G.R. No.

70705 August 21, 1989

MOISES DE LEON, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and LA TONDE;A
INC., respondents.
FERNAN, C.J.:
This petition for certiorari seeks to annul and set aside: (1) the majority decision dated
J anuary 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 J anuary, 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 J anuary 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 J r.,
a regular maintenance man; and that weeks after his dismissal, he was re-hired by the
respondent company indirectly through the Vitas-Magsaysay Village Livelihood Council,
a labor agency of respondent company, and was made to perform the tasks which he
used to do. Emiliano Tanque J r. 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 J r., 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 J r. 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 workingfor 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 well-reasoned 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 J r., 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 himother 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 J r.,
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 J anuary, 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 J anuary 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.
Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.
G.R. Nos. 82643-67 August 30, 1990
PHILIPPINE GEOTHERMAL, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, TEODULO C. CUEBILLAS,
ARMANDO CILOT, MARIANO CORULLO, YOLANDA CAL, EFREN CLERIGO,
FELICISSIMO VARGAS, et al., respondents.
PARAS, J.:
This is a petition for review on certiorari seeking to annul and set aside; (a) the
Resolution of the National Labor Relations Commission * dated November 9, 1987 in
Labor Cases Nos. RAB-403-85 to 427-85 and RAB Nos. 0392-85 to 0393-85 entitled
Teodulo C. Cuebillas, et. al. vs. Philippine Geothermal, Inc. et al. and Efren N. Clerigo
et. al. vs. Phil. Geothermal Inc. respectively which declared respondent employees as
regular and permanent employees of petitioner company and ordered their
reinstatement and (b) the Resolution dated March 9,1988 which denied the Motion for
Reconsideration.
The facts of the case are as follows:
Petitioner Philippine Geothermal, Inc. is a U.S. corporation engaged in the exploration
and development of geothermal energy resources as an alternative source of energy. It
is duly authorized to engage in business in the Philippines and at present is the prime
contractor of the National Power Corporation at the latter's operation of the Tiwi, Albay
and the Makiling-Banahaw Geothermal Projects.
1
Private respondents, on the other hand, are employees of herein petitioner occupying
various positions ranging from carpenter to Clerk II who had worked with petitioner
company under individual contracts, categorized as contractual employment, for a
period ranging from fifteen (15) days to three (3) months. These contracts were
regularly renewed to the extent that individual private respondents had rendered service
from three (3) to five (5) years until 1983 and 1984 when petitioner started terminating
their employment by not renewing their individual contracts. Subsequently petitioner
entered into job contracting agreement with Dra. Generosa Gonzales who supplies it
with skilled
manpower.
2
Sometime in J uly 1983, herein private respondents organized a separate labor union in
view of their exclusion in the bargaining unit of the regular rank and file employees
represented by the Federation of Free Workers. In August 1983, they filed a petition for
certification election with the Ministry of Labor and Employment, NCR, docketed as
Case No. NCD-LRD-8-242-84. Because of this, herein petitioner allegedly started
harassing them and replaced them with so called "contract workers". Thus, complainant
union and herein respondent employees filed a case for illegal lock-out and unfair labor
practice, docketed as Case No. 1420-83 and the instant consolidated cases RAB Case
Nos. 0403-85 to 427-85 and RAB Cases Nos. 0392-85 to 0393-85, involving 26 workers,
for unfair labor practice and/or illegal dismissal, reinstatement backwages and service
incentive.
3
On March 3, 1987, Labor Arbiter Voltaire A. Balitaan rendered a decision in favor of the
respondents the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the petitioners and
they are hereby declared regular and permanent employees of the
respondent and finding their dismissal from the service illegal, respondent
is ordered to reinstate them to their former positions without loss of
seniority rights and with one year backwages without qualification or
deduction in the amount of P590,021.76.
SO ORDERED.
4
On Appeal, the National Labor Relations Commission on November 9, 1987 rendered a
decision dismissing the appeal and affirming the decision of the Labor Arbiter.
5
A
motion for reconsideration was denied on March 9, 1988 for lack of merit.
6
Hence, this petition which was filed on April 22, 1988.
In the meantime, a writ of execution was issued by Executive Arbiter Gelacio L. Rivera,
J r. on April 11, 1988 on the ground that no appeal was interposed hence the decision of
the Labor Arbiter had become final and executory.
7
On April 20, 1988, petitioner filed a motion for the issuance of a Temporary Restraining
Order as the Sheriff tried to enforce the Writ of Execution dated April 11, 1988 against
petitioner on April 18, 1988. They further alleged that they are ready, willing and able to
post a supersedeas bond to answer for damages which respondents may suffer.
8
On J une 29, 1988, this Court issued a Temporary Restraining Order enjoining
respondents from enforcing the Resolution dated November 9, 1987, any writ of
execution or notice of garnishment issued in RAB Cases Nos. 0403-85 to 427-85 and
RAB Cases Nos. 0392-85 to 393-85 of the National Labor Relations Commission,
Department of Labor and Employment.
9
On April 17, 1989, this Court resolved to dismiss the petition for failure to sufficiently
show that the respondent commission had committed grave abuse of discretion in
rendering the questioned judgment and lifted the Temporary Restraining Order issued
on J une 29, 1988.
10
A motion for reconsideration was filed by petitioner on May 25,
1989.
11
On J une 5, 1989, this Court granted the motion; and set aside the resolution dated April
17, 1989; gave due course to the petition and required the patties to submit
simultaneously, their respective memoranda.
12
Private respondents filed their memorandum on August 8, 1989
13
while public
respondent filed its memorandum on September 1, 1989.
14
Petitioner filed its
memorandum on September 8, 1989.
15
The main issue in the case at bar is whether or not private respondents may be
considered regular and permanent employees due to their length of service in the
company despite the fact that their employment is on contractual basis.
Petitioner alleges that it engaged the services of private respondents on a monthly basis
to ensure that manpower would be available when and where needed. Private
respondents were fully aware of the nature of their employment as this was clearly
spelled out in the employment contracts. What happened to them was not a case of
unwarranted dismissal but simply one of expiration of the tenure of employment
contracts and the completion of the phase of the project for which their services were
hired.
