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69.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. Nos. L-14785 and L-14923 February 27,
1961
FELIX ABE, ET AL., plaintiffs-appellees,
vs.
FOSTER WHEELER CORPORATION and CALTEX
(PHIL.), INC., defendants-appellants.
Nicetas Suanes for plaintiffs-appellees.
Ross, Selph & Carrascoso for defendants-appellants.
R E S O L U T I O N
BARRERA, J.:
In case G.R. No. L-14875 (Felix Abe, et al. v. Foster
Wheeler Corp., et al.), defendants-appellants filed
separate motions for reconsideration of the decision
herein rendered, on the ground that (1) the employment of
the workers involved in this case was for a definite period;
and (2) Republic Act No. 1052 should not be given
retroactive effect.
There is no question that the Batangas Refinery Project is
for a specific duration, which is, until it is completed. Too,
the different phases of the construction work, e.g.,
masonry painting, plumbing, etc., may also be considered
with definite duration, which is, until they are finished. Still,
under the terms of the contract entered into by the
workers, the period or duration of their employment was
indefinite. As far as pertinent, the contract provides: .
2. The refinery construction is a project of temporary
duration and hence, your employment term shall also be
temporary dependent upon the needs and requirements,
as determined by this Company, of the particular phase of
the connstruction work to which you may be presently or
hereafter be assigned ....
Under the aforequoted provision of the contract, the
worker's term of employment is made subject to two
conditions: (1) upon the needs and requirements (not
duration) of the particular work to which he (the worker) is
assigned; and (2) that such needs and requirements are to
be as so determined by the employer. In other words, the
duration of the employment of a worker assigned to
particular kind of work is not necessarily coexistent with
the duration of such work, because the employer could, at
any stage of the work, determine whether his services are
needed or not. Likewise, the employer could, even after
the termination of a particular work, assign the employee
to another phase of the construction work, if the employer
determines that the needs of the work so require. Clearly,
the worker is without any means to know when his
services would be considered by his employer still
necessary or not.
As to the other ground relied upon in the motion, the same
was already fully discussed in the decision.
Plaintiffs-appellants in case G.R. No. L-14923 (Abe, et al.
v. Foster Wheeler Corp., et al.) also filed a motion for
reconsideration raising issues which are already fully
considered in the decision.
The motions filed in both cases are, therefore, denied for
lack of merit.
Bengzon, Actg. C.J., Bautista Angelo, Labrador,
Concepcion, Reyes, J.B.L., Paredes and Dizon,
JJ., concur.
Padilla, J., took no part.

The Lawphil Project - Arellano Law Foundation
70. LEIDEN FERNANDEZ, BRENDA GADIANO, GLORIA
ADRIANO, EMELIA NEGAPATAN, JESUS TOMONGHA,
ELEONOR QUIANOLA, ASTERIA CAMPO, FLORIDA
VILLACERAN, FLORIDA TALLEDO, MARILYN LIM and
JOSEPH CANONIGO, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, FOURTH DIVISION,
MARGUERITE
[1]
LHUILLIER AND/OR AGENCIA
CEBUANA-H. LHUILLIER, respondents.
D E C I S I O N
PANGANIBAN, J.:
Is failure to attend hearings before the labor arbiter a
waiver of the right to present evidence? Are moral
damages included in the computation of monetary award
for purposes of determining the amount of the appeal
bond? Is there a limit to the amount of service incentive
leave pay and backwages that may be awarded to an
illegally dismissed employee?
The Case
These are the main questions raised in this petition
for certiorari under Rule 65 of the Rules of Court assailing
the March 11, 1992 Decision
[2]
of Respondent National
Labor Relations Commission (NLRC),
[3]
the dispositive
portion of which reads:
[4]

WHEREFORE, premises considered, the appealed
decision is hereby declared VACATED and the entire
records of these cases are hereby ordered remanded to
the Regional Arbitration Branch VII for further
proceedings.
This petition also challenges the NLRCs May 29, 1992
Resolution denying the motion for reconsideration.
The decision
[5]
vacated by the NLRC and penned by Labor
Arbiter Gabino A. Velasquez, Jr. disposed as follows:
[6]

WHEREFORE, judgment is hereby rendered in favor of
the complainants and against the respondent. The
respondent is hereby ordered:
1. To reinstate the complainants to their respective
position [sic] at the Agencia Cebuana with full backwages
without qualification; if reinstatement is not feasible, for
one reason or another, to pay to the complainants their
respective separation pay, service incentive leave pay with
full backwages without qualification computed hereunder
as follows:
1. LEIDEN FERNANDEZ:
a) Separation Pay for 6 years = P 8,640.00
b) Service Incentive Leave (6 yrs.)= 3,322.50
c) Backwages for one year only = 34,560.00
TOTAL = P 46,522.50
2. GLORIA ADRIANO:
a) Separation pay for 17 years = P 28,560.00
b) Service incentive leave (17 yrs.)= 10,986.25
c) Backwages for one year = 40,320.00
TOTAL = P 79,866.25
3. EMELIA NEGAPATAN:
a) Separation pay for 24 yrs. =P 35,760.00
b) Service incentive leave (24 yrs.)= 13,752.00
c) Backwages for one year = 35,760.00
TOTAL = P 85,272.00
4. JESUS P. TOMONGHA:
a) Separation pay for 33 years = P 50,655.00
b) Service Incentive leave = 19,478.25
c) Backwages for one year = 36,840.00
TOTAL = P 106,973.25
5. ELEONOR QUIANOLA:
a) Separation pay for 14 years = P20,860.00
b) Service Incentive Leave = 8,022.00
c) Backwages for one year = 35,760.00
TOTAL = P 64,642.00
6. ASTERIA CAMPO:
a) Separation pay for 13 years = P19,240.00
b) Service Incentive Leave (13 yrs.) = 7,400.00
c) Backwages for one year = 35,520.00
TOTAL = P62,160.25
7. FLORIDA VILLACERAN:
a) Separation pay for 17 yrs. = P25,160.00
b) Service Incentive leave (17 yrs.) = 9,677.25
c) Backwages for one year = 35,520.00
TOTAL = P 70,357.25
8. FLORIDA TALLEDO:
a) Separation pay for 18 yrs. = P 27,450.00
b) Service Incentive leave (18 yrs.) = 10,557.00
c) Backwages for one year = 36,600.00
TOTAL = P 74,607.00
9. BRENDA GADIANO:
a) Separation pay for 13 yrs. = P19,597.50
b) Service Incentive leave (13 yrs.) 7,536.75
c) Backwages for one year 36,180.00
TOTAL = P 63,313.25
10. MARILYN LIM:
a) Separation pay for 7 yrs. = P12,950.00
b) Service Incentive for 7 yrs. = 4,980.50
c) Backwages for one year = 44,400.00
TOTAL P 62,330.00
11. JOSEPH CANONIGO:
a) Separation Pay for 2 years = P 2,700.00
b) Service Incentive Leave (2 yrs.) = 1,038.50
c) Backwages for 1 year = 32,400.00
TOTAL = P 36,138.50
2) To pay to all complainants the amount of P100,000.00
for moral damages and the amount of
another P100,000.00 for exemplary damages, plus the
amount of P98,018.25 as attorneys fees representing
10% of the total award and the amount of P30,000.00 for
litigation expenses.
The totality of the award amounting to P1,078,200.55 must
be deposited with this Office ten (10) days from receipt of
this decision for further disposition. However, the payment
of backwages will be computed as of the actual date of
payment provided it will not exceed a period of three
years.
The Facts
The factual milieu of this case is recited by the solicitor
general in his Comment dated December 21, 1992 as
follows:
[7]

1. The instant case stemmed from a consolidated
complaint against private respondents Agencia Cebuana-
H. Lhuillier and/or Margueritte Lhuillier (Lhuillier) for illegal
dismissal (Rec., pp. 56-58). The Agencia Cebuana is a
sole proprietorship operated by Margueritte Lhuillier.
2. Two (2) Position Papers were filed by petitioners, one
by Leiden E. Fernandez, Gloria B. Adriano, Emilia A.
Negapatan, Jesus P. Tomongha, Eleonor A. Quianola,
Asteria C. Ocampo [sic], Florida Villaceran, Florida B.
Tallado [sic] and Brenda A. Gadiano (Rec., pp. 79-88) and
the other by Marilyn E. Lim and Joseph Canonigo (Exhibit
C-4).
3. In their Position Papers, petitioners alleged that they
were employed by Lhuillier, as follows:
Name Position Date
of Employment
Latest
Salary/Month
Date of
Dismissal
1. Leiden
E.
Fernandez
Cashier Dec. 3, 1984 P2,880.00 July 19,
1990
2. Gloria Appraiser July 10, 1973 3,360.00 July 19,
B. Adriano 1990
3. Emilia
A.
Negapatan
Sales Girl March 9, 1966 2,980.00 July 19,
1990
4. Jesus
P.
Tomongha
Office
Clerk
July 1957 3,070.00 July 19,
1990
5. Eleonor
A.
Quianola
Office
Clerk
Dec. 8, 1976 2,980.00 July 21,
1990
6. Asteria
C. Campo
Clerk May 27, 1977 2,960.00 July 19,
1990
7. Florida
Villaceran
Sales
Clerk
March 8, 1973 2,960.00 July 19,
1990
8. Florida
B. Talledo
Pawnshop
Writer
June 19, 1972 3,050.00 July 19,
1990
9. Brenda
A.
Gadiano
Pawnshop
Teller
March 7, 1977 3,015.00 July 19,
1990
10. Marilyn
E. Lim
Branch
Manager
June 1984 3,700.00 Feb. 16,
1990
11. Joseph
M.
Record
Keeper
June 1988 2,700.00 July 14,
1990
Canonigo
Petitioners Fernandez, Adriano, Negapatan, Tomongha,
Quianola, Campo, Villaceran, Talledo, and Gadiano
further alleged that prior to and during early July 1990,
they demanded from Margueritte Lhuillier an increase in
their salaries since her business was making good and
that she was evading payment of taxes by making false
entries in her records of account; that Lhuillier became
angry and threatened them that something would happen
to their employment if they would report her to the BIR;
that shortly thereafter, Lhuillier suspected them of stealing
jewelry from the pawnshop; that on July 19, 1990, Lhuillier
verbally informed them not to report for work as their
employment had been terminated; that from July 20, 1990
they did not report for work; and on July 23, 1990, they
filed the instant complaint (Rec., pp. 79-88).
On their part, petitioners Lim and Canonigo alleged that in
early January 1990 and in June 1990, respectively, they
demanded increases in their salaries since they noted that
Lhuillier had a very lucrative business besides evading tax
payments by making false entries in her records of
account; that they also informed her that they intended to
join the Associated Labor Union (ALU), which made
Lhuillier angry, causing her to threaten them that should
they report her to the BIR and join the ALU something
would happen to their employment; that Lhuillier advised
them to tender their resignations as they were reportedly
responsible for some anomalies at the Agencia Cebuana-
H Lhuillier; that Lhuillier assured them that they will be
given separation pay; that they asked Lhuillier that they be
allowed to confront the persons who reported to her about
their supposed involvement in the alleged anomalies but
she ignored it and told them to tender their respective
resignations effective February 16, 1990 (for Lim) and July
14, 1990 (for Canonigo); and that they were not given
separation pay (Decision, pp. 6-8; Rec., pp. 256-258).
5. In her Position Paper, Lhuillier, represented initially by
Atty. Malcolm V. Seno, alleged that:
a) In the case of Marilyn Lim, on January 13, 1990, she
was informed that an investigation will be conducted by
Lhuillier because of the report received by Flora Go, also
an employee of Lhuillier, that Lim sold to a company
consumer her own jewelry, in violation of the company
house rules; on January 22, 1990, a Notice of Intended
Termination was served upon her requiring her to submit a
written explanation within 48 hours from receipt; Lim did
not submit a written explanation but actively participated in
the investigation where she admitted having committed
the violation complained of; in view of her admission of
guilt, the company lawyer recommended to the
management her demotion and transfer without reduction
of salary; after Lims receipt of a copy of the investigation
report, she sent through her lawyer a letter signifying her
intention to resign and her willingness to execute a
promissory note for her indebtedness; the company gave
Lim a draft of the promissory note which was never
returned by her; on February 24, 1990 she tendered an
irrevocable letter of resignation, hence, she was not
terminated; and because of the malicious and false
complaint filed by Lim, the company was compelled to file
a counter-complaint for Perjury against her before the
Office of the City Prosecutor of Cebu City (Rec., pp. 92-
93; 97).
b) In the case of Jesus Tomongha, he was found to have
stolen rematado jewelries worth P70,670.00 sometime in
March 1990; instead of attending the investigation
scheduled for this offense, he abandoned his job although
his application for leave of absence was not approved;
Lhuillier asked the company lawyer to talk with Tomongha
for him to return to work so that he could pay his pecuniary
liability out of his salary; Lhuillier made it a pre-condition
for his return to work that he executes a promissory note
for his indebtedness; on April 10, 1990, he executed a
promissory note and was allowed to return to work; on
July 20, 1990, he and the other petitioners, abandoned
their employment; he was not dismissed but he was
allowed to return to work and was only made to execute a
promissory note when the company found out sometime in
March 1990 that he had stolen rematado jewelries
worth P70,670.00 (Rec., pp. 97-101).
c) In the case of the other petitioners, on July 19, 1990,
Gloria Adriano was found by Flora Go to have over-
declared the weights and values of certain items of jewelry
pawned to the company, as a result of which, upon
investigation, the pawnshop was found to have lost the
amount of P174,850.00; a letter dated July 19, 1990 was
served upon Adriano to explain within 72 hours why she
should not be terminated; on July 20, 1990, Gloria
Adriano, Florida Villaceran, Emilia Negapatan, Brenda
Gadiano, Leiden Fernandez, Jesus Tomongha, Asteria
Campo and Florida Talledo did not report for work
although no requests for leave of absence were filed by
them, which absence violated company rules; on July 21,
1990, the said employees did not report for work; another
employee, Eleonor Quianola, also did not report for work
although she did not file a request for leave of absence; on
July 23, 1990 the said nine (9) employees did not report
for work; because of this unusual incident, the
management decided to make an inventory of the
transactions in Agencia Cebuana and the rematado
diamond-studded jewelry; the inventory showed that the
pawnshop incurred a considerable loss as a result of the
anomalous overpricing of pawned items and the
employees immediately responsible were Gloria Adriano,
Florida Talledo and Leiden Fernandez, being the
appraiser, writer and payer, respectively; the inventory
also showed that of the rematado diamond-studded
jewelries, items worth P1,592,200.00 were lost for which
Florida Villaceran and Emilia Negapatan were directly
responsible, being the employees entrusted with their
safekeeping; a case of Estafa was filed on July 24, 1990
before the Office of the City Prosecutor of Cebu City
against Gloria Adriano, Florida Talledo, Leiden Fernandez,
Asteria Campo, Brenda Gadiano, Florida Villaceran,
Emilia Negapatan, and Jesus Tomongha and three (3)
other unknown persons; a case of Theft was filed on
August 16, 1990 with the Office of the City Prosecutor of
Cebu City against Florida Villaceran and Emilia
Negapatan; when Lhuillier left for Hongkong on July 19,
1990, she did not terminate the employment of Gloria
Adriano nor was she advised not to report for work,
although a letter was served upon her requiring her to
explain within 72 hours why she should not be terminated
from her employment; when Lhuillier arrived from
Hongkong, she caused to be served upon the eight (8)
petitioners who joined Adriano, letters dated July 25, 1990
requiring them to explain the sudden abandonment of their
posts; petitioners, except Lim, instead of giving an
explanation, claimed that their employment[s] were
terminated on July 19, 1990; Lhuillier was prevented from
pursuing any action in respect of the illegal abandonment
of their work by the nine (9) petitioners because she was
served with summons in the instant case; petitioners did
not report for work and voluntarily abandoned their work
on July 19, 1990 in order to dramatize their sympathy for
Gloria Adriano, and they were not dismissed from their
employment; their demand for an award of damages and
attorneys fees was unwarranted; petitioners had no cause
of action against Lhuillier because they were not
terminated from employment; and Quianola could not
have been terminated from employment on July 21, 1990
because Lhuillier was in Hongkong at that time (Rec., pp.
96-108).
6. Trial on the merits ensued and hearings were
scheduled on July 5, 8, and 12, 1991.
7. The hearing scheduled on July 5, 1991 was, however,
postponed by agreement of the parties as shown in the
minutes of the proceedings on July 8, 1991:
x x x x x x x x x
REMARKS
This case was scheduled for the cross-examination of the
last witnesses (sic), Marilyn Lim, who is one of the
complainants of this (sic) consolidated cases.
The scheduled dates was (sic) July 5, 8, and 12, 1991
which dates were for the crossexamination (sic) of Marilyn
Lim and for the respondents to present their evidence.
The July 5, 1991 (sic) was postponed upon aggreement
[sic] of the parties and counsels and that it was aggreed
(sic) the repondents (sic) counsel will cross examine
Marilyn Lim on July 8, 1991 and for the respondents to
present their evidence on July 12, 1991. In as much (sic)
as the respondents and their counsel failed to appear
today to cross-examine Marilyn Lim, we moved that the
respondent be declared having waived their rights (sic) to
cross-examine Marilyn Lim. (Rec., p. 176).
8. On July 8, 1991, counsel for petitioners filed
Complainants Formal Offer of Evidence (Rec., pp. 182-
187).
9. At the hearing scheduled on July 12, 1991, Atty. Seno
and Lhuillier failed to appear. Thus, counsel for petitioners
submitted the instant case for resolution (Rec., p. 181).
10. On July 18, 1991, a Ruling was issued by Labor
Arbiter Velasquez, admitting complainants exhibits (Rec.,
pp. 189-190).
11. On July 30, 1991, counsel for petitioners filed an
Urgent Motion For Early Decision (Rec., pp. 191-193).
12. On August 6, 1991, Atty. Seno filed a Comment to the
Offer of Exhibits With Counter-Manifestation stating that:
[T]he failure of undersigned to appear on the date of
hearing was for the reason that his car bogged down, as in
fact he called up the Office of the Hearing Officer. While
his absence may be considered a waiver to cross-examine
the witness, it cannot be taken to mean forfeiture of the
right to present admissible evidence against the
complainant witness. (Rec., pp. 195-197)
13. On August 9, 1991, Atty. Seno filed his Comment on
Complainants Urgent Motion For Early Decision praying
that Lhuillier be given a period of ten (10) days from
August 9, 1991 within which to submit additional affidavits
and thereafter to consider the cases submitted for
resolution (Rec., pp. 199-200).
14. On August 15, 1991, petitioners filed a Counter-
Comment On Respondents Comment of [sic] Motion For
Early Decision alleging that under Rule VII, Section 10 (c)
of the Revised Rules of Court of the NLRC which reads:
x x x x x x x x x
c) In case of unjustified non-appearance by the
respondent during her/his turn to present evidence,
despite due notice, the case shall be considered submitted
for decision on the basis of the evidence so far presented.
the non-appearance of Lhuillier or its counsel on the
scheduled dates of hearing on July 8 and 12, 1991, was
clearly unjustified (Rec., pp. 202-205).
15. On October 14, 1991, Atty. Seno filed a Motion
Reiterating The Request For Submission Of Additional
Affidavits therein alleging that Lhuilliers previous motion to
present additional affidavits had not been acted upon; and
that he had not received an order considering the instant
case submitted for resolution. With the motion, Lhuillier
submitted the affidavits of additional witnesses, praying
that said supplemental affidavits be admitted and
presentation of additional evidence be allowed (Rec., pp.
207-209).
16. On October 16, 1991, petitioners filed an Opposition
On [sic] Respondents Request For Submission Of
Additional Affidavits And Urgent Motion To Release
Decision, alleging that counsel for Lhuillier was given
ample opportunity to present his evidence; that by his
failure to appear at the scheduled hearings without any
reason or prior motion for postponement, he was deemed
to have waived his right to present evidence; and that
about the later part of August 1991, upon learning that
Labor Arbiter Velasquez would be transferred to NLRC,
Tacloban, they (petitioners) inquired about the status of
the instant case and they were informed by Labor Arbiter
Velasquez that a Decision was already rendered (Rec.,
pp. 203-205).
On August 30, 1991, the labor arbiter rendered a decision
in favor of petitioners. On appeal, Respondent NLRC
vacated the labor arbiters order and remanded the case
for further proceedings. It subsequently denied the motion
for reconsideration.
Respondent NLRCs Ruling
Ruled the NLRC:
[8]

In resolving this issue [of due process], it is necessary to
go over the pertinent provisions of the 1990 NLRC Rules
of Procedure, more particularly Sec. 11, Rule V.
Rule V - Proceedings Before the Labor Arbiters:
Section 11. Non-appearance of Parties at
Conference/Hearings. - (a) Two (2) successive absences
at a conference/hearing by the complainant or petitioner,
who was duly notified thereof may be sufficient cause to
dismiss the case without prejudice. Where proper
justification, however, is shown by proper motion to
warrant the re-opening of the case, the Labor Arbiter shall
call a second hearing and continue the proceedings until
the case is finally decided. Dismissal of the case for the
second time due to the unjustified non-appearance of the
complainant or petitioner who was duly notified thereof
shall be with prejudice.
b) In case of two (2) successive non-appearances by the
respondent, despite due notice, during the complainants
presentation of evidence, the complainant shall be allowed
to present evidence ex-parte, subject to cross-examination
by the respondent, where proper, at the next
hearing. Upon completion of such presentation of
evidence for the complainant, another notice of hearing for
the reception of the respondents evidence shall be
issued, with a warning that failure of the respondent to
appear shall be construed as submission by him of the
case for resolution without presenting his evidence.
c) In case of two (2) successive unjustified non-
appearances by the respondent during his turn to present
evidence, despite due notice, the case shall be considered
submitted for decision on the basis of the evidence so far
presented.
The established fact is that July 8 and 12, 1991 were the
scheduled dates for the cross-examination of Marilyn Lim,
last witness for the complainants and the start of
respondents presentation of evidence. It is also not
disputed that respondent and counsel failed to appear at
the July 8 hearing. A scrutiny of the minutes of the July 8,
1991 hearing would however reveal that that date was
alloted [sic] purposely for the cross-examination of Marilyn
Lim and that respondents presentation of evidence would
start on July 12, 1991. (page 176, records) Technically,
the Labor Arbiter was correct in ruling that respondent had
waived her right to cross-examine complainant Marilyn
Lim when she failed to appear on July 8, 1991. But
definitely, it was error for him to consider the case
submitted for decision when respondent failed to appear
on July 12, 1991. The above-cited rules are clear and
explicit. It takes two successive and unjustified non-
appearance on the part of respondent before he or she
can be considered to have waived his/her right to present
evidence and thereafter to consider the case submitted for
decision on the basis of the evidence thus far
presented. Respondents absence on July 12, 1991 was
but her first since, as pointed out, it was on that day that
she was supposed to start presenting her evidence. What
the Labor Arbiter should have done was to set another
date for the reception of respondents evidence. If she still
failed to appear, his reliance on Sec. 11 (c), Rule V of the
New Rules of Procedure of the NLRC would have been
justified and this Commission would not hesitate to uphold
him on that respect. As it is, the questioned ruling was,
indeed, premature to say the least. While concern for the
less privileged workers and speediin [sic] the disposition of
labor cases are highly commendable, those
considerations should not run roughshod over well-
established principles of due process.
It may be argued that the evidence sought to be
introduced by respondent are contained in the additional
affidavits which now form part of the records, hence this
Commission can now decide this appeal on the merits. It
is with more reason that this case should be remanded not
only to allow respondent to formally present her evidence,
but also to allow complainants to cross-examine and
confront their accusers. (Underscoring supplied.)
Not satisfied, petitioners filed the present petition before
us under Rule 65 of the Rules of Court.
[9]

The Issues
Petitioners submit to this Court the following issues:
[10]

A
The Honorable Commission has committed serious
reversible error amounting to a grave abuse of discretion
and in excess of jurisdiction in finding that the private
respondent was not afforded due process by the hearing
labor arbiter, particularly the reception of private
respondents evidence.
B
The Honorable Commission has committed serious
reversible error amounting to a grave abuse of discretion
and in excess of jurisdiction in finding that the declaration
by the hearing labor arbiter submitting these cases for
decision on July 12, 1991 was not in accordance with Rule
V Section II of the 1990 New Rules of Procedure of the
NLRC (attached hereto as annex C).
C
The Honorable Commission has committed serious
reversible error amounting to a grave abuse of discretion
and in excess of jurisdiction in giving importance to private
respondents additional alleged affidavits which were filed
only on October 14, 1991 (attached hereto as annex G-
1), by way of attaching the same in private respondents
motion reiterating request for submission of additional
affidavits (attached hereto as annex G), long after the
hearing labor arbiter rendered a decision on August 30,
1992 (attached hereto as annex E), contrary to the
private respondents prayer and commitment (attached
hereto as annex F-1).
D
The Honorable Commission has committed serious
reversible error amounting to a grave abuse of discretion,
in substance and in law, in not modifying the appealed
decision of the hearing labor arbiter (attached hereto as
annex E) with respect to the accuracy of the monetary
awards pursuant to the pertinent provisions of the Labor
Code, its implementing rules and regulations and pursuant
particularly to the celebrated case of Roche (Philippines),
et als. [sic] vs. NLRC, et als., [sic] G.R. No. 83335,
October 12, 1989.
E
The Honorable Commission has no jurisdiction to entertain
private respondents two appeals.
Put differently but more plainly, the issues in this case are
as follows:
1. Did the NLRC acquire jurisdiction over the appeal
notwithstanding the alleged insufficiency of the appeal
bond?
2. Were private respondents deprived of due process of
law by the labor arbiter?
3. Were petitioners illegally dismissed?
4. Assuming petitioners were illegally dismissed, was the
computation of the backwages, service incentive leave
pay and damages valid and correct?
The Courts Ruling
The petition is meritorious. We hold that the private
respondents were not denied due process of law by the
labor arbiter; and that nine of the petitioners were illegally
dismissed, but that Petitioners Lim and Canonigo were
not.
First Issue: Insufficiency of Appeal Bond
Petitioners contend that Respondent NLRC did not
acquire jurisdiction over the appeal of private respondents
because the appeal bond was insufficient. Although the
total monetary award in their favor was P1,078,200.55,
private respondents posted a cash bond in the amount
of P752,183.00 only. In computing the monetary award
for the purpose of posting an appeal bond, private
respondents relied on Rule VI, Section 6, of the 1990 New
Rules of Procedure of the NLRC and excluded the award
for damages, litigation expenses and attorneys
fees. Petitioners argue however that the said rule cannot
prevail over Article 223 of the Labor Code, which does not
provide for such exclusion.
We agree with private respondents. Article 223 of the
Labor Code provides:
x x x x x x x x x
In case of a judgment involving a monetary award, an
appeal by the employer may be perfected only upon the
posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in
the amount equivalent to the monetary award in the
judgment appealed from.
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall
either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or,
at the option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided therein. x x
x. (Underscoring supplied.)
On the other hand, Rule VI, Section 6 of the 1990 NLRC
New Rules of Procedure,
[11]
invoked by private
respondent, provides:
Section 6. Bond. In case of the decision of a Labor
Arbiter involves a monetary award, an appeal by the
employer shall be perfected only upon the posting of a
cash or surety bond issued by a reputable bonding
company duly accredited by the Commission or the
Supreme Court in an amount equivalent to the monetary
award.
The Commission may, in meritorious cases and upon
Motion of the Appellant, reduce the amount of the
bond. However, an appeal is deemed perfected upon the
posting of the bond equivalent to the monetary
award exclusive of moral and exemplary damages as well
as attorneys fees.
Nothing herein however, shall be construed as extending
the period of appeal. (Underscoring supplied.)
There is no conflict between the two provisions. Article
223 lays down the requirement that an appeal bond
should be filed. The implementing rule, on the other hand,
explains how the appeal bond shall be computed. The
rule explicitly excludes moral and exemplary damages and
attorneys fees from the computation of the appeal
bond. This exclusion has been recognized by the Court in
a number of cases. Hence, in Erectors vs. NLRC,
[12]
the
Court nullified an NLRC order requiring the posting of an
appeal bond which, among others, even included in the
computation the award of P400,000.00 for moral and
exemplary damages. Indeed, the said implementing rule
is a contemporaneous construction of Article 223 by the
NLRC pursuant to the mandate of the Labor Code; hence,
it is accorded great respect by this Court.
[13]

