employment. Still later, however, said Article 272 (formerly Article 321) was further amended by Batas Pambansa Bilang 130, 24to eliminate altogether reference to employment without a definite period. As lastly amended, the opening lines of the article (renumbered 283), now pertinently read: "An employer may terminate an employment for any of the following just causes: . . . " BP 130 thus completed the elimination of every reference in the Labor Code, express or implied, to employment with a fixed or definite period or term. It is in the light of the foregoing description of the development of the provisions of the Labor Code bearing on term or fixed-period employment that the question posed in the opening paragraph of this opinion should now be addressed. Is it then the legislative intention to outlaw stipulations in employment contracts laying down a definite period therefor? Are such stipulations in essence contrary to public policy and should not on this account be accorded legitimacy? On the one hand, there is the gradual and progressive elimination of references to term or fixedperiod employment in the Labor Code, and the specific statement of the rule 25 that . . . Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be employed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph:provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the validity and propriety of contracts and obligations with a fixed or definite period, and imposes no restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it specie, goods or services, except the general admonition against stipulations contrary to law, morals, good customs, public order or public policy. 26Under the Civil Code, therefore, and as a general proposition, fixed-term employment contracts are not limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects with pre-determined dates of completion; they also include those to which the parties by free choice have assigned a specific date of termination. Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the engagement, the concept of regular employment will all that it implies does not appear ever to have been applied, Article 280 of the Labor Code not withstanding; also appointments to the positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity, without which no reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy, Instructions No. 8 of the Minister of Labor 27 implicitly recognize that certain company officials may be elected for what would amount to fixed periods, at the expiration of which they would have to stand down, in providing that these officials," . . . may lose their jobs as president, executive vice-president or vice-president, etc. because the stockholders or the board of directors for one reason or another did not re-elect them." There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist, e.g., where it is indeed the employee himself who insists upon a period or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non, would an agreement fixing a period be essentially evil or illicit, therefore anathema? Would such an agreement come within the scope of Article 280 which admittedly was enacted "to prevent the circumvention of the right of the employee to be secured in . . . (his) employment?" As it is evident from even only the three examples already given that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head.

It is a salutary principle in statutory construction that there exists a valid presumption that undesirable consequences were never intended by a legislative measure, and that a construction of which the statute is fairly susceptible is favored, which will avoid all objecionable mischievous, undefensible, wrongful, evil and injurious consequences. 28 Nothing is better settled than that courts are not to give words a meaning which would lead to absurd or unreasonable consequences. That s a principle that does back to In re Allen decided oil October 27, 1903, where it was held that a literal interpretation is to be rejected if it would be unjust or lead to absurd results. That is a strong argument against its adoption. The words of Justice Laurel are particularly apt. Thus: "The fact that the construction placed upon the statute by the appellants would lead to an absurdity is another argument for rejecting it. . . ." 29 . . . We have, here, then a case where the true intent of the law is clear that calls for the application of the cardinal rule of statutory construction that such intent of spirit must prevail over the letter thereof, for whatever is within the spirit of a statute is within the statute, since adherence to the letter would result in absurdity, injustice and contradictions and would defeat the plain and vital purpose of the statute. 30

Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences. Such interpretation puts the seal on Bibiso 31 upon the effect of the expiry of an agreed period of employment as still good rulea rule reaffirmed in the recent case of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served by her school a notice of termination following the expiration of the last of three successive fixed-term employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was probationary, contractual in nature, and one with a definitive period. At the expiration of the period stipulated in the contract, her appointment was deemed terminated and the letter informing her of the non-renewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes' contract of employment was due to expire and that the contract would no longer be renewed. It is not a letter of termination. The interpretation that the notice is only a reminder is consistent with the court's finding in Labajo supra. ... 32

Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the

impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to make the termination of his services effective. In any case, such clearance should properly have been given, not denied. WHEREFORE, the public respondent's Decision complained of is REVERSED and SET ASIDE. Respondent Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement and the other relief awarded and confirmed on appeal in the proceedings below. No pronouncement as to costs. SO ORDERED.

G.R. No. 169353

April 13, 2007

PNOC-ENERGY DEVELOPMENT CORPORATION, Southern Negros Geothermal Project, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Fourth Division, Cebu City, and PNOC-EDC, SNGPEU-ASSOCIATED LABOR UNIONS-TUCP, LEONORA A. TORRES, ALEJANDRO B.TABAERA, JR., ARNEL T. AMOR, ROSELA S. CALIMPONG, WILSON D. NUAY, and ROBERTO S. RENZAL, Respondents. DECISION CALLEJO, SR., J.: Before the Court is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 77584 as well as its Resolution2 dated August 11, 2005. The antecedents are as follows: Petitioner PNOC-Energy Development Corporation is a government-owned and controlled corporation engaged in the exploration, development, and utilization of energy. It undertakes several projects in areas where geothermal energy has been discovered. Each geothermal project undergoes the stages of exploration, development, and utilization or production. For each stage, several activities are undertaken such as drilling, construction, civil works, structural works, mechanical works, and electrical works until the project is finally completed. Aside from its projects in Negros Oriental, petitioner also had geothermal projects in Negros Occidental, Leyte, Albay, Sorsogon, and North Cotabato.

Petitioners Southern Negros Geothermal Production Field in Negros Oriental is divided into two phases: Palinpinon I (PAL I) and Palinpinon II (PAL II). To augment its manpower requirement occasioned by the increased activities in the development of PAL II, petitioner hired the following employees in the Administration and Maintenance Section: Name 1) Leonora Torres 2) Rosela Calimpong 3) Arnel Amor 4) Wilson Nuay 5) Roberto Renzal Date Hired July 3, 1995 July 1, 1997 May 24, 1995 May 16, 1995 January 25, 1995 Position Clerk/Typist Clerk/Typist Date Separated June 30, 1998 June 30, 1998

Helper Mechanic June 30, 1998 Service Driver Pipe Fitter June 30, 1998 June 30, 1998 June 30, 1998

6) Alejandro Tabaera February 27, 1996 Mechanic

The termination/expiration of their respective employment were specified in their initial employment contracts, which, however, were renewed and extended on their respective expiry dates. On May 29, 1998, petitioner submitted reports3 to the Department of Labor and Employment (DOLE) Regional Sub-Branch No. VII in Dumaguete City, stating that six of its employees were being terminated. Petitioner thereafter furnished the employees uniformly worded notices of termination, stating that they were being terminated from employment effective June 30, 1998 due to the substantial completion of the civil works phase of PAL II. On October 29, 1998, the six employees, herein respondents, filed before the National Labor Relations Commission (NLRC) a complaint for illegal dismissal against petitioner. Aside from reinstatement, respondents sought the payment of backwages, salary differential, collective bargaining agreement benefits, damages and attorneys fees. In their Position Paper, respondents averred that they had rendered continuous and satisfactory services from the dates of their respective employment until illegally dismissed on June 30, 1998: NAMES 1) Arnel Amor 2) Rosela Calimpong 3) Wilson Nuay 4) Roberto Renzal MONTHS and YEARS OF SERVICE 3 years and 1 month 2 years and 11 months 3 years and 1 month 3 years and 5 months