16
In the recent case of Kimberly Independent Labor Union for Solidarity, Activism, and
Nationalism-Olalia vs. Hon. Franklin M. Drilon, G.R. Nos. 77629 and 78791
promulgated last May 9, 1990, this Court classified the two kinds of regular employees,
as: 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 (1) year of service, whether continuous or broken with respect to
the activity in which they are employed. 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 employee on the day immediately after the end of
his first year of service.
Assuming therefore, that an employee could properly be regarded as a casual (as
distinguished from a regular employee) he becomes entitled to be regarded as a regular
employee of the employer as soon as he has completed one year of service. Under the
circumstances, employers may not terminate the service of a regular employee except
for a just cause or when authorized under the Labor Code. It is not difficult to see that to
uphold the contractual arrangement between the employer and the employee would in
effect be to permit employers to avoid the necessity of hiring regular or permanent
employees indefinitely on a temporary or casual status, thus to deny them security of
tenure in their jobs. Article 106 of the Labor Code is precisely designed to prevent such
result.
17
It is the policy of the state to assure the right of workers to "security of tenure."
18
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. Therefore, he should be
protected against any arbitrary deprivation of his job. Article 280 of the Labor Code has
construed "security of tenure" as meaning that "the employer shall not terminate the
services of the employee except for a just cause or when authorized by the Code."
19
PREMISES CONSIDERED, the decision of the National Labor Relations Commission is
hereby AFFIRMED and the Temporary Restraining Order issued on J une 29, 1988 is
hereby LIFTED permanently.
SO ORDERED.
Melencio-Herrera (Chairman), Padilla and Regalado, JJ., concur.
Sarmiento, J., is on leave.
[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 FILMS,respondents.
D E C I S I O N
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-NCR-CA No.
006195-94. The decision reversed that of the Labor Arbiter in NLRC-NCR-Case No. 00-07-03994-92.
The parties present conflicting sets of facts.
Petitioner Alejandro Maraguinot, J r. maintains that he was employed by private respondents on 18
J uly 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 J une 1991, he was promoted to the rank of Electrician with a weekly salary of P475.00, which
was increased toP593.00 in September 1991.
Petitioner Paulino Enero, on his part, claims that private respondents employed him in J une 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 supervisor, Mrs. Alejandria Cesario,
to facilitate their request that private respondents adjust their salary in accordance with the minimum
wage law. In J une 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 J une 1992, then refused to take him back when he
reported for work on 20 J uly 1992. Meanwhile, Maraguinot was dropped from the company payroll from 8
to 21 J une 1992, but was returned on 22 J une 1992. He was again asked to sign a blank employment
contract, and when he still refused, private respondents terminated his services on 20 J uly
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 associate 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 J uly up to 22 J uly 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 re-titled
Narito ang Puso. He went on vacation on 8 J une 1992, and by the time he reported for work on 20 J uly
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 respondents. 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 complainants to their former positions without
loss [of] seniority rights and pay their backwages starting J uly 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, J r. and thereafter until actually reinstated.
Respondents are ordered to pay also attorneys 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 was co-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.
x x x
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 J une 1991 but logged a total
of 183.25hours in J anuary 1992. Complainant Enero logged a total of only 31.57 hours in
September 1991 but worked for 183.35hours 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 NLRCs 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 NLRCs 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 NLRCs 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 NLRCs
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 NLRCs 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 employer-
employee 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 self-serving
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. J ob 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.
[20]
Indeed, 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 respondents further narrated that VIVAs 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 their 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.-- x x x
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 J uanita 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 employers power to control the employees conduct, the most
important element is the employers control of the employees 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...
To ensure that quality films are producedby the PRODUCER who is an independent
contractor, the company likewise employs a Supervising PRODUCER, a Project accountant
and a Shooting unit supervisor. The Companys 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 PRODUCERs work
accomplishment. He is there usually in the field doing the rounds of inspectionto 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
presentedto make the film more interesting and more commercially viable. (emphasis ours)
VIVAs 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 movie-making
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 directors control,
and not VIVAs direction. The director merely instructs petitioners on how to better comply with VIVAs
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 rank-and-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 superiors and Top Management can only refer to the superiors and Top
Management of VIVA. By commanding crew members to observe the rules and regulations promulgated
by VIVA, the appointment slips only emphasize VIVAs 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: J une 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.
Very truly yours,
(an illegible signature)
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 VIVAs 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 VIVAs 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 of VIVAs 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 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: xxx
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. 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 case of Industrial-Commercial-Agricultural Workers Organization v.
CIR[16 SCRA 562, 567-68 (1966)] which deals with regular seasonal employees. There we
held: xxx
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. [citingManila 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]
(underscoring 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 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
employers 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 primarilyapplicable
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 Courts 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 employers
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 J uly 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
andBustamante 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 10 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. 00-07-03994-92
is REINSTATED, subject, however, to the modification above mentioned in the computation of back
wages.
No pronouncement as to costs.
SO ORDERED.
Bellosillo, Vitug, and Kapunan, JJ., concur.
G.R. No. 79869 September 5, 1991
FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO MERCADO, JR.,
ANTONIO MERCADO, JOSE CABRAL, LUCIA MERCADO, ASUNCION GUEVARA,
ANITA MERCADO, MARINA MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO,
BRIGIDA ALCANTARA, EMERLITA MERCADO, ROMEO GUEVARA, ROMEO
MERCADO and LEON SANTILLAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD DIVISION; LABOR
ARBITER LUCIANO AQUINO, RAB-III; AURORA L. CRUZ; SPOUSES FRANCISCO
DE BORJA and LETICIA DE BORJA; and STO. NIO REALTY,
INCORPORATED, respondents.
Servillano S. Santillan for petitioners.
Luis R. Mauricio for private respondents.
PADILLA, J.:p
Assailed in this petition for certiorari is the decision * of the respondent national Labor
Relations Commission (NLRC) dated 8 August 1984 which affirmed the decision of
respondent Labor Arbiter Luciano P. Aquino with the slight modification of deleting the
award of financial assistance to petitioners, and the resolution of the respondent NLRC
dated 17 August 1987, denying petitioners' motion for reconsideration.
This petition originated from a complaint for illegal dismissal, underpayment of wages,
non-payment of overtime pay, holiday pay, service incentive leave benefits, emergency
cost of living allowances and 13th month pay, filed by above-named petitioners against
private respondents Aurora L. Cruz, Francisco Borja, Leticia C. Borja and Sto. Nio
Realty Incorporated, with Regional Arbitration Branch No. III, National Labor Relations
Commission in San Fernando, Pampanga.
