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CASUAL EMPLOYMENT

91. KIMBERLY INDEP>. UNION vs. DRILON


KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY,
ACTIVISM AND NATIONALISM-ORGANIZED LABOR
ASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE
(KILUSAN-OLALIA), ROQUE JIMENEZ, MARIO C. RONGALEROS
and OTHERS, petitioners,
vs.
HON. FRANKLIN M. DRILON, KIMBERLY-CLARK PHILIPPINES,
INC., RODOLFO POLOTAN, doing business under the firm name
"Rank Manpower Co." and UNITED KIMBERLY-CLARK
EMPLOYEES UNION-PHILLIPPINE TRANSPORT AND GENERAL
WORKERS ORGANIZATION (UKCEU-PTGWO), respondents.
KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY,
ACTIVITISM AND NATIONALISM-OLALIA (KILUSAN-
OLALIA), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MANUEL
AGUILAR, MA. ESTRELLA ALDA, CAPT. REY L. LANADA, COL.
VIVENCIO MANAIG and KIMBERLY-CLARK PHILIPPINES,
INC., respondents.

REGALADO, J .:
Before us are two consolidated petitions for certiorari filed by the
above-named petitioner union (hereinafter referred to as KILUSAN-
OLALIA, for conciseness) and individual complainants therein, to wit
(a) G.R. 77629, which seeks to reverse and set aside the decision,
dated November 13, 1986,
1
and the resolution, dated January 9, 1987,
2
respectively
handed down by the two former Ministers of Labor, both rendered in BLR Case No. NS-5-164-86; and (b)
G.R. No. 78791, which prays for the reversal of the resolutions of the National Labor Relations
Commission, dated May 25, 1987
3
and June 19,1987
4
issued in Injunction Case No. 1442 thereof.
Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed a
three-year collective bargaining agreement (CBA) with United
Kimberly-Clark Employees Union-Philippine Transport and General
Workers' Organization (UKCEU-PTGWO) which expired on June 30,
1986.
Within the 60-day freedom period prior to the expiration of and during
the negotiations for the renewal of the aforementioned CBA, some
members of the bargaining unit formed another union called "Kimberly
Independent Labor Union for Solidarity, Activism and Nationalism-
Organized Labor Association in Line Industries and Agriculture
(KILUSAN-OLALIA)."
On April 21, 1986, KILUSAN-OLALIA filed a petition for certification
election in Regional Office No. IV, Ministry of Labor and Employment
(MOLE), docketed as Case No. RO4-OD-M-415-86.
5
KIMBERLY and
(UKCEU-PTGWO) did not object to the holding of a certification election but objected to the inclusion of
the so-called contractual workers whose employment with KIMBERLY was coursed through an
independent contractor, Rank Manpower Company (RANK for short), as among the qualified voters.
Pending resolution of the petition for certification election by the med-
arbiter, KILUSAN-OLALIA filed a notice of strike on May 7, 1986 with
the Bureau of Labor Relations, docketed as BLR Case No. NS-5-164-
86,
6
charging KIMBERLY with unfair labor practices based on the following alleged acts: (1) dismissal
of union members (KILUSAN-OLALIA); (2) non-regularization of casuals/contractuals with over six
months service; (3) non-implementation of appreciation bonus for 1982 and 1983; (4) non-payment of
minimum wages; (5) coercion of employees; and (6) engaging in CBA negotiations despite the pendency
of a petition for certification election. This was later amended to withdraw the charge of coercion but to
add, as new charges, the dismissal of Roque Jimenez and the non-payment of backwages of the
reinstated Emerito Fuentes .
7

Conciliation proceedings conducted by the bureau proved futile, and
KILUSAN-OLALIA declared a strike at KIMBERLY's premises in San
Pedro, Laguna on May 23, 1986.
On May 26, 1986, KIMBERLY petitioned MOLE to assume jurisdiction
over the labor dispute. On May 30, 1986, finding that the labor dispute
would adversely affect national interest, then Minister Augusto S.
Sanchez issued an assumption order, the dispositive portion whereof
reads:
Wherefore, premises considered, immediately upon receipt
of this order, the striking union and its members are hereby
enjoined to lift the picket and remove all obstacles to the
free ingress to and egress from the company premises and
to return to work, including the 28 contractual workers who
were dismissed; likewise, the company is directed to
resume its operations immediately thereafter and to accept
all the employees back under the same terms and
conditions of employment prevailing prior to the industrial
action. Further, all issues in the notice of strike, as
amended, are hereby assumed in this assumption order,
except for the representation issue pending in Region IV in
which the Med-Arbiter is also enjoined to decide the same
the soonest possible time.
8

In obedience to said assumption order, KILUSAN-OLALIA terminated
its strike and picketing activities effective June 1, 1986 after a
compliance agreement was entered into by it with KIMBERLY.
9

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

1. KILUSAN-OLALIA = 246 votes
2. (UKCEU-PTGWO) = 266 votes
3. NO UNION = 1 vote
4. SPOILED BALLOTS = 4 votes
5. CHALLENGED BALLOTS = 64 votes

TOTAL 581 votes
On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a
"Protest and Motion to Open and Count Challenged Votes"
12
on the
ground that the 64 workers are employees of KIMBERLY within the meaning of Article 212(e) of the Labor
Code. On July 7, 1986, KIMBERLY filed an opposition to the protest and motion, asserting that there is no
employer-employee relationship between the casual workers and the company, and that the med-arbiter
has no jurisdiction to rule on the issue of the status of the challenged workers which is one of the issues
covered by the assumption order. The med-arbiter opted not to rule on the protest until the issue of
regularization has been resolved by
MOLE.
13

On November 13, 1986, then Minister Sanchez rendered a decision in
BLR Case No. NS-5-164-86,
14
the disposition wherein is summarized as follows:
1. The service contract for janitorial and yard maintenance
service between KIMBERLY and RANK was declared
legal;
2. The other casual employees not performing janitorial and
yard maintenance services were deemed labor-only
contractual and since labor-only contracting is prohibited,
such employees were held to have attained the status of
regular employees, the regularization being effective as of
the date of the decision;
3. UKCEU-PTGWO having garnered more votes than
KILUSAN-OLALIA was certified as the exclusive bargaining
representative of KIMBERLY's employees;
4. The reinstatement of 28 dismissed KILUSAN-OLALIA
members was ordered;
5. Roque Jimenez was ordered reinstated without
backwages, the period when he was out of work being
considered as penalty for his misdemeanor;
6. The decision of the voluntary arbitrator ordering the
reinstatement of Ermilo Fuentes with backwages was
declared as already final and unappealable; and
7. KIMBERLY was ordered to pay appreciation bonus for
1982 and 1983.
On November 25, 1986, KIMBERLY flied a motion for reconsideration
with respect to the regularization of contractual workers, the
appreciation bonus and the reinstatement of Roque Jimenez.
15
In a letter
dated November 24, 1986, counsel for KILUSAN-OLALIA demanded from KIMBERLY the implementation
of the November 13, 1986 decision but only with respect to the regularization of the casual workers.
16

On December 11, 1986, KILUSAN-OLALIA filed a motion for
reconsideration questioning the authority of the Minister of Labor to
assume jurisdiction over the representation issue. In the meantime,
KIMBERLY and UKCEU-PTGWO continued with the negotiations on
the new collective bargaining agreement (CBA), no restraining order
or junctive writ having been issued, and on December 18, 1986, a new
CBA was concluded and ratified by 440 out of 517 members of the
bargaining unit.
17

In an order dated January 9, 1987, former Labor Minister Franklin
Drilon denied both motions for reconsideration filed by KIMBERLY and
KILUSAN-OLALIA.
18
On March 10, 1987, the new CBA executed between KIMBERLY and
UKCEU-PTGWO was signed.
On March 16, 1987, KILUSAN-OLALIA filed a petition for certiorari in
this Court docketed as G.R. No. 77629, seeking to set aside the
aforesaid decision, dated November 13, 1986, and the order, dated
January 9, 1987, rendered by the aforesaid labor ministers.
On March 25, 1987, this Court issued in G.R. No. 77629 a temporary
restraining order, enjoining respondents from enforcing and/or
carrying out the decision and order above stated, particularly that
portion (1) recognizing respondent UKCEU-PTGWO as the exclusive
bargaining representative of all regular rank-and-file employees in the
establishment of respondent company, (2) enforcing and/or
implementing the alleged CBA which is detrimental to the interests of
the members of the petitioner union, and (3) stopping respondent
company from deducting monthly dues and other union assessments
from the wages of all regular rank-and-file employees of respondent
company and from remitting the said collection to respondent UKCEU-
PTGWO issued in BLR Case No. NS-5-164-86, entitled, "In Re: Labor
Dispute at Kimberly-Clark Philippines, Inc.," of the Department of
Labor and Employment, Manila,
19