In line with the desired objective of our labor laws to
resolve controversies on their merits, the Court has held
that the filing of a bond in appeals involving monetary
awards should be given liberal construction.
[14]
The rule
requiring the employer to post a cash or surety bond to
perfect his appeal assures the workers that they will
receive the money judgment awarded to them upon the
dismissal of the employers appeal. It also discourages
employers from using an appeal to delay or even evade
their obligation to satisfy the just and lawful claims of their
employees.
[15]

Hence, deducting from the total monetary award
of P1,078,200.55 the amount of P200,000.00 for moral
and exemplary damages, P98,018.25 for attorneys fees
and P30,000.00 for litigation expenses, the amount of
the bond should be P750,182.55. Thus, the appeal bond
actually posted in the amount of P752,183 is even more
than the amount of appeal bond that may be required from
private respondents under Respondent NLRCs rules.
Second Issue: No Denial of Due Process
The NLRC ruled that private respondents were denied due
process because the labor arbiter deemed the case
submitted for resolution when they failed to attend the
hearings on July 8 and 12, 1991. Under the NLRC Rules
of Procedure, a case may be deemed submitted for
decision on the basis of the evidence thus far adduced in
the event respondent incurs two successive absences
during his turn to present evidence. While the hearing
on July 12, 1991 was for the presentation of herein private
respondents evidence, the NLRC found that the hearing
on July 8, 1991 was scheduled for the cross-examination
of petitioners witness. Since the absences were not
made during respondents turn to present evidence,
public respondent remanded the case to the labor arbiter
for further proceedings.
Petitioners dispute the NLRC ruling, contending that the
parties in this case were able to submit their respective
position papers together with supporting affidavits and
other documents. They stress that private respondents
failure to attend the hearings on July 8 and 12, 1991,
without any justification or a motion for postponement,
warranted the submission of the case for decision
pursuant to Section 11, Rule V of the 1990 New Rules of
Procedure of the NLRC. They insist that the hearing on
July 8, 1991 was scheduled to afford private respondents
not only an opportunity to cross-examine petitioners last
witness, Marilyn Lim, [but also] to start the presentation of
[their] evidence xxx.
[16]

On the other hand, private respondents argue that the
labor arbiter erred in considering the absence of their
counsel during the hearings scheduled on July 8 and July
12, 1991 as waiver not only of the right to cross-examine
but of the right to present evidence. They further contend
that the labor arbiter released his decision notwithstanding
the pendency of three unresolved motions.
[17]
These
circumstances clearly show that they were not afforded
due process of law.
[18]

To make a clear ruling, we again cite Rule V, Section 11 of
the 1990 Rules of Procedure of Respondent NLRC, which
provides:
Section 11. Non-appearance of Parties at
Conference/Hearings. -- (a) Two (2) successive
absences at a conference/hearing by the complainant or
petitioner, who was duly notified thereof, may be sufficient
cause to dismiss the case without prejudice. Where
proper justification, however, is shown by proper motion to
warrant the re-opening of the case, the Labor Arbiter shall
call a second hearing and continue the proceedings until
the case is finally decided. Dismissal of the case of the
second time due to the unjustified non-appearance of the
complainant or petitioner who was duly notified thereof
shall be with prejudice.
(b) In case of two (2) successive non-appearances by the
respondent, despite due notice, during the complainants
presentation of evidence, the complainant shall be allowed
to present evidence ex parte, subject to cross-examination
by the respondent, where proper, at the next
hearing. Upon completion of such presentation of
evidence for the complainant, another notice of hearing for
the reception of the respondents evidence shall be
issued, with a warning that failure of the respondent to
appear shall be construed as submission by him of the
case for resolution without presenting his evidence.
(c) In case of two (2) successive unjustified non-
appearances by the respondent during his turn to present
evidence, despite due notice, the case shall be considered
submitted for decision on the basis of the evidence so far
presented. (Underscoring supplied).
It is undisputed that private respondents counsel failed to
attend the hearings on the two aforementioned
dates. Moreover, the labor arbiter
[19]
and the NLRC held
that the hearing on July 8, 1991 was only for the cross-
examination of herein petitioners witness, while that on
July 12, 1991 was for the reception of private respondents
evidence. This notwithstanding, we hold that the NLRC
committed grave abuse of discretion in remanding the
case to the labor arbiter.
Private respondents were able to file their respective
position papers and the documents in support thereof, and
all these were duly considered by the labor
arbiter.
[20]
Indeed, the requirements of due process are
satisfied where the parties are given the opportunity to
submit position papers.
[21]
In any event, Respondent
NLRC and the labor arbiter are authorized under the Labor
Code to decide a case on the basis of the position papers
and documents submitted.
[22]
The holding of an adversarial
trial depends on the discretion of the labor arbiter, and the
parties cannot demand it as a matter of right. In other
words, the filing of position papers and supporting
documents fulfilled the requirements of due
process.
[23]
Therefore, there was no denial of this right
because private respondents were given the opportunity to
present their side.
[24]

Moreover, it should be noted that private respondents did
not dispute the order of the labor arbiter submitting the
case for decision immediately after its issuance. Likewise,
they failed to present additional evidence on the date they
themselves specified. It was only on August 6, 1991 that
private respondents counsel, in his Comments to the
Offer of Exhibits
[25]
with counter-manifestation, explained
his failure to appear at the hearing on July 8, 1991. His
explanation, quoted below, is not compelling.
[26]

The failure of the undersigned to appear on the date of
hearing was for the reason that his car bogged down, as in
fact he called up the Office of the Hearing Officer. While
his absence may be considered a waiver to cross-examine
the witness, it cannot be taken to mean forfeiture of the
right to present admissible evidence against the
complainant-witness.
Three days later on August 9, 1991, private respondents
moved that they be given a period of ten days from
August 9, 1991 -- or until August 19, 1991 -- within which
to submit additional affidavits, after which, the cases will
be deemed submitted for resolution on the basis of
complainants evidence and respondents position paper
and the additional affidavits.
[27]
Counsel, however, failed
to submit the supposed evidence on said date. On
October 14, 1991, private respondents filed a Motion
Reiterating the Request for Submission of Additional
Affidavits.
[28]
Again, private respondents did not submit the
said documents.
As earlier noted, the essence of due process is simply an
opportunity to be heard, to explain ones side, or to seek a
reconsideration of the action or ruling complained of. In
the case at bar, private respondents were given ample
opportunity to do just that but they failed, for unknown
reasons, to avail themselves of such opportunity. They
themselves moved that they be allowed to present
additional affidavits on August 19, 1991, but they never
did; no valid reason was given for their failure to do
so. Their contention that the labor arbiter failed to rule on
their motion deserves scant consideration. It is axiomatic
in fact, it is plainly commonsensical that when a
counsel asks for an extension of time within which to file a
pleading, he must be ready with that pleading on the date
specified in his motion, even absent a resolution or order
disposing of his motion.
We cannot remand the instant case to the labor arbiter for
further proceedings. Respondent NLRC, on the basis of
the evidence on record, could have resolved the
dispute. To remand it to the labor arbiter is to delay
needlessly the disposition of this case, which has been
pending since July 23, 1990. It becomes our duty under
the circumstances to determine the validity of the
allegations of the parties. Remanding the case to the labor
arbiter will just frustrate speedy justice and, in any event,
would be a futile exercise, as in all probability the case
would end up with this Court. We shall thus rule on the
substantial claims of the parties.
Third Issue: Petitioners Were Illegally Dismissed
Private respondents controvert the claim of illegal
dismissal by maintaining that petitioners abandoned their
employment. They aver that on July 19, 1990, Petitioner
Gloria Adriano, pawnshop appraiser, over-declared the
weights and values of pawned pieces of jewelry, which
allegedly caused a loss of at least P174,850. In a letter
dated July 19, 1990, they required Petitioner Adriano to
explain within 72 hours why her employment should not be
terminated. On July 20, 1990, however, Petitioner Adriano
together with Petitioners Asteria Campo, Leiden
Fernandez, Brenda Gadiano, Emilia Negapatan, Eleonor
Quianola, Jesus Tomongha, Florida Talledo and Florida
Villaceran allegedly did not report for work without any
excuse. Thus, private respondents concluded that
petitioners abandoned their employment. They also state
that they intended to pursue legal action against the said
petitioners for illegal abandonment. But before they
could do so, they received summons requiring them to
respond to the complaints of illegal dismissal filed by the
said nine petitioners.
[29]

On the other hand, petitioners maintain that on July 19,
1990, Private Respondent Marguerite Lhuillier, the
pawnshop owner, told them not to report for work because
their employment had been terminated. Thus, they did not
report for work the following day, July 20, 1990. On July
23, 1990, they filed their respective complaints before the
Regional Arbitration Board of Respondent NLRC.
In view of the conflicting claims of the parties, we
examined the records of this case and found that private
respondents did not abandon their employment; rather,
they were illegally dismissed.
To succeed in pleading abandonment as a valid ground
for dismissal, the employer must prove (1) the intention of
an employee to abandon his or her employment and (2)
an overt act from which such intention may be
inferred; i.e., the employee showed no desire to resume
his work.
[30]
Mere absence is not sufficient. The employer
must prove a deliberate and unjustified refusal of the
employee to resume his employment without any intention
of returning.
[31]
Private respondents failed to discharge this
burden. The claim of abandonment was inconsistent with
the immediate filing of petitioners complaint for illegal
dismissal and prayer for reinstatement. For how can an
inference be made that an employee had no intention of
returning to work, when he filed a complaint for illegal
dismissal praying for reinstatement three days after the
alleged abandonment?
[32]
Moreover, considering that
petitioners had been with Pawnshop Lhuillier for several
years -- ranging from six (6) years to thirty three (33) years
-- it is unlikely that they would simply leave their
employment. Clearly, there is no cogent basis for private
respondents theory that said petitioners abandoned their
work. In this light, we sustain the finding of the labor
arbiter that said petitioners were illegally dismissed, with
neither just cause nor due process.
Petitioners Lim and Canonigo Resigned
The foregoing holding cannot apply to Petitioners Marilyn
Lim and Joseph Canonigo, however.
Lim claims that Private Respondent Lhuillier forced her to
resign, but at the same time assured her of separation
pay.
[33]
On February 5, 1990, prior to Lims letter of
resignation dated February 24, 1990,
[34]
her lawyer
proposed the following to Private Respondent Lhuillier:
[35]

1. That our client Ms. Marilyn Lim be given immediately a
clearance upon resignation from your good company and
payment of separation pay at the rate of one month per
year of service; and
2. That our client is willing to execute a promissory note
on her indebtedness, and will pay upon the same terms
prevailing before her resignation. Our clients ability to
settle her indebtedness should be given kind consideration
by your company considering that her eventual resignation
will render her jobless for a while. Besides, per
Investigation Report No. 2, Series of 1990, conducted by
your Resident Counsel, Atty. Malcolm V. Seno, our client
has impressed your Resident Counsel as a person of
much valor and great determination when she immediately
admitted her guilt.
3. That the various checks she endorsed to your company
be returned to our client, so that she could file a case
against the issuers or drawers of the same, be it criminal
or civil in nature. (Emphasis supplied).
Petitioner Lims testimony
[36]
that she has never been
informed of any wrongdoing until her termination is belied
by her assertions in the aforequoted letter. Her admission
of the offense charged shows that
she was not coerced to resign. Besides, the fact that
her complaint for illegal dismissal was filed long after her
resignation on February 24, 1990 suggests that it was a
mere afterthought.
On the other hand, Petitioner Canonigo contends that he
was forced to sign his letter of resignation dated July 14,
1990, because Private Respondent Lhuillier received
reports from other employees that he was responsible for
some anomalies in the pawnshop. He also stated that he
resigned because he was assured of separation
pay.
[37]
Like Petitioner Lim, he did not immediately file a
complaint for illegal dismissal, doing so only on July 23,
1990. From the foregoing facts, we see no cogent basis
for holding that he was forced to resign. On the contrary,
we find that he voluntarily tendered his resignation on the
assurance of separation pay. Clearly, Petitioner
Canonigo, like Lim, was not dismissed; rather, he resigned
voluntarily.
Fourth Issue: Service Incentive Leave Pay and Damages
In his decision, the labor arbiter granted varying amounts
of service incentive leave pay to the petitioners based on
the length of their tenure; i.e, the shortest was six years
and the longest was thirty-three years. While
recommending that the labor arbiters decision be
reinstated substantially, the solicitor general
recommended that the award of service incentive leave be
limited to three years. This is based on Article 291 of the
Labor Code which provides:
ART. 291. Money Claims. -- All money claims arising
from employer-employee relations accruing during the
effectivity of this Code shall be filed within three (3) years
from the time the cause of action accrued; otherwise they
shall be forever barred.
x x x x x x x x x.
Petitioners counter that Article 291 speaks clearly on the
prescription of filing [an] action upon monetary claims
within three (3) years from the time the cause of action
accrued, but it is not a prescription of a period of time for
the computation of monetary claims.
[38]

The clear policy of the Labor Code is to grant service
incentive leave pay to workers in all establishments,
subject to a few exceptions. Section 2, Rule V, Book III of
the Implementing Rules and Regulations
[39]
provides that
[e]very employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave
of five days with pay. Service incentive leave is a right
which accrues to every employee who has served within
12 months, whether continuous or broken reckoned from
the date the employee started working, including
authorized absences and paid regular holidays unless the
working days in the establishment as a matter of practice
or policy, or that provided in the employment contracts, is
less than 12 months, in which case said period shall be
considered as one year.
[40]
It is also commutable to its
money equivalent if not used or exhausted at the end of
the year.
[41]
In other words, an employee who has served
for one year is entitled to it. He may use it as leave days
or he may collect its monetary value. To limit the award to
three years, as the solicitor general recommends, is to
unduly restrict such right. The law indeed does not
prohibit its commutation. Moreover, the solicitor generals
recommendation is contrary to the ruling of the Court in
Bustamante et al. vs. NLRC et al.
[42]
lifting the three-year
restriction on the amount of backwages and other
allowances that may be awarded an illegally dismissed
employee, thus:
Therefore, in accordance with R.A. No. 6715, petitioners
are entitled to their full backwages, inclusive of allowances
and other benefits or their monetary equivalent, from the
time their actual compensation was withheld from them up
to the time of their actual reinstatement. (Underscoring
supplied.)
Since a service incentive leave is clearly demandable after
one year of service -- whether continuous or broken -- or
its equivalent period, and it is one of the benefits which
would have accrued if an employee was not otherwise
illegally dismissed, it is fair and legal that its computation
should be up to the date of reinstatement as provided
under Section 279 of the Labor Code, as amended, which
reads:
ART. 279. Security of Tenure. -- An employee who is
unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation is
withheld from him up to the time of his actual
reinstatement. (underscoring supplied).
However, the Implementing Rules clearly state that
entitlement to benefit provided under this Rule shall start
December 16, 1975, the date the amendatory provision of
the [Labor] Code took effect.
[43]
Hence, petitioners, except
Lim and Canonigo, should be entitled to service incentive
leave pay from December 16, 1975 up to their actual
reinstatement.
Petitioners, citing Roche Philippines et al. vs. NLRC et
al.,
[44]
further contend that the award of damages in the
case at bar should be increased, for there are eleven (11)
complainants/petitioners whose long years of employment
was illegally, oppressively and wantonly terminated by the
private respondent.
[45]

We disagree. Determination of the amount of moral
damages and attorneys fees is best left to the discretion
of the labor arbiter.
[46]
Moral damages are recoverable
where the dismissal of the employee was attended by bad
faith or fraud, or it constituted an act oppressive to labor,
or it was done in a manner contrary to morals, good
customs or public policy.
[47]
In the case before us, records
show that petitioners dismissals were done oppressively
and in bad faith, for they were just summarily dismissed
without even the benefit of notice and hearing. The well-
settled rule is that the employer shall be sanctioned for
noncompliance with the requirements of, or for failure to
observe, due process in dismissing its
employees.
[48]
Petitioners were likewise subjected to
unnecessary embarrassment or humiliation because of the
filing of the criminal charge of qualified theft, which was
later dismissed
[49]
by the investigating prosecutor.
[50]
It
follows then that the award of attorneys fees is likewise
proper, for the defendants act or omission has compelled
the plaintiff to litigate with third persons or to incur
expenses to protect his interest.
[51]

Full Backwages for Dismissals Effected After March 21,
1989
Having determined that petitioners, except Lim and
Canonigo, were illegally dismissed, we next resolve the
question of whether Respondent NLRC gravely abused its
discretion in ordering the reinstatement of dismissed
employees and the payment to them of full backwages; or,
if reinstatement was no longer feasible, whether the grant
to them of separation pay plus backwages was correct. In
several cases,
[52]
this Court has held that illegally
dismissed employees are entitled to reinstatement and full
backwages. If reinstatement is not possible, the
employees are entitled to separation pay
and full backwages. Accordingly, the award to petitioners
of backwages for three years should be modified in
accordance with Article 279
[53]
of the Labor Code, as
amended by R.A. 6715, by giving them full backwages
without conditions and limitations, the dismissals having
occurred after the effectivity of the amendatory law on
March 21, 1989.
[54]
Thus, the Court held in Bustamante:
[55]

The clear legislative intent of the amendment in Rep. Act
No. 6715 is to give more benefits to workers than was
previously given them under the Mercury Drug rule or the
deduction of earnings elsewhere rule. Thus, a closer
adherence to the legislative policy behind Rep. Act No.
6715 points to full backwages as meaning exactly that,
i.e., without deducting from backwages the earnings
derived elsewhere by the concerned employee during the
period of his illegal dismissal.
WHEREFORE, the petition is hereby GRANTED and the
assailed Decision and Resolution
are REVERSED and SET ASIDE. The labor arbiters
decision is REINSTATED with MODIFICATIONS, such
that the award of separation pay is deleted and the service
incentive leave pay is computed from December 16, 1975
up to petitioners actual reinstatement. Full backwages,
including the accrued thirteenth month pay, are also
awarded to the nine petitioners -- Leiden Fernandez,
Brenda Gadiano, Gloria Adriano, Emelia Negapatan,
Jesus Tomongha, Eleonor Quianola, Asteria Campo,
Florida Villaceran and Florida Talledo -- from the date of
their illegal dismissal to the time of their actual
reinstatement. Petitioners Lim and Canonigo, whom we
find to have voluntarily resigned, are not entitled to any
benefit.
SO ORDERED.
Narvasa, C.J., (Chairman), Romero, Melo, and Francisco,
JJ., concur.

72. Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 102973 August 24, 1993
ROGELIO CARAMOL, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
ATLANTIC GULF and PACIFIC CO. OF MANILA,
INC.,respondents.
Ricardo C. Valmonte for petitioner.
Arturo A. Alafriz & Associates for respondent Atlantic Gulf
& Pacific Company of Manila, Inc.

BELLOSILLO, J.:
The controversy as to whether petitioner is a regular or
casual employee arises from the conflicting interpretations
by the parties of Art. 280 of the Labor Code, as amended.
The article provides
The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform
activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration
of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service,
whether, such service is continuous or broken, shall be
considered a regular employee with respect to the activity
in which he is employed and his employment shall
continue while such actually exists.
Petitioner Rogelio Caramol, a worker hired by respondent
Atlantic Gulf and Pacific Co. of Manila, Inc., (ATLANTIC
GULF), on a "project-to-project" basis but whose
employment was renewed forty-four (44) times by the
latter, seeks the reversal of the decision of public
respondent National Labor Relations Commission (NLRC)
dated 31 October 1991 in NLRC NCR 00-01-04703-
88
1
which reversed and set aside the decision of the
Labor Arbiter.
The Labor Arbiter had earlier declared respondent
ATLANTIC GULF guilty of unfair labor practice, ordered it
to cease and desist from further committing unfair labor
practice against petitioner, declared illegal the constructive
dismissal of petitioner and directed respondent ATLANTIC
GULF to immediately reinstate petitioner to his former
position without loss of seniority rights and with full back
wages in the amount of P68,826.94 as of 29 November
1989.
2

The factual findings of the Labor Arbiter show that
petitioner was hired by respondent ATLANTIC GULF on 2
June 1983 for the position of rigger. Until the occurence of
the strike on 10 May 1986, his last assignment was at
respondent ATLANTIC GULF's plant in Batangas.
Petitioner claims that because of his involvement in
unionism, particularly in actively manning the picket lines,
he was among those who were not re-admitted after the
strike.
On the other hand, respondent ATLANTIC GULF
contends that petitioner was one of the several thousands
of workers who were hired on a "project-to-project" basis
and whose employment was covered by Project
Employment Contract for a particular project and for a
definite period of time. On 15 May 1986 private
respondent dispensed with the services of petitioner
claiming as justification the completion of the Nauru
project to which petitioner was assigned and the
consequent expiration of the employment contract.
In reversing the Labor Arbiter, public respondent NLRC
declared in the dispositive portion of its questioned
decision thus
WHEREFORE, based on the foregoing considerations, the
decision appealed from is hereby REVERSED and SET
ASIDE, and finding the claim of complainant to be without
legal and factual basis.
According to public respondent NLRC, petitioner is a
project employee falling under the exception of Art. 280 of
the Labor Code, as amended, explaining that
. . . As correctly asserted by respondent-company, Mr.
Caramol's services have been fixed for a specific project
shown in the contracts of employment. The principle of
party autonomy must not be interfered with absent any
showing of violation of law, public policy and
jurisprudence. "A contract duly entered into should be
respected, since a contract is the law between the parties"
(Pakistan International Airlines Corp. v. Ople, G.R. No.
61594, Sept. 28, 1990).
The exception under Article 280 of the Labor Code is
precisely designed to meet an exigency like in the case at
bar. . . .
Under the Labor Code as well as the Civil Code of the
Philippines, "the validity and propriety of contracts and
obligation with a fixed or definite period are recognized,
and imposes no restraints on the freedom of the parties to
fix the duration of a contract, whatever its object, be it
specie, food or services, except the general admonition
against stipulations contrary to law, morals, good custom,
public order or public policy" (Brent School, Inc. v.
Zamora, G.R. No. 48494, Feb. 5, 1990). . . .
Contract workers are not considered regular. Their
services depend upon availability of a project to be
undertaken. Thus, it would be unjust to retain an employee
in the payroll while waiting for another project. . . .
Petitioner now insists that public respondent NLRC
gravely abused its discretion and committed serious errors
of law and that its questioned decision is contrary to the
jurisprudential doctrine enunciated in Magante
v. NLRC
3
where it was held that the "project" employee
therein was deemed a regular employee considering the
attendant circumstances, i.e., the employee was assigned
to perform tasks which are usually necessary or desirable
in the usual business or trade of the employer; said
assignments did not end on a project to project basis,
although the contrary was made to appear through the
signing of separate employment contracts; there were no
reports of termination submitted to the nearest public
employment office every time employment was terminated
due to the completion of the project.
We grant the petition.
There is no question that stipulation on employment
contract providing for a fixed period of employment such
as "project-to-project" contract is valid provided the period
was agreed upon knowingly and voluntarily 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.
4
However, where from the circumstances it
is apparent that periods have been imposed to preclude
the acquisition of tenurial security by the employee, they
should be struck down as contrary tenurial security by the
employee, they should be struck down as contrary to
public policy, morals, good custom or public order.
In the case before us, we find sufficiently established
circumstances showing that the supposed fixed period of
employment by way of a project-to-project contract has
been imposed to preclude acquisition of tenurial security
by the petitioner. Accordingly, such arrangement must be
struck down as contrary to public policy. After a careful
perusal of the records, we sustain the findings of the Labor
Arbiter that
. . . . The records of the case established the fact that
during the employment of complainant with the respondent
company he was made to sign a project employment
contract. This practice started from the time he was hired
in 1973 up to May 10, 1986 when the AG & P Workers
and Employees Union staged a strike. Expressed
differently this practice of the respondent insofar as the
complainant is concerned has been going on continiously
for thirteen (13) long years. This Office is of the
considered belief that the nomenclature by which he was
addressed by the respondent has already attained a
regular status of employment. In addition to his length of
service the documentary evidence on record established
the fact that complainant's job is both necessary and
desirable to the business engaged in by the respondent . .
. .
Admittedly, the "project-to-project" employment of
petitioner was renewed several times, forty-four (44)
project contracts
5
according to him. Private respondent
points to this successive employment as evidence that
petitioner is a project employee in its projects. It is
asserted that being in the construction industry, it is not
unusual for private respondent and other similar
companies to hire employees or workers for a definite
period only, or whose employment is co-terminus with the
completion of a specific project as recognized by Art. 280
of the Labor Code.
However, with the successive contracts of employment
where petitioner continued to perform the same kind of
work, i.e., as rigger throughout his period of employment,
it is clearly manifest that petitioner's tasks were usually
necessary or desirable in the usual business or trade of
private respondent. There can therefore be no escape
from the conclusion that petitioner is a regular employee of
private respondent ATLANTIC GULF.
In this regard, we need only reiterate our ruling in Baguio
Country Club Corporation v. NLRC
6
that
. . . . The primary standard . . . 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" (De
Leon v. National Labor Relations Commission, G.R. No.
70705, August 21, 1989, 176 SCRA 615, 620-621) . . . .
Such repeated rehiring and the continuing need for his
service are sufficient evidence of the necessity and
indispensability of his service to the petitioner's business
or trade.
. . . . the private respondent performed the said task which
lasted for more than one year, . . . by this fact alone he is
entitled by law to be considered a regular employee.
Owing to private respondent's length of service with the
petitioner corporation, he became a regular employee, by
operation of law, one year after he was employed . . . .
It is of no moment that private respondent was told when
he was hired that his employment would only be "on a day
to day basis for a temporary period" and may be
terminated at any time subject to the petitioner's
discretion. Precisely, the law overrides such conditions
which are prejudicial to the interest of the worker.
Evidently, the employment contracts entered into by
private respondent with the petitioner have the purpose of
circumventing the employee's security of tenure. The
Court, therefore, rigorously disapproves said contracts
which demonstrate a clear attempt to exploit the employee
and deprive him of the protection sanctioned by the Labor
Code.
It is noteworthy that what 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. 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 (See De Leon v.
NLRC, ibid).
Moreover, notwithstanding its claim that petitioner was
successively employed, private respondent failed to
present any report of termination. On this point, the
pronouncement in Magante v. NLRC
7
is of singular
relevance to the instant case:
Moreover, if petitioner were employed as a "project
employee" private respondent should have submitted a
report of termination to the nearest public employment
office every time his employment is terminated due to
completion of each construction project, as required by
Policy Instruction No. 20, which provides:
. . . Moreover, the company is not required to obtain a
clearance from the Secretary of Labor in connection with
such termination. What is required of the company is a
report to the nearest Public Employment Office for
Statistical purposes (Emphasis Supplied).
Throughout the duration of petitioner's employment, there
should have been filed as many reports of termination as
there were construction projects actually finished if it were
true that petitioner Telesforo Maganto was only a project
worker.
We thus hold significant as to prejudice the cause of
private respondent the absence of any such termination
reports.
In ignoring or disregarding the existing jurisprudence on
regular employment, particularly the Magante decision, by
reversing the decision of the Labor Arbiter, public
respondent NLRC gravely abused its discretion.
Respondent further claims that since the appeal was filed
twenty-nine (29) days from receipt of the NLRC decision
by petitioner, the same should be dismissed as having
been filed out of time, alluding to the penultimate
paragraph of Art. 223 of the Labor Code which states that
"[t]he decision of the Commission shall be final and
executory after ten (10) calendar days from receipt thereof
by the parties."
This is not correct. On the contrary, the instant position is
filed pursuant to Sec. 1, Rule 65, of the Rules of Court
which may be done within a reasonable time from receipt
of the subject decision, and a period of three (3) months is
considered reasonable.
8
The fact that the assailed
decision becomes final and executory after a ten day
period does not preclude the adverse party from
challenging it by way of an original action
for certiorari under Rule 65 of the Rules of Court. He may
even further pray for the issuance of a restraining order or
a temporary injunction to prevent the immediate execution
of the assailed decision.
WHEREFORE, the petition is GRANTED. consequently,
the decision of respondent National Labor Relations
Commission dated 31 October 1991 is hereby
REVERSED and SET ASIDE. The decision of the Labor
Arbiter dated 29 November 1989 is AFFIRMED and
REINSTATED.
SO ORDERED.
Cruz, Grio-Aquino, Davide, Jr. and Quiason, JJ., concur.