1
Petitioners alleged in their complaint that they were agricultural workers utilized by
private respondents in all the agricultural phases of work on the 7 1/2 hectares of ace
land and 10 hectares of sugar land owned by the latter; that Fortunato Mercado, Sr. and
Leon Santillan worked in the farm of private respondents since 1949, Fortunato
Mercado, J r. and Antonio Mercado since 1972 and the rest of the petitioners since 1960
up to April 1979, when they were all allegedly dismissed from their employment; and
that, during the period of their employment, petitioners received the following daily
wages:
From 1962-1963 P1.50
1963-1965 P2.00
1965-1967 P3.00
1967-1970 P4.00
1970-1973 P5.00
1973-1975 P5.00
1975-1978 P6.00
1978-1979 P7.00
Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said
petitioners were her regular employees and instead averred that she engaged their
services, through Spouses Fortunato Mercado, Sr. and Rosa Mercado, their
"mandarols", that is, persons who take charge in supplying the number of workers
needed by owners of various farms, but only to do a particular phase of agricultural
work necessary in rice production and/or sugar cane production, after which they would
be free to render services to other farm owners who need their services.
2
The other private respondents denied having any relationship whatsoever with the
petitioners and state that they were merely registered owners of the land in question
included as corespondents in this case.
3
The dispute in this case revolves around the issue of whether or not petitioners are
regular and permanent farm workers and therefore entitled to the benefits which they
pray for. And corollary to this, whether or not said petitioners were illegally dismissed by
private respondents.
Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents and
held that petitioners were not regular and permanent workers of the private respondents,
for the nature of the terms and conditions of their hiring reveal that they were required to
perform phases of agricultural work for a definite period of time after which their
services would be available to any other farm owner.
4
Respondent Labor Arbiter
deemed petitioners' contention of working twelve (12) hours a day the whole year round
in the farm, an exaggeration, for the reason that the planting of lice and sugar cane
does not entail a whole year as reported in the findings of the Chief of the NLRC Special
Task Force.
5
Even the sworn statement of one of the petitioners, Fortunato Mercado,
J r., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably show
that said petitioners were hired only as casuals, on an "on and off" basis, thus, it was
within the prerogative of private respondent Aurora Cruz either to take in the petitioners
to do further work or not after any single phase of agricultural work had been completed
by them.
6
Respondent Labor Arbiter was also of the opinion that the real cause which triggered
the filing of the complaint by the petitioners who are related to one another, either by
consanguinity or affinity, was the filing of a criminal complaint for theft against Reynaldo
Mercado, son of spouses Fortunate Mercado, Sr. and Rosa Mercado, for they even
asked the help of J esus David, Zone Chairman of the locality to talk to private
respondent, Aurora Cruz regarding said criminal case.
7
In his affidavit, J esus David
stated under oath that petitioners were never regularly employed by private respondent
Aurora Cruz but were, on-and-off hired to work and render services when needed, thus
adding further support to the conclusion that petitioners were not regular and permanent
employees of private respondent Aurora Cruz.
8
Respondent Labor Arbiter further held that only money claims from years 1976-1977,
1977-1978 and 1978-1979 may be properly considered since all the other money claims
have prescribed for having accrued beyond the three (3) year period prescribed by
law.
9
On grounds of equity, however, respondent Labor Arbiter awarded petitioners
financial assistance by private respondent Aurora Cruz, in the amount of Ten Thousand
Pesos (P10,000.00) to be equitably divided among an the petitioners except petitioner
Fortunato Mercado, J r. who had manifested his disinterest in the further prosecution of
his complaint against private respondent.
10
Both parties filed their appeal with the National Labor Relations Commissions (NLRC).
Petitioners questioned respondent Labor Arbiter's finding that they were not regular and
permanent employees of private respondent Aurora Cruz while private respondents
questioned the award of financial assistance granted by respondent Labor Arbiter.
The NLRC ruled in favor of private respondents affirming the decision of the respondent
Labor Arbiter, with the modification of the deletion of the award for financial assistance
to petitioners. The dispositive portion of the decision of the NLRC reads:
WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino dated
March 3, 1983 is hereby modified in that the award of P10,000.00 financial
assistance should be deleted. The said Decision is affirmed in all other
aspects.
SO ORDERED.
11
Petitioners filed a motion for reconsideration of the Decision of the Third Division of the
NLRC dated 8 August 1984; however, the NLRC denied tills motion in a resolution
dated 17 August 1987.
12
In the present Petition for certiorari, petitioners seek the reversal of the above-
mentioned rulings. Petitioners contend that respondent Labor Arbiter and respondent
NLRC erred when both ruled that petitioners are not regular and permanent employees
of private respondents based on the terms and conditions of their hiring, for said
findings are contrary to the provisions of Article 280 of the Labor Code.
13
They submit
that petitioners' employment, even assuming said employment were seasonal,
continued for so many years such that, by express provision of Article 280 of the Labor
Code as amended, petitioners have become regular and permanent employees.
14
Moreover, they argue that Policy Instruction No. 12
15
of the Department of Labor and
Employment clearly lends support to this contention, when it states:
PD 830 has defined the concept of regular and casual employment. What
determines regularity or casualness is not the employment contract,
written or otherwise, but the nature of the job. If the job is usually
necessary or desirable to the main business of the employer, then
employment is regular. If not, then the employment is casual. Employment
for a definite period which exceeds one (1) year shall be considered re for
the duration of the definite period.
This concept of re and casual employment is designed to put an end to
casual employment in regular jobs which has been abused by many
employers to prevent so-called casuals from enjoying the benefits of
regular employees or to prevent casuals from joining unions.
This new concept should be strictly enforced to give meaning to the
constitutional guarantee of employment tenure.
16
Tested under the laws invoked, petitioners submit that it would be unjust, if not unlawful,
to consider them as casual workers since they have been doing all phases of
agricultural work for so many years, activities which are undeniably necessary,
desirable and indispensable in the rice and sugar cane production business of the
private respondents.
17
In the Comment filed by private respondents, they submit that the decision of the Labor
Arbiter, as aimed by respondent NLRC, that petitioners were only hired as casuals, is
based on solid evidence presented by the parties and also by the Chief of the Special
Task Force of the NLRC Regional Office and, therefore, in accordance with the rule on
findings of fact of administrative agencies, the decision should be given great
weight.