In its comment,
20
respondent company pointed out certain events which took place prior to the
filing of the petition in G.R. No. 77629, to wit:
1. The company and UKCEU-PTGWO have concluded a
new collective bargaining agreement which had been
ratified by 440 out of 517 members of the bargaining unit;
2. The company has already granted the new benefits
under the new CBA to all its regular employees, including
members of petitioner union who, while refusing to ratify
the CBA nevertheless readily accepted the benefits arising
therefrom;
3. The company has been complying with the check-off
provision of the CBA and has been remitting the union
dues to UKCEU-PTGWO
4. The company has already implement the decision of
November 13, 1986 insofar as the regularization of
contractual employees who have rendered more than one
(1) year of service as of the filing of the Notice of Strike on
May 7, 1986 and are not engaged in janitorial and yard
maintenance work, are concerned
5. Rank Manpower Company had already pulled out,
reassigned or replaced the contractual employees engaged
in janitorial and yard maintenance work, as well as those
with less than one year service; and
6. The company has reinstated Roque Jimenez as of
January 11, 1987.
In G.R. No. 78791, the records
21
disclose that on May 4, 1987, KILUSAN-OLALIA filed
another notice of strike with the Bureau of Labor Relations charging respondent company with unfair
labor practices. On May 8, 1987, the bureau dismissed and considered the said notice as not filed by
reason of the pendency of the representation issue before this Court in G.R. No. 77629. KILUSAN-
OLALIA moved to reconsider said order, but before the bureau could act on said motion, KILUSAN-
OLALIA declared a strike and established a picket on respondent company's premises in San Pedro,
Laguna on May 17, 1987.
On May 18, 1987, KIMBERLY filed a petition for injunction with the
National Labor Relations Commission (NLRC), docketed as Injunction
Case No. 1442. A supplement to said petition was filed on May 19,
1987. On May 26, 1987, the commission en banc issued a temporary
restraining order (TRO) on the basis of the ocular inspection report
submitted by the commission's agent, the testimonies of KIMBERLY's
witnesses, and pictures of the barricade. KILUSAN-OLALIA moved to
dissolve the TRO on the ground of lack of jurisdiction.
Immediately after the expiration of the first TRO on June 9, 1987, the
striking employees returned to their picket lines and reestablished
their barricades at the gate. On June 19, 1987, the commission en
banc issued a second TRO.
On June 25, 1987, KILUSAN-OLALIA filed another petition
for certiorari and prohibition with this Court, docketed as G.R. No.
78791, questioning the validity of the temporary restraining orders
issued by the NLRC on May 26, 1987 and June 19, 1987. On June 29,
1987, KILUSAN-OLALIA filed in said case an urgent motion for a TRO
to restrain NLRC from implementing the questioned orders. An
opposition, as well as a reply thereto, were filed by the parties.
Meanwhile, on July 3, 1987, KIMBERLY filed in the NLRC an urgent
motion for the issuance of a writ of preliminary injunction when the
strikers returned to the strike area after the second TRO expired. After
due hearing, the commission issued a writ of preliminary injunction on
July 14, 1987, after requiring KIMBERLY to post a bond in the amount
of P20,000.00.
Consequently, on July 17, 1987, KILUSAN-OLALIA filed in G.R. No.
78791 a second urgent motion for the issuance of a TRO by reason of
the issuance of said writ of preliminary injunction, which motion was
opposed by KIMBERLY.
Thereafter, in its memorandum
22
filed on December 28, 1989 and in its motion for early
resolution
23
filed on February 28, 1990, both in G.R. No. 78791, KILUSAN-OLALIA alleged that it had
terminated its strike and picketing activities and that the striking employees had unconditionally offered to
return to work, although they were refused admission by KIMBERLY. By reason of this supervening
development, the petition in G.R. No. 78791, questioning the propriety of the issuance of the two
temporary restraining orders and the writ of injunction therein, has been rendered moot and academic.
In G.R. No. 77629, the petition of KILUSAN-OLALIA avers that the
respondent Secretary of Labor and/or the former Minister of Labor
have acted with grave abuse of discretion and/or without jurisdiction in
(1) ruling on the issue of bargaining representation and declaring
respondent UKCEU-PTGWO as the collective bargaining
representative of all regular rank-and-file employees of the respondent
company; (2) holding that petitioners are not entitled to vote in the
certification election; (3) considering the regularization of petitioners
(who are not janitors and maintenance employees) to be effective only
on the date of the disputed decision; (4) declaring petitioners who are
assigned janitorial and yard maintenance work to be employees of
respondent RANK and not entitled to be regularized; (5) not awarding
to petitioners differential pay arising out of such illegal work scheme;
and (6) ordering the mere reinstatement of petitioner Jimenez.
The issue of jurisdiction actually involves a question of whether or not
former Minister Sanchez committed a grave abuse of discretion
amounting to lack of jurisdiction in declaring respondent UKCEU-
PTGWO as the certified bargaining representative of the regular
employees of KIMBERLY, after ruling that the 64 casual workers,
whose votes are being challenged, were not entitled to vote in the
certification election.
KILUSAN-OLALIA contends that after finding that the 64 workers are
regular employees of KIMBERLY, Minister Sanchez should have
remanded the representation case to the med-arbiter instead of
declaring UKCEU-PTGWO as the winner in the certification election
and setting aside the med-arbiter's order which allowed the 64 casual
workers to cast their votes.
Respondents argue that since the issues of regularization and
representation are closely interrelated and that a resolution of the
former inevitably affects the latter, it was necessary for the former
labor minister to take cognizance of the representation issue; that no
timely motion for reconsideration or appeal was made from his
decision of November 13, 1986 which has become final and
executory; and that the aforesaid decision was impliedly accepted by
KILUSAN-OLALIA when it demanded from KIMBERLY the issuance of
regular appointments to its affected members in compliance with said
decision, hence petitioner employees are now stopped from
questioning the legality thereof.
We uphold the authority of former Minister Sanchez to assume
jurisdiction over the issue of the regularization of the 64 casual
workers, which fact is not even disputed by KILUSAN-OLALIA as may
be gleaned from its request for an interim order in the notice of strike
case (BLR-NS-5-164-86), asking that the regularization issue be
immediately resolved. Furthermore, even the med-arbiter who ordered
the holding of the certification election refused to resolve the protest
on the ground that the issue raised therein correctly pertains to the
jurisdiction of the then labor minister. No opposition was offered by
KILUSAN-OLALIA. We hold that the issue of regularization was
properly addressed to the discretion of said former minister.
However, the matter of the controverted pronouncement by former
Minister Sanchez, as reaffirmed by respondent secretary, regarding
the winner in the certification election presents a different situation.
It will be recalled that in the certification election, UKCEU-PTGWO
came out as the winner, by garnering a majority of the votes cast
therein with the exception of 64 ballots which were subject to
challenge. In the protest filed for the opening and counting of the
challenged ballots, KILUSAN-OLALIA raised the main and sole
question of regularization of the 64 casual workers. The med-arbiter
refused to act on the protest on the ground that the issue involved is
within the jurisdiction of the then Minister of Labor. KILUSAN-OLALIA
then sought an interim order for an early resolution on the employment
status of the casual workers, which was one of the issues included in
the notice of strike filed by KILUSAN-OLALIA in BLR Case No. NS-5-
164-86. Consequently, Minister Sanchez rendered the questioned
decision finding that the workers not engaged in janitorial and yard
maintenance service are regular employees but that they became
regular only on the date of his decision, that is, on November 13,
1986, and, therefore, they were not entitled to vote in the certification
election. On the basis of the results obtained in the certification
election, Minister Sanchez declared UKCEU-PTGWO as the winner.
The pivotal issue, therefore, is when said workers, not performing
janitorial or yard maintenance service, became regular employees of
KIMBERLY.
We find and so hold that the former labor minister gravely abused his
discretion in holding that those workers not engaged in janitorial or
yard maintenance service attained the status of regular employees
only on November 13, 1986, which thus deprived them of their
constitutionally protected right to vote in the certification election and
choose their rightful bargaining representative.
The Labor Code defines who are regular employees, as follows:
Art. 280. Regular and Casual Employment. The
provisions of written agreement to the contrary not
withstanding and regardless of the oral agreements of the
parties, an employment shall be deemed to be regular
where the employee has been engaged to perform
activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or under
the completion or termination of which has been
determined at the time of the engagement of the employee
or where the work or services to be performed is seasonal
in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph:Provided, That any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity
in which he is employed and his employment shall continue
while such activity exists.
The law thus provides for two. kinds of regular employees, namely: (1)
those who are engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer;
and (2) those who have rendered at least one year of service, whether
continuous or broken, with respect to the activity in which they are
employed. The individual petitioners herein who have been adjudged
to be regular employees fall under the second category. These are the
mechanics, electricians, machinists machine shop helpers, warehouse
helpers, painters, carpenters, pipefitters and masons It is not disputed
that these workers have been in the employ of KIMBERLY for more
than one year at the time of the filing of the Petition for certification
election by KILUSAN-OLALIA.
Owing to their length of service with the company, these workers
became regular employees, by operation of law, one year after they
were employed by KIMBERLY through RANK. While the actual
regularization of these employees entails the mechanical act of
issuing regular appointment papers and compliance with such other
operating procedures as may be adopted by the employer, it is more
in keeping with the intent and spirit of the law to rule that the status of
regular employment attaches to the casual worker on the day
immediately after the end of his first year of service. To rule otherwise,
and to instead make their regularization dependent on the happening
of some contingency or the fulfillment of certain requirements, is to
impose a burden on the employee which is not sanctioned by law.
That the first stated position is the situation contemplated and
sanctioned by law is further enhanced by the absence of a statutory
limitation before regular status can be acquired by a casual employee.
The law is explicit. As long as the employee has rendered at least one
year of service, he becomes a regular employee with respect to the
activity in which he is employed. The law does not provide the
qualification that the employee must first be issued a regular
appointment or must first be formally declared as such before he can
acquire a regular status. Obviously, where the law does not
distinguish, no distinction should be drawn.
The submission that the decision of November 13, 1986 has become
final and executory, on the grounds that no timely appeal has been
made therefrom and that KILUSAN-OLALIA has impliedly acceded
thereto, is untenable.
Rule 65 of the Rules of Court allows original petitions
for certiorari from decisions or orders of public respondents provided
they are filed within a reasonable time. We believe that the period
from January 9, 1987, when the motions for reconsideration
separately filed by KILUSAN-OLALIA and KIMBERLY were denied, to
March 16, 1987, when the petition in G.R. No. 77629 was filed,
constitutes a reasonable time for availing of such recourse.
We likewise do not subscribe to the claim of respondents that
KILUSAN-OLALIA has impliedly accepted the questioned decision by
demanding compliance therewith. In the letter of KILUSAN-OLALIA
dated November 24, 1986
24
addressed to the legal counsel of KIMBERLY, it is there
expressly and specifically pointed out that KILUSAN-OLALIA intends to file a motion for reconsideration
of the questioned decision but that, in the meantime, it was demanding the issuance of regular
appointments to the casual workers who had been declared to be regular employees. The filing of said
motion for reconsideration of the questioned decision by KILUSAN-OLALIA, which was later denied,
sustains our position on this issue and denies the theory of estoppel postulated by respondents.
On the basis of the foregoing circumstances, and as a consequence
of their status as regular employees, those workers not perforce
janitorial and yard maintenance service were performance entitled to
the payment of salary differential, cost of living allowance, 13th month
pay, and such other benefits extended to regular employees under the
CBA, from the day immediately following their first year of service in
the company. These regular employees are likewise entitled to vote in
the certification election held in July 1, 1986. Consequently, the votes
cast by those employees not performing janitorial and yard
maintenance service, which form part of the 64 challenged votes,
should be opened, counted and considered for the purpose of
determining the certified bargaining representative.
We do not find it necessary to disturb the finding of then Minister
Sanchez holding as legal the service contract executed between
KIMBERLY and RANK, with respect to the workers performing
janitorial and yard maintenance service, which is supported by
substantial and convincing evidence. Besides, we take judicial notice
of the general practice adopted in several government and private
institutions and industries of hiring a janitorial service on an
independent contractor basis. Furthermore, the occasional directives
and suggestions of KIMBERLY are insufficient to erode primary and
continuous control over the employees of the independent
contractor.
25
Lastly, the duties performed by these workers are not independent and integral steps
in or aspects of the essential operations of KIMBERLY which is engaged in the manufacture of consumer
paper products and cigarette paper, hence said workers cannot be considered regular employees.
The reinstatement of Roque Jimenez without backwages involves a
question of fact best addressed to the discretion of respondent
secretary whose finding thereon is binding and conclusive upon this
Court, absent a showing that he committed a grave abuse in the
exercise thereof.
WHEREFORE, judgment is hereby rendered in G.R. No. 77629:
1. Ordering the med-arbiter in Case No. R04-OD-M-4-15-86 to open
and count the 64 challenged votes, and that the union with the highest
number of votes be thereafter declared as the duly elected certified
bargaining representative of the regular employees of KIMBERLY;
2. Ordering KIMBERLY to pay the workers who have been regularized
their differential pay with respect to minimum wage, cost of living
allowance, 13th month pay, and benefits provided for under the
applicable collective bargaining agreement from the time they became
regular employees.
All other aspects of the decision appealed from, which are not so
modified or affected thereby, are hereby AFFIRMED. The temporary
restraining order issued in G.R. No. 77629 is hereby made permanent.
The petition filed in G.R. No. 78791 is hereby DISMISSED.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.

90. De Leon vs NLRC
PUNO, J .:
This case stemmed from a complaint for illegal dismissal, unfair labor practice
and refund of cash bond filed by petitioners against respondents before the Arbitration
Branch of the National Labor Relations Commission (NLRC). The petition at bar
seeks the annulment of the resolution of the NLRC dated July 5, 1993 reversing the
decision of the Labor Arbiter finding respondents liable for the charges, and its
resolution dated August 10, 1993 denying petitioners' motion for reconsideration.
The undisputed facts are as follows:
On August 23, 1980, Fortune Tobacco Corporation (FTC) and Fortune Integrated
Services, Inc. (FISI) entered into a contract for security services where the latter
undertook to provide security guards for the protection and security of the
former. The petitioners were among those engaged as security guards pursuant to the
contract.
On February 1, 1991, the incorporators and stockholders of FISI sold out lock,
stock and barrel to a group of new stockholders by executing for the purpose a "Deed
of Sale of Shares of Stock". On the same date, the Articles of Incorporation of FISI
was amended changing its corporate name to Magnum Integrated Services, Inc.
(MISI). A new by-laws was likewise adopted and approved by the Securities and
Exchange Commission on June 4, 1993.
On October 15, 1991, FTC terminated the contract for security services which
resulted in the displacement of some five hundred eighty two (582) security guards
assigned by FISI/MISI to FTC, including the petitioners in this case. FTC engaged
the services of two (2) other security agencies, Asian Security Agency and Ligalig
Security Services, whose security guards were posted on October 15, 1991 to replace
FISI's security guards.
Sometime in October 1991, the Fortune Tobacco Labor Union, an affiliate of the
National Federation of Labor Unions (NAFLU), and claiming to be the bargaining
agent of the security guards, sent a Notice of Strike to FISI/MISI. On November 14,
1991, the members of the union which include petitioners picketed the premises of
FTC. The Regional Trial Court of Pasig, however, issued a writ of injunction to
enjoin the picket.
On November 29, 1991, Simeon de Leon, together with sixteen (16) other
complainants instituted the instant case before the Arbitration Branch of the
NLRC. The complaint was later amended to allow the inclusion of other
complainants.
The parties submitted the following issues for resolution:
(1) Whether petitioners were illegally dismissed;
(2) Whether respondents are guilty of unfair labor practice; and
(3) Whether petitioners are entitled to the refund of their cash bond deposited with respondent
FISI.
Petitioners alleged that they were regular employees of FTC which was also using
the corporate names Fortune Integrated Services, Inc. and Magnum Integrated
Services, Inc. They were assigned to work as security guards at the company's main
factory plant, its tobacco redrying plant and warehouse. They averred that they
performed their duties under the control and supervision of FTC's security
supervisors. Their services, however, were severed in October 1991 without valid
cause and without due process. Petitioners claimed that their dismissal was part of
respondents' design to bust their newly-organized union which sought to enforce their
rights under the Labor Standards law.
[1]

Respondent FTC, on the other hand, maintained that there was no employer-
employee relationship between FTC and petitioners. It said that at the time of the
termination of their services, petitioners were the employees of MISI which was a
separate and distinct corporation from FTC. Hence, petitioners had no cause of action
against FTC.
[2]

Respondent FISI, meanwhile, denied the charge of illegal dismissal and unfair
labor practice. It argued that petitioners were not dismissed from service but were
merely placed on floating status pending re-assignment to other posts. It alleged that
the temporary displacement of petitioners was not due to its fault but was the result of
the pretermination by FTC of the contract for security services.
[3]

The Labor Arbiter found respondents liable for the charges. Rejecting FTC's
argument that there was no employer-employee relationship between FTC and
petitioners, he ruled that FISI and FTC should be considered as a single employer. He
observed that the two corporations have common stockholders and they share the
same business address. In addition, FISI had no client other than FTC and other
corporations belonging to the group of companies owned by Lucio Tan. The Labor
Arbiter thus found respondents guilty of union busting and illegal dismissal. He
observed that not long after the stockholders of FISI sold all their stocks to a new set
of stockholders, FTC terminated the contract of security services and engaged the
services of two other security agencies. FTC did not give any reason for the
termination of the contract. The Labor Arbiter gave credence to petitioners' theory
that respondents' precipitate termination of their employment was intended to bust
their union. Consequently, the Labor Arbiter ordered respondents to pay petitioners
their backwages and separation pay, to refund their cash bond deposit, and to pay
attorney's fees.
[4]

On appeal, the NLRC reversed and set aside the decision of the Labor
Arbiter. First, it held that the Labor Arbiter erred in applying the "single employer"
principle and concluding that there was an employer-employee relationship between
FTC and FISI on one hand, and petitioners on the other hand. It found that at the time
of the termination of the contract of security services on October 15, 1991, FISI
which, at that time, had been renamed Magnum Integrated Services, Inc. had a
different set of stockholders and officers from that of FTC. They also had separate
offices. The NLRC held that the principle of "single employer" and the doctrine of
piercing the corporate veil could not apply under the circumstances. It further ruled
that the proximate cause for the displacement of petitioners was the termination of the
contract for security services by FTC on October 15, 1991. FISI could not be faulted
for the severance of petitioners' assignment at the premises of FTC. Consequently,
the NLRC held that the charge of illegal dismissal had no basis. As regards the
charge of unfair labor practice, the NLRC found that petitioners who had the burden
of proof failed to adduce any evidence to support their charge of unfair labor practice
against respondents. Hence, it ordered the dismissal of petitioners' complaint.
[5]