5) Alejandro Tabaera 2 years and 4 months 6) Leonora Torres 2 years and 11 months

Respondents further contended that their dismissal from employment was a clear case of union busting for they had previously sought union membership and actually filed a notice of strike. For its part, petitioner asseverated that respondents were contractual employees; as such, they cannot claim to have been illegally dismissed because upon the expiration of the term of the contract or the completion of the project, their employer-employee relationship also ended. After evaluating the evidence presented, the Labor Arbiter rendered judgment dismissing the complaint for lack of legal and factual basis.4 The Labor Arbiter ruled that respondents were not dismissed from work; the employer-employee relationship between the parties was severed upon the expiration of the respective contracts of respondents and the completion of the projects concerned. Not satisfied, respondents interposed an appeal to the NLRC which rendered judgment reversing the decision of the Labor Arbiter. The dispositive portion reads: WHEREFORE, the decision of the Labor Arbiter dated May 31, 1999 is SET ASIDE and a new one is rendered ORDERING the respondent the following: (1) to immediately reinstate the following complainants to their respective positions without loss of seniority rights and other privileges: a) LEONORA TORRES b) ARNEL AMOR c) WILSON NUAY d) ROBERTO RENZAL, and e) ALEJANDRO TABAERA; (2) to pay each of the complainants his/her backwages from July 1, 1998 until actual reinstatement at the rate of P116.00 per day plus his/her 13th month pay and service incentive leave pay for the same period. (3) to pay attorneys fees equivalent to ten percent (10%) of the total award. The claim of Rosela Calimpong is dismissed for lack of merit. SO ORDERED.5 The NLRC ratiocinated that respondents were regular non-project employees for having worked for more than one year in positions that required them to perform activities necessary and desirable in the normal business or trade of petitioner. The NLRC further ruled that the employment contracts of respondents were not for a specific project or for a fixed period. According to the NLRC, the dismissals made on June 30, 1998 under the pretext of project completion were illegal, being founded on an invalid, unjust, and unauthorized cause. Respondents filed a motion for reconsideration, which the NLRC denied with modification in a Resolution6 dated March 19, 2003. Only respondent Rosela Calimpong was granted relief.
1awphi1.nt

Aggrieved, petitioner filed a petition for certiorari before the CA seeking to have the NLRC decision reversed. It claimed that respondents were engaged for one definite phase of petitioners geothermal project, the execution and implementation of the civil works portion of the Fluid Collection and Disposal System (FCDS) and Associated Work Projects. Petitioner averred that at the time of respondents termination, the projects had already been substantially if not fully completed. On August 31, 2004, the CA dismissed the petition. The fallo of the decision reads: WHEREFORE, premises considered, the petition is hereby DENIED. The assailed May 23, 2001 Decision and March 19, 2003 Resolution of the National Labor Relations Commission, Fourth Division of Cebu City are AFFIRMED.
1awphi 1.nt

SO ORDERED.7 The CA ruled that respondents were performing activities necessary and desirable in the normal operations of the business of petitioner. The appellate court explained that the repeated re-hiring and the continuing need for the services of the project employees over a span of time had made them regular employees. The motion for reconsideration filed by petitioner was denied by the CA in its Resolution8 dated August 11, 2005. Petitioner sought relief from this Court via petition for review on certiorari. The pivotal questions involved in this case for our resolution are: (a) whether respondents were project employees or regular employees; and (b) whether or not they were illegally dismissed from employment.
1a\^/phi 1.net

Petitioner argues that respondents are project employees because as gleaned from their standard contracts of employment, they were hired for a specific project or undertaking, the completion or termination of which had been determined at the time of their engagement. Their contracts clearly indicated the completion or termination of the specific project or of the specific phase thereof at the time they were engaged. For their part, respondents posit that they were undeniably performing activities which are necessary or desirable in the usual trade or business of petitioner. They aver that the completion of their individual employment was not determined at the time of their engagement due to the fact that their contracts were renewed and extended over and over again. They claim that had the periods of their employment been determined, then their work with petitioner would not have lasted beyond the three-month period provided in their respective initial employment contracts. They likewise theorized that the contracts they signed were short-term contracts covering a long period of the same activity, not for a specific project or undertaking. The contentions of petitioner have no merit. Customarily, the findings made by the NLRC are afforded great respect and are even clothed with finality and considered binding on this Court, except that when such findings are contrary to those of the Labor Arbiter, this Court may elect to re-examine the same, as we shall do in this case now. Article 280 of the Labor Code of the Philippines states Article 280. REGULAR AND CASUAL EMPLOYEES. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall

be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph. Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. Thus, the applicable formula to ascertain whether an employment should be considered regular or non-regular is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer.9 As we held in Grandspan Development Corporation v. Bernardo:10 The principal test for determining whether particular employees are properly characterized as "project employees," as distinguished from "regular employees," is whether or not the project employees were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project.11 As defined, project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of the engagement of the employee.12 However, petitioner failed to substantiate its claim that respondents were hired merely as project employees. A perusal of the records of the case reveals that the supposed specific project or undertaking of petitioner was not satisfactorily identified in the contracts of respondents. To illustrate, the following is a list of the names of respondents and the projects written in their employment contracts: NAMES Leonora A. Torres Arnel T. Amor Wilson D. Nuay PROJECT NAME Additional Manpower cover additional workloads of PAL II transferred to PAL I Operations,13 PAL II Transfer to PAL I Operations14 EDC-Drilling,15 Maintenance of Drilling Materials,16Assist in Repair Maintenance of Vehicles/Equipments at Equipment Maintenance Section17 EDC Drilling Activities,18 Rig #3 Operation on OK-3RWOBL2DWO,19 Maintenance of Drilling Materials,20LG4D Drilling Operation,21 SNGP FCDS Project,22Fabrication Personal Driver for CD Turned-Over Projects23 PAL II FCDS Nasuji-NJA RI Line and Associated Works,24 PAL II FCDS PN33/PN25 Branchline/ Nasuji-NJA-Sogongon,25 SNGP FCDS Project,26 Cawayan Restoration Works,27 SNGP FCDS Project PAL I/PAL II Refurbishments,28 Support Workload increase in Fabrication/Equipment Maintenance Section29