18
Furthermore, they contend that the arguments used by petitioners in
questioning the decision of the Labor Arbiter were based on matters which were not
offered as evidence in the case heard before the regional office of the then Ministry of
Labor but rather in the case before the Social Security Commission, also between the
same parties.
19
Public respondent NLRC filed a separate comment prepared by the Solicitor General. It
submits that it has long been settled that findings of fact of administrative agencies if
supported by substantial evidence are entitled to great weight.
20
Moreover, it argues
that petitioners cannot be deemed to be permanent and regular employees since they
fall under the exception stated in Article 280 of the Labor Code, which reads:
The provisions of written agreements to the contrary notwithstanding and
regardless of the oral agreements of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where
the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
21
(emphasis supplied)
The Court resolved to give due course to the petition and required the parties to submit
their respective memoranda after which the case was deemed submitted for decision.
The petition is not impressed with merit.
The invariable rule set by the Court in reviewing administrative decisions of the
Executive Branch of the Government is that the findings of fact made therein are
respected, so long as they are supported by substantial evidence, even if not
overwhelming or preponderant;
22
that it is not for the reviewing court to weigh the
conflicting evidence, determine the credibility of the witnesses or otherwise substitute its
own judgment for that of the administrative agency on the sufficiency of the
evidence;
23
that the administrative decision in matters within the executive's jurisdiction
can only be set aside upon proof of gross abuse of discretion, fraud, or error of law.
24
The questioned decision of the Labor Arbiter reads:
Focusing the spotlight of judicious scrutiny on the evidence on record and
the arguments of both parties, it is our well-discerned opinion that the
petitioners are not regular and permanent workers of the respondents.
The very nature of the terms and conditions of their hiring reveal that the
petitioners were required to perform p of cultural work for a definite period,
after which their services are available to any farm owner. We cannot
share the arguments of the petitioners that they worked continuously the
whole year round for twelve hours a day. This, we feel, is an exaggeration
which does not deserve any serious consideration inasmuch as the plan of
rice and sugar cane does not entail a whole year operation, the area in
question being comparatively small. It is noteworthy that the findings of the
Chief of the Special Task Force of the Regional Office are similar to this.
In fact, the sworn statement of one of the petitioners Fortunato Mercado,
J r., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado,
indubitably shows that said petitioners were only hired as casuals, on-and-
off basis. With this kind of relationship between the petitioners and the
respondent Aurora Cruz, we feel that there is no basis in law upon which
the claims of the petitioners should be sustained, more specially their
complaint for illegal dismissal. It is within the prerogative of respondent
Aurora Cruz either to take in the petitioners to do further work or not after
any single phase of agricultural work has been completed by them. We
are of the opinion that the real cause which triggered the filing of this
complaint by the petitioners who are related to one another, either by
consanguinity or affinity was due to the filing of a criminal complaint by the
respondent Aurora Cruz against Reynaldo Mercado, son of spouses
Fortunato Mercado, Sr. and Rosa Mercado. In April 1979, according to
J esus David, Zone Chairman of the locality where the petitioners and
respondent reside, petitioner Fortunato Mercado, Sr. asked for help
regarding the case of his son, Reynaldo, to talk with respondent Aurora
Cruz and the said Zone Chairman also stated under oath that the
petitioners were never regularly employed by respondent Aurora Cruz but
were on-and-off hired to work to render services when needed.
25
A careful examination of the foregoing statements reveals that the findings of the Labor
Arbiter in the case are ably supported by evidence. There is, therefore, no circumstance
that would warrant a reversal of the questioned decision of the Labor Arbiter as affirmed
by the National Labor Relations Commission.
The contention of petitioners that the second paragraph of Article 280 of the Labor Code
should have been applied in their case presents an opportunity to clarify the afore-
mentioned provision of law.
Article 280 of the Labor Code reads in full:
Article 280. Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at
least one year of service whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such
actually exists.
The first paragraph answers the question of who are employees. It states that,
regardless of any written or oral agreement to the contrary, an employee is deemed
regular where he is engaged in necessary or desirable activities in the usual business or
trade of the employer, except for project employees.
A project employee has been defined to be one whose employment has been fixed for a
specific project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee, or where the work or
service to be performed is seasonal in nature and the employment is for the duration of
the season
26
as in the present case.
The second paragraph of Art. 280 demarcates as "casual" employees, all other
employees who do not fan under the definition of the preceding paragraph. The proviso,
in said second paragraph, deems as regular employees those "casual" employees who
have rendered at least one year of service regardless of the fact that such service may
be continuous or broken.
Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is
applicable to their case and that the Labor Arbiter should have considered them regular
by virtue of said proviso. The contention is without merit.
The general rule is that the office of a proviso is to qualify or modify only the phrase
immediately preceding it or restrain or limit the generality of the clause that it
immediately follows.
27
Thus, it has been held that a proviso is to be construed with
reference to the immediately preceding part of the provision to which it is attached, and
not to the statute itself or to other sections thereof.
28
The only exception to this rule is
where the clear legislative intent is to restrain or qualify not only the phrase immediately
preceding it (the proviso) but also earlier provisions of the statute or even the statute
itself as a whole.
29
Policy Instruction No. 12 of the Department of Labor and Employment discloses that the
concept of regular and casual employees was designed to put an end to casual
employment in regular jobs, which has been abused by many employers to prevent
called casuals from enjoying the benefits of regular employees or to prevent casuals
from joining unions. The same instructions show that the proviso in the second
paragraph of Art. 280 was not designed to stifle small-scale businesses nor to oppress
agricultural land owners to further the interests of laborers, whether agricultural or
industrial. What it seeks to eliminate are abuses of employers against their employees
and not, as petitioners would have us believe, to prevent small-scale businesses from
engaging in legitimate methods to realize profit. Hence, the proviso is applicable only to
the employees who are deemed "casuals" but not to the "project" employees nor the
regular employees treated in paragraph one of Art. 280.
Clearly, therefore, petitioners being project employees, or, to use the correct
term, seasonal employees, their employment legally ends upon completion of the
project or the season. The termination of their employment cannot and should not
constitute an illegal dismissal.
