January 18, 2012. G.R. No. 177498.
* The POEA Rules and Regulations Governing Overseas Employment dated 31 May 1991 provides
STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI SHIP MANAGEMENT,
petitioners, vs. SULPECIO MEDEQUILLO, JR., respondent.
Civil Law; Obligations; Novation; Novation is the extinguishment of an obligation by the
substitution or change of the obligation by a subsequent one which extinguishes or modifies the first,
either by changing the object or principal conditions, or, by substituting another in place of the
debtor, or by subrogating a third person in the rights of the creditor.—Novation is the
extinguishment of an obligation by the substitution or change of the obligation by a subsequent
one which extinguishes or modifies the first, either by changing the object or principal conditions,
or, by substituting another in place of the debtor, or by subrogating a third person in the rights of
the creditor. In order for novation to take place, the concurrence of the following requisites is
indispensable: 1. There must be a previous valid obligation, 2. There must be an agreement of the
parties concerned to a new contract, 3. There must be the extinguishment of the old contract, and
4. There must be the validity of the new contract.
Labor Law; Evidence; Substantial Evidence; Factual findings of labor officials, who are
deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not
only respect but even finality by the courts when supported by substantial evidence.—Equally
settled is the rule that factual findings of labor officials, who are deemed to have acquired
expertise in matters within their jurisdiction, are generally accorded not only respect but even
finality by the courts when supported by substantial evidence, i.e., the amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion. But these findings are
not infallible. When there is a showing that they were arrived at arbitrarily or in disregard of the
evidence on record, they may be examined by the courts. In this case, there was no showing of any
arbitrariness on the part of the lower courts in their findings of facts. Hence, we follow the settled
rule.
Same; Seafarers; Recruitment; Philippine Overseas Employment Administration (POEA)
Standard Employment Contract; The Philippine Overseas Employment Administration (POEA)
Standard Employment Contract provides that employment shall commence “upon the actual
departure of the seafarer from the airport or seaport in the port of hire.”—The POEA Standard
Employment Contract provides that employment shall commence “upon the actual departure of
the seafarer from the airport or seaport in the port of hire.” We adhere to the terms and conditions
of the contract so as to credit the valid prior stipulations of the parties before the controversy
started. Else, the obligatory force of every contract will be useless. Parties are bound not only to
the fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and law.
Same; Same; Same; Employer-Employee Relationship; Even before the start of any employer-
employee relationship, contemporaneous with the perfection of the employment contract was the
birth of certain rights and obligations, the breach of which may give rise to a cause of action against
the erring party.—We rule that distinction must be made between the perfection of the
employment contract and the commencement of the employer-employee relationship. The
perfection of the contract, which in this case coincided with the date of execution thereof, occurred
when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms
and conditions therein. The commencement of the employer-employee relationship, as earlier
discussed, would have taken place had petitioner been actually deployed from the point of hire.
Thus, even before the start of any employer-employee relationship, contemporaneous with the
perfection of the employment contract was the birth of certain rights and obligations, the breach of
which may give rise to a cause of action against the erring party. Thus, if the reverse had
happened, that is the seafarer failed or refused to be deployed as agreed upon, he would be liable
for damages.
Same; Same; Same; Penalties; Failure of the agency to deploy a worker within the prescribed
period without valid reasons shall be a cause for suspension or cancellation of license or fine. In
addition, the agency shall return all documents at no cost to the worker.Thirty (30) calendar days
from the date of processing by the administration of the employment contracts of seafarers. —
for the consequence and penalty against in case of non-deployment of the seafarer without any
valid reason. It reads: Section 4. Worker’s Deployment.—An agency shall deploy its recruits within
the deployment period as indicated below: xxx b. Failure of the agency to deploy a worker
within the prescribed period without valid reasons shall be a cause for suspension or
cancellation of license or fine. In addition, the agency shall return all documents at no
cost to the worker. (Emphasis and underscoring supplied) The appellate court correctly ruled
that the penalty of reprimand provided under Rule IV, Part VI of the POEA Rules and Regulations
Governing the Recruitment and Employment of Land-based Overseas Workers is not applicable in
this case. The breach of contract happened on February 1992 and the law applicable at that time
was the 1991 POEA Rules and Regulations Governing Overseas Employment. The penalty for non-
deployment as discussed is suspension or cancellation of license or fine.