# Footnotes
1 Rollo, p. 36.
2 Rollo, p. 27.
3 G.R. No. 74969, 7 May 1990; 185 SCRA 21.
4 Brent School, Inc. v. Zamora, G.R. No. L-48494, 5
February 1990; 181 SCRA 702, 716.
5 Reply, Rollo, pp. 105-112.
6 G.R. No. 71664, 28 February 1992; 206 SCRA 643,
649-651.
7 See Note 3, p. 28.
8 Philec Workers' Union v. Young, G.R. No. 101734, 22
January 1992.

72. PHILIPS SEMICONDUCTORS (PHILS.),
INC., petitioner, vs. ELOISA FADRIQUELA, respondent.
D E C I S I O N
CALLEJO, SR., J.:
Before us is a petition for review of the Decision
[1]
of the
Court of Appeals (CA) in CA-G.R. SP No. 52149 and its
Resolution dated January 26, 2000 denying the motion for
reconsideration therefrom.
The Case for the Petitioner
The petitioner Philips Semiconductors (Phils.), Inc. is a
domestic corporation engaged in the production and
assembly of semiconductors such as power devices, RF
modules, CATV modules, RF and metal transistors and
glass diods. It caters to domestic and foreign corporations
that manufacture computers, telecommunications
equipment and cars.
Aside from contractual employees, the petitioner
employed 1,029 regular workers. The employees were
subjected to periodic performance appraisal based on
output, quality, attendance and work attitude.
[2]
One was
required to obtain a performance rating of at least 3.0 for
the period covered by the performance appraisal to
maintain good standing as an employee.
On May 8, 1992, respondent Eloisa Fadriquela executed a
Contract of Employment with the petitioner in which she
was hired as a production operator with a daily salary
of P118. Her initial contract was for a period of three
months up to August 8, 1992,
[3]
but was extended for two
months when she garnered a performance rating of
3.15.
[4]
Her contract was again renewed for two months or
up toDecember 16, 1992,
[5]
when she received a
performance rating of 3.8.
[6]
After the expiration of her third
contract, it was extended anew, for three months,
[7]
that is,
from January 4, 1993 to April 4, 1993.
After garnering a performance rating of 3.4,
[8]
the
respondents contract was extended for another three
months, that is, from April 5, 1993 to June 4, 1993.
[9]
She,
however, incurred five absences in the month of April,
three absences in the month of May and four absences in
the month of June.
[10]
Line supervisor Shirley F. Velayo
asked the respondent why she incurred the said
absences, but the latter failed to explain her side. The
respondent was warned that if she offered no valid
justification for her absences, Velayo would have no other
recourse but to recommend the non-renewal of her
contract. The respondent still failed to respond, as a
consequence of which her performance rating declined to
2.8. Velayo recommended to the petitioner that the
respondents employment be terminated due to habitual
absenteeism,
[11]
in accordance with the Company Rules
and Regulations.
[12]
Thus, the respondents contract of
employment was no longer renewed.
The Complaint of the Respondent
The respondent filed a complaint before the National
Capital Region Arbitration Branch of the National Labor
Relations Commission (NLRC) for illegal dismissal against
the petitioner, docketed as NLRC Case No. NCR-07-
04263-93. She alleged, inter alia, that she was illegally
dismissed, as there was no valid cause for the termination
of her employment. She was not notified of any infractions
she allegedly committed; neither was she accorded a
chance to be heard. According to the respondent, the
petitioner did not conduct any formal investigation before
her employment was terminated. Furthermore, considering
that she had rendered more than six months of service to
the petitioner, she was already a regular employee and
could not be terminated without any justifiable
cause. Moreover, her absences were covered by the
proper authorizations.
[13]

On the other hand, the petitioner contended that the
respondent had not been dismissed, but that her contract
of employment for the period of April 4, 1993 to June 4,
1993 merely expired and was no longer renewed because
of her low performance rating. Hence, there was no need
for a notice or investigation. Furthermore, the respondent
had already accumulated five unauthorized absences
which led to the deterioration of her performance, and
ultimately caused the non-renewal of her contract.
[14]

The Ruling of the Labor Arbiter and the NLRC
On June 26, 1997, the Labor Arbiter rendered a decision
dismissing the complaint for lack of merit, thus:
IN THE LIGHT OF ALL THE FOREGOING, the complaint
is hereby dismissed for lack of merit. The respondent is,
however, ordered to extend to the complainant a send off
award or financial assistance in the amount equivalent to
one-month salary on ground of equity.
[15]

The Labor Arbiter declared that the respondent, who had
rendered less than seventeen months of service to the
petitioner, cannot be said to have acquired regular
status. The petitioner and the Philips Semiconductor
Phils., Inc., Workers Union had agreed in their Collective
Bargaining Agreement (CBA) that a contractual employee
would acquire a regular employment status only upon
completion of seventeen months of service. This was also
reflected in the minutes of the meeting of April 6,
1993 between the petitioner and the union. Further, a
contractual employee was required to receive a
performance rating of at least 3.0, based on output, quality
of work, attendance and work attitude, to qualify for
contract renewal. In the respondents case, she had
worked for the petitioner for only twelve months. In the
last extension of her employment contract, she garnered
only 2.8 points, below the 3.0 required average, which
disqualified her for contract renewal, and regularization of
employment. The Labor Arbiter also ruled that the
respondent cannot justifiably complain that she was
deprived of her right to notice and hearing because her
line supervisor had asked her to explain her unauthorized
absences. Accordingly, these dialogues between the
respondent and her line supervisor can be deemed as
substantial compliance of the required notice and
investigation.
The Labor Arbiter declared, however, that the respondent
had rendered satisfactory service for a period of one year,
and since her infraction did not involve moral turpitude,
she was entitled to one months salary.
Aggrieved, the respondent appealed to the NLRC, which,
on September 16, 1998, issued a Resolution affirming the
decision of the Labor Arbiter and dismissing the
appeal. The NLRC explained that the respondent was a
contractual employee whose period of employment was
fixed in the successive contracts of employment she had
executed with the petitioner. Thus, upon the expiration of
her contract, the respondents employment automatically
ceased. The respondents employment was not
terminated; neither was she dismissed.
The NLRC further ruled that as a contractual employee,
the respondent was bound by the stipulations in her
contract of employment which, among others, was to
maintain a performance rating of at least 3.0 as a
condition for her continued employment. Since she failed
to meet the said requirement, the petitioner was justified in
not renewing her contract.
The respondent filed a motion for reconsideration of the
resolution, but on January 12, 1999, the NLRC resolved to
deny the same.
The Case Before the Court of Appeals
Dissatisfied, the respondent filed a petition
for certiorari under Rule 65 before the Court of Appeals,
docketed as CA-G.R. SP No. 52149, for the reversal of the
resolutions of the NLRC.
On October 11, 1999, the appellate court rendered a
decision reversing the decisions of the NLRC and the
Labor Arbiter and granting the respondents petition. The
CA ratiocinated that the bases upon which the NLRC and
the Labor Arbiter founded their decisions were
inappropriate because the CBA and the Minutes of the
Meeting between the union and the management showed
that the CBA did not cover contractual employees like the
respondent. Thus, the seventeenth-month probationary
period under the CBA did not apply to her. The CA ruled
that under Article 280 of the Labor Code, regardless of the
written and oral agreements between an employee and
her employer, an employee shall be deemed to have
attained regular status when engaged to perform activities
which are necessary and desirable in the usual trade or
business of the employer. Even casual employees shall
be deemed regular employees if they had rendered at
least one year of service to the employer, whether broken
or continuous.
The CA noted that the respondent had been performing
activities that were usually necessary and desirable to the
petitioners business, and that she had rendered thirteen
months of service. It concluded that the respondent had
attained regular status and cannot, thus, be dismissed
except for just cause and only after due hearing. The
appellate court further declared that the task of the
respondent was hardly specific or seasonal. The periods
fixed in the contracts of employment executed by the
respondent were designed by the petitioner to preclude
the respondent from acquiring regular employment status.
The strict application of the contract of employment
against the respondent placed her at the mercy of the
petitioner, whose employees crafted the said contract.
According to the appellate court, the petitioners
contention that the respondents employment on as the
need arises basis was illogical. If such stance were
sustained, the court ruled, then no employee would attain
regular status even if employed by the petitioner for
seventeen months or more. The CA held that the
respondents sporadic absences upon which her dismissal
was premised did not constitute valid justifiable grounds
for the termination of her employment. The tribunal also
ruled that a less punitive penalty would suffice for
missteps such as absenteeism, especially considering that
the respondent had performed satisfactorily for the past
twelve months.
The CA further held that, contrary to the ruling of the Labor
Arbiter, the dialogues between the respondent and the line
supervisor cannot be considered substantial compliance
with the requirement of notice and investigation. Thus, the
respondent was not only dismissed without justifiable
cause; she was also deprived of her right to due process.
The petitioner filed a motion for reconsideration of the
decision but on January 26, 2000, the CA issued a
resolution denying the same.
The Case Before the Court
The petitioner filed the instant petition and raised the
following issues for the courts resolution: (a) whether or
not the respondent was still a contractual employee of the
petitioner as of June 4, 1993; (b) whether or not the
petitioner dismissed the respondent from her employment;
(c) if so, whether or not she was accorded the requisite
notice and investigation prior to her dismissal; and, (d)
whether or not the respondent is entitled to reinstatement
and full payment of backwages as well as attorneys fees.
On the first issue, the petitioner contends that the policy of
hiring workers for a specific and limited period on an as
needed basis, as adopted by the petitioner, is not new;
neither is it prohibited. In fact, according to the petitioner,
the hiring of workers for a specific and limited period is a
valid exercise of management prerogative. It does not
necessarily follow that where the duties of the employee
consist of activities usually necessary or desirable in the
usual course of business of the employer, the parties are
forbidden from agreeing on a period of time for the
performance of such activities. Hence, there is nothing
essentially contradictory between a definite period of
employment and the nature of the employees duties.
According to the petitioner, it had to resort to hiring
contractual employees for definite periods because it is a
semiconductor company and its business is cyclical in
nature. Its operation, production rate and manpower
requirements are dictated by the volume of business from
its clients and the availability of the basic materials. It
produces the products upon order of its clients and does
not allow such products to be stockpiled. Peak loads due
to cyclical demands increase the need for additional
manpower for short duration. Thus, the petitioner often
experiences short-term surges in labor requirements. The
hiring of workers for a definite period to supplement the
regular work force during the unpredictable peak loads
was the most efficient, just and practical solution to the
petitioners operating needs.
The petitioner contends that the CA misapplied the law
when it insisted that the respondent should be deemed a
regular employee for having been employed for more than
one year. The CA ignored the exception to this rule, that
the parties to an employment contract may agree
otherwise, particularly when the same is established by
company policy or required by the nature of work to be
performed. The employer has the prerogative to set
reasonable standards to qualify for regular employment,
as well as to set a reasonable period within which to
determine such fitness for the job.
According to the petitioner, the conclusion of the CA that
the policy adopted by it was intended to circumvent the
respondents security of tenure is without basis. The
petitioner merely exercised a right granted to it by law and,
in the absence of any evidence of a wrongful act or
omission, no wrongful intent may be attributed to
it. Neither may the petitioner be penalized for agreeing to
consider workers who have rendered more than
seventeen months of service as regular employees,
notwithstanding the fact that by the nature of its business,
the petitioner may enter into specific limited contracts only
for the duration of its clients peak demands. After all, the
petitioner asserts, the union recognized the need to
establish such training and probationary period for at least
six months for a worker to qualify as a regular
employee. Thus, under their CBA, the petitioner and the
union agreed that contractual workers be hired as
of December 31, 1992.
The petitioner stresses that the operation of its business
as a semiconductor company requires the use of highly
technical equipment which, in turn, calls for certain special
skills for their use. Consequently, the petitioner, in the
exercise of its best technical and business judgment, has
set a standard of performance for workers as well as the
level of skill, efficiency, competence and production which
the workers must pass to qualify as a regular
employee. In rating the performance of the worker, the
following appraisal factors are considered by the
respondent company as essential: (1) output (40%), (2)
quality (30%), (3) attendance (15%), and (4) work attitude
(15%). The rate of 3.0 was set as the passing grade. As
testified to by the petitioners Head of Personnel Services,
Ms. Cecilia C. Mallari:
A workers efficiency and productivity can be established
only after he has rendered service using Philips
equipment over a period of time. A worker has to undergo
training, during which time the worker is taught the
manufacturing process and quality control. After
instructions, the worker is subjected to written and oral
examinations to determine his fitness to continue with the
training. The orientation and initial training lasts from
three to four weeks before the worker is assigned to a
specific work station. Thereafter, the workers efficiency
and skill are monitored.

Among the factors considered (before a contractual
employee becomes a regular employee) are output,
quality, attendance, and work attitude, which includes
cooperation, discipline, housekeeping and inter-office
employee relationship. These factors determine the
workers efficiency and productivity.
[16]

The Courts Ruling
In ruling for the respondent, the appellate court applied
Article 280 of the Labor Code of the Philippines, as
amended, which reads:
Art. 280. Regular and Casual Employment. The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral argument of the
parties, an employment shall be deemed to be regular
where the employee has been engaged to perform
activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or services to be performed
is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph; Provided, That, any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity
in which he is employed and his employment shall
continue while such activity exists.
The appellate court held that, in light of the factual milieu,
the respondent was already a regular employee on June
4, 1993. Thus:
It is apparent from the factual circumstances of this case
that the period of employment has been imposed to
preclude acquisition of tenurial security by petitioner. It
bears stressing that petitioners original contract of
employment, dated May 8, 1992 to August 8, 1992, had
been extended through several contracts one from
October 13, 1992 to December 16, 1992, another from
January 7, 1993 to April 4, 1993, and, lastly, from April 5,
1993 to June 4, 1993.
The fact that the petitioner had rendered more than one
year of service at the time of his (sic) dismissal only shows
that she is performing an activity which is usually
necessary and desirable in private respondents business
or trade. The work of petitioner is hardly specific or
seasonal. The petitioner is, therefore, a regular
employee of private respondent, the provisions of their
contract of employment notwithstanding. The private
respondents prepared employment contracts placed
petitioner at the mercy of those who crafted the said
contract.
[17]

We agree with the appellate court.
Article 280 of the Labor Code of the Philippines was
emplaced in our statute books to prevent the
circumvention by unscrupulous employers of the
employees right to be secure in his tenure by
indiscriminately and completely ruling out all written and
oral agreements inconsistent with the concept of regular
employment defined therein. The language of the law
manifests the intent to protect the tenurial interest of the
worker who may be denied the rights and benefits due a
regular employee because of lopsided agreements with
the economically powerful employer who can maneuver to
keep an employee on a casual or temporary status for as
long as it is convenient to it.
[18]
In tandem with Article 281
of the Labor Code, Article 280 was designed to put an end
to the pernicious practice of making permanent casuals of
our lowly employees by the simple expedient of extending
to them temporary or probationary appointments, ad
infinitum.
[19]

The two kinds of regular employees under the law are (1)
those engaged to perform activities which are necessary
or desirable in the usual business or trade of the
employer; and (2) those casual employees who have
rendered at least one year of service, whether continuous
or broken, with respect to the activities in which they are
employed.
[20]
The primary standard to determine a regular
employment is the reasonable connection between the
particular activity performed by the employee in relation to
the business or trade of the employer. The test is whether
the former is usually necessary or desirable in the usual
business or trade of the employer.
[21]
If the employee has
been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the
law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not
indispensability of that activity to the business of the
employer. Hence, the employment is also considered
regular, but only with respect to such activity and while
such activity exists.
[22]
The law does not provide the
qualification that the employee must first be issued a
regular appointment or must be declared as such before
he can acquire a regular employee status.
[23]

In this case, the respondent was employed by the
petitioner on May 8, 1992 as production operator. She
was assigned to wirebuilding at the transistor
division. There is no dispute that the work of the
respondent was necessary or desirable in the business or
trade of the petitioner.
[24]
She remained under the employ
of the petitioner without any interruption since May 8,
1992 to June 4, 1993 or for one (1) year and twenty-eight
(28) days. The original contract of employment had been
extended or renewed for four times, to the same position,
with the same chores. Such a continuing need for the
services of the respondent is sufficient evidence of the
necessity and indispensability of her services to the
petitioners business.
[25]
By operation of law, then, the
respondent had attained the regular status of her
employment with the petitioner, and is thus entitled to
security of tenure as provided for in Article 279 of the
Labor Code which reads:
Art. 279. Security of Tenure. In cases of regular
employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the
time of his actual reinstatement.
The respondents re-employment under contracts ranging
from two to three months over a period of one year and
twenty-eight days, with an express statement that she may
be reassigned at the discretion of the petitioner and that
her employment may be terminated at any time upon
notice, was but a catch-all excuse to prevent her
regularization. Such statement is contrary to the letter and
spirit of Articles 279 and 280 of the Labor Code. We
reiterate our ruling in Romares v. NLRC:
[26]

Succinctly put, in rehiring petitioner, employment contracts
ranging from two (2) to three (3) months with an express
statement that his temporary job/service as mason shall
be terminated at the end of the said period or upon
completion of the project was obtrusively a convenient
subterfuge utilized to prevent his regularization. It was a
clear circumvention of the employees right to security of
tenure and to other benefits. It, likewise, evidenced bad
faith on the part of PILMICO.
The limited period specified in petitioners employment
contract having been imposed precisely to circumvent the
constitutional guarantee on security of tenure should,
therefore, be struck down or disregarded as contrary to
public policy or morals. To uphold the contractual
arrangement between PILMICO and petitioner would, in
effect, permit the former to avoid hiring permanent or
regular employees by simply hiring them on a temporary
or casual basis, thereby violating the employees security
of tenure in their jobs.
[27]

Under Section 3, Article XVI of the Constitution, it is the
policy of the State to assure the workers of security of
tenure and free them from the bondage of uncertainty of
tenure woven by some employers into their contracts of
employment. The guarantee is an act of social
justice. When a person has no property, his job may
possibly be his only possession or means of livelihood and
those of his dependents. When a person loses his job, his
dependents suffer as well. The worker should therefor be
protected and insulated against any arbitrary deprivation
of his job.
[28]

We reject the petitioners general and catch-all submission
that its policy for a specific and limited period on an as the
need arises basis is not prohibited by law or abhorred by
the Constitution; and that there is nothing essentially
contradictory between a definite period of employment and
the nature of the employees duties.
The petitioners reliance on our ruling in Brent School, Inc.
v. Zamora
[29]
and reaffirmed in subsequent rulings is
misplaced, precisely in light of the factual milieu of this
case. In the Brent School, Inc.case, we ruled that the
Labor Code does not outlaw employment contracts on
fixed terms or for specific period. We also ruled that the
decisive determinant in term employment should not be
the activity that the employee is called upon to perform but
the day certain agreed upon by the parties for the
commencement and termination of their employment
relationship. However, we also emphasized in the same
case that where from the circumstances it is apparent that
the periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck
down or disregarded as contrary to public policy and
morals. In the Romares v. NLRC case, we cited the
criteria under which term employment cannot be said to
be in circumvention of the law on security of tenure,
namely:
1) The fixed period of employment was knowingly and
voluntarily agreed upon by the parties without any force,
duress, or improper pressure being brought to bear upon
the employee and absent any other circumstances
vitiating his consent; or
2) It satisfactorily appears that the employer and the
employee dealt with each other on more or less equal
terms with no moral dominance exercised by the former or
the latter.
[30]

None of these criteria has been met in this case. Indeed,
in Pure Foods Corporation v. NLRC,
[31]
we sustained the
private respondents averments therein, thus:
[I]t could not be supposed that private respondents and all
other so-called casual workers of [the petitioner]
KNOWINGLY and VOLUNTARILY agreed to the 5-month
employment contract. Cannery workers are never on
equal terms with their employers. Almost always, they
agree to any terms of an employment contract just to get
employed considering that it is difficult to find work given
their ordinary qualifications. Their freedom to contract is
empty and hollow because theirs is the freedom to starve
if they refuse to work as casual or contractual
workers. Indeed, to the unemployed, security of tenure
has no value. It could not then be said that petitioner and
private respondents dealt with each other on more or less
equal terms with no moral dominance whatever being
exercised by the former over the latter.
[32]

We reject the petitioners submission that it resorted to
hiring employees for fixed terms to augment or
supplement its regular employment for the duration of
peak loads during short-term surges to respond to cyclical
demands; hence, it may hire and retire workers on fixed
terms, ad infinitum, depending upon the needs of its
customers, domestic and international. Under the
petitioners submission, any worker hired by it for fixed
terms of months or years can never attain regular
employment status. However, the petitioner, through Ms.
Cecilia C. Mallari, the Head of Personnel Services of the
petitioner, deposed that as agreed upon by the Philips
Semiconductor (Phils.), Inc. Workers Union and the
petitioner in their CBA, contractual employees hired
before December 12, 1993 shall acquire regular
employment status after seventeen (17) months of
satisfactory service, continuous or broken:
5. Q: What was the response of Philips regular
employees to your hiring of contractual workers in the
event of peak loads?
A: Philips regular rank-and-file employees, through
their exclusive bargaining agent, the Philips
Semiconductors (Phils.), Inc. Workers Union (Union),
duly recognized the right of Philips, in its best business
judgment, to hire contractual workers, and excluded these
workers from the bargaining unit of regular rank-and-file
employees.
Thus, it is provided under the Collective Bargaining
Agreement, dated May 16, 1993, between Philips and the
Union that:
ARTICLE I
UNION RECOGNITION
Section 1. Employees Covered: The Company hereby
recognizes the Union as the exclusive bargaining
representative of the following regular employees in the
Factory at Las Pias, Metro Manila: Janitors, Material
Handlers, Store helpers, Packers, Operators, QA
Inspectors, Technicians, Storekeepers, Production
Controllers, Inventory Controllers, Draftsmen, Machinists,
Sr. Technician, Sr. QA Inspectors, Controllers, Sr.
Draftsmen, and Servicemen, except probationary and
Casual/Contractual Employees, all of whom do not belong
to the bargaining unit.
A copy of the CBA, dated May 16, 1993, was attached as
Annex 1 to Philips Position Paper, dated August 30,
1993.
6. Q: May a contractual employee become a regular
employee of the Philips?
A: Yes. Under the agreement, dated April 6, 1993,
between the Union and Philips, contractual workers hired
before 12 December 1993, who have rendered seventeen
months of satisfactory service, whether continuous or
broken, shall be given regular status. The service
rendered by a contractual employee may be broken
depending on production needs of Philips as explained
earlier.
A copy of the Minutes of the Meeting (Minutes, for
brevity), dated April 6, 1993, evidencing the agreement
between Philips and the Union has been submitted as
Annex 2 of Philips Position Paper.
[33]

In fine, under the CBA, the regularization of a contractual
or even a casual employee is based solely on a
satisfactory service of the employee/worker for seventeen
(17) months and not on an as needed basis on the
fluctuation of the customers demands for its
products. The illogic of the petitioners incongruent
submissions was exposed by the appellate court in its
assailed decision, thus:
The contention of private respondent that petitioner was
employed on as needed basis because its operations
and manpower requirements are dictated by the volume of
business from its client and the availability of the basic
materials, such that when the need ceases, private
respondent, at its option, may terminate the contract, is
certainly untenable. If such is the case, then we see no
reason for private respondent to allow the contractual
employees to attain their regular status after they rendered
service for seventeen months. Indubitably, even after the
lapse of seventeen months, the operation of private
respondent would still be dependent on the volume of
business from its client and the availability of basic
materials. The point is, the operation of every business
establishment naturally depends on the law of supply and
demand. It cannot be invoked as a reason why a person
performing an activity, which is usually desirable and
necessary in the usual business, should be placed in a
wobbly status. In reiteration, the relation between capital
and labor is not merely contractual. It is so impressed with
public interest that labor contracts must yield to the
common good.
While at the start, petitioner was just a mere contractual
employee, she became a regular employee as soon as
she had completed one year of service. It is not difficult to
see that to uphold the contractual arrangement between
private respondent and petitioner would, in effect, be to
permit employers to avoid the necessity of hiring regular or
permanent employees. By hiring employees indefinitely
on a temporary or casual status, employers deny their
right to security of tenure. This is not sanctioned by law.