30
WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations
Commission affirming that of the Labor Arbiter, under review, is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
Melencio-Herrera (Chairperson), Paras and Regalado, JJ., concur.
Sarmiento, J., on leave.
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 J uly 18, 1971, the date of execution of the agreement, to J uly 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 J uly 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 J uly 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 J uly 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 J uly 17, 1976, since his services were necessary and desirable in the
usual business of his employer, and his employment had lasted for five years, he had
acquired the status of a regular employee and could not be removed except for valid
cause.
6
The Regional Director considered Brent School's report as an applicationfor
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 J uly 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 (frommes,
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 J une 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 J uly 18, 1971, it was perfectly legitimate for them to include in it a
stipulation fixing the duration thereof Stipulations for a term were explicitly recognized
as valid by this Court, for instance, in Biboso v. Victorias Milling Co., Inc., promulgated
on March 31, 1977,
13
and J. Walter Thompson Co. (Phil.) v. NLRC, promulgated on
December 29, 1983.
14
The Thompsoncase involved an executive who had been
engaged for a fixed period of three (3) years. Biboso involved teachers in a private
school as regards whom, the following pronouncement was made:
What is decisive is that petitioners (teachers) were well aware 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
Seasonalemployment, 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,
24
to eliminate altogether reference to employment without a
definite period. As lastly amended, the opening lines of the article (renumbered 283),
now pertinently read: "An employer may terminate an employment for any of the
following just causes: . . . " BP 130 thus completed the elimination of every reference in
the Labor Code, express or implied, to employment with a fixed or definite period or
term.
It is in the light of the foregoing description of the development of the provisions of the
Labor Code bearing on term or fixed-period employment that the question posed in the
opening paragraph of this opinion should now be addressed. Is it then the legislative
intention to outlaw stipulations in employment contracts laying down a definite period
therefor? Are such stipulations in essence contrary to public policy and should not on
this account be accorded legitimacy?
On the one hand, there is the gradual and progressive elimination of references to term
or fixed-period employment in the Labor Code, and the specific statement of the
rule
25
that
. . . Regular and Casual Employment.The provisions of 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.
26
Under the Civil Code, therefore, and as a general proposition,
fixed-term employment contracts are not limited, as they are under the present Labor
Code, to those by nature seasonal or for specific projects with pre-determined dates of
completion; they also include those to which the parties by free choice have assigned a
specific date of termination.
Some familiar examples may be cited of employment contracts which may be neither for
seasonal work nor for specific projects, but to which a fixed term is an essential and
natural appurtenance: overseas employment contracts, for one, to which, whatever the
nature of the engagement, the concept of regular employment 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 J ustice 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 inLabajo supra. ...
32
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the
expiration of his last contract with Brent School on J uly 16, 1976 without the necessity
of any notice. The advance written advice given the Department of Labor with copy to
said petitioner was a mere reminder of the impending expiration of his contract, not a
letter of termination, nor an application for clearance to terminate which needed the
approval of the Department of Labor to make the termination of his services effective. In
any case, such clearance should properly have been given, not denied.
WHEREFORE, the public respondent's Decision complained of is REVERSED and SET
ASIDE. Respondent Alegre's contract of employment with Brent School having lawfully
terminated with and by reason of the expiration of the agreed term of period thereof, he
is declared not entitled to reinstatement and the other relief awarded and confirmed on
appeal in the proceedings below. No pronouncement as to costs.
SO ORDERED.
Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin,
Corts, Grio-Aquino, Medialdea and Regalado, JJ., concur.
Fernan, C.J., took no part.
[G.R. No. 122653. December 12, 1997]
PURE FOODS CORPORATON, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, RODOLFO CORDOVA, VIOLETA CRUSIS, ET
AL.,
*
respondents.
D E C I S I O N
DAVIDE, JR., J.:
The crux of this petition for certiorari is the issue of whether employees hired for a definite period and
whose services are necessary and desirable in the usual business or trade of the employer are regular
employees.
The private respondents (numbering 906) were hired by petitioner Pure Foods Corporation to work
for a fixed period of five months at its tuna cannery plant in Tambler, General Santos City. After the
expiration of their respective contracts of employment in J une and J uly 1991, their services were
terminated. They forthwith executed a Release and Quitclaim stating that they had no claim whatsoever
against the petitioner.
On 29 J uly 1991, the private respondents filed before the National Labor Relations Commission
(NLRC) Sub-Regional Arbitration Branch No. XI, General Santos City, a complaint for illegal dismissal
against the petitioner and its plant manager, Marciano Aganon.
[1]
This case was docketed as RAB-11-08-
50284-91.
On 23 December 1992, Labor Arbiter Arturo P. Aponesto handed down a decision
[2]
dismissing the
complaint on the ground that the private respondents were mere contractual workers, and not regular
employees; hence, they could not avail of the law on security of tenure. The termination of their services
by reason of the expiration of their contracts of employment was, therefore, justified. He pointed out that
earlier he had dismissed a case entitled Lakas ng Anak-Pawis- NOWMv. Pure Foods Corp. (Case No.
RAB-11-02-00088-88) because the complainants therein were not regular employees of Pure Foods, as
their contracts of employment were for a fixed period of five months. Moreover, in another case involving
the same contractual workers of Pure Foods (Case No. R-196-ROXI- MED- UR-55-89), then Secretary of
Labor Ruben Torres held, in a Resolution dated 30 April 1990, that the said contractual workers were not
regular employees.
The Labor Arbiter also observed that an order for private respondents reinstatement would result in
the reemployment of more than 10,000 former contractual employees of the petitioner. Besides, by
executing a Release and Quitclaim, the private respondents had waived and relinquished whatever right
they might have against the petitioner.
The private respondents appealed from the decision to the National Labor Relations Commission
(NLRC), Fifth Division, in Cagayan de Oro City, which docketed the case as NLRC CA No. M-001323-93.
On 28 October 1994, the NLRC affirmed the Labor Arbiter's decision.
[3]
However, on private
respondents motion for reconsideration, the NLRC rendered another decision on 30 J anuary
1995
[4]
vacating and setting aside its decision of 28 October 1994 and holding that the private
respondents and their co-complainants were regular employees. It declared that the contract of
employment for five months was a clandestine scheme employed by [the petitioner] to stifle [private
respondents] right to security of tenure and should therefore be struck down and disregarded for being
contrary to law, public policy, and morals. Hence, their dismissal on account of the expiration of their
respective contracts was illegal.