Roberto S. Renzal

Alejandro B. Temporary Increase in Workload of Maintenance and Repair Tabaera, Activities of Light and Heavy Equipment,30Troubleshooting/Repair Jr. of All Equipments31

Rosela S. Calimpong

PAL II Transfer to PAL I Operations Clerical Workloads,32 Additional Manpower to cover additional workloads of PAL II transferred to PAL I Operations33

Unmistakably, the alleged projects stated in the employment contracts were either too vague or imprecise to be considered as the "specific undertaking" contemplated by law. Petitioners act of repeatedly and continuously hiring respondents to do the same kind of work belies its contention that respondents were hired for a specific project or undertaking. The absence of a definite duration for the project/s has led the Court to conclude that respondents are, in fact, regular employees. Another cogent factor which militates against petitioners insistence that the services of respondents were terminated because the projects for which they were hired had been completed is the fact that respondents contracts of employment were extended a number of times for different or new projects. It must be stressed that a contract that misuses a purported fixed-term employment to block the acquisition of tenure by employees deserves to be struck down for being contrary to law, morals, good customs, public order and public policy.34 In Filipinas Pre-Fabricated Building Systems (Filsystems), Inc. v. Puente,35 the Court ruled that "the length of service of a project employee is not the controlling test of employment tenure but whether or not the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee."36 Indeed, while length of time may not be the controlling test for project employment, it is vital in determining if the employee was hired for a specific undertaking or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here, respondents had been project employees several times over. Their employment ceased to be coterminous with specific projects when they were repeatedly re-hired by petitioner.37 Where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and are considered regular employees.38 As regular workers, respondents are entitled to security of tenure under Article 279 of the Labor Code and can only be dismissed for a just or authorized cause. Article 279 of the Labor Code provides: Article. 279. SECURITY OF TENURE. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. In termination cases, it is incumbent upon the employer to prove by the quantum of evidence required by law that the dismissal of an employee is not illegal; otherwise the dismissal would be unjustified.39 In the case at bar, petitioner failed to discharge the burden. The notices of termination indicated that respondents services were terminated due to the completion of the project. However, this allegation is contrary to the statement of petitioner in some of its pleadings that the project was merely "substantially completed." There is likewise no proof that the project, or the phase of work to which respondents had been assigned, was already completed at the time of their dismissal.

Since respondents were illegally dismissed from work, they are entitled to reinstatement without loss of seniority rights, full backwages, inclusive of allowances and other benefits or their monetary equivalent computed from the time their compensation was withheld from them up to the time of their actual reinstatement, pursuant to Article 279 of the Labor Code.40 WHEREFORE, in the light of the foregoing, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 77584 and the Resolution are AFFIRMED. No costs. SO ORDERED.

G.R. No. L-18873

September 30, 1963

MANILA HOTEL COMPANY, petitioner, vs. COURT OF INDUSTRIAL RELATIONS, ET AL., respondents. Government Corporate Counsel Simeon M. Gopengco and Trial Attorney Jose S. Gomez for petitioner. Gregorio E. Fajardo and Jesus Jaramillo for respondent Union. Mariano B. Tuason for respondent Court.

BAUTISTA ANGELO, J.: The Pines Hotel Employees Association filed on February 24, 1960 before the Court of Industrial Relations a petition praying, among other things, that its employees who were working at the Pines Hotel be paid additional compensation for overtime service rendered due to the exigencies of the business, as well as additional compensation for Sunday, legal holiday and nighttime work. The Manila Hotel filed its answer denying the material averments of the petition and alleging, among others, that if overtime service was rendered the same was not authorized but was rendered voluntarily, for the employees were interested in the "tips" offered by the patrons of the hotel. Presiding Judge Jose S. Bautista, to whom the petition was assigned, after trial, rendered judgment stating that the employees were entitled to the additional compensation demanded, including that for overtime work, because an employee who renders overtime service is entitled to compensation even if he rendered it without prior authority. A motion for reconsideration was filed on

the ground that the order was contrary to law and the evidence, but the same was denied by the industrial court en banc.
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In compliance with the order of the court, the Examining Division of the Court of Industrial Relations submitted a report in which it stated that the amount due the employees as additional compensation for overtime and night services rendered from January to December 31, 1958 was P32,950.69. The management filed its objection to the report on the ground that it included 22 names of employees who were not employees of the Pines Hotel at the time the petition was filed so that insofar as said employees are concerned the petition merely involves a money claim which comes under the jurisdiction of the regular courts. The trial judge, however, overruled this objection holding that, while the 22 employees were actually not in the service at the time of the filing of the petition, they were however subsequently employed even during the pendency of the incident, and so their claim comes within the jurisdiction of the Court of Industrial Relations. Hence, the present petition for review. There is no merit in this appeal it appearing that while it is true that the 22 employees whose claim is objected to were not actually in the service at the time the instant petition was filed, they were however, subsequently reemployed even while the present incident was pending consideration by the trial court. Moreover, it appears that the questioned employees were never separated from the service. Their status is that of regular seasonal employees who are called to work from time to time, mostly during summer season. The nature of their relationship with the hotel is such that during off season they are temporarily laid off but during summer season they are re-employed, or when their services may be needed. They are not strictly speaking separated from the service but are merely considered as on leave of absence without pay until they are re-employed. Their employment relationship is never severed but only suspended. As such, these employees can be considered as in the regular employment of the hotel. WHEREFORE, the order appealed from is affirmed. No costs.

G.R. No. 150478. April 15, 2005 HACIENDA BINO/HORTENCIA STARKE, INC./HORTENCIA L. STARKE, Petitioners, vs. CANDIDO CUENCA, FRANCISCO ACULIT, ANGELINA ALMONIA, DONALD ALPUERTO, NIDA BANGALISAN, ROGELIO CHAVEZ, ELMO DULINGGIS, MERCEDES EMPERADO, TORIBIO EMPERADO, JULIANA ENCARNADO, REYNALDO ENCARNADO, GENE FERNANDO, JOVEN FERNANDO, HERNANI FERNANDO, TERESITA FERNANDO, BONIFACIO GADON, JOSE GALLADA, RAMONITO KILAYKO, ROLANDO KILAYKO, ALFREDO LASTIMOSO, ANTONIO LOMBO, ELIAS LOMBO, EMMA LOMBO, LAURENCIA LOMBO, LUCIA LOMBO, JOEL MALACAPAY, ADELA MOJELLO, ERNESTO MOJELLO, FRUCTOSO MOJELLO, JESSICA MOJELLO, JOSE MOJELLO, MARITESS MOJELLO, MERLITA MOJELLO, ROMEO MOJELLO, RONALDO MOJELLO, VALERIANA MOJELLO, JAIME NEMENZO, RODOLFO NAPABLE,