The petitioners filed a motion for reconsideration of the resolution of the NLRC
but the same was denied.
[6]
Hence, this petition.
We gave due course to the petition on May 15, 1995. Thus, the ruling
in St. Martin Funeral Home vs. NLRC
[7]
remanding all petitions for certiorari from the
decision of the NLRC to the Court of Appeals does not apply to the case at bar.
The petition is impressed with merit.
An examination of the facts of this case reveals that there is sufficient ground to
conclude that respondents were guilty of interfering with the right of petitioners to
self-organization which constitutes unfair labor practice under Article 248 of the
Labor Code.
[8]
Petitioners have been employed with FISI since the 1980s and have
since been posted at the premises of FTC -- its main factory plant, its tobacco redrying
plant and warehouse. It appears from the records that FISI, while having its own
corporate identity, was a mere instrumentality of FTC, tasked to provide protection
and security in the company premises. The records show that the two corporations
had identical stockholders and the same business address. FISI also had no other
clients except FTC and other companies belonging to the Lucio Tan group of
companies. Moreover, the early payslips of petitioners show that their salaries were
initially paid by FTC.
[9]
To enforce their rightful benefits under the laws on Labor
Standards, petitioners formed a union which was later certified as bargaining agent of
all the security guards. On February 1, 1991, the stockholders of FISI sold all their
participations in the corporation to a new set of stockholders which renamed the
corporation Magnum Integrated Services, Inc. On October 15, 1991, FTC, without
any reason, preterminated its contract of security services with MISI and contracted
two other agencies to provide security services for its premises. This resulted in the
displacement of petitioners. As MISI had no other clients, it failed to give new
assignments to petitioners. Petitioners have remained unemployed since then. All
these facts indicate a concerted effort on the part of respondents to remove petitioners
from the company and thus abate the growth of the union and block its actions to
enforce their demands in accordance with the Labor Standards laws. The Court held
in Insular Life Assurance Co., Ltd., Employees Association-NATU vs. Insular Life
Assurance Co., Ltd.:
[10]

The test of whether an employer has interfered with and coerced employees within
the meaning of section (a) (1) is whether the employer has engaged in conduct which
it may reasonably be said tends to interfere with the free exercise of employees' rights
under section 3 of the Act, and it is not necessary that there be direct evidence that any
employee was in fact intimidated or coerced by statements of threats of the employer
if there is a reasonable inference that anti-union conduct of the employer does have an
adverse effect on self-organization and collective bargaining.
[11]

We are not persuaded by the argument of respondent FTC denying the presence of
an employer-employee relationship. We find that the Labor Arbiter correctly applied
the doctrine of piercing the corporate veil to hold all respondents liable for unfair
labor practice and illegal termination of petitioners' employment. It is a fundamental
principle in corporation law that a corporation is an entity separate and distinct from
its stockholders and from other corporations to which it is connected. However, when
the concept of separate legal entity is used to defeat public convenience, justify
wrong, protect fraud or defend crime, the law will regard the corporation as an
association of persons, or in case of two corporations, merge them into one. The
separate juridical personality of a corporation may also be disregarded when such
corporation is a mere alter ego or business conduit of another person.
[12]
In the case at
bar, it was shown that FISI was a mere adjunct of FTC. FISI, by virtue of a contract
for security services, provided FTC with security guards to safeguard its
premises. However, records show that FISI and FTC have the same owners and
business address, and FISI provided security services only to FTC and other
companies belonging to the Lucio Tan group of companies. The purported sale of the
shares of the former stockholders to a new set of stockholders who changed the name
of the corporation to Magnum Integrated Services, Inc. appears to be part of a scheme
to terminate the services of FISI's security guards posted at the premises of FTC and
bust their newly-organized union which was then beginning to become active in
demanding the company's compliance with Labor Standards laws. Under these
circumstances, the Court cannot allow FTC to use its separate corporate personality to
shield itself from liability for illegal acts committed against its employees.
Thus, we find that the termination of petitioners' services was without basis and
therefore illegal. Under Article 279 of the Labor Code, an employee who is unjustly
dismissed from work is 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
witheld from him up to the time of his actual reinstatement. However, if
reinstatement is no longer possible, the employer has the alternative of paying the
employee his separation pay in lieu of reinstatement.
[13]

IN VIEW WHEREOF, the petition is GRANTED. The assailed resolutions of
the NLRC are SET ASIDE. Respondents are hereby ordered to pay petitioners their
full backwages, and to reinstate them to their former position without loss of seniority
rights and privileges, or to award them separation pay in case reinstatement is no
longer feasible.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Pardo and Ynares-Santiago, JJ., concur.
Kapunan J., on leave.

94. MARCIAL GU-MIRO, petitioner, vs. ROLANDO C. ADORABLE and
BERGESEN D.Y. MANILA, respondents.
D E C I S I O N
YNARES-SANTIAGO, J .:
Before us is a petition for review on certiorari of the decision of the Court
of Appeals in CA-G.R. SP No. 66131 dated May 29, 2003,
[1]
which modified
the decision of the National Labor Relations Commission (NLRC) by
increasing the incentive bonus awarded to petitioner from US$594.56 to
US$1189.12.
Petitioner Marcial Gu-Miro was formerly employed as a Radio Officer of
respondent Bergesen D.Y. Philippines, which acted for and in behalf of its
principal Bergesen D.Y. ASA, on board its different vessels. A Certification
dated April 14, 1998 was issued by Bergesen D.Y. Philippines, Inc.s
President and General Manager Rolando C. Adorable showing that petitioner
served in the company on board its vessels starting 1988.
[2]
The case before
us involves an employment contract signed by petitioner to commence service
on board the M/V HEROS, which stipulated a monthly salary of US$929.00 for
a period of eight (8) months. It also provided for overtime pay of US$495.00
per month and vacation leave with pay in the amount of US$201.00 per month
equivalent to six and a half days.
[3]
The contract of employment was signed on
March 18, 1996 and petitioner commenced work on April 15, 1996.
Record shows that respondent company traditionally gives an incentive
bonus termed as Re-employment Bonus to employees who decide to rejoin
the company after the expiration of their employment contracts. After the
expiration of petitioners contract in December 1996, the same was renewed
by respondent company until September 9, 1997, as stated in the Certification
issued by Bergesen D.Y. Philippines, Inc. In September 1997, petitioners
services were terminated due to the installation of labor saving devices which
made his services redundant. Upon his forced separation from the company,
petitioner requested that he be given the incentive bonus plus the additional
allowances he was entitled to. Respondent company, however, refused to
accede to his request.
Thus, in June 1999 petitioner filed a complaint with the NLRC, Regional
Arbitration Branch of Cebu, for payment of the incentive bonus from April 15,
1996 to September 15, 1997, 10% of the basic wage, unclaimed payment for
incentive bonus from September 1993 to June 1994, non-remittance of
provident fund from July 1992 to June 1994, moral and exemplary damages
as well as attorneys fees. On December 29, 1999, the complaint was
provisionally dismissed by the NLRC due to the failure of petitioner to file the
required position paper. Petitioner re-filed the complaint on March 2, 2000
accordingly.
In a Decision dated June 6, 2000, the Labor Arbiter dismissed the case for
lack of merit,
[4]
based on the following findings:
x x x. Incentive bonus or reemployment bonus are benefits not found in the POEA
approved contract. These are benefits which are specifically granted pursuant to an
internal memorandum entitled Employment Conditions for Filipino Seafarers serving
on board vessels of Bergesen D.Y. ASA. As stated in the said internal
memorandum, entitlement to the benefits therein (is) not automatic but (is) subject to
some conditions. As clearly stated in the said memorandum, the reemployment bonus
is an incentive bonus system for reemployment upon signing for a subsequent
period. x x x. In order that a seafarer, like the complainant, be entitled to
reemployment/incentive bonus, he must satisfy all of the following requirements, to
wit:
1) He must be employed in a vessel under a principal who is a member of the
reemployment bonus scheme;
2) He must have been an officer of the principal members vessel subject to the
additional conditions stated in page 2 of the aforementioned internal memorandum;
and
3) After serving in a principal-members vessel, he must be reemployed in
another or the same principal-members vessel.
To avail of the benefits under this scheme, seafarers like the complainant has to prove
that he met all the foregoing conditions. It is, thus, his burden to prove that he is
entitled to the said benefit. Complainant, however, miserably failed to adduce
evidence that he met all the foregoing conditions for entitlement to the benefit. He
relied on his unsubstantiated allegation that a certain Captain D. Ramirez received an
incentive bonus even if he did not sign up with the Company. x x x.
x x x x x x x x x
For obvious reasons, complainants claims for moral and exemplary damages as well
as attorneys fees are denied. x x x.
[5]

Petitioner appealed to the NLRC, which set aside the Labor Arbiters
decision and ordered respondents to pay petitioner the amount of US$594.56
in a Decision dated March 5, 2001. The pertinent portion of the NLRCs
decision states:
The Contract of Employment entered into between the complainant and the
respondents specifically set a term of eight (8) months which was supposed to be from
April 15, 1996 up to December 14, 1996. The complainants length of service from
December 15, 1996 to September 9, 1997, or a period of nine (9) months, more or
less, was an extended term of employment. A closer look at the facts shows that the
extended term was even longer than the original term of the contract.
x x x x x x x x x
[W]e construe that the extended term of the contract of employment from December
15, 1996 up to September 9, 1997 was considered as re-employment of the
complainant. And when there was re-employment, it is presumed that all the
conditions set forth by the respondents in their established company written policy
entitled Employment Conditions for Filipino Seafarers Serving Onboard Vessels of
Bergesen D.Y. ASA are deemed complied with. The pertinent portion of the said
company policy states:
2. Re-employment bonus
The company has established an incentive bonus system for re-employment upon
signing for a subsequent period.
The conditions are as follows:
x x x x x x x x x
Radio Officers/Electricians Serving onboard bulk carriers- 8% of basic wage per
month of actual service.
To do otherwise, we would allow the respondent to circumvent its own established
policy to merely extending the original contract of employment.
[6]

Petitioner and respondents filed separate Motions for Reconsideration
which were both denied by the NLRC in its Resolution dated April 24, 2001.
Not satisfied with the monetary award, petitioner filed a petition for review
with the Court of Appeals claiming that there was an error in computing the
amount of the incentive bonus he is entitled to. Petitioner argued that he
should be considered as a regular employee of respondent company and
thus, entitled to backwages or, at the very least, separation pay.
The Court of Appeals, on May 29, 2003, rendered the assailed Decision
where it ruled:
WHEREFORE, the petition is GRANTED. The assailed Decision dated March 5,
2001 is hereby MODIFIED increasing the award of incentive bonus from US$594.56
to US$1189.12.
SO ORDERED.
[7]

In arriving at its decision, the appellate court made the following findings:
It is uncontroverted that the company grants incentive bonus for re-employment upon
signing for a subsequent period. For radio officers onboard bulk carriers, it shall be
8% of the basic wage per month of actual service. In this case, we find nothing in the
record to show that the classification of the vessel to which the petitioner was
deployed is a Gas/LPG Tanker, which would make him entitled to 10% instead of 8%
of the basic wage as incentive bonus. Thus, the public respondent correctly applied
the rate of 8% of the basic wage per month of actual service, the basic wage in this
case being the amount stipulated in the contract of employment, i.e., US$929.00, and
does not include the stipulated rate for overtime pay.
The question now is the application of the provision of the memorandum with respect
to the length of actual service. Record shows that after the expiration of the original
eight-month employment contract on December 15, 1996, the petitioner was in fact
re-employed when his service was extended for another nine (9) months or up to
September 1997. This unquestionably entitled him to the incentive bonus for the 8-
month period covered by the contract and which was correctly awarded to him by the
public respondent NLRC. However, as to the succeeding period, although it was not
covered by a written contract, it is unrebutted that the petitioner was actually made to
suffer work during that period. Hence, there was a monthly re-employment of the
petitioner for the succeeding 9 months. Conformably, since the incentive bonus is
given for re-employment upon signing for a subsequent period, for purposes of
computing the same, the petitioner is deemed to have been re-employed not only for
the 8 months covered by the contract but also for the succeeding 8 months preceding
the last month when he was terminated. x x x.
x x x x x x x x x
As for the claim for backwages or separation pay, we note that these claims were
neither raised in the petitioners position paper nor in the motion for reconsideration
filed before the NLRC; hence, they can no longer be raised for the first time in this
petition. x x x.
[8]

Hence, the instant petition for certiorari based on the following grounds:
I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT PLACED THE
BURDEN UPON PETITIONER TO PROVE THAT M/V HEROS IS AN LPG/GAS
TANKER.
II. CONSIDERING THAT PETITIONER HAD WORKED FOR BERGESEN D.Y.
PHILIPPINES FOR AND IN BEHALF OF ITS PRINCIPAL BERGESEN D.Y. ASA
FOR TEN (10) LONG YEARS ABOARD ITS DIFFERENT VESSELS, PETITIONER
SHOULD HAVE BEEN CONSIDERED AS A REGULAR EMPLOYEE BY THE
COURT OF APPEALS.
III. THE HONORABLE COURT OF APPEALS LIKEWISE ERRED WHEN IT SAID IN
ITS DECISION THAT PETITIONER FAILED TO RAISE THE ISSUE OF
BACKWAGES AND SEPARATION PAY IN THE MOTION FOR
RECONSIDERATION FILED WITH THE NLRC.
[9]