Accordingly, the NLRC ordered the petitioner to reinstate the private respondents to their former
position without loss of seniority rights and other privileges, with full back wages; and in case their
reinstatement would no longer be feasible, the petitioner should pay them separation pay equivalent to
one-month pay or one-half-month pay for every year of service, whichever is higher, with back wages
and 10% of the monetary award as attorneys fees.
Its motion for reconsideration having been denied,
[5]
the petitioner came to this Court contending that
respondent NLRC committed grave abuse of discretion amounting to lack of jurisdiction in reversing the
decision of the Labor Arbiter.
The petitioner submits that the private respondents are now estopped from questioning their
separation from petitioners employ in view of their express conformity with the five-month duration of their
employment contracts. Besides, they fell within the exception provided in Article 280 of the Labor Code
which reads: [E]xcept 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.
Moreover, the first paragraph of the said article must be read and interpreted in conjunction with the
proviso in the second paragraph, which reads: 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.... In the instant case, the private
respondents were employed for a period of five months only. In any event, private respondents' prayer
for reinstatement is well within the purview of the Release and Quitclaim they had executed wherein
they unconditionally released the petitioner from any and all other claims which might have arisen from
their past employment with the petitioner.
In its Comment, the Office of the Solicitor General (OSG) advances the argument that the private
respondents were regular employees, since they performed activities necessary and desirable in the
business or trade of the petitioner. The period of employment stipulated in the contracts of employment
was null and void for being contrary to law and public policy, as its purpose was to circumvent the law on
security of tenure. The expiration of the contract did not, therefore, justify the termination of their
employment.
The OSG further maintains that the ruling of the then Secretary of Labor and Employment in LAP-
NOWM v. Pure Foods Corporation is not binding on this Court; neither is that ruling controlling, as the
said case involved certification election and not the issue of the nature of private respondents
employment. It also considers private respondents quitclaim as ineffective to bar the enforcement for the
full measure of their legal rights.
The private respondents, on the other hand, argue that contracts with a specific period of
employment may be given legal effect provided, however, that they are not intended to circumvent the
constitutional guarantee on security of tenure. They submit that the practice of the petitioner in hiring
workers to work for a fixed duration of five months only to replace them with other workers of the same
employment duration was apparently to prevent the regularization of these so-called casuals, which is a
clear circumvention of the law on security of tenure.
We find the petition devoid of merit.
Article 280 of the Labor Code defines regular and casual employment as follows:
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.
Thus, the two kinds of regular employees are (1) those who are 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 activity in which they are employed.
[6]
In the instant case, the private respondents activities consisted in the receiving, skinning, loining,
packing, and casing-up of tuna fish which were then exported by the petitioner. Indisputably, they were
performing activities which were necessary and desirable in petitioners business or trade.
Contrary to petitioner's submission, the private respondents could not be regarded as having been
hired for a specific project or undertaking. The term specific project or undertaking under Article 280 of
the Labor Code contemplates an activity which is not 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 completion; the
services employed are then necessary and desirable in the employers usual business only for the
period of time it takes to complete the project.
[7]
The fact that the petitioner repeatedly and continuously hired workers to do the same kind of work
as that performed by those whose contracts had expired negates petitioners contention that those
workers were hired for a specific project or undertaking only.
Now on the validity of private respondents' five-month contracts of employment. In the leading case
of Brent School, Inc. v. Zamora,
[8]
which was reaffirmed in numerous subsequent cases,
[9]
this Court has
upheld the legality of fixed-term employment. It ruled that the decisive determinant in term employment
should not be the activities that the employee is called upon to perform but the day certain agreed upon
by the parties for the commencement and termination of their employment relationship. But, this Court
went on to say 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.
Brent also laid down the criteria under which term employment cannot be said to be in circumvention
of the law on security of tenure:
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 termswith no moral dominance exercised by the former or the latter.
None of these criteria had been met in the present case. As pointed out by the private respondents:
[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.
[10]
The petitioner does not deny or rebut private respondents' averments (1) that the main bulk of its
workforce consisted of its so-called casual employees; (2) that as of J uly 1991, casual workers
numbered 1,835; and regular employees, 263; (3) that the company hired casual every month for the
duration of five months, after which their services were terminated and they were replaced by other
casual employees on the same five-month duration; and (4) that these casual employees were actually
doing work that were necessary and desirable in petitioners usual business.
As a matter of fact, the petitioner even stated in its position paper submitted to the Labor Arbiter that,
according to its records, the previous employees of the company hired on a five-month basis numbered
about 10,000 as of J uly 1990. This confirms private respondents allegation that it was really the practice
of the company to hire workers on a uniformly fixed contract basis and replace them upon the expiration
of their contracts with other workers on the same employment duration.
This scheme of the petitioner was apparently designed to prevent the private respondents and the
other casual employees from attaining the status of a regular employee. It was a clear circumvention of
the employees right to security of tenure and to other benefits like minimum wage, cost-of-living
allowance, sick leave, holiday pay, and 13th month pay.
[11]
Indeed, the petitioner succeeded in evading
the application of labor laws. Also, it saved itself from the trouble or burden of establishing a just cause
for terminating employees by the simple expedient of refusing to renew the employment contracts.
The five-month period specified in private respondents employment contracts 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.
[12]
To uphold the contractual arrangement
between the petitioner and the private respondents 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.
[13]
The execution by the private respondents of a Release and Quitclaim did not preclude them from
questioning the termination of their services. Generally, quitclaims by laborers are frowned upon as
contrary to public policy and are held to be ineffective to bar recovery for the full measure of the workers
rights.
[14]
The reason for the rule is that the employer and the employee do not stand on the same
footing.
[15]
Notably, the private respondents lost no time in filing a complaint for illegal dismissal. This act is
hardly expected from employees who voluntarily and freely consented to their dismissal.
[16]
The NLRC was, thus, correct in finding that the private respondents were regular employees and that
they were illegally dismissed from their jobs. Under Article 279 of the Labor Code and the recent
jurisprudence,
[17]
the legal consequence of illegal dismissal is reinstatement without loss of seniority rights
and other privileges, with full back wages computed from the time of dismissal up to the time of actual
reinstatement, without deducting the earnings derived elsewhere pending the resolution of the case.