SEGUNDIA OCDEN, JARDIOLINA PABALINAS, LAURO PABALINAS, NOLI PABALINAS, RUBEN PABALINAS, ZALDY PABALINAS, ALFREDO PANOLINO, JOAQUIN PEDUHAN, JOHN PEDUHAN, REYNALDO PEDUHAN, ROGELIO PEDUHAN, JOSEPHINE PEDUHAN, ANTONIO PORRAS, JR., LORNA PORRAS, JIMMY REYES, ALICIA ROBERTO, MARCOS ROBERTO, JR., MARIA SANGGA, RODRIGO SANGGA, ARGENE SERON, SAMUEL SERON, SR., ANGELINO SENELONG, ARMANDO SENELONG, DIOLITO SENELONG, REYNALDO SENELONG, VICENTE SENELONG, FEDERICO STA. ANA, ROGELIO SUASIM, EDNA TADLAS, ARTURO TITONG, JR., JOSE TITONG, JR., NANCY VINGNO, ALMA YANSON, JIMMY YANSON, MYRNA VILLANUEVA BELENARIO, SALVADOR MALACAPAY, and RAMELO TIONGCO, Respondents. DECISION CALLEJO, SR., J.: Before us is a petition for review of the Decision1 of the Court of Appeals (CA), dated July 31, 2001, and the Resolution dated September 24, 2001 denying the petitioners motion for reconsideration. The assailed decision modified the decision of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000099-98. Hacienda Bino is a 236-hectare sugar plantation located at Barangay Orong, Kabankalan City, Negros Occidental, and represented in this case by Hortencia L. Starke, owner and operator of the said hacienda. The 76 individual respondents were part of the workforce of Hacienda Bino consisting of 220 workers, performing various works, such as cultivation, planting of cane points, fertilization, watering, weeding, harvesting, and loading of harvested sugarcanes to cargo trucks.2 On July 18, 1996, during the off-milling season, petitioner Starke issued an Order or Notice which stated, thus: To all Hacienda Employees: Please bear in mind that all those who signed in favor of CARP are expressing their desire to get out of employment on their own volition. Wherefore, beginning today, July 18, only those who did not sign for CARP will be given employment by Hda. Bino. (Sgd.) Hortencia Starke3 The respondents regarded such notice as a termination of their employment. As a consequence, they filed a complaint for illegal dismissal, wage differentials, 13th month pay, holiday pay and premium pay for holiday, service incentive leave pay, and moral and exemplary damages with the NLRC, Regional Arbitration Branch No. VI, Bacolod City, on September 17, 1996.4 In their Joint Sworn Statement, the respondents as complainants alleged inter alia that they are regular and permanent workers of the hacienda and that they were dismissed without just and lawful cause. They further alleged that they were dismissed because they applied as beneficiaries under the Comprehensive Agrarian Reform Program (CARP) over the land owned by petitioner Starke.5

For her part, petitioner Starke recounted that the companys Board of Directors petitioned the Sangguniang Bayan of Kabankalan for authority to re-classify, from agricultural to industrial, commercial and residential, the whole of Hacienda Bino, except the portion earmarked for the CARP. She asserted that half of the workers supported the re-classification but the others, which included the herein respondents, opted to become beneficiaries of the land under the CARP. Petitioner Starke alleged that in July 1996, there was little work in the plantation as it was off-season; and so, on account of the seasonal nature of the work, she issued the order giving preference to those who supported the re-classification. She pointed out that when the milling season began in October 1996, the work was plentiful again and she issued notices to all workers, including the respondents, informing them of the availability of work. However, the respondents refused to report back to work. With respect to the respondents money claims, petitioner Starke submitted payrolls evidencing payment thereof. On October 6, 1997, Labor Arbiter Ray Allan T. Drilon rendered a Decision,6 finding that petitioner Starkes notice dated July 18, 1996 was tantamount to a termination of the respondents services, and holding that the petitioner company was guilty of illegal dismissal. The dispositive portion of the decision reads: WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of the complainants illegal and ordering respondent Hortencia L. Starke, Inc. represented by Hortencia L. Starke, as President, to: 1. Reinstate the complainants to their former position without loss of seniority rights immediately upon receipt of this decision; 2. PAY the backwages and wage differentials of the complainants, to wit: in the total amount of Four Hundred Ninety-Five Thousand Eight Hundred Fifty-Two and 72/100 (P495,852.72) Pesos; and 3. TO PAY the complainants attorney's fee in the amount of Forty-Nine Thousand Five Hundred Eighty-Five and 27/100 (P49,585.27) Pesos. Respondents are further directed to deposit to this Office the total judgment award of FIVE HUNDRED FORTY-FIVE THOUSAND AND FOUR HUNDRED THIRTY-SEVEN AND 99/100 (P545,437.99) PESOS within ten (10) days from receipt of this decision. All other claims are hereby DISMISSED for lack of merit. SO ORDERED.7 Both the petitioners and the respondents appealed the case to the NLRC. On July 24, 1998, the NLRC affirmed with modification the decision of the Labor Arbiter. The dispositive part of its decision reads: WHEREFORE, premises considered, the Decision of the Labor Arbiter is AFFIRMED WITH MODIFICATIONS. Respondent is further ordered to pay the complainants listed in the Holiday Pay Payroll the amounts due them.