[34]

Even then, the petitioners reliance on the CBA is
misplaced. For, as ratiocinated by the appellate court in
its assailed decision:
Obviously, it is the express mandate of the CBA not to
include contractual employees within its coverage. Such
being the case, we see no reason why an agreement
between the representative union and private respondent,
delaying the regularization of contractual employees,
should bind petitioner as well as other contractual
employees. Indeed, nothing could be more unjust than to
exclude contractual employees from the benefits of the
CBA on the premise that the same contains an
exclusionary clause while at the same time invoke a
collateral agreement entered into between the parties to
the CBA to prevent a contractual employee from attaining
the status of a regular employee.
This cannot be allowed.
The CBA, during its lifetime, constitutes the law between t
he parties. Such being the rule, the aforementioned CBA
should be binding only upon private respondent and its reg
ular employees who were duly represented by the
bargaining union. The agreement embodied in the
Minutes of Meeting between the representative union
and private respondent, providing that contractual
employees shall become regular employees only after
seventeen months of employment, cannot bind
petitioner. Such a provision runs contrary to law not only
because contractual employees do not form part of the
collective bargaining unit which entered into the CBA with
private respondent but also because of the Labor Code
provision on regularization. The law explicitly states that
an employee who had rendered at least one year of
service, whether such service is continuous or broken,
shall be considered a regular employee. The period set
by law is one year. The seventeen months provided by
the Minutes of Meeting is obviously much
longer. The principle is well settled that the law forms part
of and is read into every contract without the need for the
partiesexpressly making reference to it.
[35]

On the second and third issues, we agree with the
appellate court that the respondent was dismissed by the
petitioner without the requisite notice and without any
formal investigation. Given the factual milieu in this case,
the respondents dismissal from employment for incurring
five (5) absences in April 1993, three (3) absences in May
1993 and four (4) absences in June 1993, even if true, is
too harsh a penalty. We do agree that an employee may
be dismissed for violation of reasonable regulations/rules
promulgated by the employer. However, we emphasized
in PLDT v. NLRC
[36]
that:
Dismissal is the ultimate penalty that can be meted to an
employee. Where a penalty less punitive would suffice,
whatever missteps may have been committed by the
worker ought not to be visited with a consequence so
severe such as dismissal from employment. For, the
Constitution guarantees the right of workers to security of
tenure. The misery and pain attendant to the loss of jobs
then could be avoided if there be acceptance of the view
that under certain circumstances of the case the workers
should not be deprived of their means of livelihood.
[37]

Neither can the conferences purportedly held between the
respondent and the line supervisor be deemed substantial
compliance with the requirements of notice and
investigation. We are in full accord with the following
ratiocinations of the appellate court in its assailed
decision:
As to the alleged absences, we are convinced that the
same do not constitute sufficient ground for
dismissal. Dismissal is just too stern a penalty. No less
than the Supreme Court mandates that where a penalty
less punitive would suffice, whatever missteps may be
committed by labor ought not to be visited with a
consequence so severe. (Meracap v. International
Ceramics Manufacturing Co., Inc., 92 SCRA 412
[1979]). Besides, the fact that petitioner was repeatedly
given a contract shows that she was an efficient worker
and, therefore, should be retained despite occasional
lapses in attendance. Perfection cannot, after all, be
demanded. (Azucena, The Labor Code, Vol. II, 1996 ed.,
[p.] 680)
Finally, we are convinced that it is erroneous for the
Commission to uphold the following findings of the Labor
Arbiter, thus:
Those dialogues of the complainant with the Line
Supervisor, substantially, stand for the notice and
investigation required to comply with due process. The
complainant did not avail of the opportunity to explain her
side to justify her shortcomings, especially, on
absences. She cannot now complain about deprivation of
due process.
Of course, the power to dismiss is a formal prerogative of
the employer. However, this is not without
limitations. The employer is bound to exercise caution in
terminating the services of his employees. Dismissals
must not be arbitrary and capricious. Due process must
be observed in dismissing an employee because it affects
not only his position but also his means of
livelihood. Employers should respect and protect the
rights of their employees which include the right to
labor. (Liberty Cotton Mills Workers Union v. Liberty
Cotton Mills, Inc., 90 SCRA 391 [1979])
To rule that the mere dialogue between private respondent
and petitioner sufficiently complied with the demands of
due process is to disregard the strict mandate of the
law. A conference is not a substitute for the actual
observance of notice and hearing. (Pepsi Cola Bottling
Co., Inc. v. National Labor Relations Commission, 210
SCRA 277 [1992]) The failure of private respondent to
give petitioner the benefit of a hearing before she was
dismissed constitutes an infringement on her constitutional
right to due process of law and not to be denied the equal
protection of the laws. The right of a person to his labor is
deemed to be his property within the meaning of the
constitutional guarantee. This is his means of
livelihood. He cannot be deprived of his labor or work
without due process of law. (Batangas Laguna Tayabas
Bus Co. v. Court of Appeals, 71 SCRA 470 [1976])
All told, the court concludes that petitioners dismissal is
illegal because, first, she was dismissed in the absence of
a just cause, and second, she was not afforded procedural
due process. In pursuance of Article 279 of the Labor
Code, we deem it proper to order the reinstatement of
petitioner to her former job and the payment of her full
backwages. Also, having been compelled to come to
court to protect her rights, we grant petitioners prayer for
attorneys fees.
[38]

IN LIGHT OF ALL THE FOREGOING, the assailed
decision of the appellate court in CA-G.R. SP No. 52149 is
AFFIRMED. The petition at bar is DENIED. Costs against
the petitioner.
SO ORDERED.
Puno, (Chairman), Quisumbing, Austria-
Martinez, and Tinga, JJ., concur.

73. PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, ROLANDO S. ANGELES
and RICARDO P. PABLO, JR., respondents.
D E C I S I O N
PUNO, J.:
This is a special civil action for certiorari to annul the
Decision of the National Labor Relations Commission
(NLRC) dated July 31, 1996
[1]
and its Resolution dated
November 4, 1996
[2]
in NLRC Case No. RAB III-06-5735-
94. The NLRC granted separation pay to the private
respondents inspite of its finding that they were validly
dismissed for committing bribery.
Private respondents Rolando S. Angeles and Ricardo P.
Pablo, Jr. were employed by petitioner corporation as
tollway guards. They were posted at the North Luzon
Tollway, Sta. Rita, Guiguinto, Bulacan interchange. Their
services, however, were terminated effective close of
office hours of June 15, 1994 on the ground of serious
misconduct.
The circumstances leading to the termination of private
respondents employment are as follows:
On September 8, 1993, Rosario C. Maravilla complained
to the Tollway General Manager, Mr. Ibarra G. Paulino,
about the mulcting activities of some security personnel
at the North Luzon Tollway. Acting on the complaint, Mr.
Paulino formed an investigating team composed of
Rolando Hidalgo, Vicente del Rosario, Salvador Bautista
and Luisito Alvarez.
On September 11, 1993, the investigating team staged an
entrapment. They marked one P500.00 bill and two
P100.00 bills with an asterisk and recorded their serial
number. They handed the marked money to Maravilla
with instruction to give it to whoever demands money from
her. Thus, the team, together with Maravilla, boarded the
latters passenger jeepney driven by Eustaquio Paa. The
jeepney was then carrying a cargo of dogs destined for
Baguio City.
Before reaching the Plaza Santa Entry, the jeepney was
stopped by Angeles who was on duty at that time. He
allegedly suspected them of illegally transporting
dogs. Angeles approached the driver, asked for his
drivers license and told him to park at the shoulder of the
road. After the jeepney had parked, the driver alighted
and talked to the guards on duty, Angeles and Pablo
Maravilla also got off the vehicle to talk to them.
The members of the investigating team saw private
respondents accept cash and a sack containing a dog
from Maravilla, after which they allowed the jeepney to
leave.
As private respondents walked toward the toll plaza, they
were accosted by the members of the investigating team
headed by Hidalgo. Surprised, Angeles dropped the bills
he was holding. Upon verification, Hidalgo found that
these were the same bills they had previously
marked. The team also confiscated the dog from
Pablo. They were brought to the Sta. Rita Field Office for
initial investigation.
On April 25, 1994, Mr. Ibarra issued a Notice of Dismissal
to private respondents requiring them to answer the
charge of serious misconduct. After private respondents
filed their respective answers, a formal investigation was
held. Hidalgo, del Rosario and Bautista testified against
private respondents.
After the formal investigation, the investigating officer
submitted his findings to Mr. Ibarra and recommended the
dismissal of private respondents. Adopting the findings
and recommendation of the investigating officer, Mr. Ibarra
issued a Notice of Termination to private respondents
informing them that their employment shall cease effective
close of office hours of June 15, 1994.
On June 17, 1994, private respondents filed a complaint
for illegal dismissal against petitioner. They alleged that
they were dismissed without just or authorized cause and
without due process. They claimed that the entrapment
staged on September 11, 1993 was mastermind by
Hidalgo, former manager of the North Luzon Tollway, in
retaliation, as they have been very critical of his
administration. The complaint prayed for reinstatement
plus payment of backwages and mid-year bonus for the
year 1994.
The Labor Arbiter ruled that private respondents dismissal
was illegal. He held that petitioner failed to prove by clear
and convincing evidence that private respondents
committed serious misconduct. However, instead of
ordering their reinstatement, the Labor Arbiter ordered the
payment of separation pay because of strained
relations. He also ordered petitioner to pay private
respondents their backwages and mid-year bonus. The
dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby
entered in favor of the complainants and against the
respondent, ordering the latter, as follows:
1. To pay the sum of P7,185.00 representing the midyear
bonus of complainants for the year 1994;
2. To pay the sum total of P215,550.00 as backwages of
the complainants from June 15, 1994 up to this writing;
and
3. To pay the sum total of P206,542.00 representing the
separation pay of both complainants from the date of their
employment up to this writing.
So Ordered.
[3]

On appeal, the NLRC modified the decision of the Labor
Arbiter. It held that private respondents act of receiving a
sum of money and a dog from motorists constituted
bribery which was a sufficient ground for their
dismissal. The NLRC nonetheless ordered petitioner to
pay private respondents their separation pay on the
ground of equity. It also retained the award of private
respondents mid-year bonus for 1994. The dispositive
portion of the decision states:
WHEREFORE, premises considered, the appealed
decision is hereby MODIFIED, to read as follows:
1. Declaring the dismissal of complainants to be legal as
falling under the provision of Article 282 of the Labor
Code, as amended;
2. Ordering respondent Philippine National Construction
Corporation (PNCC) to pay complainants Rolando
Angeles and Ricardo Pablo their separation pay in the
amount of P70,609.00 and P143,118.00, respectively;
3. Ordering respondent PNCC to pay complainants
Rolando Angeles and Ricardo Pablo their mid-year bonus
in the amount of P3,209.50 and P3,975.50, respectively.
All other claims of both parties are DIMISSED for lack of
merit.
So ordered.
[4]

Petitioner filed a motion for reconsideration but it was
denied by the NLRC for lack of merit.
[5]

On March 13, 1997, petitioner filed the petition at bar
raising the sole assignment of error:
Public respondent, through its Second Division,
committed grave abuse of discretion amounting to lack of
jurisdiction in ordering petitioner to pay private
respondents their separation pay and mid-year bonus
notwithstanding its finding that private respondents
committed grave and serious misconduct.
[6]

On June 18, 1997, we required the respondents to
comment on the petition.
[7]

Private respondents filed their comment on September 2,
1997. They raised the following arguments.
1. The National Labor Relations Commission erred in not
finding the Philippine National Construction Corporation
guilty of estoppel and laches when the herein private
respondents (complainants in the Labor Arbiter) were
required to answer the charges against them only on April
25, 1994 while the act complained of occurred on
September 11, 1993;
2. Even assuming without admitting that the modification
by the Honorable NLRC was correct, yet the assailed
decision of said court has become final and executory as
this instant petition was unreasonably and belatedly filed;
3. The assailed decision of the Honorable NLRC is in
accord with law and jurisprudence.
[8]

The Solicitor General, on the other hand, filed its comment
on May 4, 1998. It submitted that the NLRC erred in
awarding separation pay to private respondents although it
was correct in awarding mid-year bonus to them. The
Solicitor General thus recommended that the decision of
the NLRC be modified by deleting the award of separation
pay to private respondents.
[9]

In view of the recommendation of the Solicitor General, we
required the NLRC to file its own comment if it so desires
within ten days from notice.
[10]
The NLRC, however, failed
to file its own comment within the prescribed period.
We shall first resolve the issues raised by private
respondents.
First, on the issue of estoppel and laches. Private
respondents contend that petitioner is already barred by
laches from charging them with serious misconduct
because more than seven (7) months have lapsed since
the commission of the act complained of. We disagree.
Laches, in a general sense, is the failure or neglect, for an
unreasonable and unexplained length of time, to do that
which, by exercising due diligence, could or should have
been done earlier.
[11]
Estoppel by laches arises from the
negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party
entitled to assert it either has abandoned it or declined to
assert it.
[12]
It does not merely speak of delay but
unreasonable delay, which is absent in this case. An
employer is not expected to dismiss an erring employee
instantly because it may opt to give the employee the
chance to reform and to regain his confidence.
Second, as regards the timeliness of the petition. The
petition was filed on March 13, 1997. At that time, the
prevailing rule was that petitions for certiorari may be filed
within reasonable time from receipt of the resolution
denying the motion for reconsideration. There was no
fixed standard to determine the reasonableness of the
period, but the Court generally considered the period of
three (3) months to be reasonable.
[13]

The records show that petitioner received the resolution of
the NLRC denying its motion for reconsideration on
December 16, 1996 and the petition at bar was filed two
(2) months and twenty-seven (27) days later. We thus find
that the instant petition was filed on time.
We now go to the primary issue in this case whether
private respondents are entitled to separation pay and
mid-year bonus.
We rule in the negative.
An employee who is dismissed for just cause is generally
not entitled to separation pay. In some cases, however,
the Court awards separation pay to a legally dismissed
employee on the grounds of equity and social justice. This
is not allowed, though, when the employee has been
dismissed for serious misconduct or some other cause
reflecting on his moral character.
[14]

We stated in the leading case of Philippine Long Distance
Telephone Co. vs. NLRC:
[15]

We hold that henceforth separation pay shall be allowed
as a measure of social justice only in those instances
where the employee is validly dismissed for causes other
than serious misconduct or those reflecting on his moral
character. Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving
moral turpitude, like theft or illicit sexual relations with a
fellow worker, the employer may not be required to give
the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the
ground of social justice.
A contrary rule would, as the petitioner correctly argues,
have the effect, of rewarding rather than punishing the
erring employee for his offense. And we do not agree that
the punishment in his dismissal only and that the
separation pay has nothing to do with the wrong he has
committed. Of course it has. Indeed, if the employee who
steals from the company is granted separation pay even
as he is validly dismissed, it is not unlikely that he will
commit a similar offense in his next employment because
he thinks he can expect a like leniency if he is again found
out. This kind of misplaced compassion is not going to do
labor in general any good as it will encourage the
infiltration of its ranks by those who do not deserve the
protection and concern of the Constitution.
The policy of social justice is not intended to countenance
wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it
certainly will not condone the offense. Compassion for the
poor is an imperative of every humane society but only
when the recipient is not a rascal claiming an undeserved
privilege. Social justice cannot be permitted to be a refuge
of scoundrels any more than can equity be an impediment
to the punishment of the guilty. Those who invoke social
justice may do so only if their hands are clean and their
motives blameless and not simply because they happen to
be poor. This great policy of our Constitution is not meant
for the protection of those who have proved they are not
worthy of it, like the workers who have tainted the cause of
labor with the blemishes of their character.
In the case at bar, private respondents were caught in the
act of accepting bribe in the form of cash and a dog from a
motorists who was suspected of illegality transporting
dogs. As tollway guards, private respondents had the duty
to maintain peace and order at the North Luzon
Expressway and to ensure that tollway rules and
regulations are followed. But private respondents did the
contrary by yielding to bribery. They were the first to
violate the rules they were tasked to
enforce. Undoubtedly, private respondents act
constituted serious misconduct which warranted their
dismissal from service. It is for this reason that we find
private respondents undeserving of the comparison
accorded by the law to workers who are bound to join the
ranks of the unemployed.
Likewise, private respondents are not entitled to the mid-
year bonus they are claiming. We do not agree with the
Solicitor Generals contention that private respondents
have already earned their mid-year bonus at the time of
their dismissal. A bonus is a gift from the employer and
the grant thereof is a management prerogative. Petitioner
may not be compelled to award a bonus to private
respondents whom it found guilty of serious misconduct.
We held in Traders Royal Bank vs. NLRC:
[16]

A bonus is a gratuity or an act of liberality of the giver
which the recipient has no right to demand as a matter of
right. It is something given in addition to what is ordinarily
received by or strictly due the recipient. The granting of a
bonus is basically a management prerogative which
cannot be forced upon the employer who may not be
obliged to assume the onerous burden of granting
bonuses or other benefits aside from the employees basic
salaries or wages. (citations omitted)
We further held in Metro Transit Organization, Inc. vs.
NLRC
[17]
that a bonus becomes a demandable or
enforceable obligation only when it is made part of the
wage or salary or compensation of the employee, thus:
The general rule is that a bonus is a gratuity or an act of
liberality which the recipient has no right to demand as a
matter of right. A bonus, however, is a demandable or
enforceable obligation when it is made part of the wage or
salary or compensation of the employee. Whether or not
a bonus forms part of wages depends upon the
circumstances and conditions for its payment. If it is
additional compensation which the employer promised
and agreed to give without any conditions imposed for its
payment, such as success of business or greater
production or output, then it is part of the wage. But if it is
paid only if profits are realized or if a certain level of
productivity is achieved, it cannot be considered part of
the wage. Where it is not payable to all but only to some
employees and only when their labor becomes more
efficient or more productive, it is only an inducement for
efficiency, a prize therefor, not a part of the wage.
Private respondents in this case neither alleged nor
adduced evidence to show that the bonus they are
claiming is a regular benefit which has become part of
their compensation. Thus, the presumption is that it is not
a demandable obligation from the employer and the latter
may not be compelled to grant the same to undeserving
employees.
IN VIEW WHEREOF, the petition is GRANTED. The
assailed decision and resolution of the NLRC are hereby
SET ASIDE.
SO ORDERED.
Bellosillo (Chairman), Mendoza, and Quisumbing,
JJ., concur.
Buena, J., on leave.

74. INTERNATIONAL PHARMACEUTICALS,
INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION (NLRC), FOURTH DIVISION, and DR.
VIRGINIA CAMACHO QUINTIA, respondents.
D E C I S I O N
MENDOZA, J.:
This is a petition for certiorari to set aside the decision of
the National Labor Relations Commission which
affirmed in toto the decision of the Labor Arbiter, finding
petitioner guilty of the illegal dismissal of private
respondent Virginia Camacho Quintia, as well as its
resolution denying reconsideration.
Petitioner International Pharmaceuticals, Inc. (IPI) is a
corporation engaged in the manufacture, production and
sale of pharmaceutical products. In March 1983, it
employed private respondent Virginia Camacho Quintia as
Medical Director of its Research and Development
department, replacing one Diana Villaraza.
[1]
The
government, in that year, launched a program
encouraging the development of herbal medicine and
offering incentives to interested parties. Petitioner
decided to venture into the development of herbal
medicine, although it is now alleged that this was merely
experimental, to find out if it would be feasible to include
herbal medicine in its business.
[2]
One of the government
requirements was the hiring of a
pharmacologist. Petitioner avers that it was only for this
purpose that private respondent was hired, hence its
contention that private respondent was a project
employee.
The contract of employment provided for a term of one
year from the date of its execution on March 19, 1983,
subject to renewal by mutual consent of the parties at
least thirty days before its expiration. It provided for a
monthly compensation of P4,000.00. It was agreed that
Quintia could continue teaching at the Cebu Doctors
Hospital,
[3]
where she was, at that time, a full-time member
of the faculty.
Quintia claimed that when her contract of employment was
about to expire, she was invited by Xavier University in
Cagayan de Oro City to be the chairperson of its
pharmacology department. However, Pio Castillo, the
president and general manager, prevailed upon her to
stay, assuring her of security of tenure. Because of this
assurance, she declined the offer of Xavier
University.
[4]
Indeed, after her contract expired on March
19, 1984, she remained in the employ of petitioner where
she not only performed the work of Medical Director of its
Research and Development department but also that of
company physician. This continued until her termination
on July 12, 1986.
In her complaint, private respondent alleges that the
reason for her termination was her taking up the cudgels
for the rank and file employees when she felt they were
given a raw deal by the officers of their own Savings and
Loan Association. She claimed that sometime in June
1986, while Pio Castillo was in China, the Association
declared dividends to its members. Due to complaints of
the employees, meetings were held during which private
respondent pointed out the inequality in the imposition of
interest rate to the low-salaried employees and led them
in the demand for a full disclosure of the associations
financial status. Her participation was resented by the
associations officers, all of whom were appointed by
management, so that when Castillo arrived, private
respondent was summoned to Castillos office where she
was berated for her acts and humiliated in front of some
laborers. When she sought permission to explain her side,
she was arrogantly turned down and told to leave.
[5]

On July 10, 1986, Quintia was replaced as head of the
Research and Development department by Paz
Wong. Two days later, on July 12, 1986, she received an
inter-office memorandum officially terminating her services
allegedly because of the expiration of her contract of
employment.
On January 21, 1987,
[6]
private respondent filed a
complaint, charging petitioner with illegal dismissal and
praying that petitioner be ordered to reinstate private
respondent and to pay her full backwages and moral
damages.
[7]

In its position paper, petitioner claimed that private
respondent had been hired on a consultancy basis
coterminous with the duration of the project involving the
development of herbal medicine and that her employment
was terminated upon the abandonment of that project. It
explained that Quintias employment, which lasted for
more than two years after the original contract expired,
was by virtue of an oral agreement with the same terms as
the written contract or, at the very least, by virtue of
implied extensions of the said contract which lasted until
the company decided that nothing would come out from
said project.
[8]

In a decision rendered on December 18, 1990, the Labor
Arbiter found private respondent to have been illegally
dismissed. He held that private respondent was a regular
employee and not a project employee and so could not be
dismissed without just and/or legal causes as provided in
the Labor Code. Moreover, he found that petitioner failed
to observe due process in terminating Quintias
services. For this reason, the Labor Arbiter ordered the
petitioner to reinstate private respondent and to pay her
backwages for three years, including 13th month pay and
Service Incentive Leave, moral damages and attorneys
fees amounting to P177,099.94. He further ruled that if
reinstatement was no longer feasible, petitioner should
pay private respondent P6,000 as separation pay.
On appeal, the NLRC affirmed the ruling in a decision
dated May 26, 1992. Petitioner moved for
reconsideration, but its motion was denied for lack of
merit. The NLRC directed the Labor Arbiter to conduct a
hearing to determine whether reinstatement was
feasible. Hence, this petition.
We find the petition to be without merit.
First. Art. 280 of the Labor Code

provides:
Art. 280. Regular and casual employment. - The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform
activities which are usually necessary or desirable in the
usual business or trade of the employer except where the
employment has been fixed for a specific project or
undertaking, the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration
of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity
in which he is employed and his employment shall
continue while such activity exists.
In Brent School, Inc. v. Zamora,
[9]
it was held that although
work done under a contract is necessary and desirable in
relation to the usual business of the employer, a contract
for a fixed period may nonetheless be made so long as it
is entered into freely, voluntarily and knowingly by the
parties. Applying this ruling to the case at bar, the NLRC
held that the written contract between petitioner and
private respondent was valid, but, after its expiration on
March 18, 1984, as the petitioner had decided to continue
her services, it must respect the security of tenure of the
employee in accordance with Art. 280. It said:
To our mind, when complainant was allowed to continue
working without the benefit of a contract after the
expiration of the one year period provided in their written
contract, that act completely changed the complexion of
the relationship between the parties.
The NLRC cited the following facts to justify its
ruling: Quintia was continued as Medical Director
and even given the additional function of company
physician after the expiration of the original contract; she
undertook various civic activities for and in behalf of
petitioner, such as conducting free clinics and giving out
IPI products; she did work which was necessary and
desirable in relation to the trade or business of petitioner;
and her employment lasted for more than (3) three years.
Petitioner contends:
(1) that the NLRCs reliance on Art. 280 is clearly
contrary to this Courts decisions;
(2) that private respondents tasks are really not
necessary and desirable to the usual business of
petitioner;
(3) that there is clearly no legal or factual basis to
support respondent NLRCs reliance on the absence of a
new written contract as indicating that respondent Quintia
became a regular employee.
[10]

Petitioners first ground is that the ruling of the NLRC is
contrary to the Brent School decision. He contends that
Art. 280 should not be so interpreted as to
render employment contracts with a fixed term
invalid. But the NLRC precisely upheld the validity of the
contract in accordance with the Brent
School case. Indeed, the validity of the written contract is
not in issue in this case. What is in issue is whether
private respondent did not become a regular employee
after the expiration of the written contract on March 18,
1984 on the basis of the facts pointed out by the NLRC,
simply because there was in the beginning a contract of
employment with a fixed term.
Petitioner also invokes the ruling in Singer Sewing
Machine v. Drilon
[11]
in which it was stated:
The definition that regular employees are those who
perform activities which are desirable and necessary for
the business of the employer is not determinative in this
case. Any agreement may provide that one party shall
render services for and in behalf of another for a
consideration (no matter how necessary for the latters
business) even without being hired as an employee. This
is precisely true in the case of an independent
contractorship as well as in an agency agreement. The
Court agrees with the petitioners argument that Article
280 is not the yardstick for determining the existence of an
employment relationship because it merely distinguishes
between two kinds of employees, i.e., regular employees
and casual employees, for purposes of determining
the right of an employee to certain benefits, to join or form
a union, or to security of tenure. Article 280 does not
apply where the existence of an employment relationship
is in dispute.
Petitioner argues:
Even assuming arguendo that respondent Quintia was
performing tasks which were necessary and desirable to
the main business of petitioner, said standard cannot
apply since said Article merely distinguishes between
regular and casual employment for the purpose of
determining entitlement to benefits under the Labor
Code. In this case, respondent Quintias alleged status
as regular employee has precisely been disputed by
petitioner. And, as this Honorable Court noted in the
foregoing case, an agreement may provide that one party
will render services, no matter how necessary for the other
partys business, without being hired as
a regular employee, and this is precisely the nature of the
contract entered into by the parties in this case.
[12]

Clearly, petitioner misapplies the ruling in Singer. Quintias
status as an employee is not disputed in this
case. Therefore, in determining whether she was a
project employee or a regular employee, the question is
whether her work was necessary and desirable to the
main business of the employer. It is true that, as held
in Singer, parties can enter into an agreement for the
rendering of services by one to the other and that however
necessary such services may be to the latters business
the contract will not necessarily give rise to an employer-
employee relationship if the elements of such relationship
are not present. But that is not the question in this
case. Quintia was an employee. The question is whether,
given the fact that she was an employee, she was a
regular or a project employee, considering that she had
been continued in the service of petitioner for more than
two years following the expiration of her written contract.
Petitioners second point is that private respondents tasks
were not really necessary and desirable in respect of the
usual business of petitioner, the work done by Quintia
being on a temporary basis only.
[13]
According to
petitioner, Quintias engagement was only for the duration
of its herbal medicine development project. In addition,
petitioner points out that private respondent was not
required to keep fixed office hours and this arrangement
continued even after the expiration of the written contract,
thus indicating the temporary nature of her employment.
Petitioners allegations are contrary to the factual findings
of both the NLRC and the Labor Arbiter, particularly their
findings that she was the head of petitioners Research
and Development department; that in addition, she
performed the function of company physician; and that she
undertook various civic activities in behalf of petitioner and
that this engagement lasted for more than three years
(1983 - 1986).
[14]
Certainly, as the NLRC observed, these
facts show complainant working not as consultant but as
a regular employee albeit a managerial one.
[15]
It should
be added that Quintia was hired to replace one Diana
Villaraza,
[16]
which suggests that the position to which she
was appointed by petitioner was an existing one, so
much so that after the termination of
Quintias employment, somebody else (Paz Wong) was
appointed in her place.
[17]
If private respondents
employment was for a particular project which had
allegedly been terminated, why would there be a need to
replace her?
We are not prepared to throw overboard the findings of
both the NLRC and the Labor Arbiter on the
matter. These are essentially factual matters which are
within the competence of the labor agencies to determine.
Their findings are accorded by this Court respect and
finality if, as in this case, they are supported by substantial
evidence.
[18]