However, since reinstatement is no longer possible because the petitioner's tuna cannery plant had,
admittedly, been closed in November 1994,
[18]
the proper award is separation pay equivalent to one month
pay or one-half month pay for every year of service, whichever is higher, to be computed from the
commencement of their employment up to the closure of the tuna cannery plant. The amount of back
wages must be computed from the time the private respondents were dismissed until the time petitioner's
cannery plant ceased operation.
[19]
WHEREFORE, for lack of merit, the instant petition is DISMISSED and the challenged decision of 30
J anuary 1995 of the National Labor Relations Commission in NLRC CA No. M-001323-93 is hereby
AFFIRMED subject to the above modification on the computation of the separation pay and back wages.
SO ORDERED.
Bellosillo, Vitug, and Kapunan, JJ., concur.
G.R. No. L-53453 January 22, 1986
MANILA HOTEL CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and RENATO L. CRUZ, respondents.
CUEVAS, J.:
This petition for certiorari seeks the review and reversal of the decision of respondent
National Labor Relations Commission (NLRC) dated J anuary 11, 1978, which affirmed
in toto the decision of the Labor Arbiter ordering petitioner Manila Hotel Corporation to
reinstate private respondent Renato L. Cruz "to his former position as gardener without
loss of seniority rights and other privileges appertaining thereto if any, with backwages
from the date of his dismissal on March 19, 1977 until he is actually reinstated", and "to
immediately reclassify him as a regular or permanent employee".
Renato L. Cruz was employed as gardener by Manila Hotel on "probation status"
effective September 22, 1976. The appointment which was signed by Cruz provided,
inter alia:
1. ...
2. Your compensation will be FOUR HUNDRED PESOS (P400.00) per month payable
semi-monthly.
3. This employment is for a probationary period of six (6) months and subject to your
submitting all necessary work permits and clearances such as medical and security
clearances. Your job performance and efficiency upon the expiration of your probation
shall be reviewed and appraised in accordance with the HOTEL's and other generally
accepted work standards. If you have satisfactorily passed your probation, you will be
reclassified to the regular roll.
4. As soon as you become a regular employee, you will be entitled to (a) number of
benefits and privileges that have been instituted.
1
On March 20, 1977, or a day before the expiration of the probationary period, Cruz's
position was "abolished" by Manila Hotel allegedly due to economic reverses or
business recession, and to salvage the enterprise from imminent danger of collapse.
2
Anent said reason for his termination and/or abolition, private respondent maintains that

On March 19, 1977, at the close of office hours, Mr. Rodriguez called complainant Cruz
and the other three (3) gardeners (Rufino Arcis, Albert Manila and Arthur Reyes) who
were also under a Probationary Appointment and told them to immediately tender their
respective resignation, because allegedly the Hotel was under a 'retrenchment policy'.
The announcement was a blow to Mr. Cruz. In two days he would have finished his
probationary period, and he hoped to be reclassified as a regular employee. Earlier, that
morning, Mr. Rodriguez had just commended him for his job performance and had
designated him "In-Charge" or Lead Gardener. Mr. Cruz requested additional time to
think it over. The request was ignored. Mr. Rodriguez informed them that as of that day
they were terminated.
The following day, Mr. Cruz reported for work nonetheless. However, his
time card was no longer in the card rack. From then on Mr. Cruz
embarked on a daily trip to Manila Hotel desperately hoping that his short
but commendable job performance would earn him a new appointment. It
was a fruitless effort for always, management's reply was that 'no position
was available which suited his qualification'. It has been so to the present.
Ironically, he later learned of Arcis' and Manila's promotion to Steward and
Reyes' retention as sole gardener.
3
Sometime on March 24, 1977, private respondent was upon his request, granted a
personal clearance.
4
Claiming that his dismissal was illegal and constitutes unfair labor practice, Cruz filed
with the Regional Office No. IV, Department (now Ministry) of Labor on March 25,1977
a complaint against petitioner Manila Hotel.
5
The case was certified for compulsory
arbitration.
On December 29, 1977, Labor Arbiter Conrado B. Maglaya rendered a decision
6
the
dispositive portion of which reads as follows:
WHEREFORE, premises considered, respondent Manila Hotel is hereby
ORDERED to reinstate complainant Renato L. Cruz to his former position
as Gardener without loss of seniority rights and other privileges
appertaining thereto if any, with backwages from the date of his dismissal
on March 19, 1977 until he is actually reinstated.
Respondent is likewise ORDERED upon reinstatement of complainant, to
immediately reclassify him as a regular or permanent employee and issue
therefor the corresponding appointment. Respondent is further ORDERED
to submit proof of compliance with these orders immediately thereafter.
Petitioner appealed to the National Labor Relations Commission (NLRC).
7
And the
latter affirmed in toto the decision
8
of the Labor Arbiter thereby dismissing petitioner's
appeal for lack of merit.
Petitioner now contends that respondent Commission (1) unwarrantedly disregarded the
fact that private respondent was a mere probationary employee whose position could be
abolished for cause; (2) unjustifiably refused to consider the serious business reverses
and uneconomic operation as a valid and just cause for terminating services of a
probationary employee or abolishing his position upon the expiration of the probationary
employment; and (3) erroneously and illegally coerce petitioner into retaining private
respondent and paying him backwages even long after the expiration of the
probationary employment notwithstanding the validity of abolition of private respondent's
position and without giving petitioner the right or opportunity to evaluate the
performance of the private respondent prior to reclassification of his position to regular
status.
In a Resolution promulgated on April 11, 1980, We resolved to require respondents to
comment on the petition without however giving due course thereto. We likewise issued
a restraining order enjoining NLRC from executing the decision complained of until after
the instant petition shall have been finally resolved.
There is no dispute that as a probationary employee, private respondent Cruz had but a
limited tenure. Although on probationary basis, however, Cruz still enjoys the
constitutional protection on security of tenure. During his tenure of employment
therefore or before his contract expires, respondent Cruz cannot be removed except for
cause as provided for by law. This is categorically provided for by Art. 282 of the Labor
Code, which states:
Art. 282. Probationary Employment- Probationary employment shall not
exceed six (6) mo nths from the date the employee started working,
unless it is covered by apprenticeship agreement stipulating a longer
period. The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with reasonable standards,
made known by the employer to the employee at the time of his
engagement. An employee who is allowed to work after a probationary
period shall be considered a regular employee. (Emphasis supplied)
This security of tenure of a probationary employee finds added support in the Biboso vs.