In this petition, we are called upon to resolve two basic issues: The
first concerns what percentage to use in computing the incentive bonus which
petitioner is entitled to. In the memorandum entitledEmployment Conditions
for Filipino Seafarers Serving Onboard Vessels of Bergesen D.Y.
ASA (Employment Conditions Memorandum), Radio Officers are entitled to
re-employment bonus equivalent to a certain percentage of their basic wage
per month of actual service. If the employee served onboard a bulk carrier, he
is entitled to 8% of his basic wage per month of actual service. Alternatively, if
service was done onboard a gas carrier tanker, the employee is entitled to
10% of his basic wage per month of actual service.
The NLRC and the Court of Appeals both agree that petitioner failed to
adduce concrete proof to show that M/V HEROS is a Gas/LPG Tanker and
not a bulk carrier. Hence, the Court of Appeals upheld the use of 8% by the
NLRC as multiplier to compute the incentive bonus. Respondent company
argues that petitioner failed to allege the nature of M/V HEROS at the earliest
opportunity, belatedly alleging this information in the Motion for
Reconsideration with the NLRC. Petitioner insists that M/V HEROS is a
Gas/LPG Tanker which entitles him to 10% of his basic wage as incentive
bonus; and that the Court of Appeals erred in ruling that it was petitioners
burden to prove the classification of M/V HEROS.
We rule in petitioners favor. The registration papers, which contain the
vessel classification of M/V HEROS, are the conclusive evidence that
petitioner needs to prove his allegation. However, these are in the custody of
respondent company or its mother company, Bergesen D.Y. ASA.
Interestingly, respondent company never presented the registration papers in
evidence.
We find that respondent companys failure to controvert the allegation,
when it had the opportunity and resources to do so, works in favor of
petitioner. Time and again we have held that should doubts exist between the
evidence presented by the employer and the employee, the scales of justice
must be tilted in favor of the latter.
[10]
Moreover, the law creates the
presumption that evidence willfully suppressed would be adverse if
produced.
[11]

Consequently, the amount of incentive bonus termed as re-employment
bonus which petitioner is entitled to should be computed as follows:
Salary per month = US$929.00
No. of months of actual service = 16 months
Rate = 10% of basic wage
US$929.00/month x 16 months x 10% = US$1,486.40
The second and third grounds raised in this petition are related, based on
petitioners allegation that he should be considered a regular employee of
respondent company, having been employed onboard the latters different
vessels for the span of 10 years. Hence, petitioner claims that he is entitled to
backwages or at the very least separation pay, invoking our decision
in Millares, et al. v. NLRC
[12]
where it was held that the repeated re-hiring of a
Chief Engineer of a shipping company for 20 years is sufficient evidence of
the necessity and indispensability of the employees service to the employers
business or trade. Hence, applying the express provision of Article 280 of the
Labor Code,
[13]
such an employee should be considered as a regular
employee.
Petitioners argument is not well-taken. The decision of Millares, et al. v.
NLRC was reconsidered and set aside in a Resolution
[14]
where it was held:
[I]t is clear that seafarers are considered contractual employees. They can not be
considered as regular employees under Article 280 of Labor Code. Their employment
is governed by the contracts they sign every time they are rehired and their
employment is terminated when the contract expires. Their employment is
contractually fixed for a certain period of time. They fall under the exception of
Article 280 whose employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the
engagement of the employee or where the nature of the work or services to be
performed is seasonal in nature and employment is for the duration of the season.
x x x x x x x x x
Moreover, it is an accepted maritime industry practice that employment of seafarers
(is) for a fixed period only. Constrained by the nature of their employment which is
quite peculiar and unique in itself, it is for the mutual interest of both the seafarer and
the employer why employment status must be contractual only or for a certain period
of time. Seafarers spend most of their time at sea and understandably, they cannot
stay for a long and an indefinite period of time at sea. Limited access to shore society
during the employment will have an adverse impact on the seafarer. The national,
cultural and lingual diversity among the crew during the [Contract of Enlistment] is a
reality that necessitates the limitation of its period.
[15]

Clearly, petitioner cannot be considered as a regular employee
notwithstanding that the work he performs is necessary and desirable in the
business of respondent company. As expounded in the above-
mentioned Millares Resolution, an exception is made in the situation of
seafarers. The exigencies of their work necessitates that they be employed
on a contractual basis.
Thus, even with the continued re-hiring by respondent company of
petitioner to serve as Radio Officer onboard Bergesens different vessels, this
should be interpreted not as a basis for regularization but rather a series of
contract renewals sanctioned under the doctrine set down by the
second Millares case. If at all, petitioner was preferred because of practical
considerationsnamely, his experience and qualifications. However, this
does not alter the status of his employment from being contractual.
With respect to the claim for backwages and separation pay, it is now well-
settled that the award of backwages and separation pay in lieu of
reinstatement are reliefs that are awarded to an employee who is unjustly
dismissed.
[16]
In the instant case, petitioner was separated from his
employment due to the termination of an impliedly renewed contract with
respondent company. Hence, there is no illegal or unjust dismissal.
WHEREFORE, premises considered, the petition is GRANTED IN PART.
The Decision of the Court of Appeals in CA-G.R. SP No. 66131 dated May 29,
2003 is MODIFIED in that the award of incentive bonus is increased from
US$1189.12 to US$1,486.40. Petitioners claim that he be declared a regular
employee and awarded backwages and separation pay is DENIED for lack of
merit.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna,
JJ., concur.

95. ROBERTO RAVAGO, petitioner, vs. ESSO EASTERN MARINE, LTD.
and TRANS-GLOBAL MARITIME AGENCY, INC., respondents.
D E C I S I O N
CALLEJO, SR., J .:
Before us is a petition for review on certiorari under Rule 45 of the 1997
Rules of Court, as amended, of the Decision
[1]
of the Court of Appeals (CA) as
well as its Resolution in CA-G.R. SP No. 66234 which denied the motion for
reconsideration thereof.
The Factual Antecedents
The Esso Eastern Marine Ltd. (EEM), now the Petroleum Shipping Ltd., is
a foreign company based in Singapore and engaged in maritime commerce.
It is represented in the Philippines by its manning agent and co-respondent
Trans-Global Maritime Agency, Inc. (Trans-Global), a corporation organized
under the Philippine laws.
Roberto Ravago was hired by Trans-Global to work as a seaman on board
various Esso vessels. On February 13, 1970, Ravago commenced his duty
as S/N wiper on board the Esso Bataan under a contract that lasted until
February 10, 1971. Thereafter, he was assigned to work in different Esso
vessels where he was designated diverse tasks, such as oiler, then assistant
engineer. He was employed under a total of 34 separate and unconnected
contracts, each for a fixed period, by three different companies, namely, Esso
Tankers, Inc. (ETI), EEM and Esso International Shipping (Bahamas) Co., Ltd.
(EIS), Singapore Branch. Ravago worked with Esso vessels until August 22,
1992, a period spanning more than 22 years, thus:
CONTRACT
FROM
DURATION
TO
POSITION VESSEL COMPANY
13 Feb 70 10 Feb 71 SN/Wiper Esso Bataan ETI
[2]

07 May 71 27 May 72 Wiper Esso
Yokohama
EEM
[3]

07 Aug 72 02 Jul 73 Oiler Esso Kure EEM
03 Oct 73 30 Jun 74 Oiler Esso Bangkok ETI
18 Sep 74 26 July 75 Oiler Esso EEM
Yokohama
23 Oct 75 22 Jun 76 Oiler Esso Port
Dickson
EEM
10 Sep 76 26 Dec 76 Oiler Esso Bangkok ETI
27 Dec 76 29 Apr 77 Temporary Jr.
3AE
Esso Bangkok ETI
08 Jul 77 15 Mar 78 Jr. 3AE Esso Bombay ETI
03 Jun 78 03 Feb 79 Temporary
3AE
Esso Hongkong ETI
04 Apr 79 24 Jun 79 3AE Esso Orient EEM
25 Jun 79 16 Jul 79 3AE Esso
Yokohama
EEM
17 Jul 79 05 Dec 79 3AE Esso Orient EEM
10 Feb 80 25 Oct 80 3AE Esso Orient EEM
19 Jan 81 03 Jun 81 3AE Esso Port
Dickson
EEM
04 Jun 81 11 Sep 81 3AE Esso Orient EEM
06 Dec 81 20 Apr 82 3AE Esso Chawan EEM
21 Apr 82 01 Aug 82 Temporary
2AE
Esso Chawan EEM*
03 Nov 82 06 Feb 83 2AE Esso Jurong EEM
07 Feb 83 10 Jul 83 2AE Esso
Yokohama
EEM
31 Aug 83 13 Mar 84 2AE Esso Tumasik EEM
04 May 84 08 Jan 85 2AE Esso Port
Dickson
EEM
13 Mar 85 31 Oct 85 2AE Esso Castellon EEM
29 Dec 85 22 Jul 86 2AE Esso Jurong EIS
[4]

13 Sep 86 09 Jan 87 2AE Esso Orient EIS
21 Mar 87 15 Oct 87 2AE Esso Port
Dickson
EIS
20 Nov 87 18 Dec 87
Temporary
1AE Esso Chawan EIS
19 Dec 87 25 Jun 88 2AE Esso
Melbourne
EIS
04 Aug 88 19 Mar 89 Temporary
1AE
Esso Port
Dickson
EIS
20 Mar 89 19 May 89 1AE Esso Port
Dickson
EIS*
28 Jul 89 17 Feb 90 1AE Esso
Melbourne
EIS
16 Apr 90 11 Dec 90 1AE Esso Orient EIS
09 Feb 91 06 Oct 91 1AE Esso
Melbourne
EIS
16 Dec 91 22 Aug 92 1AE Esso Orient EIS
* Upgraded/Confirmed on regular rank on board.
[5]

On August 24, 1992, or shortly after completing his latest contract with
EIS, Ravago was granted a vacation leave with pay from August 23, 1992
until October 28, 1992. Preparatory to his embarkation under a new contract,
he was ordered to report, on September 28, 1992, for a Medical Pre-
Employment Examination.
[6]
The Pre-Employment Physical Examination
Record shows that Ravago passed the medical examination conducted by the
O.P. Jacinto Medical Clinic, Inc. on October 6, 1992.
[7]
He, likewise, attended
a Pre-Departure Orientation Seminar conducted by the Capt. I.P. Estaniel
Training Center, a division of Trans-Global, on October 7, 1992.
[8]

On the night of October 12, 1992, a stray bullet hit Ravago on the left leg
while he was waiting for a bus ride in Cubao, Quezon City. He fractured his
left proximal tibia and was hospitalized at the Philippine Orthopedic Hospital.
Ravagos wife, Lolita, informed Trans-Global and EIS of the incident on
October 13, 1992 for purposes of availing medical benefits. As a result of his
injury, Ravagos doctor opined that he would not be able to cope with the job
of a seaman and suggested that he be given a desk job.
[9]
Ravagos left leg
had become apparently shorter, making him walk with a limp. For this reason,
the company physician, Dr. Virginia G. Manzo, found him to have lost his
dexterity, making him unfit to work once again as a seaman.
[10]
Citing the
opinion of Ravagos doctor, Dr. Manzo wrote:
Because of his unsteady gait, pronounced limp, and loss of normal dexterity of his
leg and foot, we doubted whether Mr. Ravago can physically tackle the usual
activities of a seaman in the course of his work without any added risk over and above
the ordinary or standard risk inherent to his job. These activities include climbing up
and down the engine room through a long flight of iron stairs with narrow steps which
could be slippery at times due to grease or oil, jumping from an unsteady and floating
motor launch or boat to board or alight a tanker through a flight of steps or climbing
up and down a pilot ladder, wearing of heavy safety shoes, etc.
Mr. Ravagos doctor replied that, after being informed about the nature of the job, he
believes that Mr. Ravago would not be able to cope with these kinds of activities. In
effect, the Orthopedic doctor said Mr. Ravago is not fit to go back to his work as a
seaman.
We concur with the opinion of the doctor that Mr. Ravago is not fit to go back to his
job as a seaman in view of the risk of physical injury to himself as result of the
deformity and loss of dexterity of his injured leg.
As a seaman, we consider his inability partial permanent. His injury corresponds to
Grade 13 in the Schedule of Disability of the Standard Employment Contract.
[11]

Consequently, instead of rehiring Ravago, EIS paid him his Career
Employment Incentive Plan (CEIP)
[12]
as of March 1, 1993 and his final tax
refund for 1992. After deducting his Social Security System and medical
contributions from November 1992 to February 1993, EIS remitted the net
amount of P162,232.65, following Ravagos execution of a Deed of Quitclaim
and/or Release.
[13]