Indeed, the terms of the written employment contract are
clear:
. . . That the FIRST PARTY is a manufacturer of
medicines and pharmaceutical preparations, while the
SECOND PARTY is a Doctor of Medicine and
Pharmacologist of long standing;
That the FIRST PARTY desires to hire the SECOND
PARTY as Medical Director of its Research and
Development department, which the latter accepts, under
the following terms and conditions, to wit:
1. That the SECOND PARTY shall perform and/or cause
the performance of the following:
a) Microbiological research and testing;
b) Clinical research and testing;
c) Prove and support First Partys claims in its brochures,
literature and advertisements;
d) Register with and cause the approval by Food and
Drug Administration of all pharmaceutical and medical
preparations developed and tested by the First Partys
R&D department; and
e) To do and perform such other duties as may, from time
to time, be assigned by the First Party consonant to and in
accord with the position herein conferred. . . .
There is no mention whatsoever of any project or of any
consultancy in the contract. As aptly observed by the
Solicitor General, the duties of Quintia as provided for in
the contract reject any notion of consultancy. Clearly, she
was hired as Medical Director of the Research and
Development department of petitioner company and not
as consultant nor for any particular project. The work she
performed was manifestly necessary and desirable to the
usual business of petitioner, considering that it is engaged
in the manufacture and production of medicinal
preparations. Petitioner itself admits that research and
development are part of its business.
[19]

We agree with the Labor Arbiter that the fact that she was
not required to report at a fixed hour or to keep fixed hours
of work does not detract from her status as a regular
employee. As petitioner itself admits, Quintia was a
managerial employee
[20]
and therefore not covered by the
Labor Code provisions on hours of work. What this Court
said in once case
[21]
is apropos:
The primary standard, . . . 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.
Neither does the fact that private respondent was teaching
full-time at the Cebu Doctors College negate her regular
status since this fact does not affect the nature of Quintias
work. Whether ones employment is regular is not
determined by the number of hours one works, but by the
nature of the work and by the length of time one has been
in that particular job.
Considering the foregoing, it is clear that Quintia became
a regular employee of petitioner after her contract expired
on March 18, 1984 and her services were continued for
more than two years in the usual trade or business of the
employer.
Petitioner goes on to state his third point that there is
clearly no legal or factual basis to support respondent
NLRCs reliance on the absence of a new written contract
as indicating that respondent Quintia became a regular
employee.
[22]
In support, the petitioner again cites
the Brent School case
[23]
where it was recognized that
term contracts can be made orally.
[24]
Hence, it is argued
that the mere fact that there was no subsequent written
contract does not mean that the original agreement was
abandoned and/or that respondent became a regular
employee due to the absence thereof and/or that the
parties had executed a new agreement, in the absence of
evidence showing intent to abandon and/or novate the
same. It posits that, based on the acts of the parties, an
implied renewal was entered into, or, at the very least,
petitioner claims, the absence of a written contract only
indicates that the parties impliedly agreed to extend their
written contract.
There is absolutely no principle of law to support the
proposition urged by petitioner. On the other hand the
written contract in this case provided that it was subject to
renewal by mutual consent of the parties at least thirty
days before its expiration on March 18, 1984. There is no
evidence to show that the parties mutually agreed to
renew their contract. On the other hand, to sustain
petitioners contention that there was an implied extension
after the expiration of the original contract would make it
possible for employers like petitioner to circumvent Art.
280 of the Labor Code and thus prevent an employee from
becoming regular through the simple expedient of making
him sign a contract for a term and then extend to him a
contract term, after term, after term.
Moreover, assuming that petitioner is correct that there
was at least an implied renewal of the written contract
containing the same terms and conditions, then Quintias
termination should have been effective in March of 1986
or March of 1987 rather than July of 1986. It should be
noted that the fixed term stated in the written contract
allegedly renewed is one year. Considering that the said
contract was executed on March 19, 1983, then if there
really were implied renewals with the same terms and
conditions, private respondents employment should not
have been terminated in July of 1986. As discussed
earlier, the decision of the NLRC is based not alone on
inference drawn from the expiration of the contract but on
facts which, in light of Art. 280, show that private
respondents work was in pursuance of the business of
petitioner.
Second. Prescinding from the premise that private
respondent was a project employee, petitioner claims that
because it had discontinued its herbal medicine project
after it had been shown not to be viable, private
respondents employment had to be terminated, too.
We have already shown why this claim has no basis and
no merit. Petitioner was unable to prove that it had
actually undertaken a project. Private respondents
contract will be searched in vain for any mention of a
project. What it states is that Quintias employment was
one for a definite period, not for a project as petitioner
would have it. A project employment is one where the
employment has been fixed for a specific
project/undertaking, the completion or termination of which
has been determined at the time of the engagement of the
employee.
[25]
Quintias engagement after the expiration of
the written contract cannot be said to have been pre-
determined because, if petitioners other claim is to be
believed, it was essentially contingent upon the feasibility
of herbal medicine as part of petitioners business and for
as long as the herbal medicine development was being
pursued by it.
It follows from the conclusion that private respondent
Quintia was a regular employee that she could only be
dismissed for just or authorized cause.
[26]
The records are
bereft of any evidence showing the existence of any of the
specified causes in the Labor Code. It may be that an
employer is allowed wider discretion in terminating
employment in respect of managerial personnel compared
to rank-and-file employees, and that such managerial
employees can be separated from the service for loss of
confidence.
[27]
However, a mere allegation of such ground
is not sufficient. As this Court has held in Western
Shipping Agency, Inc. v. NLRC:
[28]

Loss of confidence is a valid ground for the dismissal of
managerial employees . . . But even managerial
employees enjoy security of tenure, . . . and, . . . can only
be dismissed after cause is shown in an appropriate
proceeding. The loss of confidence must be substantiated
by evidence. The burden of proof is on the employer to
show grounds justifying the loss of confidence.
Petitioner in this case failed to discharge this burden, as
both the Labor Arbiter and the NLRC found.
Moreover, as the labor arbiter found, petitioner failed to
accord due process to private respondent in terminating
her services. In the case of Aurora Land Projects Corp. v.
NLRC it was stated:
[29]

The law requires that the employer must furnish the
worker sought to be dismissed with two written
notices before termination of employee can be legally
effected: (1) notice which apprises the employee of the
particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the
employee of the employers decision to dismiss him
(Section 13, BP 130; Sections 2-6, Rule XIV, Book V
Rules and Regulations Implementing the Labor Code as
amended). Failure to comply with the requirements taints
the dismissal with illegality. This procedure is mandatory;
in the absence of which, any judgment reached by
management is void and inexistent. (Tingson, Jr. v.
NLRC, 185 SCRA 498 [1990]; National Service
Corporation v. NLRC, 168 SCRA 122 [1988]; Ruffy v.
NLRC, 182 SCRA 365 [1990].
The memoranda dated July 12, 1986 and July 10,
1986, copies of which were furnished the complainant,
informing her of the termination of her contract and the
appointment of a replacement, without apprising her of the
particular acts or omissions for which her dismissal was
sought, do not suffice to satisfy the requirements of
notice. Nor was petitioner given the opportunity to be
heard.
[30]
Consequently, her dismissal from the service was
illegal.
Third. Petitioner contends that the reinstatement of
private respondent is not feasible because the position
which she held was abolished on account of its decision to
discontinue its herbal medicine development project
and that, in any event, because the position is a
sensitive one which needs an employee in whom the
petitioner has full faith and confidence. It is also
contended that reinstatement would be untenable
considering the antagonism engendered as a result of this
case.
[31]

As regards the claim that the position has already been
abolished and, therefore, reinstatement is impossible,
suffice it to state that the factual findings of the Labor
Arbiter belie this. A replacement for private respondent
was appointed two (2) days prior to her termination. If the
position had been abolished, there would have been no
necessity for a replacement.
But we agree that because of antagonism generated by
this case and the private respondents own preference for
separation pay, reinstatement would no longer
be feasible. It would thus be in the best interest of the
parties to order the payment of separation pay in lieu of
reinstatement. Such an amount should not be equivalent
to one-half month salary for every year of service only, as
ordered by the Labor Arbiter and affirmed by the NLRC
but, in accordance with our decisions,
[32]
it must be
equivalent to one month salary for every year of service.
Private respondent should be given separation pay and
backwages in accordance with the Labor Code. The
backwages, however, are to be computed only for three
years from July 12, 1986, the date of her dismissal,
without deduction or qualification, considering that the
dismissal was made before the effectivity on March 21,
1989, of R.A. No. 6715, which provides for the payment of
full backwages to employees who are illegally
dismissed.
[33]

WHEREFORE, the petition is DISMISSED. The decision
of the National Labor Relations Commission is MODIFIED
by ordering petitioner to pay private respondent separation
pay equivalent to one month salary for every year of
service. In all other respects, the decision of the NLRC is
AFFIRMED.
SO ORDERED.
Regalado (Chairman), Melo, Puno and Martinez,
JJ., concur.

75. PRUDENTIAL BANK and TRUST
COMPANY, petitioner, vs. CLARITA T.
REYES, respondent.
D E C I S I O N
GONZAGA-REYES, J.:
Before the Court is a petition for review on certiorari of the
Decision,
[1]
dated October 15, 1999 of the Court of
Appeals in C.A.-G.R. SP No. 30607 and of its Resolution,
dated December 6, 1999 denying petitioners motion for
reconsideration of said decision. The Court of Appeals
reversed and set aside the resolution
[2]
of the National
Labor Relations Commission (NLRC) in NLRC NCR CA
No. 009364-95, reversing and setting aside the labor
arbiters decision and dismissing for lack of merit private
respondents complaint.
[3]

The case stems from NLRC NCR Case No. 00-06-03462-
92, which is a complaint for illegal suspension and illegal
dismissal with prayer for moral and exemplary damages,
gratuity, fringe benefits and attorneys fees filed by Clarita
Tan Reyes against Prudential Bank and Trust Company
(the Bank) before the labor arbiter. Prior to her dismissal,
private respondent Reyes held the position of Assistant
Vice President in the foreign department of the Bank,
tasked with the duties, among others, to collect checks
drawn against overseas banks payable in foreign currency
and to ensure the collection of foreign bills or checks
purchased, including the signing of transmittal letters
covering the same.
After proceedings duly undertaken by the parties,
judgment was rendered by Labor Arbiter Cornelio L.
Linsangan, the dispositive portion of which reads:
WHEREFORE, finding the dismissal of complainant to be
without factual and legal basis, judgment is hereby
rendered ordering the respondent bank to pay her back
wages for three (3) years in the amount of P540,000.00
(P15,000.00 x 36 mos.). In lieu of reinstatement, the
respondent is also ordered to pay complainant separation
pay equivalent to one month salary for every year of
service, in the amount of P420,000.00 (P15,000 x 28
mos.). In addition, the respondent should also pay
complainant profit sharing and unpaid fringe
benefits. Attorneys fees equivalent to ten (10%) percent
of the total award should likewise be paid by respondent.
SO ORDERED.
[4]

Not satisfied, the Bank appealed to the NLRC which, as
mentioned at the outset, reversed the Labor Arbiters
decision in its Resolution dated 24 March 1997. Private
respondent sought reconsideration which, however, was
denied by the NLRC in its Resolution of 28 July
1998. Aggrieved, private respondent commenced on
October 28, 1998, a petition for certiorari before the
Supreme Court.
[5]
The subject petition was referred to the
Court of Appeals for appropriate action and disposition per
resolution of this Court dated November 25, 1998, in
accordance with the ruling in St. Martin Funeral Homes
vs. NLRC.
[6]

In its assailed decision, the Court of Appeals adopted the
following antecedent facts leading to Reyess dismissal as
summarized by the NLRC:
The auditors of the Bank discovered that two checks, No.
011728-7232-146, in the amount of US$109,650.00, and
No. 011730-7232-146, in the amount of US$115,000.00,
received by the Bank on April 6, 1989, drawn by the
Sanford Trading against Hongkong and Shanghai Banking
Corporation, Jurong Branch, Singapore, in favor of
Filipinas Tyrom, were not sent out for collection to
Hongkong Shanghai Banking Corporation on the alleged
order of the complainant until the said checks became
stale.
The Bank created a committee to investigate the findings
of the auditors involving the two checks which were not
collected and became stale.
On March 8, 1991, the president of the Bank issued a
memorandum to the complainant informing her of the
findings of the auditors and asked her to give her side. In
reply, complainant requested for an extension of one week
to submit her explanation. In a subsequent letter, dated
March 14, 1991, to the president, complainant stated that
in view of the refusal of the Bank that she be furnished
copies of the pertinent documents she is requesting and
the refusal to grant her a reasonable period to prepare her
answer, she was constrained to make a general denial of
any misfeasance or malfeasance on her part and asked
that a formal investigation be made.
As the complainant failed to attend and participate in the
formal investigation conducted by the Committee on May
24, 1991, despite due notice, the Committee proceeded
with its hearings and heard the testimonies of several
witnesses.
The Committees findings were:
a) The two (2) HSBC checks were received by the
Foreign Department on 6 April 1989. On the same day,
complainant authorized the crediting of the account of
Filipinas Tyrom in the amount of P4,780,102.70
corresponding to the face value of the checks, (Exhibits 6,
22 to 22-A and 23 to 23-A). On the following day, a
transmittal letter was prepared by Ms. Cecilia Joven, a
remittance clerk then assigned in the Foreign Department,
for the purpose of sending out the two (2) HSBC checks
for collection. She then requested complainant to sign the
said transmittal letters (Exhibits 1, 7 and 25; TSN, 11
March 1993, pp. 42-52), as it is complainant who gives her
instructions directly concerning the transmittal of foreign
bills purchased. All other transmittal letters are in fact
signed by complainant.
b) After Ms. Joven delivered the transmittal letters and
the checks to the Accounting Section of the Foreign
Department, complainant instructed her to withdraw the
same for the purpose of changing the addressee thereon
from American Express Bank to Bank of Hawaii (ibid.)
under a special collection scheme (Exhibits 4 and 5 to 5-
B).
c) After complying with complainants instruction, Ms.
Joven then returned to complainant for the latter to sign
the new transmittal letters. However, complainant told Ms.
Joven to just hold on to the letters and checks and await
further instructions (ibid.). Thus, the new transmittal
letters remained unsigned. (See Exhibits 5 to 5-B).
d) In June 1989, Ms. Joven was transferred to another
department. Hence, her duties, responsibilities and
functions, including the responsibility over the two (2)
HSBC checks, were turned over to another remittance
clerk, Ms. Analisa Castillo (Exhibit 14; TSN, 4 June 1993,
pp. 27-29).
e) When asked by Ms. Castillo about the two (2) HSBC
checks, Ms. Joven relayed to the latter complainants
instruction (Exhibit 14; TSN, 4 June 1993, p. 42).
f) About fifteen (15) months after the HSBC checks were
received by the Bank, the said checks were discovered in
the course of an audit conducted by the Banks
auditors. Atty. Pablo Magno, the Banks legal counsel,
advised complainant to send the checks for collection
despite the lapse of fifteen (15) months.
g) Complainant, however, deliberately withheld Atty.
Magnos advice from her superior, the Senior Vice-
President, Mr. Renato Santos and falsely informed the
latter that Atty. Magno advised that a demand letter be
sent instead, thereby further delaying the collection of the
HSBC checks.
h) On 10 July 1990, the HSBC checks were finally sent
for collection, but were returned on 16 July 1990 for the
reason account closed (Exhibits 2-A and 3-A).
After a review of the Committees findings, the Board of
Directors of the Bank resolved not to re-elect complainant
any longer to the position of assistant president pursuant
to the Banks By-laws.
On July 19, 1991, complainant was informed of her
termination of employment from the Bank by Senior Vice
President Benedicto L. Santos, in a letter the text of which
is quoted in full:
Dear Mrs. Reyes:
After a thorough investigation and appreciation of the
charges against you as contained in the Memorandum of
the President dated March 8, 1991, the Fact Finding
Committee which was created to investigate the
commission and/or omission of the acts alluded therein,
has found the following:
1. You have deliberately held the clearing of Checks Nos.
11728 and 11730 of Hongkong and Shanghai Banking
Corporation in the total amount of US$224,650.00 by
giving instructions to the collection clerk not to send the
checks for collection. In view thereof, when the said
checks were finally sent to clearing after the lapse of 15
months from receipt of said checks, they were returned for
the reason Account closed. To date, the value of said
checks have not been paid by Filipinas Tyrom, which as
payee of the checks, had been credited with their peso
equivalent;
2. You tried to influence the decision of Atty. Pablo P.
Magno, Bank legal counsel, by asking him to do
something allegedly upon instructions of a Senior Vice
President of the Bank or else lose his job when in truth
and in fact no such instructions was given; and
3. You deliberately withheld from Mr. Santos, Senior Vice
President, the advice given by the legal counsel of the
Bank which Mr. Santos had asked you to seek. As a
matter of fact, you even relayed a false advice which
delayed further the sending of the two checks for
collection. Likewise, you refused to heed the advice of the
Banks legal counsel to send the checks for collection.
These findings have given rise to the Banks loss of trust
and confidence in you, the same being acts of serious
misconduct in the performance of your duties resulting in
monetary loss to the Bank. In view thereof, the Board has
resolved not to re-elect you to the position of Assistant
Vice President of the Bank. Accordingly, your services are
terminated effective immediately. In relation thereto, your
monetary and retirement benefits are forfeited except
those that have vested in you.
In her position paper, complainant alleged that the real
reason for her dismissal was her filing of the criminal
cases against the bank president, the vice president and
the auditors of the Bank, such filing not being a valid
ground for her dismissal. Furthermore, she alleged that it
would be self-serving for the respondent to state that she
was found guilty of gross misconduct in deliberately
withholding the clearing of the two dollar checks. She
further alleged that she was not afforded due process as
she was not given the chance to refute the charges
mentioned in the letter of dismissal. Hence, she was
illegally dismissed.
On the other hand, respondent argues that there were
substantial bases for the Bank to lose its trust and
confidence on the complainant and, accordingly, had just
cause for terminating her services. Moreover, for filing the
clearly unfounded suit against the respondents officers,
complainant is liable to pay moral and exemplary
damages and attorneys fees.
[7]

The Court of Appeals found that the NLRC committed
grave abuse of discretion in ruling that the dismissal of
Reyes is valid. In effect, the Court of Appeals reinstated
the judgment of the labor arbiter with modification as
follows:
WHEREFORE, in the light of the foregoing, the decision
appealed from is hereby REVERSED and SET ASIDE. In
lieu thereof, judgment is hereby rendered ordering
respondent Bank as follows:
1. To pay petitioner full backwages and other benefits
from July 19, 1991 up to the finality of this judgment;
2. To pay petitioner separation pay equivalent to one (1)
month salary for every year of service in lieu of
reinstatement; and
3. To pay attorneys fee equivalent to ten (10%) percent
of the total award.
SO ORDERED.
[8]

Hence, the Banks recourse to this Court contending in its
memorandum that:
IN SETTING ASIDE THE DECISION DATED 24 MARCH
1997 AND THE RESOLUTION DATED 28 JULY 1998 OF
THE NLRC AND REINSTATING WITH MODIFICATION
THE DECISION DATED 20 JULY 1995 OF LABOR
ARBITER CORNELIO L. LINSANGAN, THE
HONORABLE COURT OF APPEALS SERIOUSLY
ERRED, IN VIEW OF THE FOLLOWING:
I.
IT IS THE SEC (NOW THE REGIONAL TRIAL COURT)
AND NOT THE NLRC WHICH HAS ORIGINAL AND
EXCLUSIVE JURISDICTION OVER CASES INVOLVING
THE REMOVAL FROM OFFICE OF CORPORATE
OFFICERS.
II.
EVEN ASSUMING ARGUENDO THAT THE NLRC HAS
JURISDICTION, THERE WAS SUBSTANTIAL
EVIDENCE OF RESPONDENTS MISCONDUCT
JUSTIFYING THE BANKS LOSS OF TRUST AND
CONFIDENCE ON (sic) HER.
III.
EVEN ASSUMING ARGUENDO THAT RESPONDENT
WAS ENTITLED TO BACKWAGES, THE HONORABLE
COURT OF APPEALS ERRED IN AWARDING
UNLIMITED AND UNQUALIFIED BACKWAGES
THEREBY GOING FAR BEYOND THE LABOR
ARBITERS DECISION LIMITING THE SAME TO THREE
YEARS, WHICH DECISION RESPONDENT HERSELF
SOUGHT TO EXECUTE.
[9]

In sum, the resolution of this petition hinges on (1) whether
the NLRC has jurisdiction over the complaint for illegal
dismissal; (2) whether complainant Reyes was illegally
dismissed; and (3) whether the amount of back wages
awarded was proper.
On the first issue, petitioner seeks refuge behind the
argument that the dispute is an intra-corporate controversy
concerning as it does the non-election of private
respondent to the position of Assistant Vice-President of
the Bank which falls under the exclusive and original
jurisdiction of the Securities and Exchange Commission
(now the Regional Trial Court) under Section 5 of
Presidential Decree No. 902-A. More specifically,
petitioner contends that complainant is a corporate officer,
an elective position under the corporate by-laws and her
non-election is an intra-corporate controversy cognizable
by the SEC invoking lengthily a number of this Courts
decisions.
[10]

Petitioner Bank can no longer raise the issue of jurisdiction
under the principle of estoppel. The Bank participated in
the proceedings from start to finish. It filed its position
paper with the Labor Arbiter. When the decision of the
Labor Arbiter was adverse to it, the Bank appealed to the
NLRC. When the NLRC decided in its favor, the bank said
nothing about jurisdiction. Even before the Court of
Appeals, it never questioned the proceedings on the
ground of lack of jurisdiction. It was only when the Court
of Appeals ruled in favor of private respondent did it raise
the issue of jurisdiction. The Bank actively participated in
the proceedings before the Labor Arbiter, the NLRC and
the Court of Appeals. While it is true that jurisdiction over
the subject matter of a case may be raised at any time of
the proceedings, this rule presupposes that laches or
estoppel has not supervened. In this regard, Baaga vs.
Commission on the Settlement of Land Problems,
[11]
is
most enlightening. The Court therein stated:
This Court has time and again frowned upon the
undesirable practice of a party submitting his case for
decision and then accepting the judgment, only if
favorable, and attacking it for lack of jurisdiction when
adverse. Here, the principle of estoppel lies. Hence, a
party may be estopped or barred from raising the question
of jurisdiction for the first time in a petition before the
Supreme Court when it failed to do so in the early stages
of the proceedings.
Undeterred, the Bank also contends that estoppel cannot
lie considering that from the beginning, petitioner Bank
has consistently asserted in all its pleadings at all stages
of the proceedings that respondent held the position of
Assistant Vice President, an elective position which she
held by virtue of her having been elected as such by the
Board of Directors. As far as the records before this Court
reveal however, such an assertion was made only in the
appeal to the NLRC and raised again before the Court of
Appeals, not for purposes of questioning jurisdiction but to
establish that private respondents tenure was subject to
the discretion of the Board of Directors and that her non-
reelection was a mere expiration of her term. The Bank
insists that private respondent was elected Assistant Vice
President sometime in 1990 to serve as such for only one
year. This argument will not do either and must be
rejected.
It appears that private respondent was appointed
Accounting Clerk by the Bank on July 14, 1963. From that
position she rose to become supervisor. Then in 1982,
she was appointed Assistant Vice-President which she
occupied until her illegal dismissal on July 19, 1991. The
banks contention that she merely holds an elective
position and that in effect she is not a regular employee is
belied by the nature of her work and her length of service
with the Bank. As earlier stated, she rose from the ranks
and has been employed with the Bank since 1963 until the
termination of her employment in 1991. As Assistant Vice
President of the foreign department of the Bank, she is
tasked, among others, to collect checks drawn against
overseas banks payable in foreign currency and to ensure
the collection of foreign bills or checks purchased,
including the signing of transmittal letters covering the
same. It has been stated that the primary standard of
determining regular employment is the reasonable
connection between the particular activity performed by
the employee in relation to the usual trade or business of
the employer.
[12]
Additionally, an employee is regular
because of the nature of work and the length of service,
not because of the mode or even the reason for hiring
them.
[13]
As Assistant Vice-President of the Foreign
Department of the Bank she performs tasks integral to the
operations of the bank and her length of service with the
bank totaling 28 years speaks volumes of her status as a
regular employee of the bank. In fine, as a regular
employee, she is entitled to security of tenure; that is, her
services may be terminated only for a just or authorized
cause.
[14]
This being in truth a case of illegal dismissal, it is
no wonder then that the Bank endeavored to the very end
to establish loss of trust and confidence and serious
misconduct on the part of private respondent but, as will
be discussed later, to no avail.
This brings us to the second issue wherein the Bank
insists that it has presented substantial evidence to prove
the breach of trust on the part of private respondent
warranting her dismissal. On this point, the Court of
Appeals disagreed and set aside the findings of the NLRC
that Reyes deliberately withheld the release of the two
dollar checks; that she is guilty of conflict of interest that
she waived her right to due process for not attending the
hearing; and that she was dismissed based on loss of trust
and confidence. We quote pertinent portions of the
decision, to wit:
FIRST: Respondent Bank heavily relied on the testimony
and affidavit of Remittance Clerk Joven in trying to
establish loss of confidence. However, Jovens allegation
that petitioner instructed her to hold the subject two dollar
checks amounting to $224,650.00 falls short of the
requisite proof to warrant petitioners dismissal. Except for
Jovens bare assertion to withhold the dollar checks per
petitioners instruction, respondent Bank failed to adduce
convincing evidence to prove bad faith and malice. It
bears emphasizing that respondent Banks witnesses
merely corroborate Jovens testimony.
Upon this point, the rule that proof beyond reasonable
doubt is not required to terminate an employee on the
charge of loss of confidence and that it is sufficient that
there is some basis for such loss of confidence, is not
absolute. The right of an employer to dismiss employees
on the ground that it has lost its trust and confidence in
him must not be exercised arbitrarily and without just
cause. For loss of trust and confidence to be valid ground
for an employees dismissal, it must be substantial and not
arbitrary, and must be founded on clearly established facts
sufficient to warrant the employees separation from work
(Labor vs. NLRC, 248 SCRA 183).
SECOND. Respondent Banks charge of deliberate
withholding of the two dollar checks finds no support in the
testimony of Atty. Jocson, Chairman of the Investigating
Committee. On cross examination, Atty. Jocson testified
that the documents themselves do not show any direct
withholding (pp. 186-187, Rollo). There being conflict in
the statement of witnesses, the court must adopt the
testimony which it believes to be true (U.S. vs. Losada, 18
Phil. 90).
THIRD. Settled is the rule that when the conclusions of
the Labor Arbiter are sufficiently substantiated by the
evidence on record, the same should be respected by
appellate tribunals since he is in a better position to
assess and evaluate the credibility of the contending
parties (Ala Mode Garments, Inc. vs. NLRC, 268 SCRA
497). In this regard, the Court quotes with approval the
following disquisition of Labor Arbiter Linsangan, thus:
This Office has repeatedly gone over the records of the
case and painstakingly examined the testimonies of
respondent banks witnesses. One thing was clearly
established: that the legality of complainants dismissal
based on the first ground stated in respondents letter of
termination (exh. 25-J, supra) will rise or fall on the
credibility of Miss Joven who undisputedly is the star
witness for the bank. It will be observed that the
testimonies of the banks other witnesses, Analiza Castillo,
Dante Castor and Antonio Ragasa pertaining to the non-
release of the dollar checks and their corresponding
transmittal letters were all anchored on what was told
them by Ms. Joven, that is: she was instructed by
complainant to hold the release of subject checks. In a
nutshell, therefore, the issue boils down to who between
complainant and Ms. Joven is more credible.
After painstakingly examining the testimonies of Ms. Joven
and respondents other witnesses this Office finds the
evidence still wanting in proof of complainants guilt. This
Office had closely observed the demeanor of Ms. Joven
while testifying on the witness stand and was not
impressed by her assertions. The allegation of Ms. Joven
in that her non-release of the dollar checks was upon the
instruction of complainant Reyes is extremely doubtful. In
the first place, the said instruction constitutes a gross
violation of the banks standard
operating procedure. Moreover, Ms. Joven was fully
aware that the instruction, if carried out, will greatly
prejudice her employer bank. It was incumbent upon Ms.
Joven not only to disobey the instruction but even to report
the matter to management, if same was really given to her
by complainant.
Our doubt on the veracity of Ms. Jovens allegation even
deepens as we consider the fact that when the non-
release of the checks was discovered by Ms. Castillo the
former contented herself by continuously not taking any
action on the two dollar checks. Worse, Ms. Joven even
impliedly told by Ms. Castillo (sic) to ignore the two checks
and just withhold their release. In her affidavit Ms. Castillo
said:
4. When I asked Cecille Joven what I was supposed to
do with those checks, she said the same should be held
as per instruction of Mrs. Reyes. (Exh. 14, supra).
The evidence shows that it was only on 16 May 1990 that
Ms. Joven broke her silence on the matter despite the fact
that on 15 November 1989, at about 8:00 p.m. the
complainant, accompanied by driver Celestino Banito,
went to her residence and confronted her regarding the
non-release of the dollar checks. It took Ms. Joven
eighteen (18) months before she explained her side on the
controversy. As to what prompted her to make her letter
of explanation was not even mentioned.
On the other hand, the actions taken by the complainant
were spontaneous. When complainant was informed by
Mr. Castor and Ms. Castillo regarding the non-release of
the checks sometime in November, 1989 she immediately
reported the matter to Vice President Santos, Head of the
Foreign Department. And as earlier mentioned,
complainant went to the residence of Ms. Joven to
confront her. In this regard, Celestino Bonito,
complainants driver, stated in his affidavit, thus:
1. Sometime on November 15, 1989 at about 7:00
oclock in the evening, Mrs. Clarita Tan Reyes and I were
in the residence of one Ms. Cecille Joven, then a
Processing Clerk in the Foreign Department of Prudential
Bank;
2. Ms. Cecille Joven, her mother, myself, and Mrs. Clarita
Tan Reyes were seated in the sala when the latter asked
the former, Ms. Cecille Joven, how it came about that the
two dollar checks which she was then holding with the
transmittal letters, were found in a plastic envelope kept
day-to-day by the former;
3. Hesitatingly, Cecille Joven said: Eh, Mother (Mrs. Tan
Reyes had been intimately called Mother in the
Bank) akala ko bouncing checks yon mga yon.
4. Mrs. Clarita Tan Reyes, upon hearing those words,
was surprised and she said: Ano, papaano mong alam na
bouncing na hindi mo pa pinadadala;
5. Mrs. Cecille Joven turned pale and was not able to
answer.
There are other factors that constrain this Office to doubt
even more the legality of complainants dismissal based
on the first ground stated in the letter of dismissal. The
non-release of the dollar checks was reported to top
management sometime on 15 November 1989 when
complainant, accompanied by Supervisor Dante Castor
and Analiza Castillo, reported the matter to Vice President
Santos. And yet, it was only on 08 March 1991, after a
lapse of sixteen (16) months from the time the non-release
of the checks was reported to the Vice President, that
complainant was issued a memorandum directing her to
submit an explanation. And it took the bank another four
(4) months before it dismissed complainant.
The delayed action taken by respondent against
complainant lends credence to the assertion of the latter
that her dismissal was a mere retaliation to the criminal
complaints she filed against the banks top officials.
It clearly appears from the foregoing that the complainant
herein has no knowledge of, much less participation in, the
non-release of the dollar checks under discussion. Ms.
Joven is solely responsible for the same. Incidentally, she
was not even reprimanded by the bank.
FOURTH. Respondent Bank having failed to furnish
petitioner necessary documents imputing loss of
confidence, petitioner was not amply afforded opportunity
to prepare an intelligent answer. The Court finds nothing
confidential in the auditors report and the affidavit of
Transmittal Clerk Joven. Due process dictates that
management accord the employees every kind of
assistance to enable him to prepare adequately for his
defense, including legal representation.
The issue of conflict of interest not having been covered
by the investigation, the Court finds it irrelevant to the
charge.
[15]