Victorias Mining case' for even as this Court ruled in that case that the respondent
public official did not commit grave abuse of discretion in dismissing the teachers' claim
for reinstatement following the expiration of their contracts, it nevertheless held that-
2. This is by no means to assert that the security of tenure protection of the Constitution
does not apply to probationary employees. The Labor Code has wisely provided for
such a case thus: 'the termination of employment of probational employees and those
employed with a fixed period shall be subject to such regulations as the Secretary of
Labor may prescribe to prevent the circumvention of the right of the employees to be
secured in their employment as provided herein'. There is no question here as noted in
the assailed order of Presidential Executive Assistant Clave, that petitioners did not
enjoy a permanent status. During such period they could remain in their position and
any circumvention of their rights, in accordance with the statutory scheme, subject to
inquiry and thereafter correction by the Department of Labor. Thus there was the
safeguard as to their duration of employment being respected, To that extent, their
tenure was secure. ...
9
This brings us to the issue of whether or not, respondent Cruz's termination and/or
abolition of his position made on a justifiable cause. Petitioner justifies such termination
on ground of retrenchment. Respondent NLRC found this defense untenable. We agree,
since an examination of the records failed to indicate any factual or legal basis for such
a plea. No financial statement of any kind for the year 1976 or immediately prior thereto
was submitted by the petitioner to prove its economic difficulties. Its claim of business
reverses and imminent danger of collapse are nothing but glittering generalities.
It cannot be denied that a host of cases has affirmed the right of an employer to layoff or
dismiss employees due to losses in the operation of business, lack of work, and
considerable reduction in the volume of the employer's business. In the case at bar,
however, petitioner failed to go into the specifics of its claimed business reverses. It
prefers to hide behind the blanket observation of the then Assistant Secretary of Labor
that "the hotel industry is virtually in crisis as a result of plummeting business". That the
hotel industry is in crisis does not, however, necessarily mean that petitioner is itself
suffering from business reverses. Being one of the better known hotels in the country, it
could be an exception. But petitioner's asserted excuses being in the nature of an
affirmative defense, the burden lies on its shoulder to substantiate such an allegation
with clear and satisfactory evidence, which it miserably failed to do.
Petitioner likewise argues that it was imperatively necessary to reduce its personnel due
to losses in the operation of its business; that it is an employer's prerogative to
determine who among its employees should be retained; and that in the exercise
thereof, it may not be interfered with. The only exception is when it can be shown that
the employer, under cover of this right, is proceeding against an employee in an unjust
or capricious manner. Specifically, the power of an employer to terminate a probationary
employment contract is subject to various limitations. First, it must be exercised in
accordance with the specific requirements of the contract. If a particular time is
prescribed, the termination must be done within such time. Should the contract require a
written notice, then such form should be used. Secondly, the dissatisfaction of the
employer must be real and in good faith, not feigned so as to circumvent the contract or
the law; and thirdly, there must be no unlawful discrimination in the dismissal.
10
The records show that petitioner had four (4) gardeners under probationary employment.
Respondent Cruz was one of them. Within the period of his probationary employment,
Cruz was made a lead gardener, clearly a recognition of his good performance and
competent service. When petitioner, pursuant to its alleged policy of retrenchment,
abolished Cruz's position as gardener, the three other gardeners in its employ under
similar probationary contract were retained. Two of them, Rufino Arcis and Albert Manila,
were even promoted and appointed as stewards. The third one, Arturo Reyes, was
retained as sole gardener. Petitioner justifies Cruz not being made a steward he having
reached only third year high school. But if a third year high school may not be promoted
to be a steward from that of being a gardener, how then can Arcis who was merely a
sixth grader, qualify for promotion from gardener to steward? Our examination of the
records failed to reveal any standard or criteria adopted by the petitioner in making the
promotion and selection in question thus leading us to the conclusion that Cruz was
arbitrarily terminated and/or dismissed.
What makes Cruz's dismissal highly suspicious is that it took place at a time when he
needs only but a day to be eligible as a regular employee. That he is competent finds
support in his being promoted to a lead gardener in so short span of less than six (6)
months. There is that strong presumption in his favor that his performance had been
satisfactory. By terminating his employment and/or abolishing his position with but only
one day remaining in his probationary appointment, petitioner deprived Cruz of
qualifying as, a regular employee with its concommitant rights and privileges. Cruz was
also deprived of his only means of livelihood upon a vague and empty assertion of
"retrenchment.
Very recently, we had occasion to rule that the prerogative of management to dismiss or
lay-off an employee must be done without abuse of discretion, for what is at stake is not
only petitioner's position but also his means of livelihood.
11
The right of an employer to
freely select or discharge his employees is subject to regulation by the State, basically
in the exercise of its paramount police power.
12
This is so because the preservation of
the lives of the citizens is a basic duty of the State, more vital than the preservation of
corporate profits.
13
In the final analysis, what is in issue is the correctness of the findings of facts made by
the National Labor Relations Commission. Such findings of the Commission are entitled
to great respect if supported by substantial evidence
14
as in the present case. Moreover,
alleged error in the National Labor Relations Commission's factual finding is not
correctible by certiorari but by ordinary appeal.
15
Since there was no valid termination, private respondent is entitled under Article 280 of
the Labor Code to reinstatement without loss of seniority rights and with backwages
from the time his compensation was withheld up to the time of his reinstatement.
However, in a number of illegal dismissal cases,
16
this Court in the interest of justice
and expediency, has adopted the policy of granting backwages for a maximum period of
three (3) years without qualification and deduction.
Considering that this case has been pending since March 25, 1977 or a period of almost
nine (9) years now, an award of backwages for three (3) years is just and reasonable.
WHEREFORE, the appealed decision is hereby MODIFIED insofar as the payment of
backwages is concerned in that the petitioner is ordered to pay private respondent Cruz
three (3) years backwages computed on the basis of his pay as of March 19, 1977,
without qualification and deduction.
Except as thus modified, the appealed decision is AFFIRMED in all other respects. The
restraining order earlier issued is hereby ordered lifted and/or set aside. SO ORDERED.