SO ORDERED.8 A motion for reconsideration of the said decision was denied by the NLRC.9 Dissatisfied, the respondents appealed the case to the CA where the following issues were raised: A. THE HONORABLE COMMISSION GRAVELY ABUSED ITS DISCRETION AND POWER BY VIOLATING THE DOCTRINE OF "STARE DECISIS" LAID DOWN BY THE SUPREME COURT AND THE APPLICABLE LAWS AS TO THE STATUS OF THE SUGAR WORKERS. B. THE HONORABLE COMMISSION COMMITTED SERIOUS ERRORS BY ADMITTING THE MOTION TO DISMISS AND/OR ANSWER TO PETITIONERS APPEAL MEMORANDUM DATED MARCH 26, 1998 FILED BY COUNSEL FOR THE HEREIN RESPONDENTS INSPITE OF THE FACT THAT IT WAS FILED WAY BEYOND THE REGLEMENTARY PERIOD. C. THE HONORABLE COMMISSION COMMITTED GRAVE ERROR IN GIVING CREDENCE TO THE SWEEPING ALLEGATIONS OF THE COMPLAINANTS AS TO THE AWARD OF BACKWAGES AND HOLIDAY PAY WITHOUT ANY BASIS.10 On July 31, 2001, the CA rendered a Decision,11 the dispositive portion of which reads: WHEREFORE, the decision of the National Labor Relations Commission is hereby MODIFIED by deleting the award for holiday pay and premium pay for holidays. The rest of the Decision is hereby AFFIRMED. SO ORDERED.12 The CA ruled that the concept of stare decisis is not relevant to the present case. It held that the ruling inMercado, Sr. v. NLRC13 does not operate to abandon the settled doctrine that sugar workers are considered regular and permanent farm workers of a sugar plantation owner, considering that there are facts peculiar in that case which are not present in the case at bar. In the Mercado case, the farm laborers worked only for a definite period for a farm owner since the area of the land was comparatively small, after which they offer their services to other farm owners. In this case, the area of the hacienda, which is 236 hectares, simply does not allow for the respondents to work for a definite period only. The CA also held that the petitioners reliance on Bacolod-Murcia Milling Co. Inc. v. NLRC14 was misplaced, as it in fact, bolstered the respondents' posture that they are regular employees. In that case, the Court held that a sugar worker may be considered as in regular employment even during those years when he is merely a seasonal worker where the issues concern the determination of an employer-employee relationship and security of tenure. Further, the CA held that the respondents appeal to the NLRC was not perfected since they failed to accompany their notice of appeal with a memorandum of appeal, or to timely file a memorandum of appeal. Thus, as to them, the decision of the Labor Arbiter became final and executory. The NLRC, therefore, gravely abused its discretion when it modified the decision of the Labor Arbiter and awarded to the respondents holiday pay and premium for holiday pay. Finally, the CA affirmed the award of backwages, finding no circumstance that would warrant a reversal of the findings of the Labor Arbiter and NLRC on this point. 15

On September 24, 2001, the CA denied the motion for reconsideration filed by the petitioners due to their failure to indicate the date of the receipt of the decision to determine the timeliness of the motion.16 Hence, this petition for review. The petitioners submit the following issues: A. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND POWER BY VIOLATING THE DOCTRINE OF "STARE DECISIS" LAID DOWN BY THE SUPREME COURT AND THE APPLICABLE LAWS AS TO THE STATUS OF THE SUGAR WORKERS. B. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE MOTION FOR RECONSIDERATION FOR FAILURE TO STATE THE DATE OF THE RECEIPT OF THE DECISION IN THE MOTION FOR RECONSIDERATION.17 Petitioner Starke contends that the established doctrine that seasonal employees are regular employees had been overturned and abandoned by Mercado, Sr. v. NLRC.18 She stresses that in that case, the Court held that petitioners therein who were sugar workers, are seasonal employees and their employment legally ends upon completion of the project or the season. Petitioner Starke argues that the CA violated the doctrine of stare decisisin not applying the said ruling. She asserts that the respondents, who are also sugar workers, are seasonal employees; hence, their employment can be terminated at the end of the season and such termination cannot be considered an illegal dismissal. Petitioner Starke maintains that the determination of whether the workers are regular or seasonal employees is not dependent on the number of hectares operated upon by them, or the number of workers, or the capitalization involved, but rather, in the nature of the work. She asserts that the respondents also made their services available to the neighboring haciendas. To buttress her contention that the respondents are seasonal employees, petitioner Starke cites Rep. Act 6982, An Act Strengthening the Social Amelioration Program in the Sugar Industry, Providing the Mechanics for its Implementation, and for other Purposes, which recognizes the seasonal nature of the work in the sugar industry.19 Petitioner Starke also takes exception to the denial of her motion for reconsideration due to failure to state the date of the receipt of the decision. She asserts that a denial of a motion for reconsideration due to such cause is merely directory and not mandatory on the part of the CA. Considering that the amount involved in this case and the fact that the motion was filed within the reglementary period, the CA should have considered the motion for reconsideration despite such procedural lapse.20 On the other hand, the respondents aver that the petitioners erroneously invoke the doctrine of stare decisis since the factual backdrop of this case and the Mercado case is not similar. The respondents posit that the Mercadocase ruled on the status of employment of farm laborers who work only for a definite period of time for a farm owner, after which they offer their services to other farm owners. Contrarily, the respondents contend that they do not work for a definite period but throughout the whole year, and do not make their services available to other farm owners. Moreover, the land involved in the Mercado case is comparatively smaller than the sugar land involved in this case. The respondents insist that the vastness of the land involved in this case requires the workers to work on a year-round basis, and not on an "on-and-off" basis like the farm workers in the Mercado case. Finally, the respondents maintain that the requirement that the date of receipt of the decision should be indicated in the motion for reconsideration is mandatory and jurisdictional and, if not complied with, the court must deny the motion outright.21

The petition is without merit. On the substantial issue of whether the respondents are regular or seasonal employees, the petitioners contend that the CA violated the doctrine of stare decisis by not applying the ruling in the Mercado case that sugar workers are seasonal employees. We hold otherwise. Under the doctrine of stare decisis, when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same.22 Where the facts are essentially different, however, stare decisisdoes not apply, for a perfectly sound principle as applied to one set of facts might be entirely inappropriate when a factual variance is introduced.23 The CA correctly found that the facts involved in this case are different from the Mercado case; therefore, the ruling in that case cannot be applied to the case at bar, thus: We do not find the concept of stare decisis relevant in the case at bench. For although in the Mercado case, the Supreme Court held the petitioners who were sugar workers not to be regular but seasonal workers, nevertheless, the same does not operate to abandon the settled doctrine of the High Court that sugar workers are considered regular and permanent farm workers of a sugar plantation owner, the reason being that there are facts present that are peculiar to the Mercado case. The disparity in facts between the Mercado case and the instant case is best exemplified by the fact that the former decision ruled on the status of employment of farm laborers, who, as found by the labor arbiter, work only for a definite period for a farm worker, after which they offer their services to other farm owners, considering the area in question being comparatively small, comprising of seventeen and a half (17) hectares of land, such that the planting of rice and sugar cane thereon could not possibly entail a whole year operation. The herein case presents a different factual condition as the enormity of the size of the sugar hacienda of petitioner, with an area of two hundred thirty-six (236) hectares, simply do not allow for private respondents to render work only for a definite period. Indeed, in a number of cases, the Court has recognized the peculiar facts attendant in the Mercado case. InAbasolo v. NLRC,24 and earlier, in Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC,25 the Court made the following observations: In Mercado, although respondent constantly availed herself of the petitioners services from year to year, it was clear from the facts therein that they were not in her regular employ. Petitioners therein performed different phases of agricultural work in a given year. However, during that period, they were free to work for other farm owners, and in fact they did. In other words, they worked for respondent, but were nevertheless free to contract their services with other farm owners. The Court was thus emphatic when it ruled that petitioners were mere project employees, who could be hired by other farm owners.26 Recently, the Court reiterated the same observations in Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade27 and added that the petitioners in the Mercado case were "not hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase thereof." In this case, there is no evidence on record that the same particulars are present. The petitioners did not present any evidence that the respondents were required to perform certain phases of agricultural work for a definite period of time. Although the petitioners assert that the respondents made their services available to the neighboring haciendas, the records do not, however, support such assertion.