We uphold the findings of the Court of Appeals that the
dismissal of private respondent on the ground of loss of
trust and confidence was without basis. The charge was
predicated on the testimony of Ms. Joven and we defer to
the findings of the Labor Arbiter as confirmed and adopted
by the Court of Appeals on the credibility of said
witness. This Court is not a trier of facts and will not weigh
anew the evidence already passed upon by the Court of
Appeals.
[16]

On the third issue, the Bank questions the award of full
backwages and other benefits from July 19, 1991 up to the
finality of this judgment; separation pay equivalent to one
(1) month salary for every year of service in lieu of
reinstatement; and attorneys fees equivalent to ten (10%)
percent of the total award. The Bank argues, in the main,
that private respondent is not entitled to full backwages in
view of the fact that she did not bother to appeal that
portion of the labor arbiters judgment awarding back
wages limited to three years. It must be stressed that
private respondent filed a special civil action for certiorari
to review the decision of the NLRC
[17]
and not an ordinary
appeal. An ordinary appeal is distinguished from the
remedy of certiorari under Rule 65 of the Revised Rules of
Court in that in ordinary appeals it is settled that a party
who did not appeal cannot seek affirmative relief other
than the ones granted in the decision of the court
below.
[18]
On the other hand, resort to a judicial review of
the decisions of the National Labor Relations Commission
in a petition for certiorari under Rule 65 of Rules of Court
is confined to issues of want or excess of jurisdiction and
grave abuse of discretion.
[19]
In the instant case, the Court
of Appeals found that the NLRC gravely abused its
discretion in finding that the private respondents dismissal
was valid and so reversed the same. Corollary to the
foregoing, the appellate court awarded backwages in
accordance with current jurisprudence.
Indeed, jurisprudence is clear on the amount of
backwages recoverable in cases of illegal
dismissal. Employees illegally dismissed prior to the
effectivity of Republic Act No. 6715 on March 21, 1989 are
entitled to backwages up to three (3) years without
deduction or qualification, while those illegally dismissed
after are granted full backwages inclusive of allowances
and other benefits or their monetary equivalent from the
time their actual compensation was withheld from them up
to the time of their actual reinstatement.
[20]
Considering
that private respondent was terminated on July 19, 1991,
she is entitled to full backwages from the time her actual
compensation was withheld from her (which, as a rule, is
from the time of her illegal dismissal) up to the finality of
this judgment (instead of reinstatement) considering that
reinstatement is no longer feasible as correctly pointed out
by the Court of Appeals on account of the strained
relations brought about by the litigation in this case. Since
reinstatement is no longer viable, she is also entitled to
separation pay equivalent to one (1) month salary for
every year of service.
[21]
Lastly, since private respondent
was compelled to file an action for illegal dismissal with
the labor arbiter, she is likewise entitled to attorneys
fees
[22]
at the rate above-mentioned. There is no room to
argue, as the Bank does here, that its liability should be
mitigated on account of its good faith and that private
respondent is not entirely blameless. There is no showing
that private respondent is partly at fault or that the Bank
acted in good faith in terminating an employee of twenty-
eight years. In any event, Article 279 of Republic Act No.
6715
[23]
clearly and plainly provides for full backwages to
illegally dismissed employees.
WHEREFORE, the instant petition for review on certiorari
is DENIED, and the assailed Decision of the Court of
Appeals, dated October 15, 1999, is AFFIRMED.
SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Sandoval-
Gutierrez, JJ., concur.

76.
77. COMMISSIONER OF INTERNAL
REVENUE, petitioner,
vs.
HON. COURT OF TAX APPEALS and MANILA GOLF &
COUNTRY CLUB, INC., respondents.
Bito, Misa & Lozada for private respondent.

MEDIALDEA, J.:
In Commissioner of Internal Revenue v. Manila Hotel
Corporation, et al., G.R. No. 83250, September 26, 1989,
We overruled a decision of the Court of Tax Appeals
which declared the collection of caterer's tax under
Section 191-A of Republic Act No. 6110 illegal because
Sec. 42 of House Bill No. 17839, which carries that
proviso, was vetoed by then President Ferdinand E.
Marcos when the bill was presented to him and Congress
had not taken any step to override the presidential veto.
We held thus:
The power of the State to impose the 3% caterer's tax is
not debatable. The Court of Tax Appeals erred, however,
in holding that the tax was abolished as a result of the
presidential veto of August 4, 1969. It failed to examine
the law then, and up to now, existing on the subject which
has always imposed a 3% caterer's tax on operators of
restaurants. Since the Manila Hotel operates restaurants
in its premises, it is liable to pay the tax provided in
paragraph (1), Section 206 of the Tax Code.
(Commissioner of Internal Revenue v. Manila Hotel
Corporation and the Court of Tax Appeals, G.R. No.
83250, September 26, 1989)
The petition now before Us presents an identical question:
whether the presidential veto referred to the entire section
or merely to the imposition of 20% tax on gross receipts of
operators or proprietors of restaurants, refreshment
parlors, bars and other eating places which are maintained
within the premises or compound of a hotel, motel or
resthouses. Reference to the Manila Hotel case, therefore,
might have been sufficient to dispose of this petition were
it not for the position of the CTA that a chief executive has
no power to veto part of an item in a bill; either he vetoes
an entire section or approves it but not a fraction thereof.
Herein private respondent, Manila Golf & Country Club,
Inc. is a non-stock corporation. True, it maintains a golf
course and operates a clubhouse with a lounge, bar and
dining room, but these facilities are for the exclusive use of
its members and accompanied guests, and it charges on
cost-plus-expense basis. As such, it claims it should have
been exempt from payment of privilege taxes were it not
for the last paragraph of Section 191-A of R.A. No. 6110,
otherwise known as the "Omnibus Tax Law." Section 191-
A reads:
Sec. 191-A. Caterer. A caterer's tax is hereby imposed
as follows:
(1) On proprietors or operators of restaurants, refreshment
parlors and other eating places, including clubs, and
caterers, three per cent of their gross receipts.
(2) On proprietors or operators of restaurants, bars, cafes
and other eating places, including clubs, where distilled
spirits, fermented liquors, or wines are served, three per
cent of their gross receipts from sale of food or
refreshments and seven per cent of their gross receipts
from sale of distilled spirits, fermented liquors or wines.
Two sets of commercial invoices or receipts serially
numbered in duplicate shall be separately prepared and
issued, one for sale of refreshments served, and another
for each sale of distilled spirits, fermented liquors or wines
served, the originals of the invoices or receipts to be
issued to the purchaser or customer.
(3) On proprietors or operators of restaurants, refreshment
parlors, bars, cafes and other eating places which are
maintained within the preferences or compound of a hotel,
motel, resthouse, cockpit, race track, jai-alai, cabaret,
night or day club by means of a connecting door or
passage twenty per cent of their gross receipts.
Where the establishments are operated or maintained by
clubs of any kind or nature (irrespective of the disposition
of their net income and whether or not they cater
exclusively to members or their guests) the keepers of the
establishments shall pay the corresponding tax at the rate
fixed above. (Emphasis supplied)
Republic Act No. 6110 took effect on September 1, 1969.
By this virtue, petitioners assessed the club fixed taxes as
operators of golf links and restaurants, and also
percentage tax (caterer's tax) for its sale of foods and
fermented liquors/wines for the period covering September
1969 to December 1970 in the amount of P32,504.96. The
club protested claiming the assessment to be without
basis because Section 42 was vetoed by then President
Marcos. The veto message reads:
MALACAANG
Manila
August 4, 1969
Gentlemen of the House
of Representatives:
I have the honor to inform you that I have this day signed
H.B. No. 17839, entitled:
AN ACT AMENDING CERTAIN
PROVISIONS OF THE NATIONAL INTERNAL
REVENUE CODE, AS AMENDED
Pursuant to the provisions of Section 20-(3), Article VI, of
the Constitution, however, I have vetoed the following
items in this bill:
xxx xxx xxx
pp. 44, SEC. 42. Inserting a new Section 191-A which
imposes a caterer's tax of three percent of the gross
receipts of proprietors or operators of restaurants,
refreshment parlors and other eating places; three percent
of gross receipts from sale of food or refreshment and
seven percent on gross receipts from the sale of distilled
spirits, fermented liquors or wines, on proprietors or
operators of restaurants, bars, cafes and other eating
places, including clubs, where distilled spirits, fermented
liquors, or wines are served; and twenty percent of gross
receipts on proprietor or operators of restaurants,
refreshment parlors, bars, cafes and other eating places
maintained within the premises or compound of a hotel,
motel, resthouse, cockpit, race track, jai-alai, cabaret,
night or day club, or which are accessible to patrons of
said establishments by means of a connecting door or
passage.
The burden of petition will be shifted to the consuming
public.
The development of hotels, essential to our tourist
industry, may be restrained considering that a big portion
of hotel earnings comes from food sale. . . .
This bill, H.B. No. 17839, has become Republic Act No.
6110.
Respectfully,
(SGD.) FERDINAND E. MARCOS
[Emphasis ours]
The protestation of the club was denied by the petitioner
who maintains that Section 42 was not entirely vetoed but
merely the words "hotels, motels, resthouses" on the
ground that it might restrain the development of hotels
which is essential to the tourism industry. This in fact was
the position of the House Ways and Means Committee
which reported, to wit:
When Congress decided to split Section 191 into two
parts, one dealing with contractors, and the other dealing
with those who serve food and drinks, the intention was to
classify and to improve. While the Congress expanded the
coverage of both 191 and 191-A, it also provided for
certain exemptions. The veto message seems to object to
certain additions to 191-A. What additions are
objectionables can be gleaned from the reasons given: a
general reason that this sort of tax is passed on to the
consuming public, and a particular reason that hotel
developments, so essential to the tourist industry, may be
restrained. These reasons have been taken together in the
interpretations of the veto message and the deletions of
such enterprises as are connected with the tourist industry
has therefore been recommended.
To interpret the veto. message otherwise would result in
the exemption of entities already subject of tax. This would
be absurd. Where the Congress wanted to exempt, it was
so provided in the bill. While the President may veto any
item or items in a revenue bill the constitution does not
give him the power to repeal an existing tax. (2nd
Indorsement dated December 9, 1969, Chairman on Ways
and Means, Sixth Congress of the Republic of the Phil.)
(Exhs. 14, p. 85, B.I.R. rec.). (pp. 20-21, Rollo)
It was by reason of this interpretation of the Committee
that R.A. No. 6110 was published in Volume 66, No. 18, p.
4531 of the Official Gazette (May 4, 1970) in such a way
that Section 191-A was included in the text save for the
words "hotels, motels, resthouses."
As already mentioned, the Court of Tax Appeals, upon
petition by the club, sustained the latter's position
reasoning that the veto message was clear and
unqualified, as in fact it was confirmed three years later,
after much controversy, by the Office of the President,
thus:
Mr. Antero M. Sison, Jr.
San Martin Building, 1564,
A. Mabini, P.O. Box 2288
Manila, Philippines
Dear Sir:
With reference to your letter dated July 14, 1972, we wish
to inform you that Section 42 (which contains Sec. 191-A)
of House Bill No. 17839, now R.A. 6110 was one of the
Sections vetoed by the President in his veto message
dated August 4, 1969, vetoing certain sections of the said
revenue bill.
Very Truly Yours,
(SGD.) IRINEO T. AGUIRRE, JR.
Presidential Staff Assistant
(p. 49, Rollo)
As mentioned earlier, We have already ruled that the
presidential veto referred merely to the inclusion of hotels,
motels and resthouses in the 20% caterer's tax bracket but
not to the whole section. But, as mentioned earlier also,
the CTA opined that the President could not veto words or
phrases in a bill but only an entire item. Obviously, what
the CTA meant by "item" was an entire section. We do not
agree. But even assuming it to be so, it would also be to
petitioner's favor. The ineffectual veto by the President
rendered the whole section 191-A as not having been
vetoed at all and it, therefore, became law as an
unconstitutional veto has no effect, whatsoever. (See
Bolinao Electronics Corp. v. Valeria No. L-20740, June 30,
1964, 11 SCRA 486).
However, We agree with then Solicitor General Estelito
Mendoza and his associates that inclusion of hotels,
motels and resthouses in the 20% caterer's tax bracket
are "items" in themselves within the meaning of Sec.
20(3), Art. VI of the 1935 Constitution which, therefore, the
President has the power to veto. An "item" in a revenue
bill does not refer to an entire section imposing a particular
kind of tax, but rather to the subject of the tax and the tax
rate. In the portion of a revenue bill which actually imposes
a tax, a section identifies the tax and enumerates the
persons liable therefor with the corresponding tax rate. To
construe the word "item" as referring to the whole section
would tie the President's hand in choosing either to
approve the whole section at the expense of also
approving a provision therein which he deems
unacceptable or veto the entire section at the expense of
foregoing the collection of the kind of tax altogether. The
evil which was sought to be prevented in giving the
President the power to disapprove items in a revenue bill
would be perpetrated rendering that power inutile (See
Commonwealth ex rel. Elkin v. Barnett, 199 Pa. 161, 55
LRA 882 [1901]).
ACCORDINGLY, the petition is GRANTED and the
decision of the Court of Tax Appeals in CTA Case No.
2630 is set aside. Section 191-A of RA No. 6110 is valid
and enforceable and, hence, the Manila Golf & Country
Club Inc. is liable for the amount assessed against it.
SO ORDERED.
Narvasa, Cruz and Grio-Aquino, JJ., concur.
Gancayco, J., is on leave.

78. UNIVERSITY OF STO. TOMAS, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, UST
FACULTY UNION, respondents.
Abad, Leao & Associates for petitioner.
Eduardo J. Mario, Jr. for private respondent.