However, on March 22, 1993, Ravago filed a complaint
[14]
for illegal
dismissal with prayer for reinstatement, backwages, damages and attorneys
fees against Trans-Global and EIS with the Philippine Overseas Employment
Administration Adjudication Office.
In their Answer dated April 14, 1993, respondents denied that Ravago was
dismissed without notice and just cause. Rather, his services were no longer
engaged in view of the disability he suffered which rendered him unfit to work
as a seafarer. This fact was further validated by the company doctor and
Ravagos attending physician. They averred that Ravago was a contractual
employee and was hired under 34 separate contracts by different companies.
In his position paper, Ravago insisted that he was fit to resume pre-injury
activities as evidenced by the certification
[15]
issued by Dr. Marciano Foronda
M.D., one of his attending physicians at the Philippine Orthopedic Hospital,
that at present, fracture of tibia has completely healed and patient is fit to
resume pre-injury activities anytime.
[16]
Ravago, likewise, asserted that he
was not a mere contractual employee because the respondents regularly and
continuously rehired him for 23 years and, for his continuous service, was
awarded a CEIP payment upon his termination from employment.
On December 15, 1996, Labor Arbiter Ramon Valentin C. Reyes rendered
a decision in favor of Ravago, the complainant. He ruled that Ravago was a
regular employee because he was engaged to perform activities which were
usually necessary or desirable in the usual trade or business of the employer.
The Labor Arbiter noted that Ravagos services were repeatedly contracted;
he was even given several promotions and was paid a monthly service
experience bonus. This was in keeping with the increasing number of long
term careers established with the respondents. Finally, the Labor Arbiter
resolved that an employer cannot terminate a workers employment on the
ground of disease unless there is a certification by a competent public health
authority that the said disease is of such nature or at such a stage that it
cannot be cured within a period of six months even with proper medical
treatment. He concluded that Ravago was illegally dismissed. The decretal
portion of the Labor Arbiters decision reads:
WHEREFORE, premises considered, judgment is hereby rendered finding the
dismissal illegal and ordering respondents to reinstate complainant to his former
position without loss of seniority rights and other benefits. Further, the respondents
are jointly and severally liable to pay complainant backwages from the time of his
dismissal up to the promulgation of this decision. Such backwages is provisionally
fixed at US$96,285.00 less the P162,285.83 (sic) paid to the complainant as Career
Employment Incentive Plan. And ordering respondents to pay complainant 10% of the
total monetary award as attorneys fees.
All other claims are dismissed for lack of merit.
SO ORDERED.
[17]

Aggrieved, the respondents appealed the decision to the National Labor
Relations Commission (NLRC) on July 3, 1997, raising the following grounds:
THE DECISION IS VITIATED BY SERIOUS ERRORS IN THE FINDINGS OF
FACT WHICH, IF NOT CORRECTED, WOULD CAUSE GRAVE OR
IRREPARABLE DAMAGE OR INJURY TO THE RESPONDENTS. THESE
FINDINGS ARE:
(A) THAT COMPLAINANT WAS A REGULAR EMPLOYEE BECAUSE HE WAS
HIRED AND REHIRED IN VARIOUS CAPACITIES ON BOARD ESSO
VESSELS IN A SPAN OF 23 YEARS;
(B) THAT COMPLAINANT WAS A REGULAR EMPLOYEE BECAUSE HE WAS
ENGAGED IN THE SERVICES INDISPENSABLE IN THE OPERATION OF
THE VARIOUS VESSELS OF RESPONDENTS;
(C) THAT COMPLAINANT WAS FIT TO RESUME PRE-INJURY ACTIVITIES
AND HIS FRACTURE COMPLETELY HEALED NOTWITHSTANDING A
CONTRARY MEDICAL OPINION OF COMPLAINANTS OWN PHYSICIAN
AND RESPONDENTS COMPANY PHYSICIAN; AND
(D) THAT COMPLAINANT WAS ILLEGALLY DISMISSED BY
RESPONDENTS.
[18]

On April 26, 2001, the NLRC rendered a decision affirming that of the
Labor Arbiter. The NLRC based its decision in the case of Millares v. National
Labor Relations Commission,
[19]
wherein it was held that:
It is, likewise, clear that petitioners had been in the employ of the private respondents
for 20 years. The records reveal that petitioners were repeatedly re-hired by private
respondents even after the expiration of their respective eight-month contracts. Such
repeated re-hiring which continued for 20 years, cannot but be appreciated as
sufficient evidence of the necessity and indispensability of petitioners service to the
private respondents business or trade.
Verily, as petitioners had rendered 20 years of service, performing activities which
were necessary and desirable in the business or trade of private respondents, they are,
by express provision of Article 280 of the Labor Code, considered regular
employees.
[20]

The NLRC, likewise, declared that Ravago was illegally dismissed and
that the quitclaim executed by him could not be considered as a waiver of his
right to question the validity of his dismissal and seek reinstatement and other
reliefs. According to the NLRC, such quitclaim is against public policy,
considering the economic disadvantage of the employee and the inevitable
pressure brought about by financial capacity.
The respondents filed a motion for reconsideration of the decision,
claiming that the ruling of the Court in Millares v. NLRC
[21]
had not yet become
final and executory. However, the NLRC denied the motion.
Thereafter, the respondents filed a petition for certiorari before the CA on
the following grounds: (a) the ruling in Millares v. NLRC had not yet acquired
finality, nor has it become a law of the case orstare decisis because the Court
was still resolving the pending motion for reconsideration; (b) Ravago was not
illegally dismissed because after the expiration of his contract, there was no
obligation on the part of the respondents to rehire him; and (c) the quitclaim
signed by Ravago was voluntarily entered into and represented a reasonable
settlement of the account due him.
On August 29, 2001, the respondents filed an Urgent Application for the
Issuance of a Temporary Restraining Order and Writ of Preliminary Injunction
to enjoin and restrain the Labor Arbiter from enforcing his decision. On
September 5, 2001, the CA issued a Resolution
[22]
temporarily restraining
NLRC Sheriff Manolito Manuel from enforcing and/or implementing the
decision of the Labor Arbiter as affirmed by the NLRC.
On November 14, 2001, the CA granted the application for preliminary
injunction upon filing by the respondents of a bond in the amount
of P500,000.00. Thus, the respondents filed the surety bond as directed by
the appellate court. Before the approval thereof, however, Ravago filed a
motion to set aside the Resolution dated November 14, 2001, principally
arguing that the instant case was a labor dispute, wherein an injunction is
proscribed under Article 254
[23]
of the Labor Code of the Philippines.
In their comment on Ravagos motion, the respondents professed that the
case before the CA did not involve a labor dispute within the meaning of
Article 212(l)
[24]
of the Labor Code of the Philippines, but a money claim
against the employer as a result of termination of employment.
On August 28, 2002, the CA rendered a decision in favor the
respondents. The fallo of the decision reads:
WHEREFORE, the petition is GRANTED. The assailed decisions of the NLRC are
hereby REVERSED and SET ASIDE and the injunctive writ issued on November
14, 2001, is hereby made PERMANENT.
SO ORDERED.
[25]

The CA ratiocinated as follows:
The employment, deployment, rights and obligation of Filipino seafarers are
particularly set forth under the rules and regulations governing overseas employment
promulgated by the POEA. Section C, Part I of the Standard Employment Contract
Governing the Employment of All Filipino Seamen on Board Ocean-Going Vessels
emphatically provides the following:
SECTION C. DURATION OF CONTRACT
The period of employment shall be for a fix (sic) period but in no case to exceed 12
months and shall be stated in the Crew Contract. Any extension of the Contract period
shall be subject to the mutual consent of the parties.
It is clear from the foregoing that seafarers are contractual employees whose terms of
employment are fixed for a certain period of time. A fixed term is an essential and
natural appurtenance of seamens employment contracts to which, whatever the nature
of the engagement, the concept of regular employment under Article 280 of the Labor
Code does not find application. The contract entered into by a seafarer with his
employer sets in detail the nature of his job, the amount of his wage and, foremost, the
duration of his employment. Only a satisfactory showing that both parties dealt with
each other on more or less equal terms with no dominance exercised by the employer
over the seafarer is necessary to sustain the validity of the employment contract. In the
absence of duress, as it is in this case, the contract constitutes the law between the
parties.
[26]

The CA noted that the employment status of seafarers has been
established with finality by the Courts reconsideration of its decision
in Millares v. National Labor Relations Commission,
[27]
wherein it was ruled
that seamen are contractual employees. According to the CA, the fact that
Ravago was not rehired upon the completion of his contract did not result in
his illegal dismissal; hence, he was not entitled to reinstatement or payment of
separation pay. The CA, likewise, affirmed the writ of preliminary injunction it
earlier issued, declaring that an injunction is a preservative remedy issued for
the protection of a substantive right or interest, an antidote resorted to only
when there is a pressing necessity to avoid injurious consequences which
cannot be rendered under any standard compensation.
Hence, the present recourse.
Ravago, now the petitioner, has raised the following issues:
I.
[WHETHER OR NOT] THE COURT OF APPLEALS GRAVELY ERRED AND
VIOLATED THE LABOR CODE WHEN IT ISSUED A RESTRAINING ORDER
AND THEREAFTER A WRIT OF PRELIMINARY INJUNCTION IN CA-G.R. SP
NO. 66234.
II.
[WHETHER OR NOT] THE COURT OF APPEALS GRAVELY ERRED, [AND]
BLATANTLY DISREGARDED THE CONSTITUTIONAL MANDATE ON
PROTECTION TO FILIPINO OVERSEAS WORKERS, AND COUNTENANCED
UNWARRANTED DISCRIMINATION WHEN IT RULED THAT PETITIONER
CANNOT BECOME A REGULAR EMPLOYEE.
[28]

On the first issue, the petitioner asserts that the CA violated Article 254 of
the Labor Code when it issued a temporary restraining order, and thereafter a
writ of preliminary injunction, to derail the enforcement of the final and
executory judgment of the Labor Arbiter as affirmed by the NLRC. On the
other hand, the respondents contend that the issue has become academic
since the CA had already decided the case on its merits.
The contention of the petitioner does not persuade.
The petitioners reliance on Article 254
[29]
of the Labor Code is misplaced.
The law proscribes the issuance of injunctive relief only in those cases
involving or growing out of a labor dispute. The case before the NLRC neither
involves nor grows out of a labor dispute. It did not involve the fixing of terms
or conditions of employment or representation of persons with respect
thereto. In fact, the petitioners complaint revolves around the issue of his
alleged dismissal from service and his claim for backwages, damages and
attorneys fees. Moreover, Article 254 of the Labor Code specifically provides
that the NLRC may grant injunctive relief under Article 218 thereof.
Besides, the anti-injunction policy of the Labor Code, basically, is freedom
at the workplace. It is more appropriate in the promotion of the primacy of
free collective bargaining and negotiations, including voluntary arbitration,
mediation and conciliation, as modes of settling labor and industrial
disputes.
[30]

Generally, an injunction is a preservative remedy for the protection of a
persons substantive rights or interests. It is not a cause of action in itself but
a mere provisional remedy, an appendage to the main suit. Pressing
necessity requires that it should be resorted to only to avoid injurious
consequences which cannot be remedied under any measure of
consideration. The application of an injunctive writ rests upon the presence of
an exigency or of an exceptional reason before the main case can be
regularly heard. The indispensable conditions for granting such temporary
injunctive relief are: (a) that the complaint alleges facts which appear to be
satisfactory to establish a proper basis for injunction, and (b) that on the entire
showing from the contending parties, the injunction is reasonably necessary to
protect the legal rights of the plaintiff pending the litigation.
[31]

It bears stressing that in the present case, the respondents petition
contains facts sufficient to warrant the issuance of an injunction under Article
218, paragraph (e) of the Labor Code of the Philippines.
[32]
Further,
respondents had already posted a surety bond more than adequate to cover
the judgment award.
On the second issue, the petitioner earnestly urges this Court to re-
examine its Resolution dated July 29, 2002 in Millares v. National Labor
Relations Commission
[33]
and reinstate the doctrine laid down in its original
decision rendered on March 14, 2000, wherein it was initially determined that
a seafarer is a regular employee. The petitioner asserts that the decision of
the CA and, indirectly, that of the Resolution of this Court dated July 29, 2002,
are violative of the constitutional mandate of full protection to labor,
[34]
whether
local or overseas, because it deprives overseas Filipino workers, such as
seafarers, an opportunity to become regular employees without valid and
serious reasons. The petitioner maintains that the decision is discriminatory
and violates the constitutional provision on equal protection of the laws, in
addition to being partial to and overly protective of foreign employers.
The respondents, on the other hand, asseverate that there is no law or
administrative rule or regulation imposing an obligation to rehire a seafarer
upon the completion of his contract. Their refusal to secure the services of
the petitioner after the expiration of his contract can never be tantamount to a
termination. The respondents aver that the petitioner is not entitled to
backwages, not only because it is without factual justification but also because
it is not warranted under the law. Furthermore, the respondents assert that
the rulings in the Coyoca v. NLRC,
[35]
and the latest Millares case remain good
and valid precedents that need to be reaffirmed. The respondents cited the
ruling of the Court in Coyoca case where the Court ruled that a Filipino
seamans contract does not provide for separation or termination pay because
it is governed by the Rules and Regulations Governing Overseas
Employment.
The contention of the respondents is correct.
In a catena of cases, this Court has consistently ruled that seafarers are
contractual, not regular, employees.
In Brent School, Inc. v. Zamora,
[36]
the Court ruled that seamen and
overseas contract workers are not covered by the term regular employment
as defined in Article 280 of the Labor Code. The Court said in that case:
The question immediately provoked ... is whether or not a voluntary agreement on a
fixed term or period would be valid where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer. The definition seems non sequitur. From the premise that
the duties of an employee entail activities which are usually necessary or desirable
in the usual business or trade of the employer the conclusion does not necessarily
follow that the employer and employee should be forbidden to stipulate any period of
time for the performance of those activities. There is nothing essentially
contradictory between a definite period of an employment contract and the nature of
the employees duties set down in that contract as being usually necessary or
desirable in the usual business or trade of the employer. The concept of the
employees duties as being usually necessary or desirable in the usual business or
trade of the employer is not synonymous with or identical to employment with a fixed
term. Logically, the decisive determinant in term employment should not be the
activities that the employee is called upon to perform, but the day certain agreed upon
by the parties for the commencement and termination of their employment
relationship, a day certain being understood to be that which must necessarily come,
although it may not be known when. Seasonal employment, and employment for a
particular project are merely instances of employment in which a period, were not
expressly set down, is necessarily implied.
[37]