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.28 There is no doubt that the respondents were performing work necessary and desirable in the usual trade or business of an employer. Hence, they can properly be classified as regular employees. For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have been employed only for the duration of one season.29 While the records sufficiently show that the respondents work in the hacienda was seasonal in nature, there was, however, no proof that they were hired for the duration of one season only. In fact, the payrolls,30submitted in evidence by the petitioners, show that they availed the services of the respondents since 1991. Absent any proof to the contrary, the general rule of regular employment should, therefore, stand. It bears stressing that the employer has the burden of proving the lawfulness of his employees dismissal.31 On the procedural issue, petitioner Starke avers that the CA should not have denied outright her motion for reconsideration, considering its timely filing and the huge amount involved. This contention is already moot. Petitioner Starke has already aired in this petition the arguments in her motion for reconsideration of the CA decision, which have been adequately addressed by this Court. Assuming arguendo that the CA indeed failed to consider the motion for reconsideration, petitioner Starke was not left without any other recourse.32 IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision of the Court of Appeals, dated July 31, 2001, and its Resolution dated September 24, 2001 are hereby AFFIRMED. SO ORDERED.

G.R. No. 168052

February 20, 2006

POSEIDON FISHING/TERRY DE JESUS, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and JIMMY S. ESTOQUIA, Respondents. DECISION CHICO-NAZARIO, J.: Article 280 of the Labor Code, in its truest sense, distinguishes between regular and casual employees to protect the interests of labor. Its language evidently manifests the intent to safeguard the tenurial interest of the worker who may be denied the rights and benefits due a regular employee

by virtue of lopsided agreements with the economically powerful employer who can maneuver to keep an employee on a casual status for as long as convenient.1 This petition assails the Decision2 of the Court of Appeals dated 14 March 2005 in CA-G.R. SP No. 81140 entitled, "Poseidon Fishing/Terry De Jesus v. National Labor Relations Commission and Jimmy S. Estoquia" which affirmed that of the National Labor Relations Commission (NLRC). The NLRC had affirmed with modification the Decision dated 5 December 2000 of Labor Arbiter Melquiades Sol D. Del Rosario in NLRC-NCR Case No. 00-07-03625-00, declaring private respondent to have been illegally dismissed and entitled to backwages and separation pay. As thoroughly told by the Court of Appeals and the Labor Arbiter, the particulars are beyond dispute: Petitioner Poseidon Fishing is a fishing company engaged in the deep-sea fishing industry. Its various vessels catch fish in the outlying islands of the Philippines, which are traded and sold at the Navotas Fish Port. One of its boat crew was private respondent Jimmy S. Estoquia.3 Petitioner Terry de Jesus is the manager of petitioner company. Private respondent was employed by Poseidon Fishing in January 1988 as Chief Mate. After five years, he was promoted to Boat Captain. In 1999, petitioners, without reason, demoted respondent from Boat Captain to Radio Operator of petitioner Poseidon.4 As a Radio Operator, he monitored the daily activities in their office and recorded in the duty logbook the names of the callers and time of their calls.5 On 3 July 2000, private respondent failed to record a 7:25 a.m. call in one of the logbooks. However, he was able to record the same in the other logbook. Consequently, when he reviewed the two logbooks, he noticed that he was not able to record the said call in one of the logbooks so he immediately recorded the 7:25 a.m. call after the 7:30 a.m. entry.6 Around 9:00 oclock in the morning of 4 July 2000, petitioner Terry de Jesus detected the error in the entry in the logbook. Subsequently, she asked private respondent to prepare an incident report to explain the reason for the said oversight.7 At around 2:00 oclock in the afternoon of that same day, petitioner Poseidons secretary, namely Nenita Laderas, summoned private respondent to get his separation pay amounting to Fifty-Five Thousand Pesos (P55,000.00). However, he refused to accept the amount as he believed that he did nothing illegal to warrant his immediate discharge from work.8 Rising to the occasion, private respondent filed a complaint for illegal dismissal on 11 July 2000 with the Labor Arbiter, alleging nonpayment of wages with prayer for back wages, damages, attorneys fees, and other monetary benefits. In private respondents position paper, he averred that petitioner Poseidon employed him as a Chief Mate sometime in January 1988. He claimed that he was promoted to the position of Boat Captain five years after. However, in 1999, he was demoted from Boat Captain to Radio Operator without any reason and shortly, he was terminated without just cause and without due process of law. Conversely, petitioners Poseidon and Terry de Jesus strongly asserted that private respondent was a contractual or a casual employee whose services could be terminated at the end of the contract even without a just or authorized cause in view of Article 280 of the Labor Code, which provides:

Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. (Emphasis supplied.) Petitioners further posited that when the private respondent was engaged, it was made clear to him that he was being employed only on a "por viaje" or per trip basis and that his employment would be terminated at the end of the trip for which he was being hired. As such, the private respondent could not be entitled to separation pay and other monetary claims. On 5 December 2000, following the termination of the hearing of the case, the Labor Arbiter decided in favor of private respondent. The Labor Arbiter held that even if the private respondent was a casual employee, he became a regular employee after a period of one year and, thereafter, had attained tenurial security which could only be lost due to a legal cause after observing due process. The dispositive portion of the Decision reads: CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered finding complainant to have been illegally dismissed and so must immediately be reinstated to his former position as radio operator and paid by respondent[s] in solidum his backwages which as of December 3, 2000 had already accumulated in the sum ofP35,880.00 plus his unpaid one (1) week salary in the sum of P1,794.00. Respondents are further ordered to pay attorneys fees in a sum equivalent to 10% of the awarded claims.9 Consequently, the petitioners filed their Memorandum of Appeal with the NLRC for the reversal of the aforesaid decision. On 24 September 2002, the NLRC affirmed the decision of the Labor Arbiter with the modification, inter alia, that: (a) the private respondent would be paid his separation pay equivalent to one-half of his monthly pay for every year of service that he has rendered in lieu of reinstatement; and (b) an amount equivalent to six months salary should be deducted from his full backwages because it was his negligence in the performance of his work that brought about his termination. It held: WHEREFORE, the decision is modified as follows: 1. The amount equivalent to six (6) months salary is to be deducted from the total award of backwages; 2. The respondent is ordered to pay complainant separation pay equivalent to one-half (1/2) month pay for every year of service counted from 1998; x x x 3. The respondent is ordered to pay complainants unpaid wages in the amount of P1,794.00; and