GUTIERREZ, JR., J.:
May a university, pending resolution by the National Labor
Relations Commission (NLRC) of its labor dispute with its
union, comply with a readmission order by granting
substantially equivalent academic assignments, in lieu of
actual reinstatement, to dismissed faculty members?
On June 19, 1989, the University of Sto. Tomas (UST),
through its Board of Trustees, terminated the employment
of all sixteen union officers and directors of respondent
UST Faculty Union on the ground that "in publishing or
causing to be published in Strike Bulletin No. 5 dated
August 4, 1987, the libelous and defamatory attacks
against the Father Rector, (each of them) has committed
the offenses of grave misconduct, serious disrespect to a
superior and conduct unbecoming a faculty member."
(Rollo p. 41)
As a result of the dismissal of said employees, some
faculty members staged mass leaves of absence on June
28, 1989 and several days thereafter, disrupting classes in
all levels at the University. (Rollo, pp. 53, 92)
On July 5, 1989, the faculty union filed a complaint for
illegal dismissal and unfair labor practice with the
Department of Labor and Employment. (Rollo, p. 42)
On July 7, 1989, the labor arbiter, on a prima facie
showing that the termination was causing a serious labor
dispute, certified the matter to the Secretary of Labor and
Employment for a possible suspension of the effects of
termination. (Rollo, p. 51)
Secretary Franklin Drilon subsequently issued an order
dated July 11, 1989, the decretal portion of which reads as
follows:
WHEREFORE, ABOVE PREMISES CONSIDERED, and
in the interest of industrial peace and pursuant to Section
33 (b) of RA 6715, the effects of the termination of Ma.
Melvyn Alamis, Eduardo Marino, Jr., Urbano Agalabia,
Anthony Cura, Norma Collantes, Fulvio Guerrero, Corinta
Barranco, Porfirio Jose Guico, Lily Matias, Rene Sison,
Henedino Brondial, Myrna Hilario, Ronaldo Asuncion,
Nilda Redoblado, Zenaida Burgos, and Milagros Nino are
hereby suspended and management is likewise ordered to
accept them back to work under the same terms and
conditions prevailing prior to their dismissal.
In furtherance of this Order, all faculty members are
directed to immediately report back for work and for
management to accept them back under the same terms
and conditions prevailing prior to the strike.
Labor Arbiter Nieves de Castro is hereby directed to
proceed with the case pending before her and to expedite
the resolution of the same.
Pending resolution, the parties are directed to cease and
desist, from committing any and all acts that might
exacerbate the situation. (Rollo, p. 54)
Petitioner UST filed a motion for reconsideration on July
12, 1989 asking the Secretary of Labor and Employment
to either assume jurisdiction over the present case or
certify it to the National Labor Relations Commission
(NLRC) for compulsory arbitration without suspending the
effects of the termination of the 16 dismissed faculty
members. (Rollo, pp. 55-64)
On July 18, 1989, Secretary Drilon, acting on said motion
for reconsideration, issued another order modifying his
previous order. The dispositive portion of the new order is
quoted below:
WHEREFORE, ABOVE PREMISES CONSIDERED, the
Order dated 11 July 1989 is hereby modified. Accordingly,
this Office hereby certifies the labor dispute to the National
Labor Relations Commission for compulsory arbitration
pursuant to Article 263(g) of the Labor Code, as amended
by Section 27 of RA 6715.
In accordance with the above, the University of Santo
Tomas is hereby ordered to readmit all its faculty
members, including the sixteen (16) union officials, under
the same terms and conditions prevailing prior to the
present dispute.
The NLRC is hereby instructed to immediately call the
parties and expedite the resolution of the dispute.
The directive to the parties to cease and desist from
committing any act that will aggravate the situation is
hereby reiterated. (Rollo, p. 81)
The petitioner filed a motion for clarification dated July 20,
1989 which was subsequently withdrawn. (Rollo, p. 94)
On July 27, 1989, Secretary Drilon issued another order
that contained the following dispositive portion:
WHEREFORE, ABOVE PREMISES CONSIDERED, the
Order dated 18 July 1989 directing the readmission of all
faculty members, including the 16 union officials, under
the same terms and conditions prevailing prior to the
instant dispute is hereby affirmed.
The NLRC is hereby ordered to immediately call the
parties and ensure the implementation of this Order.
No further motion of this and any nature shall be
entertained. (Rollo, p. 103)
The NLRC subsequently caned the parties to a
conference on August 11, 1989 before its Labor Arbiter
Romeo Go. (Rollo, p. 9)
On August 14, 1989, the respondent union filed before the
NLRC a motion to implement the orders of the Honorable
Secretary of Labor and Employment dated July 11, 18 and
27, 1989 and to cite Atty. Joselito Guianan Chan (the
petitioner's in-house counsel) for contempt. (Rollo, p. 104)
The petitioner, on August 25, 1989, filed its opposition to
the private respondent's motion. (Rollo, p. 112)
On September 6, 1989, the NLRC issued a resolution,
which is the subject of this petition for certiorari, set forth
below:
Certified Case No. 0531 IN RE: LABOR DISPUTE at the
University of Santo Tomas. Acting on the Motion to
Implement the Orders of the Honorable Secretary of Labor
and Employment dated July 11, 18, and 27, 1989 and to
cite Joselito Guianan Chan for Contempt dated August 14,
1989 and the Urgent Ex-parte Motion to Implement
Certification Orders of the Honorable Secretary of Labor
and Employment dated July 18 and 17, (Sic) 1989 and the
subsequent Manifestation dated September 4, 1989, all
filed by the UST Faculty Union; and considering the
Opposition to Union's Motion to Cite Atty. Joselito Guianan
Chan for Contempt and Comments on its Motion to
Implement the Orders of the Honorable Secretary of Labor
and Employment dated July 11, 18 and 27, 1989 filed on
August 25, 1989 by UST through its counsel, the
Commission, after deliberation, resolved, to wit:
a) The University is hereby directed to comply and
faithfully abide with the July 11, 18 and 27, 1989 Orders of
the Secretary of Labor and Employment by immediately
reinstating or readmitting the following faculty members
under the same terms and conditions prevailing prior to
the present dispute or merely reinstate them in the payroll:
a) Ronaldo Asuncion
b) Lily Matias
c) Nilda Redoblado
d) Zenaida Burgos
e) Eduardo Marino, Jr.
f) Milagros Nino
g) Porfirio Guico
b) To fully reinstate, by giving him additional units or
through payroll reinstatement, Prof. Urbano Agalabia who
was assigned only six (6) units;
c) To fully reinstate or reinstate through payroll, Prof.
Fulvio Guerrero, who was assigned only three (3) units;
d) The University is directed to pay the above-mentioned
faculty members full backwages starting from July 13,
1989, the date the faculty members presented themselves
for reinstatement up to the date of actual reinstatement or
payroll reinstatement.
e) The payroll reinstatement of the above-named faculty
members is hereby allowed only up to the end of the First
semester 1989; Next semester, the University is directed
to actually reinstate the faculty members by giving them
their normal teaching loads;
f) The University is directed to cease and desist from
offering the aforementioned faculty members substantially
equivalent academic assignments as this is not
compliance in good faith with the Orders of the Secretary
of Labor and Employment. (Rollo, pp. 30-31)
Acting on an urgent motion for the issuance of a writ of
preliminary injunction and/or restraining order, the Court
resolved to issue a temporary restraining order dated
October 25, 1989 enjoining respondents from enforcing or
executing the assailed NLRC resolution. (Rollo, p. 160)
The petitioner assigns the following errors:
I
THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION (NLRC) GRAVELY ABUSED ITS
DISCRETION IN A MANNER AMOUNTING TO LACK OR
EXCESS OF JURISDICTION WHEN IT ISSUED THE
ASSAILED RESOLUTION WHICH ORDERS THE
ALTERNATIVE REMEDIES OF ACTUAL
REINSTATEMENT OR PAYROLL REINSTATEMENT OF
THE DISMISSED FACULTY MEMBERS.
II
THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION GRAVELY ABUSED ITS DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT DIRECTED THE UNIVERSITY TO PAY SOME
OF THE DISMISSED FACULTY MEMBERS ASSIGNED
TO HANDLE SUBSTANTIALLY EQUIVALENT
ACADEMIC ASSIGNMENTS, 'FULL BACKWAGES
STARTING FROM JULY 13, 1989, THE DATE THE
FACULTY MEMBERS PRESENTED THEMSELVES FOR
REINSTATEMENT UP TO THE DATE OF ACTUAL
REINSTATEMENT OR PAYROLL REINSTATEMENT.
III
THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNT ING TO LACK OR EXCESS OF
JURISDICTION WHEN IT CONSIDERED AS 'NOT
COMPLIANCE IN GOOD FAITH WITH THE ORDERS OF
THE SECRETARY OF LABOR AND EMPLOYMENT' THE
UNIVERSITY'S ACT OF GRANTING TO SOME OF THE
DISMISSED FACULTY MEMBERS, SUBSTANTIALLY
EQUIVALENT ACADEMIC ASSIGNMENTS.
IV
THE HONORABLE NLRC GRAVELY ABUSED ITS
DISCRETION WHEN IT ARROGATED UPON ITSELF
THE EXERCISE OF THE RIGHT AND PREROGATIVES
REPOSED BY LAW TO THE PETITIONER UNIVERSITY
IN THE LATTER'S CAPACITY AS EMPLOYER. (Rollo,
pp. 9-10)
We shall deal with the first and third assignment of errors
jointly because they are interrelated.
The petitioner states in its petition that: a) It has already
actually reinstated six of the dismissed faculty members,
namely: Professors Alamis, Collantes, Hilario, Barranco,
Brondial and Cura; b) As to Professors Agalabia and
Guerrero, whose teaching assignments were partially
taken over by new faculty members, they were given back
their remaining teaching loads (not taken by new faculty
members) but were likewise given substantially equivalent
academic assignments corresponding to their teachings
loads already taken over by new faculty members; c) The
remaining seven faculty members, to wit: Professors
Asuncion, Marino Jr., Matias, Redoblado, Burgos, Nino
and Guico, were given substantially equivalent academic
assignments in lieu of actual teaching loads because all of
their teaching loads originally assigned to them at the start
of the first semester of school year 1989-1990 were
already taken over by new faculty members; d) One
dismissed faculty member Rene Sison, had been "absent
without official leave" or AWOL as early as the start of the
first semester. (Rollo, pp. 11-12).
The petitioner advances the argument that its grant of
substantially equivalent academic assignments to some of
the dismissed faculty members, instead of actual
reinstatement, is well-supported by just and valid reasons.
It alleges that actual reinstatement of the dismissed faculty
members whose teaching assignments were previously
taken over by new faculty members is not feasible nor
practicable since this would compel the petitioner
university to violate and terminate its contracts with the
faculty members who were assigned to and had actually
taken over the courses. The petitioner submits that it was
never the intention of the Secretary of Labor to force it to
break employment contracts considering that those
ordered temporarily reinstated could very well be
accommodated with substantially equivalent academic
assignments without loss in rank, pay or privilege.
Likewise, it claims that to change the faculty member
when the semester is about to end would seriously impair
and prejudice the welfare and interest of the students
because dislocation, confusion and loss in momentum, if
not demoralization, will surely ensue once the change in
faculty is effected. (Rollo, pp. 13-14)
The petitioner also avers that the faculty members who
were given substantially equivalent academic assignments
were told by their respective deans to report to the Office
of Academic Affairs and Research for their academic
assignments but the said faculty members failed to comply
with these instructions. (Rollo, p. 118) Thus, the petitioner
postulates, mere payroll reinstatement which would give
rise to the obligation of the University to pay these faculty
members, even if the latter are not working, would
squarely run counter to the principle of "No Work, No Pay".
(Rollo, p. 15)
The respondent UST Faculty Union, on the other hand,
decries that the petitioner is using the supposed
substantially equivalent academic assignments as a
vehicle to embarrass and degrade the union leaders and
that the refusal of the petitioner to comply with the return-
to-work order is calculated to deter, impede and
discourage the union leaders from pursuing their union
activities. (Rollo, pp. 246, 254)
It also claims that the dismissed faculty members were
hired to perform teaching functions and, indeed, they have
rendered dedicated teaching service to the University
students for periods ranging from 12 to 39 years. Hence,
they maintain, their qualifications are fitted for classroom
activities and the assignment to them of non-teaching
duties, such as (a) book analysis; (b) syllabi-making or
revising; (c) test questions construction; (d) writing of
monographs and modules for students' use in learning
"hard to understand" topics on the lectures; (e) designing
modules, transparencies, charts, diagrams for students'
use as learning aids; and (f) other related assignments, is
oppressive. (Rollo, pp. 243-244)
In resolving the contentions of both parties, this Court
refers to Article 263 (g), first paragraph, of the Labor
Code, as amended by Section 27 of Republic Act No.
6715, which provides:
(g) When, in his opinion, there exists a labor dispute
causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary of
Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such assumption
or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as
specified in the assumption or certification order. If one
has already taken place at the time of assumption or
certification, all striking or locked out employees shall
immediately return to work and the employer shall
immediately resume operations and readmit all workers
under the same terms and conditions prevailing before the
strike or lockout. The Secretary of Labor and Employment
or the Commission may seek the assistance of law
enforcement agencies to ensure compliance with this
provision as well as with such orders as he may issue to
enforce the same. (Emphasis supplied.)
It was in compliance with the above provision that
Secretary Drilon issued his July 18, 1989 order to "readmit
all its faculty members, including the sixteen (16) union
officials, under the same terms and conditions prevailing
prior to the present dispute." (Rollo, p. 81) And rightly so,
since the labor controversy which brought about a
temporary stoppage of classes in a university populated
by approximately 40,000 students affected national
interest.
After the petitioner filed a motion for clarification which,
however, was subsequently withdrawn, Secretary Drilon
issued another order dated July 27, 1989 affirming his July
18 order and directing the NLRC to immediately call the
parties and "ensure the implementation of this order"
(Rollo, p. 103)
The NLRC was thereby charged with the task of
implementing a valid return-to-work order of the Secretary
of Labor. As the implementing body, its authority did not
include the power to amend the Secretary's order. Since
the Secretary's July 18 order specifically provided that the
dismissed faculty members shall be readmitted under the
same terms and conditions prevailing prior to the present
dispute, the NLRC should have directed the actual
reinstatement of the concerned faculty members. It
therefore erred in granting the alternative remedy of
payroll reinstatement which, as it turned, only resulted in
confusion. The remedy of payroll reinstatement is nowhere
to be found in the orders of the Secretary of Labor and
hence it should not have been imposed by the public
respondent NLRC. There is no showing that the facts
called for this type of alternative remedy.
For the same reason, we rule that the grant of
substantially equivalent academic assignments can not be
sustained. Clearly, the giving of substantially equivalent
academic assignments, without actual teaching loads,
cannot be considered a reinstatement under the same
terms and conditions prevailing before the strike. Within
the context of Article 263(g), the phrase "under the same
terms and conditions" contemplates actual reinstatement
or the return of actual teaching loads to the dismissed
faculty members. There are academic assignments such
as the research and writing of treatises for publication or
full-time laboratory work leading to exciting discoveries
which professors yearn for as badges of honor and
achievement. The assignments given to the reinstated
faculty members do not fall under such desirable
categories.
Article 263(g) was devised to maintain the status quo
between the workers and management in a labor dispute
causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, pending
adjudication of the controversy. This is precisely why the
Secretary of Labor, in his July 11, 1989 order, stated that
"Pending resolution, the parties are directed to cease and
desist from committing any and all acts that might
exacerbate the situation." (Rollo, p. 54) And in his order of
July 18, he decreed that "The directive to the parties to
cease and desist from committing any act that will
aggravate the situation is hereby reiterated." (Rollo, p. 81)
The grant of substantially equivalent academic
assignments of the nature assigned by the petitioner
would evidently alter the existing status quo since the
temporarily reinstated teachers will not be given their
usual teaching loads. In fact, the grant thereof aggravated
the present dispute since the teachers who were assigned
substantially equivalent academic assignments refused to
accept and handle what they felt were degrading or
unbecoming assignments, in turn prompting the petitioner
University to withhold their salaries. (Rollo, p. 109)
We therefore hold that the public respondent NLRC did
not commit grave abuse of discretion when it ruled that the
petitioner should "cease and desist from offering the
aforementioned faculty members substantially equivalent
academic assignments as this is not compliance in good
faith with the order of the Secretary of Labor and
Employment."
It was error for the NLRC to order the alternative remedies
of payroll reinstatement or actual reinstatement. However,
the order did not amount to grave abuse of discretion.
Such error is merely an error of judgment which is not
correctible by a special civil action for certiorari. The NLRC
was only trying its best to work out a satisfactory ad hoc
solution to a festering and serious problem. In the light of
our rulings on the impropriety of the substantially
equivalent academic assignments and the need to defer
the changes of teachers until the end of the first semester,
the payroll reinstatement will actually minimize the
petitioners problems in the payment of full backwages.
As to the second assignment of error, the petitioner
contends that the NLRC committed grave abuse of
discretion in awarding backwages from July 13, 1989, the
date the faculty members presented themselves for work,
up to the date of actual reinstatement, arguing that the
motion for reconsideration seasonably filed by the
petitioner had effectively stayed the Secretary's order
dated July 11, 1989.
The petitioner's stand is unmeritorious. A return-to-work
order is immediately effective and executory despite the
filing of a motion for reconsideration by the petitioner. As
pointed out by the Court in Philippine Air Lines Employees
Association (PALEA) v. Philippine Air Lines, Inc. (38
SCRA 372 [1971]):
The very nature of a return-to-work order issued in a
certified case lends itself to no other construction. The
certification attests to the urgency of the matter affecting
as it does an industry indispensable to the national
interest. The order is issued in the exercise of the court's
compulsory power of arbitration, and therefore must be
obeyed until set aside. To say that its effectivity must wait
affirmance in a motion for reconsideration is not only to
emasculate it but indeed to defeat its import, for by then
the deadline fixed for the return-to-work would, in the
ordinary course, have already passed and hence can no
longer be affirmed insofar as the time element is
concerned.
Additionally, although the Secretary's order of July 11 was
modified by the July 18 order, the return-to-work portion of
the earlier order which states that "the faculty members
should be admitted under the same terms and conditions
prevailing prior to the dispute" was affirmed.
We likewise affirm the NLRC's finding that the dismissed
teachers presented themselves for reinstatement on July
13, 1989 since the factual findings of quasi-judicial
agencies like the NLRC are generally accorded not only
respect but even finality if such findings are supported by
substantial evidence. (Mamerto v. Inciong, 118 SCRA 265
[1982]; Baby Bus, Inc. v. Minister of Labor, 158 SCRA 221
[1988]; Packaging Products Corporation v. National Labor
Relations Commission, 152 SCRA 210 [1987]; Talisay
Employees' and Laborers Association (TELA) v. Court of
Industrial Relations, 143 SCRA 213 [1986]). There is no
showing that such substantial evidence is not present.
The petitioner, however, stresses that since the faculty
members who were given substantially equivalent
academic assignments did not perform their assigned
tasks, then they are not entitled to backwages. (Rollo, p.
19) The petitioner is wrong. The reinstated faculty
members' refusal to assume their substantially equivalent
academic assignments does not contravene the
Secretary's return-to-work order. They were merely
insisting on being given actual teaching loads, on the
return-to-work order being followed. We find their
persistence justified as they are rightfully and legally
entitled to actual reinstatement. Since the petitioner
University failed to comply with the Secretary's order of
actual reinstatement, we adjudge that the NLRC's award
of backwages until actual reinstatement is correct.
With respect to the fourth assignment of error, the
petitioner expostulates that as employer, it has the sole
and exclusive right and prerogative to determine the
nature and kind of work of its employees and to control
and manage its own operations. Thus, it objects to the
NLRC's act of substituting its judgment for that of the
petitioner in the conduct of its affairs and operations.
(Rollo, pp. 23-24)
Again, we cannot sustain the petitioner's contention. The
hiring, firing, transfer, demotion and promotion of
employees are traditionally Identified as management
prerogatives. However, these are not absolute
prerogatives. They are subject to limitations found in law,
a collective bargaining agreement, or general principles of
fair play and justice. (Abbott Laboratories [Phil.] Inc. v.
NLRC, 154 SCRA 713 [1987])
Article 263(g) is one such limitation provided by law. To
the extent that Art. 263(g) calls for the admission of all
workers under the same terms and conditions prevailing
before the strike, the petitioner University is restricted from
exercising its generally unbounded right to transfer or
reassign its employees. The public respondent NLRC is
not substituting its own judgment for that of the petitioner
in the conduct of its own affairs and operations; it is merely
complying with the mandate of the law.
The petitioner manifests the fear that if the temporarily
reinstated faculty members will be allowed to handle
actual teaching assignments in the classroom, the latter
would take advantage of the situation by making the
classroom the forum not for the purpose of imparting
knowledge to the students but for the purpose of assailing
and lambasting the administration. (Rollo, p. 330) There
may be a basis for such a fear. We can even state that
such concern is not entirely unfounded nor farfetched.
However, such a fear is speculative and does not warrant
a deviation from the principle that the dismissed faculty
members must be actually reinstated pending resolution of
the labor dispute. Unpleasant situations are sometimes
aftermaths of bitter labor disputes. It is the function of
Government to fairly apply the law and thereby minimize
the dispute's harmful effects. It is in this light that the
return to work order should be viewed and obeyed.
One thing has not escaped this Court's attention.
Professors Alamis, Cura, Collantes, Barranco, Brondial
and Hilario were already reinstated by the petitioner in
compliance with the Secretary's return-to-work order.
Knowing this to be a fact, the NLRC, in its assailed
resolution, dealt only with the fate of the remaining faculty
members who were given substantially equivalent
academic assignments. The names of the aforementioned
faculty members appear nowhere in the disputed NLRC
order. Inasmuch as these faculty members actually
reinstated were not covered by the NLRC resolution, then
it follows that they were likewise not covered by the
Court's temporary restraining order enjoining respondents
from enforcing or executing the NLRC resolution. The
effects of the temporary restraining order did not extend to
them. Yet, after the Court issued the temporary restraining
order, the petitioner lost no time in recalling their actual
teaching assignments and giving them, together with the
rest of the dismissed faculty members, substantially
equivalent academic assignments.
The petitioner's dogmatic insistence in issuing
substantially equivalent academic assignments stems
from the fact that the teaching loads of the dismissed
professors have already been assigned to other faculty
members. It wants us to accept this remedy as one
resorted to in good faith. And yet, the petitioner's
employment of the temporary restraining order as a
pretext to enable it to substitute substantially equivalent
academic assignments even for those who were earlier
already reinstated to their actual teaching loads runs
counter to the dictates of fair play.
With respect to the private respondent's allegation of union
busting by the petitioner, we do not at this time pass upon
this issue. Its determination falls within the competence of
the NLRC, as compulsory arbitrator, before whom the
labor dispute is under consideration. We are merely called
upon to decide the propriety of the petitioner University's
grant of substantially equivalent academic assignments
pending resolution of the complaint for unfair labor pratice
and illegal dismissal filed by the private respondent.
Although we pronounce that the dismissed faculty
members must be actually reinstated while the labor
dispute is being resolved, we have to take into account the
fact that at this time, the first semester for schoolyear
1990-1991 is about to end. To change the faculty
members around the time of final examinations would
adversely affect and prejudice the students whose welfare
and interest we consider to be of primordial importance
and for whom both the University and the faculty union
must subordinate their claims and desires. This Court
therefore resolves that the actual reinstatement of the non-
reinstated faculty members, pending resolution of the
labor controversy before the NLRC, may take effect at the
start of the second semester of the schoolyear 1990-1991
but not later. With this arrangement, the petitioner's
reasoning that it will be violating contracts with the faculty
members who took over the dismissed professors'
teaching loads becomes moot considering that, as it
alleges in its petition, it operates on a semestral basis.
Under the principle that no appointments can be made to
fill items which are not yet lawfully vacant, the contracts of
new professors cannot prevail over the right to
reinstatement of the dismissed personnel. However, we
apply equitable principles for the sake of the students and
order actual reinstatement at the start of the second
semester.
WHEREFORE, the petition is hereby DISMISSED.
However, the NLRC resolution dated September 6, 1989
is MODIFIED and the petitioner University of Sto. Tomas
is directed to temporarily reinstate, pending and without
prejudice to the outcome of the labor dispute before the
National Labor Relations Commission, the sixteen (16)
dismissed faculty members to their actual teaching
assignments, at the start of the second semester of the
schoolyear 1990-1991. Prior to their temporary
reinstatement to their actual teaching loads, the said
faculty members shall be entitled to fall wages,
backwages, and other benefits. The Temporary
Restraining Order dated October 25, 1989 is hereby
LIFTED.
SO ORDERED.
Fernan, C.J., (Chairman), Bidin and Cortes, JJ., concur.
Feliciano, J., is on leave.

79. A.M. ORETA & CO., INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
SIXTO GRULLA JR., respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner

MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 of the Rules
of Court seeking annulment of the resolution of the
respondents National Labor Relations Commission dated
January 17, 1986 (p. 24, rollo) in BES Case no. 8-1371
entitled , "SIXTO GRULLA, JR., Complainant, versus A.M.
ORETA & COMPANY INC. and/or ENGINEERING
CONSTRUCTION & INDUSTRIAL DEVELOPMENT CO.
(ENDECO), Respondents", affirming the decision of the
Philippine Overseas Employment Administration (POEA)
awarding to private respondents herein Sixto Grulla the
salaries corresponding to the unexpired portion of his
employment contract.
The antecedent facts are as follows:
Private respondent Grulla was engaged by Engineering
Construction and Industrial Development Company
(ENDECO) through A.M. Oreta and Co., Inc., as a
carpenter in its projects in Jeddah, Saudi Arabia. The
contract of employment, which was entered into June 11,
1980 was for a period of twelve (12) months. Respondent
Grulla left the Philippines for Jeddah, Saudi Arabia on
August 5, 1980.
On August 15, 1980, Grulla met an accident which
fractured his lumbar vertebra while working at the jobsite.
He was rushed to the New Jeddah Clinic and was
confined there for twelve (12) days. On August 27, 1980,
Grulla was discharged from the hospital and was told that
he could resume his normal duties after undergoing
physical therapy for two weeks.
On September 18, 1980, respondent Grulla reported back
to his Project Manager and presented to the latter a
medical certificate declaring the former already fit for work.
Since then, he started working again until he received a
notice of termination of his employment on October 9,
1980.
In December, 1981, respondent Grulla filed a complaint for
illegal dismissal, recovery of medical benefits, unpaid
wages for the unexpired ten (10) months of his contract
and the sum of P1,000.00 as reimbursement of medical
expenses against A.M. Oreta and Company, Inc., and
Engineering Construction and Industrial Development Co.
(ENDECO) with the Philippine Overseas Employment
Administration (POEA).lwph1.t
The petitioner A.M. Oreta and Company, Inc and
ENDECO filed their answer and alleged that the contract
of employment entered into between petitioners and Grulla
provides, as one of the grounds for termination, violations
of the rules and regulations promulgated by the contractor;
and that Grulla was dismissed because he has not
performed his duties satisfactorally within the probationary
period of three months.
On August 8, 1985, the POEA rendered a decision (pp.
97-107, Rollo) the dispositive portion of which states, inter
alia:
In view of the foregoing, this Office finds and so holds that
complainants dismissal was illegal and warrants the award
of his wages for the unexpired portion of the contract.
2. Anent the complainant's claim for medical expenses,
this Office finds the same well-taken. Respondent did not
deny either specifically or generally said claim. Hence, it is
deemed admitted.
Wherefore, judgment is hereby rendered ordering
repondents A.M. Oreta and Company, Inc , and its foreign
principal Engineering Construction and Industrial
Development Company (ENDECO) jointly and severally to
pay the complainant within ten (10) days from receipt of
this Order the sum of THREE THOUSAND SEVEN
HUNDRED U.S. DOLLARS (U.S.$ 3,700.00) or its
equivalent at the time of payment representing
complainant's salaries for the unexpired portion of his
contract for ten (10) months and the sum of ONE
THOUSAND PESOS ( P1,00.00 ) representing
reimbursement of medical expenses.
Respondent is likewise ordered to pay attorney's fees
equivalent to ten (10%) percent of total award
SO ORDERED.
Petitioner appealed from the adverse decision to
respondent Commission. On January 17, 1986,
respondent Commission dismissed the appeal for lack of
merit and affirmed in toto the decision of the POEA.
On April 1, 1986, the instant petition was filed on the
ground that the respondent Commission commited grave
abuse of discretion in affirming the decision of the POEA.
A temporary restraining order was issued by this court on
April 23, 1986, enjoining the respondents from enforcing
the questioned resolution of the respondent Commission.
The issue to be resolved in the instant case are whether or
not the employment of respondent Grulla was illegaly
terminated by the petitioner; and whether or not the
respondent Grulla is entitled to salaries corresponding to
the unexpired portion of his employment contract.
Petitioner contends that the respondent Grulla was validly
dismissed because the latter was still a probationary
employee; and that his dismissal was justified on the basis
of his unsatisfactory performance of his job during the
probationary period. This contention has no merit.
Article 280 (formerly Article 281) of the Labor Code, as
amended, provides:
Article 280. Regular and Casual Employment The
provisions of written agreement to the contrary not
withstanding and regardless of the oral agreements of the
parties, an employment shall be deemed to be regular
where the employee has been engaged to perform
activities which are usually necessary or desireable in the
usual business or trade of employer, except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which has
been determined at the time of engagement of the
employment or where the work or service to be performed
is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph:Provided, that any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity
in which he is employed and his employment shall
continue while such actually exists.
It may be well to cite at this point Policy Instructions No.
12 of the then Minister of Labor (Now Secretary of Labor
and Employment) which provides:
PD 850 has defined the concept of regular and casual
employment. What determines regularity or casualness is
not employment contract, written or otherwise, but the
nature of the job. If the job is usually necessary or
desireable to the main business of the employer, the
employment is regular. . .
Petitioner admitted that respondent Grulla was employed
in the company as carpenter for a period of twelve (12)
months before he was dismissed on October 9, 1980. A
perusal of the employment contract reveals that although
the period of employment of respondent Grulla is twelve
(12) months, the contract is renewable subject to future
agreements of the parties. It is clear from the employment
contract that the respondent Grulla was hired by the
company as a regular employee and not just mere
probationary employee.
On the matter of probationary employment, the law in
point is Article 281 (formerly 282) of the Labor Code which
provides in part:
Art. 281 Probationary Employment . . .The services of an
employee who has been engaged on a probationary basis
may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with
reasonable standards made known by the employer to the
employee at the time of engagement. An employee who is
allowed to work after a probationary period shall be
considered a regular employee. (Italics supplied)
The law is clear to the effect that in all cases involving
employees engaged on probationary period basis, the
employer shall make known to the employee at the time
he is hired, the standards by which he will qualify as a
regular employee. Nowhere in the employment contract
executed between petitioner company and respondent
Grulla is there a stipulation that the latter shall undergo a
probationary period for three months before he can qualify
as a regular employee. There is also no evidence on
record showing that the respondent Grulla has been
appraised of his probationary status and the requirements
which he should comply in order to be a regular employee.
In the absence of this requisites, there is justification in
concluding that respondent Grulla was a regular employee
at the time he was dismissed by petitioner. As such, he is
entitled to security of tenure during his period of
employment and his services cannot be terminated except
for just and authorized causes enumerated under the
Labor Code and under the employment contract.
Granting, in gratia argumenti, that respondent is a
probationary employee, he cannot, likewise, be removed
except for cause during the period of probation. Although
a probationary or temporary employee has limited tenure,
he still enjoys security of tenure. During his tenure of
employment or before his contract expires, he cannot be
removed except for cause as provided by law (Euro-Linea
Phils., Inc. v. NLRC, No. L-75782, December 1, 1987, 156
SCRA 78; Manila Hotel Corporation v. NLRC, No. L-
53453, January 22, 1986, 141 SCRA 169).lwph1.t
Article 282 of the Labor Code sets forth the following just
causes for which an employer may terminate an
employment, namely:
(a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his
duties;
(c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offense by the employee
against the person of his employer or any immediate
member of his family or his duly authorized representative;
and
(e) other cause analogous to the foregoing
The alleged ground of unsatisfactory performance relied
upon by petitioner for dismissing respondent Grulla is not
one of the just causes for dismissal provided in the Labor
Code. Neither is it included among the grounds for
termination of employment under Article VII of the contract
of employment executed by petitioner company and
respondent Grulla (p. 18, Rollo). Moreover, petitioner has
failed to show proof of the particular acts or omissions
constituting the unsatisfactory performance of Grulla of his
duties, which was allegedly due to his poor physical state
after the accident. Contrary to petitioner's claims, records
show that the medical certificate issued by the hospital
where respondent Grulla was confined as a result of the
accident, clearly and positively stated that Grulla was
already physically fit for work after he was released from
the hospital (p. 102, Rollo).lwph1.t
Anent the respondent Commission's finding of lack of due
process in the dismissal of Grulla, the petitioner claims
that notice and hearing are important only if the employee
is not aware of the problems affecting his employment;
that the same is not true in the instant case where
respondent Grulla knew all along that he could no longer
effectively perform his job due to his physical condition.
We find that this contention has no legal basis.
The twin requirements of notice and hearing constitute
essential elements of due process in cases of employee
dismissal: the requirement of notice is intended to inform
the employee concerned of the employer's intent to
dismiss and the reason for the proposed dismissal, while
the requirement of hearing affords the employee an
opportunity to answer his employer's charges against him
and accordingly to defend himself therefrom before
dismissal is effected. Neither of these requirements can be
dispensed with without running afoul of the due process
requirement of the Constitution (Century Textile Mills, Inc.,
et al. v. NLRC, et al., G.R. No. 77859, May 25,1988).
In the case at bar, respondent Grulla was not, in any
manner, notified of the charges against him before he was
outrightly dismissed. Neither was any hearing or
investigation conducted by the company to give the
respondent a chance to be heard concerning the alleged
unsatisfactory performance of his work.
In view of the foregoing, the dismissal of respondent
Grulla violated the security of tenure under the contract of
employment which specifically provides that the contract
term shall be for a period of twelve (12) calendar months.
Consequently the respondent Grulla should be paid his
salary for the unexpired portion of his contract of
employment which is ten (10) months (See Cuales v.
NLRC, et al., No. L-57379 April 28, 1983, 121 SCRA 812).
The findings of the POEA and the respondent Commission
that the respondent Grulla is entitled to salaries in the
amount of US$ 3,700.00 or its equivalent in Philippine
currency for the unexpired portion of his contract and the
sum of P1,000.00 as reimbursement of medical expenses
bear great weight. Well-established is the principle that
findings of administrative agencies which have acquired
expertise because their jurisdiction is confined to specific
matters are generally accorded not only respect but even
finality. Judicial review by this Court on labor cases does
not go so far as to evaluate the sufficiency of the evidence
upon which the labor officer or office based his or its
determination but are limited to issues of jurisdiction or
grave abuse of discretion (Special Events and Central
Shipping Office Workers Union v. San Miguel Corporation,
Nos. L-51002-06, May 30, 1983, 122 SCRA 557). In the
instant case, the assailed Resolution of the respondent
Commission is not tainted with arbitrariness that would
amount to grave abuse of discretion or lack of jurisdiction
and therefore, We find no reason to disturb the same.
ACCORDINGLY, premises considered, the instant petition
is dismissed for lack of merit and the resolution of the
respondent Commission dated January 17, 1986 is hereby
AFFIRMED. The temporary restraining order issued on
April 23, 1986 is lifted.
SO ORDERED.
Narvasa, Cruz, Gancayco and Gri;o-Aquino, JJ., concur.

80. FR. PEDRO ESCUDERO, O.P. JOSEFINA AGUILAR
and UNIVERSITY OF SANTO TOMAS, petitioners,
vs.
OFFICE OF THE PRESIDENT OF THE PHILIPPINES and
CARMELITA B. REYES, respondents.
Augusta K Aligada Jr. for petitioners.
The Solicitor General for public respondent.
Bonifacio R. Reyes, Jr. for private respondent.