...
Some familiar examples may be cited of employment contracts which may be neither
for seasonal work nor for specific projects, but to which a fixed term is an essential
and natural appurtenance: overseas employment contracts, for one, to which,
whatever the nature of the engagement, the concept of regular employment with all
that it implies does not appear ever to have been applied, Article 280 of the Labor
Code notwithstanding; also appointments to the positions of dean, assistant dean,
college secretary, principal, and other administrative offices in educational
institutions, which are by practice or tradition rotated among the faculty members, and
where fixed terms are a necessity without which no reasonable rotation would be
possible. ...
[38]

...
Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor Code clearly appears to have been,
as already observed, to prevent circumvention of the employees right to be secure in
his tenure, the clause in said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of regular employment as
defined therein should be construed to refer to the substantive evil that the Code itself
has singled out: agreements entered into precisely to circumvent security of tenure. It
should have no application to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the
employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter. Unless,
thus, limited in its purview, the law would be made to apply to purposes other than
those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in
its effects and apt to lead to absurd and unintended consequences.
[39]

The Court made the same ruling in Coyoca v. National Labor Relations
Commission
[40]
and declared that a seafarer, not being a regular employee, is
not entitled to separation or termination pay.
Furthermore, petitioners contract did not provide for separation benefits. In this
connection, it is important to note that neither does the POEA standard employment
contract for Filipino seamen provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing
Overseas Employment and the said Rules do not provide for separation or termination
pay. ...
...
Therefore, although petitioner may not be a regular employee of private respondent,
the latter would still have been liable for payment of the benefits had the principal
failed to pay the same.
[41]

In the July 29, 2002 Resolution of this Court in Millares v. National Labor
Relations Commission,
[42]
it reiterated its ruling that seafarers are contractual
employees and, as such, are not covered by Article 280 of the Labor Code of
the Philippines:
From the foregoing cases, it is clear that seafarers are considered contractual
employees. They cannot be considered as regular employees under Article 280 of the
Labor Code. Their employment is governed by the contracts they sign every time they
are rehired and their employment is terminated when the contract expires. Their
employment is contractually fixed for a certain period of time. They fall under
the exception of Article 280 whose employment has been fixed for a specific project
or undertaking the completion or termination of which has been determined at the
time of engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season. We need not
depart from the rulings of the Court in the two aforementioned cases which indeed
constitute stare decisis with respect to the employment status of seafarers.
...
... The Standard Employment Contract governing the Employment of All Filipino
Seamen on Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C,
specifically provides that the contract of seamen shall be for a fixed period. And in no
case should the contract of seamen be longer than 12 months. It reads:
Section C. Duration of Contract
The period of employment shall be for a fixed period but in no case to exceed 12
months and shall be stated in the Crew Contract. Any extension of the Contract period
shall be subject to the mutual consent of the parties.

Petitioners make much of the fact that they have been continually re-hired or their
contracts renewed before the contracts expired (which has admittedly been going on
for twenty [20] years). By such circumstance they claim to have acquired regular
status with all the rights and benefits appurtenant to it.
Such contention is untenable. Undeniably, this circumstance of continuous re-hiring
was dictated by practical considerations that experienced crew members are more
preferred. Petitioners were only given priority or preference because of their
experience and qualifications but this does not detract the fact that herein petitioners
are contractual employees. They can not be considered regular employees. We quote
with favor the explanation of the NLRC in this wise:
xxx The reference to permanent and probationary masters and employees in these
papers is a misnomer and does not alter the fact that the contracts for enlistment
between complainants-appellants and respondent-appellee Esso International were for
a definite periods of time, ranging from 8 to 12 months. Although the use of the terms
permanent and probationary is unfortunate, what is really meant is eligible for-
re-hire. This is the only logical conclusion possible because the parties cannot and
should not violate POEAs requirement that a contract of enlistment shall be for a
limited period only; not exceeding twelve (12) months.
From all the foregoing, we hereby state that petitioners are not considered regular or
permanent employees under Article 280 of the Labor Code. Petitioners employment
have automatically ceased upon the expiration of their contracts of enlistment
(COE). Since there was no dismissal to speak of, it follows that petitioners are not
entitled to reinstatement or payment of separation pay or backwages, as provided by
law.
[43]

The Court ruled that the employment of seafarers for a fixed period is not
discriminatory against seafarers and in favor of foreign employers. As
explained by this Court in its July 29, 2002 Resolution inMillares:
Moreover, it is an accepted maritime industry practice that employment of seafarers
are for a fixed period only. Constrained by the nature of their employment which is
quite peculiar and unique in itself, it is for the mutual interest of both the seafarer and
the employer why the employment status must be contractual only or for a certain
period of time. Seafarers spend most of their time at sea and understandably, they can
not stay for a long and an indefinite period of time at sea. Limited access to shore
society during the employment will have an adverse impact on the seafarer. The
national, cultural and lingual diversity among the crew during the COE is a reality that
necessitates the limitation of its period.
[44]

In Pentagon International Shipping, Inc. v. William B. Adelantar,
[45]
the
Court cited its rulings in Millares and Coyoca and reiterated that a seafarer is
not a regular employee entitled to backwages and separation pay:
Therefore, Adelantar, a seafarer, is not a regular employee as defined in Article 280 of
the Labor Code. Hence, he is not entitled to full backwages and separation pay in lieu
of reinstatement as provided in Article 279 of the Labor Code. As we held
in Millares, Adelantar is a contractual employee whose rights and obligations are
governed primarily by [the] Rules and Regulations of the POEA and, more
importantly, by R.A. 8042, or the Migrant Workers and Overseas Filipinos Act of
1995.
The latest ruling of the Court in Marcial Gu-Miro v. Rolando C. Adorable
and Bergesen D.Y. Manila
[46]
reaffirmed yet again its rulings that a seafarer is
employed only on a contractual basis:
Clearly, petitioner cannot be considered as a regular employee notwithstanding that
the work he performs is necessary and desirable in the business of respondent
company. As expounded in the above-mentioned MillaresResolution, an exception is
made in the situation of seafarers. The exigencies of their work necessitates that they
be employed on a contractual basis.
Thus, even with the continued re-hiring by respondent company of petitioner to serve
as Radio Officer onboard Bergesens different vessels, this should be interpreted not
as a basis for regularization but rather a series of contract renewals sanctioned under
the doctrine set down by the second Millares case. If at all, petitioner was preferred
because of practical considerations namely, his experience and qualifications.
However, this does not alter the status of his employment from being contractual.
The petitioner failed to convince the Court why it should restate its
decision in Millares and reverse its July 29, 2002 Resolution in the same case.
IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED.
The assailed Decision dated August 28, 2002 of the Court of Appeals is
hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario,
JJ., concur.

96. PAKISTAN INTERNATIONAL AIRLINES
CORPORATION, petitioner,
vs
HON. BLAS F. OPLE, in his capacity as Minister of Labor; HON.
VICENTE LEOGARDO, JR., in his capacity as Deputy Minister;
ETHELYNNE B. FARRALES and MARIA MOONYEEN
MAMASIG, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for
petitioner.
Ledesma, Saludo & Associates for private respondents.

FELICIANO, J .:
On 2 December 1978, petitioner Pakistan International Airlines
Corporation ("PIA"), a foreign corporation licensed to do business in
the Philippines, executed in Manila two (2) separate contracts of
employment, one with private respondent Ethelynne B. Farrales and
the other with private respondent Ma. M.C. Mamasig.
1
The contracts, which
became effective on 9 January 1979, provided in pertinent portion as follows:
5. DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of three (3) years, but can
be extended by the mutual consent of the parties.
xxx xxx xxx
6. TERMINATION
xxx xxx xxx
Notwithstanding anything to contrary as herein provided,
PIA
reserves the right to terminate this agreement at any time by giving the EMPLOYEE
notice in writing in advance one month before the intended termination or in lieu thereof,
by paying the EMPLOYEE wages equivalent to one month's salary.
xxx xxx xxx
10. APPLICABLE LAW:
This agreement shall be construed and governed under
and by the laws of Pakistan, and only the Courts of
Karachi, Pakistan shall have the jurisdiction to consider any
matter arising out of or under this agreement.
Respondents then commenced training in Pakistan. After their training
period, they began discharging their job functions as flight attendants,
with base station in Manila and flying assignments to different parts of
the Middle East and Europe.
On 2 August 1980, roughly one (1) year and four (4) months prior to
the expiration of the contracts of employment, PIA through Mr. Oscar
Benares, counsel for and official of the local branch of PIA, sent
separate letters both dated 1 August 1980 to private respondents
Farrales and Mamasig advising both that their services as flight
stewardesses would be terminated "effective 1 September 1980,
conformably to clause 6 (b) of the employment agreement [they had)
executed with [PIA]."
2

On 9 September 1980, private respondents Farrales and Mamasig
jointly instituted a complaint, docketed as NCR-STF-95151-80, for
illegal dismissal and non-payment of company benefits and bonuses,
against PIA with the then Ministry of Labor and Employment
("MOLE"). After several unfruitful attempts at conciliation, the MOLE
hearing officer Atty. Jose M. Pascual ordered the parties to submit
their position papers and evidence supporting their respective
positions. The PIA submitted its position paper,
3
but no evidence, and there
claimed that both private respondents were habitual absentees; that both were in the habit of bringing in
from abroad sizeable quantities of "personal effects"; and that PIA personnel at the Manila International
Airport had been discreetly warned by customs officials to advise private respondents to discontinue that
practice. PIA further claimed that the services of both private respondents were terminated pursuant to
the provisions of the employment contract.
In his Order dated 22 January 1981, Regional Director Francisco L.
Estrella ordered the reinstatement of private respondents with full
backwages or, in the alternative, the payment to them of the amounts
equivalent to their salaries for the remainder of the fixed three-year
period of their employment contracts; the payment to private
respondent Mamasig of an amount equivalent to the value of a round
trip ticket Manila-USA Manila; and payment of a bonus to each of the
private respondents equivalent to their one-month salary.
4
The Order stated
that private respondents had attained the status of regular employees after they had rendered more than
a year of continued service; that the stipulation limiting the period of the employment contract to three (3)
years was null and void as violative of the provisions of the Labor Code and its implementing rules and
regulations on regular and casual employment; and that the dismissal, having been carried out without
the requisite clearance from the MOLE, was illegal and entitled private respondents to reinstatement with
full backwages.
On appeal, in an Order dated 12 August 1982, Hon. Vicente
Leogardo, Jr., Deputy Minister, MOLE, adopted the findings of fact
and conclusions of the Regional Director and affirmed the latter's
award save for the portion thereof giving PIA the option, in lieu of
reinstatement, "to pay each of the complainants [private respondents]
their salaries corresponding to the unexpired portion of the contract[s]
[of employment] . . .".
5

In the instant Petition for Certiorari, petitioner PIA assails the award of
the Regional Director and the Order of the Deputy Minister as having
been rendered without jurisdiction; for having been rendered without
support in the evidence of record since, allegedly, no hearing was
conducted by the hearing officer, Atty. Jose M. Pascual; and for
having been issued in disregard and in violation of petitioner's rights
under the employment contracts with private respondents.
1. Petitioner's first contention is that the Regional Director, MOLE, had
no jurisdiction over the subject matter of the complaint initiated by
private respondents for illegal dismissal, jurisdiction over the same
being lodged in the Arbitration Branch of the National Labor Relations
Commission ("NLRC") It appears to us beyond dispute, however, that
both at the time the complaint was initiated in September 1980 and at
the time the Orders assailed were rendered on January 1981 (by
Regional Director Francisco L. Estrella) and August 1982 (by Deputy
Minister Vicente Leogardo, Jr.), the Regional Director had jurisdiction
over termination cases.
Art. 278 of the Labor Code, as it then existed, forbade the termination
of the services of employees with at least one (1) year of service
without prior clearance from the Department of Labor and
Employment:
Art. 278. Miscellaneous Provisions . . .
(b) With or without a collective agreement, no employer
may shut down his establishment or dismiss or terminate
the employment of employees with at least one year of
service during the last two (2) years, whether such service
is continuous or broken, without prior written authority
issued in accordance with such rules and regulations as
the Secretary may promulgate . . . (emphasis supplied)
Rule XIV, Book No. 5 of the Rules and Regulations
Implementing the Labor Code, made clear that in case of a
termination without the necessary clearance, the Regional
Director was authorized to order the reinstatement of the
employee concerned and the payment of backwages;
necessarily, therefore, the Regional Director must have been
given jurisdiction over such termination cases:
Sec. 2. Shutdown or dismissal without clearance. Any
shutdown or dismissal without prior clearance shall be
conclusively presumed to be termination of employment
without a just cause. The Regional Director shall, in such
case order the immediate reinstatement of the employee
and the payment of his wages from the time of the
shutdown or dismissal until the time of reinstatement.
(emphasis supplied)
Policy Instruction No. 14 issued by the Secretary of Labor, dated
23 April 1976, was similarly very explicit about the jurisdiction of
the Regional Director over termination of employment cases:
Under PD 850, termination cases with or without CBA
are now placed under the original jurisdiction of the
Regional Director. Preventive suspension cases, now
made cognizable for the first time, are also placed under
the Regional Director. Before PD 850, termination cases
where there was a CBA were under the jurisdiction of the
grievance machinery and voluntary arbitration, while
termination cases where there was no CBA were under the
jurisdiction of the Conciliation Section.
In more details, the major innovations introduced by PD
850 and its implementing rules and regulations with respect
to termination and preventive suspension cases are:
1. The Regional Director is now required to rule on every
application for clearance, whether there is opposition or
not, within ten days from receipt thereof.
xxx xxx xxx
(Emphasis supplied)
2. The second contention of petitioner PIA is that, even if the Regional
Director had jurisdiction, still his order was null and void because it
had been issued in violation of petitioner's right to procedural due
process .
6
This claim, however, cannot be given serious consideration. Petitioner was ordered by
the Regional Director to submit not only its position paper but also such evidence in its favor as it might
have. Petitioner opted to rely solely upon its position paper; we must assume it had no evidence to
sustain its assertions. Thus, even if no formal or oral hearing was conducted, petitioner had ample
opportunity to explain its side. Moreover, petitioner PIA was able to appeal his case to the Ministry of
Labor and Employment.
7