4. Respondent is ordered to pay attorneys fees in a sum equivalent to ten percent (10%) of the awarded claims.10 Petitioners moved for the reconsideration of the NLRC decision, but were denied in a Resolution dated 29 August 2003. Petitioners filed a Petition for Certiorari with the Court of Appeals, imputing grave abuse of discretion, but the Court of Appeals found none. The following is the fallo of the decision: WHEREFORE, the foregoing premises considered, the instant petition is hereby DENIED.11 In a last attempt at vindication, petitioners filed the present petition for reviewhttp://elibrary.supremecourt.gov.ph/dtSearch/ - _ftn with the following assignment of errors: I. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE RESPONDENT WAS A REGULAR EMPLOYEE WHEN IN TRUTH HE WAS A CONTRACTUAL/PROJECT/SEASONAL EMPLOYEE. II. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE RESPONDENT WAS ILLEGALLY DISMISSED FROM EMPLOYMENT. III. THE HONORABLE COURT OF APPEALS ERRED IN NOT CONSIDERING THE RESPONDENT A SEASONAL EMPLOYEE AND APPLYING THE RULING IN RJL MARTINEZ FISHING CORPORATION vs. NLRC THAT "the activity of fishing is a continuous process and could hardly be considered as seasonal in nature." IV. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE RESPONDENT IS ENTITLED TO BACKWAGES, SEPARATION PAY, ATTORNEYS FEES AND OTHER MONETARY BENEFITS. V. THE HONORABLE COURT OF APPEALS ERRED IN NOT RESOLVING THE PRAYER FOR THE ISsuance of preliminary injunction and/or temporary restraining order.12 The fundamental issue entails the determination of the nature of the contractual relationship between petitioners and private respondent, i.e., was private respondent a regular employee at the time his employment was terminated on 04 July 2000? Asserting their right to terminate the contract with private respondent per the "Kasunduan" with him, petitioners pointed to the provision thereof stating that he was being employed only on a por viaje basis and that his employment would be terminated at the end of the trip for which he was being hired, to wit:

NA, kami ay sumasang-ayon na MAGLINGKOD at GUMAWA ng mga gawaing magmula sa pag-alis ng lantsa sa pondohan sa Navotas patungo sa palakayahan; pabalik sa pondohan ng lantsa sa Navotas hanggang sa paghango ng mga kargang isda.13 Petitioners lament that fixed-term employment contracts are recognized as valid under the law notwithstanding the provision of Article 280 of the Labor Code. Petitioners theorize that the Civil Code has always recognized the validity of contracts with a fixed and definite period, and imposes no restraints on the freedom of the parties to fix the duration of the contract, whatever its object, be it species, goods or services, except the general admonition against stipulations contrary to law, morals, good customs, public order and public policy. Quoting Brent School Inc. v. Zamora,14 petitioners are hamstrung on their reasoning that under the Civil Code, fixed-term employment contracts are not limited, as they are under the present Labor Code, to those that by their nature are seasonal or for specific projects with pre-determined dates of completion as they also include those to which the parties by free choice have assigned a specific date of termination. Hence, persons may enter into such contracts as long as they are capacitated to act, petitioners bemoan. We are far from persuaded by petitioners ratiocination. Petitioners construal of Brent School, Inc. v. Zamora, has certainly gone astray. The subject of scrutiny in the Brent case was the employment contract inked between the school and one engaged as its Athletic Director. The contract fixed a specific term of five years from the date of execution of the agreement. This Court upheld the validity of the contract between therein petitioner and private respondent, fixing the latters period of employment. This Court laid down the following criteria for judging the validity of such fixed-term contracts, to wit: Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employees right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences.15 (Emphasis supplied.) Brent cited some familiar examples of employment contracts which may neither be for seasonal work nor for specific projects, but to which a fixed term is an essential and natural appurtenance, i.e., overseas employment contracts, appointments to the positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity without which no reasonable rotation would be possible.16 Thus, in Brent, the acid test in considering fixed-term contracts as valid is: if from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be disregarded for being contrary to public policy.

On the same tack as Brent, the Court in Pakistan International Airlines Corporation v. Ople,17 ruled in this wise: It is apparent from Brent School that the critical consideration is the presence or absence of a substantial indication that the period specified in an employment agreement was designed to circumvent the security of tenure of regular employees which is provided for in Articles 280 and 281 of the Labor Code. This indication must ordinarily rest upon some aspect of the agreement other than the mere specification of a fixed term of the employment agreement, or upon evidence aliunde of the intent to evade. Consistent with the pronouncements in these two earlier cases, the Court, in Cielo v. National Labor Relations Commission,18 did not hesitate to nullify employment contracts stipulating a fixed term after finding that "the purpose behind these individual contracts was to evade the application of the labor laws." In the case under consideration, the agreement has such an objective - to frustrate the security of tenure of private respondent- and fittingly, must be nullified. In this case, petitioners intent to evade the application of Article 280 of the Labor Code is unmistakable. In a span of 12 years, private respondent worked for petitioner company first as a Chief Mate, then Boat Captain, and later as Radio Operator. His job was directly related to the deep-sea fishing business of petitioner Poseidon. His work was, therefore, necessary and important to the business of his employer. Such being the scenario involved, private respondent is considered a regular employee of petitioner under Article 280 of the Labor Code, the law in point, which provides: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. (Emphasis supplied.) Moreover, unlike in the Brent case where the period of the contract was fixed and clearly stated, note that in the case at bar, the terms of employment of private respondent as provided in the Kasunduan was not only vague, it also failed to provide an actual or specific date or period for the contract. As adroitly observed by the Labor Arbiter: There is nothing in the contract that says complainant, who happened to be the captain of said vessel, is a casual, seasonal or a project worker. The date July 1 to 31, 1998 under the heading "Pagdating" had been placed there merely to indicate the possible date of arrival of the vessel and is not an indication of the status of employment of the crew of the vessel. Actually, the exception under Article 280 of the Labor Code in which the respondents have taken refuge to justify its position does not apply in the instant case. The proviso, "Except where the employment has been fixed for a specific project or undertaking the completion or determination 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." (Article 280 Labor Code), is inapplicable because the very contract adduced by respondents is unclear and uncertain. The kasunduan does not specify the duration that complainant had been hired x x x.19 (Emphasis supplied.) Furthermore, as petitioners themselves admitted in their petition before this Court, private respondent was repeatedly hired as part of the boats crew and he acted in various capacities onboard the vessel. In Integrated Contractor and Plumbing Works, Inc. v. National Labor Relations Commission,20 we held that the test to determine whether employment is regular or not is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. And, 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. 21 In Bustamante v. National Labor Relations Commission,22 the Court expounded on what are regular employees under Article 280 of the Labor Code, viz: It is undisputed that petitioners were illegally dismissed from employment. Article 280 of the Labor Code, states: ART. 280. Regular and Casual Employment. - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. This provision draws a line between regular and casual employment, a distinction however often abused by employers. The provision enumerates two (2) kinds of employees, the regular employees and the casual employees. The regular employees consist of the following: 1) those 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 such service is continuous or broken.23 Ostensibly, in the case at bar, at different times, private respondent occupied the position of Chief Mate, Boat Captain, and Radio Operator. In petitioners interpretation, however, this act of hiring and re-hiring actually highlight private respondents contractual status saying that for every engagement, a fresh contract was entered into by the parties at the outset as the conditions of employment changed when the private respondent filled in a different position. But to this Court, the act of hiring and re-hiring in various capacities is a mere gambit employed by petitioner to thwart the tenurial protection of private respondent. Such pattern of re-hiring and the recurring need for his services are testament to the necessity and indispensability of such services to petitioners business or trade.24