CORTES, J.:
This special civil action for certiorari stemmed from a
complaint for reinstatement and backwages filed by
private respondent Carmelita B. Reyes against the
petitioners University of Santo Tomas (UST), Friar Pedro
Escudero and Josefina Aguilar, the Assistant Regent and
Principal, respectively, of the Elementary School
Department of UST.
Carmelita B. Reyes was appointed by petitioner UST on
June 17, 1972 as a teacher with a "probationary rank" in
the latter's Elementary School Department," "with all the
duties, rights and privileges appertaining thereto in
accordance with the Statutes and Faculty Code of the
University and other existing rules and regulations" [Rollo,
p. 7.] This appointment expressly provided that it was to
take effect on July 5, 1972 and will terminate at the end of
the 1972-1973 school year.
On June 7,1973, Reyes's appointment was renewed
effective on June 4, 1973 and to terminate at the end of
the school year 1973-1974. Her appointment was again
renewed on April 2, 1974, to take effect on June 3, 1974
and to terminate at the end of schoolyear 1974-1975.
There was no mention in these two renewals whether her
appointment was permanent or still probationary.
On February 7,1975, private respondent Reyes received
from petitioners a notice of termination of her services,
advising her that she filed not be given a new contract of
appointment for the ensuing schoolyear. Claiming that she
was illegally terminated she filed on February 14, 1975 a
complaint for reinstatement with backwages with Regional
Office No. IV of the Department of Labor.
On November 13,1975, Labor Arbiter Ricarte T. Soriano
rendered a decision upholding the termination of Reyes
but ordering petitioner to grant her separation pay,
equivalent to one and one-half months pay. The Labor
Arbiter justified the award in this wise:
xxx xxx xxx
Although the respondents have shown by overwhelming
evidence to the satisfaction of the undersigned that the
dismissal was justified, hence, reinstatement of the
complainant is unwarranted, the undersigned Arbiter finds
it rather still reasonable to order respondents to pay
complainant one- half month pay for every year of service.
The same is in line with the goals of the Labor Code to be
more sympathetic to the cause of the laborers. [Rollo, p.
68.]
From this decision of the Labor Arbiter, both parties
appealed to the National Labor Relations Commission
(NLRC). The NLRC however found no valid cause for the
termination and ordered petitioners to reinstate Reyes to
her former position with full backwages from the time her
services were terminated on February 7,1975 up to her
actual reinstatement without loss of seniority rights and
other benefits appertaining thereto.
On appeal to the Secretary of Labor, the then Acting
Secretary of Labor, Amado G. Inciong, issued an Order
dated November 22,1977 modifying the NLRC decision by
deleting the order for the reinstatement of Reyes and
ordering petitioners to instead pay her separation pay
equivalent to one-half month salary for every year of
service.
Private respondent appealed to the Office of the President
and on May 27, 1980, the Office of the President rendered
a decision reversing that of the Acting Secretary of Labor,
the decretal portion of which reads:
In view of the foregoing, respondents-appellees should
reinstate complainant-appellant Carmelita B. Reyes to her
former position with full back wages from the time her
services were terminated on February 7, 1975 up to her
actual reinstatement, without loss of seniority rights, as
well as to other pertinent benefits. [Rollo, p. 36.]
Hence, petitioner filed the instant special civil action for
certiorari seeking to annul the decision of the respondent
Office of the President on the principal ground that the
private respondent Reyes has not been illegally
terminated and therefore, the order for her reinstatement
with full backwages had no legal basis.
The pivotal issue in this case is whether grave abuse of
discretion can be attributed to the respondent Office of the
President in holding that private respondent Reyes was
dismissed illegally.
Petitioners maintain that Reyes' last appointment was one
with a fixed period; i.e., from June 3, 1974 until the end of
the 1974-1975 school year, hence her employment was
not covered by then Article 318 * of the Labor Code
prohibiting dismissals without any just cause. Petitioners
assert that Reyes' appointment terminates upon expiration
of the period fixed therein such that when Reyes was sent
a notice of the termination of her services as of the end of
the 1974-1975 schoolyear, petitioners were merely
enforcing the provisions of her last appointment.
Moreover, Reyes' employment was subject as well to the
UST Faculty Code which prescribes a three-year
probationary period in accordance with the 1970 Manual
of Regulations for Private Schools. That Code requires a
third renewal of the annual appointment in order that a
teacher may be considered permanent, thus:
xxx xxx xxx
The provisions of Sections 3 and 4 notwithstanding,
faculty members who have rendered three consecutive
years (six semesters) of satisfactory service on full time
basis as determined by the pertinent rules of the
University and of the Bureau of Private Schools shall
be considered permanent upon the third renewal of their
annual appointment, ...
xxx xxx xxx
[Rollo, p. 16.]
Petitioners maintain that Reyes failed to render three
consecutive years of satisfactory service [Rollo, pp. 16-
17,] as shown by her poor efficiency rating found
established by the Labor Arbiter, and that it is the third
renewal of the appointment of Reyes which is the
operative act that will confer her a permanent status.
Since her appointment was not renewed for the third time,
petitioners insist that she has not attained permanent
status [Rollo, p. 171].
There is merit in the petition.
The provisions of the Labor Code, in force at the time the
cause of action of Reyes accrued on February 7, 1975
Villones v. Employees' Compensation Commission, G.R.
No. L-46200, July 30, 1979, 92 SCRA 320], states that
"[t]he 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 to prevent the circumvention of the right of
the employees to be secured in their employment as
provided herein" [Section 320; Emphasis supplied].
Under Section 6, Rule I, Book IV of the Rules
Implementing the Labor Code:
Section 6. Probationary and fixed period employment. -(a)
Where the work for which an employee has been engaged
is learnable or apprenticeable in accordance with the
standards prescribed by the Department of Labor, the
probationary employment period of the employee shall be
limited to the authorized learnership or apprenticeable
period, whichever is applicable.
(b) Where the work is neither learnable nor apprenticeable
the probationary period of employment shall not exceed 6
months from the date the employee actually started
working.
xxx xxx xxx
However, the six-month probationary period prescribed by
the Secretary of Labor is merely the general rule. The
recognized exceptions to this rule, as further set forth in
Policy Instructions No. 11 issued by the Secretary of Labor
on April 23, 1976, are:
xxx xxx xxx
Probationary employment has been the subject of
misunderstanding in some quarters. Some people believe
six (6) months is the probationary period in all cases. On
the other hand, employees who have already served the
probationary period are sometimes required to serve again
on probation.
Under the Labor Code, six (6) months is the general
probationary period, but the probationary period is actually
the period needed to determine fitness for the job. This
period, for lack of a better measurement, is deemed to be
the period needed to learn the job.
Thus, if the job is apprenticeable, then the probationary
period is the apprenticeship period, which may be six (6)
months, less than six (6) months, or more than six (6)
months, depending upon the nature of the job. Therefore,
upon graduation an apprentice may not be put under
probationary employment in the company in which he
trained. In another company, however, the probationary
period for him would be six (6) months. The reason is to
allow the employer to test his working habits and other
personal traits with respect to his fitness for regularization
in the company. If the job is learnable-can be learned
within three months-then the probationary period is three
months or less. The learner upon completion of the
learning period must be considered regular.
The probationary employment of professors, instructors
and teachers shall be subject to standards established by
the Department of Education and Culture.
xxx xxx xxx
[Rollo, p. 110; Emphasis supplied.]
It is thus clear that the Labor Code authorizes different
probationary periods, according to the requirements of the
particular job. For private school teachers, the period of
probation is governed by the 1970 Manual of Regulations
for Private Schools, adopted by the Department of
Education and Culture pursuant to the provisions of Act
No. 2076, as amended by Act No. 3075 and
Commonwealth Act No. 180. Paragraph 75 of the Manual
provides that "[f]ull-time teachers who have rendered three
consecutive years of satisfactory service shall be
considered permanent," while the preceding paragraph
requires that the employment contracts be in writing with
at least one school-year's duration. That the probationary
period for private school teachers is three years has
already been confirmed by this Court in the recent case
of Labajo v. Alejandro [G.R. No. 80383, September 26,
1988] wherein it was declared:
xxx xxx xxx
The three (3)-year period of service mentioned in
paragraph 75 [of the Manual of Regulations for Private
Schools] is of course the maximum period or upper limit,
so to speak, of probationary employment allowed in the
case of private school teachers. This necessarily implies
that a regular or permanent employment status may,
under certain conditions, be attained in less than three (3)
years. By and large, however, whether or not one has
indeed attained permanent status in one's employment,
before the passage of three (3) years, is a matter of proof.
[at p. 7.]
xxx xxx xxx
The best proof as to whether Reyes had already attained
permanent status, is her contract with petitioner UST. That
contract which was only the second renewal of her original
probationary appointment reads as follows:
April 2,1974
Mrs. Carmelita Reyes
Elementary School Department
University of Santo Tomas
Dear Mrs. Reyes,
Upon recommendation of the Elementary's Council of the
ELEMENTARY SCHOOL DEPARTMENT
I have the pleasure to appoint you
TEACHER
with all the duties, rights and privileges appertaining
thereto in accordance with the Statutes and Faculty Code
of the University and other existing rules and regulations.
This appointment takes effect on June 3,1974 and
terminates at the end of the 1974-1975 school year.
Sincerely,
(signed)
FR. EXCELSIO GARCIA, O.P.
Assistant to the Rector
for Academic Affairs
NON-TENURED
APPOINTMENT
ACCEPTED:
(signed)
CARMELITA B. REYES
DATED: June 3,1974
The above contract reveals two significant points: 1) that
the contract is one with a definite period to start on June 3,
1974 to end at the close of the 1974- 75 schoolyear and 2)
that Reyes' signature appears underneath the words
"NON-TENURED APPOINTMENT ACCEPTED." These
features in the contract indicate that the appointment of
Reyes subsists only for the 1974- 75 schoolyear. That the
contract contained the words "non-tenured appointment
accepted" reveals the non-permanent status of her
employment. Nothing therein states that a permanent
appointment was extended to her nor that UST was
obliged to extend her one upon the expiration of the above
contract.
Moreover no vested right to a permanent appointment had
as yet accrued in her favor since she had not yet
completed the prerequisite three year period necessary for
the acquisition of permanent status, as required both by
the Manual of Regulations for Private Schools and the
UST Faculty Code. That her appointment was only for a
fixed duration is further evinced by the fact that on
February 7, 1975, before the expiration of the
abovementioned contract, Reyes was served a notice that
she may not expect her appointment to be renewed the
next schoolyear and that her probationary employment
was to terminate at the close of the schoolyear 1974-75.
Although Reyes was allowed to complete her term
according to the stipulated period, indeed no new contract
was extended her. Reyes however construed the February
7, 1975 notice as a notice of termination and claims that it
constituted dismissal without just cause and thus filed the
instant case.
Reyes' argument is not persuasive. It loses sight of the
fact that her employment was probationary, contractual in
nature, and one with a definite 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, where the Court in construing a similar
letter sent to private school teachers whose contracts with
San Andres High School were due to expire said:
xxx xxx xxx
Such letter was either a formal reminder to private
respondents that their respective contracts of employment
with petitioners for school year 1984-85 were due to expire
on 31 March 1985, or advance notice that such contracts
would no longer be renewed for school year 1985-86, or
both. [at p. 10.]
As to the question of the existence of just cause to justify
the dismissal, the Court finds applicable here the case
ofBiboso v. Victorias Milling Company, Inc. [G.R. No. L-
44360, March 31, 1977, 76 SCRA 250, (1977).] In that
case, the Court held that while probationary employees
enjoy security of tenure such that they cannot be removed
except for cause as provided by law, such protection
extends only during the period of probation. Once that
period expires, the constitutional protection could no
longer be invoked. This has been reiterated in subsequent
cases [Manila Hotel Corporation v. NLRC, G.R. No.
53453, January 22, 1986, 141 SCRA 169; Euro-Linea,
Phils., Inc. v. National Labor Relations Commission, G.R.
No. 75782, December 1, 1987, 156 SCRA 78; Labajo v.
Alejandro, et al, supra.]
In the instant case, the probation period provided is three
years covered by three separate written annual contracts.
Reyes as a probationary and contractual employee was
entitled to security of tenure only during the three year
period of her probation and such protection ended the
moment her last employment contract expired at the close
of schoolyear 1974-75 and she was not extended a
renewal of her appointment.
The Office of the President therefore gravely abused its
discretion in finding that Reyes was illegally terminated, in
ordering her reinstatement and in awarding her
backwages "from the time her services were terminated on
February 7, 1975 up to her actual reinstatement" [Rollo, p.
36.]
WHEREFORE, the decision of the respondent Office of
the President is hereby SET ASIDE, and the Order of the
Assistant Secretary of Labor dated November 22,1977 is
REINSTATED.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ.,
concur.
81. INTERNATIONAL CATHOLIC MIGRATION
COMMISSION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
BERNADETTE GALANG, respondents.

FERNAN, C.J.:
The issue to be resolved in the instant case is whether or
not an employee who was terminated during the
probationary period of her employment is entitled to her
salary for the unexpired portion of her six-month
probationary employment.
The facts of the case are undisputed.
Petitioner International Catholic Migration Commission
(ICMC), a non-profit organization dedicated to refugee
service at the Philippine Refugee Processing Center in
Morong, Bataan engaged the services of private
respondent Bernadette Galang on January 24, 1983 as a
probationary cultural orientation teacher with a monthly
salary of P2,000.00.
Three (3) months thereafter, or on April 22, 1983, private
respondent was informed, orally and in writing, that her
services were being terminated for her failure to meet the
prescribed standards of petitioner as reflected in the
performance evaluation of her supervisors during the
teacher evaluation program she underwent along with
other newly-hired personnel.
Despite her termination, records show that private
respondent did not leave the ICMC refugee camp at
Morong, Bataan, but instead stayed thereat for a few days
before leaving for Manila, during which time, she was
observed by petitioner to be allegedly acting strangely.
On July 24, 1983, private respondent returned to Morong,
Bataan on board the service bus of petitioner to
accomplish the clearance requirements. In the evening of
that same day, she was found at the Freedom Park of
Morong wet and shivering from the
rain
and acting bizarrely. She was then taken to petitioner's
hospital where she was given the necessary medical
attention.
Two (2) days later, or on July 26, 1983, she was taken to
her residence in Manila aboard petitioner's service bus.
Thru a letter, her father expressed appreciation to
petitioner for taking care of her daughter. On that same
day, her father received, on her behalf, the proportionate
amount of her 13th month pay and the equivalent of her
two week pay.
On August 22, 1983, private respondent filed a
complaint
1
for illegal dismissal, unfair labor practice and
unpaid wages against petitioner with the then Ministry of
Labor and Employment, praying for reinstatement with
backwages, exemplary and moral damages.
On October 8, 1983, after the parties submitted their
respective position papers and other pleadings, Labor
Arbiter Pelagio A. Carpio rendered his decision dismissing
the complaint for illegal dismissal as well as the complaint
for moral and exemplary damages but ordering the
petitioner to pay private respondent the sum of P6,000.00
as payment for the last three (3) months of the agreed
employment period pursuant to her verbal contract of
employment.
2

Both parties appealed the decision to the National Labor
Relations Commission. In her appeal, private respondent
contended that her dismissal was illegal considering that it
was effected without valid cause. On the other hand,
petitioner countered that private respondent who was
employed for a probationary period of three (3) months
could not rightfully be awarded P6,000.00 because her
services were terminated for failure to qualify as a regular
employee in accordance with the reasonable standards
prescribed by her employer.
On August 22, 1985, the NLRC, by a majority vote of
Commissioners Guillermo C. Medina and Gabriel M.
Gatchalian, sustained the decision of the Labor Arbiter
and thus dismissed both appeals for lack of merit.
Commissioner Miguel Varela, on the other hand,
dissented and voted for the reversal of the Labor Arbiter's
decision for lack of legal basis considering that the
termination of services of complainant, now private
respondent, was effected during her probationary period
on valid grounds made known to her.
3

Dissatisfied, petitioner filed the instant petition.
Petitioner maintains that private respondent is not entitled
to the award of salary for the unexpired three-month
portion of the probationary period since her services were
terminated during such period when she failed to qualify
as a regular employee in accordance with the reasonable
standards prescribed by petitioner; that having been
terminated on valid grounds during her probationary
period, or specifically on April 24, 1983, petitioner is not
liable to private respondent for services not rendered
during the unexpired three-month period, otherwise, unjust
enrichment of her part would result; that under Article 282
(now Article 281) of the Labor Code, if the employer finds
that the probationary employees does not meet the
standards of employment set for the position, the
probationary employee may be terminated at any time
within the six-month period, without need of exhausting
raid entire six-month term.
4

The Solicitor General, on the other hand, contends that a
probationary employment for six (6) months, as in the
case of herein private respondent, is an employment for a
definite period of time and, as such, the employer is duty-
bound to allow the probationary employee to work until the
termination of the probationary employment before her re-
employment could be refused; that when petitioner
disrupted the probationary employment of private
respondent, without giving her the opportunity to improve
her method of instruction within the said period, it held
itself liable to pay her salary for the unexpired portion of
such employment by way of damages pursuant to the
general provisions of civil law that he who in any manner
contravenes the terms of his obligation without any valid
cause shall be liable for damages;
5
that, as held
in Madrigal v. Ogilvie, et al,
6
the damages so awarded are
equivalent to her salary for the unexpired portion of her
employment for a fixed period.
7

We find for petitioner.
There is justifiable basis for the reversal of public
respondent's award of salary for the unexpired three-
month portion of private respondent's six-month
probationary employment in the light of its express finding
that there was no illegal dismissal. There is no dispute that
private respondent was terminated during her probationary
period of employment for failure to qualify as a regular
member of petitioner's teaching staff in accordance with its
reasonable standards. Records show that private
respondent was found by petitioner to be deficient in
classroom management, teacher-student relationship and
teaching techniques.
8
Failure to qualify as a regular
employee in accordance with the reasonable standards of
the employer is a just cause for terminating a probationary
employee specifically recognized under Article 282 (now
Article 281) of the Labor Code which provides thus:
ART. 281. 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 employer who has been engaged in a
probationary basis may be terminated for a just cause or
when he fails to qualify as a regular employer in
accordance with reasonable standard made known by the
employer to the employer 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.)
It must be noted that notwithstanding the finding of legality
of the termination of private respondent, public respondent
justified the award of salary for the unexpired portion of
the probationary employment on the ground that a
probationary employment for six (6) months is an
employment for a "definite period" which requires the
employer to exhaust the entire probationary period to give
the employee the opportunity to meet the required
standards.
The legal basis of public respondent is erroneous. A
probationary employee, as understood under Article 282
(now Article 281) of the Labor Code, is one who is on trial
by an employer during which the employer determines
whether or not he is qualified for permanent employment.
A probationary appointment is made to afford the
employer an opportunity to observe the fitness of a
probationer while at work, and to ascertain whether he will
become a proper and efficient employee.
9
The word
"probationary", as used to describe the period of
employment, implies the purpose of the term or period, but
not its length.
10

Being in the nature of a "trial period"
11
the essence of a
probationary period of employment fundamentally lies in
the purpose or objective sought to be attained by both the
employer and the employee during said period. The length
of time is immaterial in determining the correlative rights of
both in dealing with each other during said period. While
the employer, as stated earlier, observes the fitness,
propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment, the
probationer, on the other, seeks to prove to the employer,
that he has the qualifications to meet the reasonable
standards for permanent employment.
It is well settled that the employer has the right or is at
liberty to choose who will be hired and who will be denied
employment. In that sense, it is within the exercise of the
right to select his employees that the employer may set or
fix a probationary period within which the latter may test
and observe the conduct of the former before hiring him
permanently. The equality of right that exists between the
employer and the employee as to the nature of the
probationary employment was aptly emphasized by this
Court in Grand Motor Parts Corporation v. Minister of
Labor, et al., 130 SCRA 436 (1984), citing the 1939 case
of Pampanga Bus. Co., Inc. v. Pambusco Employees
Union, Inc. 68 Phil. 541, thus:
The right of a laborer to sell his labor to such persons as
he may choose is, in its essence, the same as the right of
an employer to purchase labor from any person whom it
chooses. The employer and the employee have thus an
equality of right guaranteed by the Constitution. If the
employer can compel the employee to work against the
latter's will, this is servitude. If the employee can compel
the employer to give him work against the employer's will,
this is oppression.
As the law now stands, Article 281 of the Labor Code
gives ample authority to the employer to terminate a
probationary employee 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. There is nothing
under Article 281 of the Labor Code that would preclude
the employer from extending a regular or a permanent
appointment to an employee once the employer finds that
the employee is qualified for regular employment even
before the expiration of the probationary period.
Conversely, if the purpose sought by the employer is
neither attained nor attainable within the said period,
Article 281 of the Labor Code does not likewise preclude
the employer from terminating the probationary
employment on justifiable causes as in the instant case.
We find unmeritorious, therefore, public respondents
argument that the security of tenure of probationary
employees within the period of their probation, as in the
case of herein private respondent, justified the award of
salary for the unexpired portion of her probationary
employment. The termination of private respondent
predicated on a just cause negates the application in this
case of the pronouncement in the case of Biboso v.
Victories Milling Co., Inc.,
12
on the right of security of
tenure of probationary employees.
Upon inquiry by the then Ministry of Labor and
Employment as a consequence of the illegal dismissal
case filed by private respondent before it, docketed as
Case No. NLRC NCR-8-3786-83, it was found that there
was no illegal dismissal involved in the case, hence, the
circumvention of the rights of the probationary employees
sought to be regulated as pointed out in Biboso v.
Victorias Milling Co., Inc.,
13
is wanting.
There was no showing, as borne out by the records, that
there was circumvention of the rights of private respondent
when she was informed of her termination. Her dismissal
does not appear to us as arbitrary, fanciful or whimsical.
Private respondent was duly notified, orally and in writing,
that her services as cultural orientation teacher were
terminated for failure to meet the prescribed standards of
petitioner as reflected in the performance evaluation
conducted by her supervisors during the teacher
evaluating program. The dissatisfaction of petitioner over
the performance of private respondent in this regard is a
legitimate exercise of its prerogative to select whom to hire
or refuse employment for the success of its program or
undertaking. More importantly, private respondent failed to
show that there was unlawful discrimination in the
dismissal.
It was thus a grave abuse of discretion on the part of
public respondent to order petitioner to pay private
respondent her salary for the unexpired three-month
portion of her six-month probationary employment when
she was validly terminated during her probationary
employment. To sanction such action would not only be
unjust, but oppressive on the part of the employer as
emphasized in Pampanga Bus Co., Inc., v. Pambusco
Employer Union, Inc.
14

WHEREFORE, in view of the foregoing, the petition is
GRANTED. The Resolution of the National Labor
Relations Commission dated August 22, 1985, is hereby
REVERSED and SET ASIDE insofar as it ordered
petitioner to pay private respondent her P6,000.00 salary
for the unexpired portion of her six-month probationary
employment. No cost.
SO ORDERED.
82. EURO-LINEA, PHILS., INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
JIMMY O. PASTORAL, respondents.

PARAS, J.:
This is a petition for review on certiorari seeking to reverse
and set aside the resolution of public respondent, *NLRC,
in Case No. RAB 111-2-1589-84 entitled "Jimmy O.
Pastoral v. Euro-Linea Phils., Inc." affirming the decision of
the Labor Arbiter ** which ordered the reinstatement of
complainant with six months backwages.
The facts as found by the Solicitor General are as follows:
On August 17, 1983, petitioner hired Pastoral as shipping
expediter on a probationary basis for a period of six
months ending February 18, 1984. However, prior to hiring
by petitioner, Pastoral had been employed by Fitscher
Manufacturing Corporation also as shipping expediter for
more than one and a half years. Pastoral was absorbed by
petitioner but under a probationary basis.
On February 4, 1984, Pastoral received a memorandum
dated January 31, 1984 terminating his probationary
employment effective also on February 4, 1984 in view of
his failure ito meet the performance standards set by the
company." To contest his dismissal, Pastoral filed a
complaint for illegal dismissal against petitioner on
February 6, 1984 (Rollo, pp. 45-46). On July 19, 1985, the
Labor Arbiter found petitioner guilty of illegal dismissal, the
dispositive portion of the decision reading:
WHEREFORE all things considered the respondent or its
President and/or General Manager should be as it is
hereby ordered to reinstate complainant with six months
backwages.
SO ORDERED.
San Fernando, Pampanga, Philippines, July 19,1985.
EMILIO TONGIO
Labor Arbiter
(Rollo, p. 32).
Petitioner appealed the decision to the NLRC on August 5,
1985 (Rollo, pp. 33-39) but the appeal was dismissed on
July 16, 1986 (Resolution; Rollo, p. 41).
Hence, this petition.
Petitioner raises the following errors of the NLRC (Rollo, p.
7):
a) The Labor Arbiter decided a question of law in a
manner contrary to the spirit and purpose of the law; and
that
b) The Labor Arbiter gravely abused his discretion by
ignoring the material and significant facts in favor of
employer.
In the resolution of October 29, 1986, the Second Division
of the Court without giving due course to the petition
required the respondents to comment (Rollo, p. 42).
The Solicitor General submitted his comment on
November 24, 1986 (Rollo, pp. 45-49), while petitioner
through counsel filed its reply to public respondent
National Labor Relations Commission's comment in
compliance with the resolution of December 10, 1986
(Rollo, p. 50).
In the resolution of February 18, 1987 (Rollo, 58), the
Court gave due course to the petition and required the
parties to file their respective memoranda.
The only issue is whether or not the National Labor
Relations Commission acted with grave abuse of
discretion amounting to excess of jurisdiction in ruling
against the dismissal of the respondent, a temporary or
probationary employee, by his employer (Petitioner).
Although a probationary or temporary employee has a
limited tenure, he still enjoys the constitutional protection
of security of tenure. During his tenure of employment or
before his contract expires, he cannot be removed except
for cause as provided for by law (Manila Hotel Corp. v.
NLRC, 141 SCRA 169 [1986]).
This brings us to the issue of whether or not private
respondent's dismissal was justifiable.
Petitioner claims that the dismissal is with cause, since
respondent during his period of employment failed to meet
the performance standards set by the company; that
employers should be given leeway in the application of his
right to choose efficient workers (Rollo, p. 6) and that the
determination of compliance with the standards is the
prerogative of the employer as long as it is not whimsical;
that it had terminated for cause the respondent before the
expiration of the probationary employment (Rollo, p. 70,
Petitioner's Memorandum).
The records, however, reveal the contrary.
Petitioner not only failed to present sufficient evidence to
substantiate the cause of private respondent's dismissal,
but likewise failed to cite particular acts or instances to
show the latter's poor performance.
As correctly argued by the Solicitor General
There is no dispute that failure to qualify as a regular
employee in accordance with reasonable standards
prescribed by the employer is a ground to terminate an
employee engaged on a probationary basis (Art. 282,
Labor Code; Bk. VI, Rule 1, Section 6(c), Implementing
Rules, Labor Code). In this case, petitioner alleged that
Pastoral was dismissed because he failed to meet its
performance standard. However, petitioner did not bother
to cite particular acts or instances in its position paper
which show that Pastoral was performing below par. ...
Petitioner's performance as shipping expediter can readily
be gauged from specific acts as may be gleaned from his
duties enumerated by petitioner to include processing of
export and import documents for dispatch or release and
talking to customs personnel regarding said documents.
(p. 2, Annex "E " Petition).
Furthermore, what makes the dismissal highly suspicious
is the fact that while petitioner claims that respondent was
inefficient, it retained his services until the last remaining
two weeks of the six months probationary employment.
No less important is the fact that private respondent had
been a shipping expediter for more than one and a half
years before he was absorbed by petitioner. It therefore
appears that the dismissal in question is without sufficient
justification.
It must be emphasized 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.
(Remerco Garments Manufacturing vs. Minister of Labor,
135 SCRA 137 [1985]). 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 (PAL, Inc. vs. PALEA, 57 SCRA 489 [1974]).
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 (Phil. Apparel Workers
Union v. NLRC, 106 SCRA 444 [1981]; Manila Hotel Corp.
v. NLRC, supra).
Finally, it is significant to note that in the interpretation of
the protection to labor and social justice provisions of the
constitution and the labor laws and rules and regulations
implementing the constitutional mandate, the Supreme
Court has always adopted the liberal approach which
favors the exercise of labor rights. (Adamson & Adamson,
Inc. v. CIR, 127 SCRA 268 [1984]).
In the instant case, it is evident that the NLRC correctly
applied Article 282 in the light of the foregoing and that its
resolution is not tainted with unfairness or arbitrariness
that would amount to grave abuse of discretion or lack of
jurisdiction (Rosario Brothers Inc. v. Ople, 131 SCRA 73
[1984]).
PREMISES CONSIDERED, the petition is DISMISSED for
lack of merit, and the resolution of the NLRC is affirmed.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ.,
concur.

Footnotes