There is another reason why petitioner's claim of denial of due
process must be rejected. At the time the complaint was filed by
private respondents on 21 September 1980 and at the time the
Regional Director issued his questioned order on 22 January 1981,
applicable regulation, as noted above, specified that a "dismissal
without prior clearance shall be conclusively presumed to be
termination of employment without a cause", and the Regional
Director was required in such case to" order the immediate
reinstatement of the employee and the payment of his wages from the
time of the shutdown or dismiss until . . . reinstatement." In other
words, under the then applicable rule, the Regional Director did not
even have to require submission of position papers by the parties in
view of the conclusive (juris et de jure) character of the presumption
created by such applicable law and regulation. In Cebu Institute of
Technology v. Minister of Labor and Employment,
8
the Court pointed out that
"under Rule 14, Section 2, of the Implementing Rules and Regulations, the termination of [an employee]
which was without previous clearance from the Ministry of Labor is conclusively presumed to be without
[just] cause . . . [a presumption which] cannot be overturned by any contrary proof however strong."
3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of
its contract of employment with private respondents Farrales and
Mamasig, arguing that its relationship with them was governed by the
provisions of its contract rather than by the general provisions of the
Labor Code.
9

Paragraph 5 of that contract set a term of three (3) years for that
relationship, extendible by agreement between the parties; while
paragraph 6 provided that, notwithstanding any other provision in the
Contract, PIA had the right to terminate the employment agreement at
any time by giving one-month's notice to the employee or, in lieu of
such notice, one-months salary.
A contract freely entered into should, of course, be respected, as PIA
argues, since a contract is the law between the parties.
10
The principle of
party autonomy in contracts is not, however, an absolute principle. The rule in Article 1306, of our Civil
Code is that the contracting parties may establish such stipulations as they may deem
convenient, "provided they are not contrary to law, morals, good customs, public order or public policy."
Thus, counter-balancing the principle of autonomy of contracting parties is the equally general rule that
provisions of applicable law, especially provisions relating to matters affected with public policy, are
deemed written into the contract.
11
Put a little differently, the governing principle is that parties may not
contract away applicable provisions of law especially peremptory provisions dealing with matters heavily
impressed with public interest. The law relating to labor and employment is clearly such an area and
parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and
regulations by simply contracting with each other. It is thus necessary to appraise the contractual
provisions invoked by petitioner PIA in terms of their consistency with applicable Philippine law and
regulations.
As noted earlier, both the Labor Arbiter and the Deputy Minister,
MOLE, in effect held that paragraph 5 of that employment contract
was inconsistent with Articles 280 and 281 of the Labor Code as they
existed at the time the contract of employment was entered into, and
hence refused to give effect to said paragraph 5. These Articles read
as follows:
Art. 280. 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 to his backwages computed from the
time his compensation was withheld from him up to the
time his reinstatement.
Art. 281. Regular and Casual Employment. The provisions
of written agreement to the contrary notwithstanding and
regardless of the oral agreements of the parties, an
employment shall be deemed to be regular where the
employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has
been fixed for a specific project or undertaking the
completion 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 as regular employee with respect to the activity
in which he is employed and his employment shall continue
while such actually exists. (Emphasis supplied)
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al.,
12
the Court had
occasion to examine in detail the question of whether employment for a fixed term has been outlawed
under the above quoted provisions of the Labor Code. After an extensive examination of the history and
development of Articles 280 and 281, the Court reached the conclusion that a contract providing for
employment with a fixed period was not necessarily unlawful:
There can of course be no quarrel with the proposition
that where from the circumstances it is apparent that
periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck
down or disregarded as contrary to public policy, morals,
etc. But where no such intent to circumvent the law is
shown, or stated otherwise, where the reason for the law
does not exist e.g. where it is indeed the employee himself
who insists upon a period or where the nature of the
engagement is such that, without being seasonal or for a
specific project, a definite date of termination is a sine qua
non would an agreement fixing a period be essentially evil
or illicit, therefore anathema Would such an agreement
come within the scope of Article 280 which admittedly was
enacted "to prevent the circumvention of the right of the
employee to be secured in . . . (his) employment?"
As it is evident from even only the three examples already
given that Article 280 of the Labor Code, under a narrow
and literal interpretation, not only fails to exhaust the gamut
of employment contracts to which the lack of a fixed period
would be an anomaly, but would also appear to restrict,
without reasonable distinctions, the right of an employee to
freely stipulate with his employer the duration of his
engagement, it logically follows that such a literal
interpretation should be eschewed or avoided. The law
must be given reasonable interpretation, to preclude
absurdity in its application. Outlawing the whole concept of
term employment and subverting to boot the principle of
freedom of contract to remedy the evil of employers" using
it as a means to prevent their employees from obtaining
security of tenure is like cutting off the nose to spite the
face or, more relevantly, curing a headache by lopping off
the head.
xxx xxx xxx
Accordingly, and since the entire purpose behind the
development of legislation culminating in the present Article
280 of the Labor Code clearly appears to have been, as
already observed, to prevent circumvention of the
employee's right to be secure in his tenure, the clause in
said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of
regular employment as defined therein should be construed
to refer to the substantive evil that the Code itself has
singled out: agreements entered into precisely to
circumvent security of tenure. It should have no application
to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being
brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily
appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance
whatever being exercised by the former over the
latter. Unless thus limited in its purview, the law would be
made to apply to purposes other than those explicitly stated
by its framers; it thus becomes pointless and arbitrary,
unjust in its effects and apt to lead to absurd and
unintended consequences. (emphasis supplied)
It is apparent from Brent School that the critical consideration is
the presence or absence of a substantial indication that the
period specified in an employment agreement was designed to
circumvent the security of tenure of regular employees which is
provided for in Articles 280 and 281 of the Labor Code. This
indication must ordinarily rest upon some aspect of the
agreement other than the mere specification of a fixed term of
the ernployment agreement, or upon evidence aliunde of the
intent to evade.
Examining the provisions of paragraphs 5 and 6 of the employment
agreement between petitioner PIA and private respondents, we
consider that those provisions must be read together and when so
read, the fixed period of three (3) years specified in paragraph 5 will
be seen to have been effectively neutralized by the provisions of
paragraph 6 of that agreement. Paragraph 6 in effect took back from
the employee the fixed three (3)-year period ostensibly granted by
paragraph 5 by rendering such period in effect a facultative one at the
option of the employer PIA. For petitioner PIA claims to be authorized
to shorten that term, at any time and for any cause satisfactory to
itself, to a one-month period, or even less by simply paying the
employee a month's salary. Because the net effect of paragraphs 5
and 6 of the agreement here involved is to render the employment of
private respondents Farrales and Mamasig basically employment at
the pleasure of petitioner PIA, the Court considers that paragraphs 5
and 6 were intended to prevent any security of tenure from accruing in
favor of private respondents even during the limited period of three (3)
years,
13
and thus to escape completely the thrust of Articles 280 and 281 of the Labor Code.
Petitioner PIA cannot take refuge in paragraph 10 of its employment
agreement which specifies, firstly, the law of Pakistan as the
applicable law of the agreement and, secondly, lays the venue for
settlement of any dispute arising out of or in connection with the
agreement "only [in] courts of Karachi Pakistan". The first clause of
paragraph 10 cannot be invoked to prevent the application of
Philippine labor laws and regulations to the subject matter of this
case, i.e., the employer-employee relationship between petitioner PIA
and private respondents. We have already pointed out that the
relationship is much affected with public interest and that the
otherwise applicable Philippine laws and regulations cannot be
rendered illusory by the parties agreeing upon some other law to
govern their relationship. Neither may petitioner invoke the second
clause of paragraph 10, specifying the Karachi courts as the sole
venue for the settlement of dispute; between the contracting parties.
Even a cursory scrutiny of the relevant circumstances of this case will
show the multiple and substantive contacts between Philippine law
and Philippine courts, on the one hand, and the relationship between
the parties, upon the other: the contract was not only executed in the
Philippines, it was also performed here, at least partially; private
respondents are Philippine citizens and respondents, while petitioner,
although a foreign corporation, is licensed to do business (and actually
doing business) and hence resident in the Philippines; lastly, private
respondents were based in the Philippines in between their assigned
flights to the Middle East and Europe. All the above contacts point to
the Philippine courts and administrative agencies as a proper forum
for the resolution of contractual disputes between the parties. Under
these circumstances, paragraph 10 of the employment agreement
cannot be given effect so as to oust Philippine agencies and courts of
the jurisdiction vested upon them by Philippine law. Finally, and in any
event, the petitioner PIA did not undertake to plead and prove the
contents of Pakistan law on the matter; it must therefore be presumed
that the applicable provisions of the law of Pakistan are the same as
the applicable provisions of Philippine law.
14

We conclude that private respondents Farrales and Mamasig were
illegally dismissed and that public respondent Deputy Minister, MOLE,
had not committed any grave abuse of discretion nor any act without
or in excess of jurisdiction in ordering their reinstatement with
backwages. Private respondents are entitled to three (3) years
backwages without qualification or deduction. Should their
reinstatement to their former or other substantially equivalent positions
not be feasible in view of the length of time which has gone by since
their services were unlawfully terminated, petitioner should be
required to pay separation pay to private respondents amounting to
one (1) month's salary for every year of service rendered by them,
including the three (3) years service putatively rendered.
ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for
lack of merit, and the Order dated 12 August 1982 of public
respondent is hereby AFFIRMED, except that (1) private respondents
are entitled to three (3) years backwages, without deduction or
qualification; and (2) should reinstatement of private respondents to
their former positions or to substantially equivalent positions not be
feasible, then petitioner shall, in lieu thereof, pay to private
respondents separation pay amounting to one (1)-month's salary for
every year of service actually rendered by them and for the three (3)
years putative service by private respondents. The Temporary
Restraining Order issued on 13 September 1982 is hereby LIFTED.
Costs against petitioner.
SO ORDERED.
Fernan (C.J., Chairman), Gutierrez, Jr., Bidin and Corts, JJ., concur.

97. BRENT SCHOOL vs. ZAMORA
BRENT SCHOOL, INC.DIMACHE vs. RONALDO ZAMORA and
DOROTEO R. ALEGRE
G.R. No. L-48494 February 5, 1990 en banc

FACTS:

Private respondent Doroteo R. Alegre was engaged as athletic
director by petitioner Brent School, Inc. at a yearly compensation
of P20,000.00. The contract fixed a specific term for its existence,
five (5) years, i.e., from July 18, 1971, the date of execution of the
agreement, to July 17, 1976. Subsequent subsidiary agreements
dated March 15, 1973, August 28, 1973, and September 14, 1974
reiterated the same terms and conditions, including the expiry
date, as those contained in the original contract of July 18, 1971.

On April 20,1976, Alegre was given a copy of the report filed by
Brent School with the Department of Labor advising of the
termination of his services effective on July 16, 1976. The stated
ground for the termination was "completion of contract, expiration
of the definite period of employment." Although protesting the
announced termination stating that his services were necessary
and desirable in the usual business of his employer, and his
employment lasted for 5 years - therefore he had acquired the
status of regular employee - Alegre accepted the amount of
P3,177.71, and signed a receipt therefor containing the phrase,
"in full payment of services for the period May 16, to July 17, 1976
as full payment of contract."

The Regional Director considered Brent School's report as an
application for clearance to terminate employment (not a report of
termination), and accepting the recommendation of the Labor
Conciliator, refused to give such clearance and instead required
the reinstatement of Alegre, as a "permanent employee," to his
former position without loss of seniority rights and with full back
wages.

ISSUE:

Whether or not the provisions of the Labor Code, as amended,
have anathematized "fixed period employment" or employment for
a term.

RULING:

Respondent Alegre's contract of employment with Brent School
having lawfully terminated with and by reason of the expiration of
the agreed term of period thereof, he is declared not entitled to
reinstatement.

The employment contract between Brent School and Alegre was
executed on July 18, 1971, at a time when the Labor Code of the
Philippines (P.D. 442) had not yet been promulgated. At that time,
the validity of term employment was impliedly recognized by the
Termination Pay Law, R.A. 1052, as amended by R.A. 1787.
Prior, thereto, it was the Code of Commerce (Article 302) which
governed employment without a fixed period, and also implicitly
acknowledged the propriety of employment with a fixed period.
The Civil Code of the Philippines, which was approved on June
18, 1949 and became effective on August 30,1950, itself deals
with obligations with a period. No prohibition against term-or fixed-
period employment is contained in any of its articles or is
otherwise deducible therefrom.

It is plain then that when the employment contract was signed
between Brent School and Alegre, it was perfectly legitimate for
them to include in it a stipulation fixing the duration thereof
Stipulations for a term were explicitly recognized as valid by this
Court.

The status of legitimacy continued to be enjoyed by fixed-period
employment contracts under the Labor Code (PD 442), which
went into effect on November 1, 1974. The Code contained
explicit references to fixed period employment, or employment
with a fixed or definite period. Nevertheless, obscuration of the
principle of licitness of term employment began to take place at
about this time.

Article 320 originally stated that the "termination of employment of
probationary employees and those employed WITH A FIXED
PERIOD shall be subject to such regulations as the Secretary of
Labor may prescribe." Article 321 prescribed the just causes for
which an employer could terminate "an employment without a
definite period." And Article 319 undertook to define "employment
without a fixed period" in the following manner: 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.