Petitioners would brush off private respondents length of service by stating that he had worked for the company merely for several years25 and that in those times, his services were not exclusive to petitioners. On the other hand, to prove his claim that he had continuously worked for petitioners from 1988 to 2000, private respondent submitted a copy of his payroll26 from 30 May 1988 to October 1988 and a copy of his SSS Employees Contributions27 as of the year 2000. These documents were submitted by private respondent in order to benchmark his claim of 12 years of service. Petitioners, however, failed to submit the pertinent employee files, payrolls, records, remittances and other similar documents which would show that private respondents work was not continuous and for less than 12 years. Inasmuch as these documents are not in private respondents possession but in the custody and absolute control of petitioners, their failure to refute private respondents evidence or even categorically deny private respondents allegations lead us to no other conclusion than that private respondent was hired in 1988 and had been continuously in its employ since then. Indeed, petitioners failure to submit the necessary documents, which as employers are in their possession, gives rise to the presumption that their presentation is prejudicial to its cause.28 To recapitulate, it was after 12 long years of having private respondent under its wings when petitioners, possibly sensing a brewing brush with the law as far as private respondents employment is concerned, finally found a loophole to kick private respondent out when the latter failed to properly record a 7:25 a.m. call. Capitalizing on this faux pas, petitioner summarily dismissed private respondent. On this note, we disagree with the finding of the NLRC that private respondent was negligent on account of his failure to properly record a call in the log book. A review of the records would ineluctably show that there is no basis to deduct six months worth of salary from the total separation pay that private respondent is entitled to. We note further that the NLRCs finding clashes with that of the Labor Arbiter which found no such negligence and that such inadvertence on the part of private respondent, at best, constitutes simple negligence punishable only with admonition or suspension for a day or two. As the records bear out, private respondent himself seasonably realized his oversight and in no time recorded the 7:25 a.m. call after the 7:30 a.m. call. Gross negligence under Article 282 of the Labor Code, 29 as amended, connotes want of care in the performance of ones duties, while habitual neglect implies repeated failure to perform ones duties for a period of time, depending upon the circumstances.30 Here, it is not disputed that private respondent corrected straight away the recording of the call and petitioners failed to prove the damage or injury that such inadvertence caused the company. We find, as the Labor Arbiter31 had found, that there is no sufficient evidence on record to prove private respondents negligence, gross or simple for that matter, in the performance of his duties to warrant a reduction of six months salary from private respondents separation pay. Moreover, respondent missed to properly record, not two or three calls, but just a single call. It was also a first infraction on the part of private respondent, not to mention that the gaffe, if at all, proved to be innocuous. Thus, we find such slip to be within tolerable range. After all, is it not a rule32 that in carrying out and interpreting the provisions of the Labor Code and its implementing regulations, the workingman's welfare should be primordial? Petitioners next assert that deep-sea fishing is a seasonal industry because catching of fish could only be undertaken for a limited duration or seasonal within a given year. Thus, according to petitioners, private respondent was a seasonal or project employee. We are not won over. As correctly pointed out by the Court of Appeals, the "activity of catching fish is a continuous process and could hardly be considered as seasonal in nature."33 In Philex Mining Corp. v. National Labor Relations Commission,34we defined project employees as those workers hired (1) for a specific

project or undertaking, and (2) the completion or termination of such project has been determined at the time of the engagement of the employee. The principal test for determining whether particular employees are "project employees" as distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project. In this case, petitioners have not shown that private respondent was informed that he will be assigned to a "specific project or undertaking." As earlier noted, neither has it been established that he was informed of the duration and scope of such project or undertaking at the time of their engagement. More to the point, in Maraguinot, Jr. v. National Labor Relations Commission,35 we ruled that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired 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. In fine, inasmuch as private respondents functions as described above are no doubt "usually necessary or desirable in the usual business or trade" of petitioner fishing company and he was hired continuously for 12 years for the same nature of tasks, we are constrained to say that he belongs to the ilk of regular employee. Being one, private respondents dismissal without valid cause was illegal. And, where illegal dismissal is proven, the worker is entitled to back wages and other similar benefits without deductions or conditions.36 Indeed, it behooves this Court to be ever vigilant in checking the unscrupulous efforts of some of our entrepreneurs, primarily aimed at maximizing their return on investments at the expense of the lowly workingman.37 WHEREFORE, the present petition is hereby DENIED. The Decision of the Court of Appeals dated 14 March 2005 in CA-G.R. SP No. 81140 is hereby AFFIRMED WITH MODIFICATION by deleting the reduction of an amount equivalent to six months of pay from private respondents separation pay. The case is remanded to the Labor Arbiter for further proceedings solely for the purpose of determining the monetary liabilities of petitioners in accordance with the decision. The Labor Arbiter is ORDERED to submit his compliance thereon within thirty (30) days from notice of this decision, with copies furnished to the parties. Costs against petitioners. SO ORDERED.