Subsequently, the foregoing articles regarding employment with
"a definite period" and "regular" employment were amended by
Presidential Decree No. 850, effective December 16, 1975.

Article 320, dealing with "Probationary and fixed period
employment," was altered by eliminating the reference to persons
"employed with a fixed period," and was renumbered (becoming
Article 271).

As it is evident that Article 280 of the Labor Code, under a narrow
and literal interpretation, not only fails to exhaust the gamut of
employment contracts to which the lack of a fixed period would be
an anomaly, but would also appear to restrict, without reasonable
distinctions, the right of an employee to freely stipulate with his
employer the duration of his engagement, it logically follows that
such a literal interpretation should be eschewed or avoided. The
law must be given a reasonable interpretation, to preclude
absurdity in its application. Outlawing the whole concept of term
employment and subverting to boot the principle of freedom of
contract to remedy the evil of employer's using it as a means to
prevent their employees from obtaining security of tenure is like
cutting off the nose to spite the face or, more relevantly, curing a
headache by lopping off the head.

Such interpretation puts the seal on Bibiso upon the effect of the
expiry of an agreed period of employment as still good rulea
rule reaffirmed in the recent case of Escudero vs. Office of the
President (G.R. No. 57822, April 26, 1989) where, in the fairly
analogous case of a teacher being served by her school a notice
of termination following the expiration of the last of three
successive fixed-term employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of
the fact that her employment was probationary, contractual in
nature, and one with a definitive period. At the expiration of the
period stipulated in the contract, her appointment was deemed
terminated and the letter informing her of the non-renewal of her
contract is not a condition sine qua non before Reyes may be
deemed to have ceased in the employ of petitioner UST. The
notice is a mere reminder that Reyes' contract of employment
was due to expire and that the contract would no longer be
renewed. It is not a letter of termination.

Paraphrasing Escudero, respondent Alegre's employment was
terminated upon the
expiration of his last contract with Brent School on July 16, 1976
without the necessity of any notice. The advance written advice
given the Department of Labor with copy to said petitioner was a
mere reminder of the impending expiration of his contract, not a
letter of termination, nor an application for clearance to terminate
which needed the approval of the Department of Labor to make
the termination of his services effective. In any case, such
clearance should properly have been given, not denied.

99. PURE FOODS CORPORATON, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, RODOLFO CORDOVA, VIOLETA
CRUSIS, ET AL.,
*
respondents.
D E C I S I O N
DAVIDE, JR., J .:
The crux of this petition for certiorari is the issue of whether employees
hired for a definite period and whose services are necessary and desirable in
the usual business or trade of the employer are regular employees.
The private respondents (numbering 906) were hired by petitioner Pure
Foods Corporation to work for a fixed period of five months at its tuna cannery
plant in Tambler, General Santos City. After the expiration of their respective
contracts of employment in June and July 1991, their services were
terminated. They forthwith executed a Release and Quitclaim stating that
they had no claim whatsoever against the petitioner.
On 29 July 1991, the private respondents filed before the National Labor
Relations Commission (NLRC) Sub-Regional Arbitration Branch No. XI,
General Santos City, a complaint for illegal dismissal against the petitioner
and its plant manager, Marciano Aganon.
[1]
This case was docketed as RAB-
11-08-50284-91.
On 23 December 1992, Labor Arbiter Arturo P. Aponesto handed down a
decision
[2]
dismissing the complaint on the ground that the private respondents
were mere contractual workers, and not regular employees; hence, they could
not avail of the law on security of tenure. The termination of their services by
reason of the expiration of their contracts of employment was, therefore,
justified. He pointed out that earlier he had dismissed a case entitled Lakas
ng Anak-Pawis- NOWM v. Pure Foods Corp. (Case No. RAB-11-02-00088-
88) because the complainants therein were not regular employees of Pure
Foods, as their contracts of employment were for a fixed period of five
months. Moreover, in another case involving the same contractual workers of
Pure Foods (Case No. R-196-ROXI- MED- UR-55-89), then Secretary of
Labor Ruben Torres held, in a Resolution dated 30 April 1990, that the said
contractual workers were not regular employees.
The Labor Arbiter also observed that an order for private respondents
reinstatement would result in the reemployment of more than 10,000
former contractual employees of the petitioner. Besides, by executing a
Release and Quitclaim, the private respondents had waived and
relinquished whatever right they might have against the petitioner.
The private respondents appealed from the decision to the National Labor
Relations Commission (NLRC), Fifth Division, in Cagayan de Oro City, which
docketed the case as NLRC CA No. M-001323-93.
On 28 October 1994, the NLRC affirmed the Labor Arbiter's
decision.
[3]
However, on private respondents motion for reconsideration, the
NLRC rendered another decision on 30 January 1995
[4]
vacating and setting
aside its decision of 28 October 1994 and holding that the private respondents
and their co-complainants were regular employees. It declared that the
contract of employment for five months was a clandestine scheme employed
by [the petitioner] to stifle [private respondents] right to security of tenure and
should therefore be struck down and disregarded for being contrary to law,
public policy, and morals. Hence, their dismissal on account of the expiration
of their respective contracts was illegal.
Accordingly, the NLRC ordered the petitioner to reinstate the private
respondents to their former position without loss of seniority rights and other
privileges, with full back wages; and in case their reinstatement would no
longer be feasible, the petitioner should pay them separation pay equivalent to
one-month pay or one-half-month pay for every year of service, whichever is
higher, with back wages and 10% of the monetary award as attorneys fees.
Its motion for reconsideration having been denied,
[5]
the petitioner came to
this Court contending that respondent NLRC committed grave abuse of
discretion amounting to lack of jurisdiction in reversing the decision of the
Labor Arbiter.
The petitioner submits that the private respondents are now estopped from
questioning their separation from petitioners employ in view of their express
conformity with the five-month duration of their employment contracts.
Besides, they fell within the exception provided in Article 280 of the Labor
Code which reads: [E]xcept where the employment has been fixed for a
specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee.
Moreover, the first paragraph of the said article must be read and
interpreted in conjunction with the proviso in the second paragraph, which
reads: Provided that any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed.... In
the instant case, the private respondents were employed for a period of five
months only. In any event, private respondents' prayer for reinstatement is
well within the purview of the Release and Quitclaim they had executed
wherein they unconditionally released the petitioner from any and all other
claims which might have arisen from their past employment with the petitioner.
In its Comment, the Office of the Solicitor General (OSG) advances the
argument that the private respondents were regular employees, since they
performed activities necessary and desirable in the business or trade of the
petitioner. The period of employment stipulated in the contracts of
employment was null and void for being contrary to law and public policy, as
its purpose was to circumvent the law on security of tenure. The expiration of
the contract did not, therefore, justify the termination of their employment.
The OSG further maintains that the ruling of the then Secretary of Labor
and Employment in LAP-NOWM v. Pure Foods Corporation is not binding on
this Court; neither is that ruling controlling, as the said case involved
certification election and not the issue of the nature of private respondents
employment. It also considers private respondents quitclaim as ineffective to
bar the enforcement for the full measure of their legal rights.
The private respondents, on the other hand, argue that contracts with a
specific period of employment may be given legal effect provided, however,
that they are not intended to circumvent the constitutional guarantee on
security of tenure. They submit that the practice of the petitioner in hiring
workers to work for a fixed duration of five months only to replace them with
other workers of the same employment duration was apparently to prevent the
regularization of these so-called casuals, which is a clear circumvention of
the law on security of tenure.
We find the petition devoid of merit.
Article 280 of the Labor Code defines regular and casual employment as
follows:
ART. 280. Regular and Casual Employment.-- The provisions of written agreement to
the contrary notwithstanding and regardless of the oral argument of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph; Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists.
Thus, the two kinds of regular employees are (1) those who are engaged
to perform activities which are necessary or desirable in the usual business or
trade of the employer; and (2) those casual employees who have rendered at
least one year of service, whether continuous or broken, with respect to the
activity in which they are employed.
[6]

In the instant case, the private respondents activities consisted in the
receiving, skinning, loining, packing, and casing-up of tuna fish which were
then exported by the petitioner. Indisputably, they were performing activities
which were necessary and desirable in petitioners business or trade.
Contrary to petitioner's submission, the private respondents could not be
regarded as having been hired for a specific project or undertaking. The term
specific project or undertaking under Article 280 of the Labor Code
contemplates an activity which is not commonly or habitually performed or
such type of work which is not done on a daily basis but only for a specific
duration of time or until completion; the services employed are then necessary
and desirable in the employers usual business only for the period of time it
takes to complete the project.
[7]

The fact that the petitioner repeatedly and continuously hired workers to
do the same kind of work as that performed by those whose contracts had
expired negates petitioners contention that those workers were hired for a
specific project or undertaking only.
Now on the validity of private respondents' five-month contracts of
employment. In the leading case of Brent School, Inc. v. Zamora,
[8]
which was
reaffirmed in numerous subsequent cases,
[9]
this Court has upheld the legality
of fixed-term employment. It ruled that the decisive determinant in term
employment should not be the activities that the employee is called upon to
perform but the day certain agreed upon by the parties for the commencement
and termination of their employment relationship. But, this Court went on to
say that where from the circumstances it is apparent that the periods have
been imposed to preclude acquisition of tenurial security by the employee,
they should be struck down or disregarded as contrary to public policy and
morals.
Brent also laid down the criteria under which term employment cannot be
said to be in circumvention of the law on security of tenure:
1) The fixed period of employment was knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other
on more or less equal terms with no moral dominance exercised by the former or the
latter.
None of these criteria had been met in the present case. As pointed out by
the private respondents:
[I]t could not be supposed that private respondents and all other so-called casual
workers of [the petitioner] KNOWINGLY and VOLUNTARILY agreed to the 5-
month employment contract. Cannery workers are never on equal terms with their
employers. Almost always, they agree to any terms of an employment contract just to
get employed considering that it is difficult to find work given their ordinary
qualifications. Their freedom to contract is empty and hollow because theirs is the
freedom to starve if they refuse to work as casual or contractual workers. Indeed, to
the unemployed, security of tenure has no value. It could not then be said that
petitioner and private respondents "dealt with each other on more or less equal terms
with no moral dominance whatever being exercised by the former over the latter.
[10]

The petitioner does not deny or rebut private respondents' averments (1)
that the main bulk of its workforce consisted of its so-called casual
employees; (2) that as of July 1991, casual workers numbered 1,835; and
regular employees, 263; (3) that the company hired casual every month for
the duration of five months, after which their services were terminated and
they were replaced by other casual employees on the same five-month
duration; and (4) that these casual employees were actually doing work that
were necessary and desirable in petitioners usual business.
As a matter of fact, the petitioner even stated in its position paper
submitted to the Labor Arbiter that, according to its records, the previous
employees of the company hired on a five-month basis numbered about
10,000 as of July 1990. This confirms private respondents allegation that it
was really the practice of the company to hire workers on a uniformly fixed
contract basis and replace them upon the expiration of their contracts with
other workers on the same employment duration.
This scheme of the petitioner was apparently designed to prevent the
private respondents and the other casual employees from attaining the
status of a regular employee. It was a clear circumvention of the employees
right to security of tenure and to other benefits like minimum wage, cost-of-
living allowance, sick leave, holiday pay, and 13th month pay.
[11]
Indeed, the
petitioner succeeded in evading the application of labor laws. Also, it saved
itself from the trouble or burden of establishing a just cause for terminating
employees by the simple expedient of refusing to renew the employment
contracts.
The five-month period specified in private respondents employment
contracts having been imposed precisely to circumvent the constitutional
guarantee on security of tenure should, therefore, be struck down or
disregarded as contrary to public policy or morals.
[12]
To uphold the contractual
arrangement between the petitioner and the private respondents would, in
effect, permit the former to avoid hiring permanent or regular employees by
simply hiring them on a temporary or casual basis, thereby violating the
employees security of tenure in their jobs.
[13]

The execution by the private respondents of a Release and Quitclaim did
not preclude them from questioning the termination of their
services. Generally, quitclaims by laborers are frowned upon as contrary to
public policy and are held to be ineffective to bar recovery for the full measure
of the workers rights.
[14]
The reason for the rule is that the employer and the
employee do not stand on the same footing.
[15]

Notably, the private respondents lost no time in filing a complaint for illegal
dismissal. This act is hardly expected from employees who voluntarily and
freely consented to their dismissal.
[16]

The NLRC was, thus, correct in finding that the private respondents were
regular employees and that they were illegally dismissed from their
jobs. Under Article 279 of the Labor Code and the recent jurisprudence,
[17]
the
legal consequence of illegal dismissal is reinstatement without loss of seniority
rights and other privileges, with full back wages computed from the time of
dismissal up to the time of actual reinstatement, without deducting the
earnings derived elsewhere pending the resolution of the case.
However, since reinstatement is no longer possible because the
petitioner's tuna cannery plant had, admittedly, been closed in November
1994,
[18]
the proper award is separation pay equivalent to one month pay or
one-half month pay for every year of service, whichever is higher, to be
computed from the commencement of their employment up to the closure of
the tuna cannery plant. The amount of back wages must be computed from
the time the private respondents were dismissed until the time petitioner's
cannery plant ceased operation.
[19]

WHEREFORE, for lack of merit, the instant petition is DISMISSED and the
challenged decision of 30 January 1995 of the National Labor Relations
Commission in NLRC CA No. M-001323-93 is hereby AFFIRMED subject to
the above modification on the computation of the separation pay and back
wages.
SO ORDERED.
Bellosillo, Vitug, and Kapunan, JJ., concur.