Same; Same; Same; Migrant Workers Act (R.A. No. 8042); The absence of the Philippine
Overseas Employment Administration (POEA) Rules with regard to the payment of damages to the
affected seafarer does not mean that the seafarer is precluded from claiming the same, the Supreme
Court decreed the applicability of Section 10 of Republic Act No. 8042 (Migrant Workers Act) which
provides for money claims by reason of a contract involving Filipino workers for overseas
deployment.—The POEA Rules Governing the Recruitment and Employment of Seafarers do not
provide for the award of damages to be given in favor of the employees. The claim provided by the
same law refers to a valid contractual claim for compensation or benefits arising from employer-
employee relationship or for any personal injury, illness or death at levels provided for within the
terms and conditions of employment of seafarers. However, the absence of the POEA Rules with
regard to the payment of damages to the affected seafarer does not mean that the seafarer is
precluded from claiming the same. The sanctions provided for non-deployment do not end with the
suspension or cancellation of license or fine and the return of all documents at no cost to the
worker. As earlier discussed, they do not forfend a seafarer from instituting an action for damages
against the employer or agency which has failed to deploy him. We thus decree the application of
Section 10 of Republic Act No. 8042 (Migrant Workers Act) which provides for money claims by
reason of a contract involving Filipino workers for oversea10. s deployment. The law provides:
Sec. Money Claims.—Notwithstanding any provision of law to the contrary, the Labor Arbiters of
the National Labor Relations Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint,
the claims arising out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual, moral, exemplary
and other forms of damages. x x x (Underscoring supplied)
Civil Law; Damages; Actual Damages; One is entitled to an adequate compensation only for
such pecuniary loss suffered by him as he has duly proved.—Applying the rules on actual damages,
Article 2199 of the New Civil Code provides that one is entitled to an adequate compensation only
for such pecuniary loss suffered by him as he has duly proved. Respondent is thus liable to pay
petitioner actual damages in the form of the loss of nine (9) months’ worth of salary as provided in
the contract. This is but proper because of the non-deployment of respondent without just cause.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.295
Rodello B. Ortiz for petitioners.
Linsangan, Linsangan & Linsangan for respondent.
PEREZ,J.:
Before the Court is a Petition for Review on Certiorari1 of the Decision2 of the First Division of
the Court of Appeals in CA-G.R. SP No. 91632 dated 31 January 2007, denying the petition
for certiorari filed by Stolt-Nielsen Transportation Group, Inc. and Chung Gai Ship Management
(petitioners) and affirming the Resolution of the National Labor Relations Commission (NLRC).
The dispositive portion of the assailed decision reads:
 “WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed Decision
promulgated on February 28, 2003 and the Resolution dated July 27, 2005 are AFFIRMED.”3
The facts as gathered by this Court follow:
On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before the Adjudication
Office of the Philippine Overseas Employment Administration (POEA) against the petitioners for
illegal dismissal under a first contract and for failure to deploy under a second contract. In his
complaint-affidavit,4 respondent alleged that:
1. On 6 November 1991 (First Contract), he was hired by Stolt-Nielsen Marine
Services, Inc on behalf of its principal Chung-Gai Ship Management of Panama
as Third
2. Assistant Engineer on board the vessel “Stolt Aspiration” for a period of nine (9)
months;
3. He would be paid with a monthly basic salary of $808.00 and a fixed overtime
pay of $404.00 or a total of $1,212.00 per month during the employment period
commencing on 6 November 1991;
4. On 8 November 1991, he joined the vessel MV “Stolt Aspiration”;
5. On February 1992 or for nearly three (3) months of rendering service and while
the vessel was at Batangas, he was ordered by the ship’s master to disembark
the vessel and repatriated back to Manila for no reason or explanation;
6. Upon his return to Manila, he immediately proceeded to the petitioner’s office
where he was transferred employment with another vessel named MV “Stolt
Pride” under the same terms and conditions of the First Contract;
7. On 23 April 1992, the Second Contract was noted and approved by the POEA;.
8. The POEA, without knowledge that he was not deployed with the vessel,
certified the Second Employment Contract on 18 September 1992.
9. Despite the commencement of the Second Contract on 21 April 1992, petitioners
failed to deploy him with the vessel MV “Stolt Pride”;
10. He made a follow-up with the petitioner but the same refused to comply with the
Second Employment Contract.
11. On 22 December 1994, he demanded for his passport, seaman’s book and other
employment documents. However, he was only allowed to claim the said
documents in exchange of his signing a document;
12. He was constrained to sign the document involuntarily because without these
documents, he could not seek employment from other agencies.
He prayed for actual, moral and exemplary damages as well as attorney’s fees for his illegal
dismissal and in view of the Petitioners’ bad faith in not complying with the Second Contract.
The case was transferred to the Labor Arbiter of the DOLE upon the effectivity of the Migrant
Workers and Overseas Filipinos Act of 1995.
The parties were required to submit their respective position papers before the Labor Arbiter.
However, petitioners failed to submit their respective pleadings despite the opportunity given to
them.5
On 21 July 2000, Labor Arbiter Vicente R. Layawen rendered a judgment 6 finding that the
respondent was constructively dismissed by the petitioners. The dispositive portion reads:
“WHEREFORE, premises considered, judgment is hereby rendered, declaring the respondents
guilty of constructively dismissing the complainant by not honoring the employment contract.
Accordingly, respondents are hereby ordered jointly and solidarily to pay complainant the
following:
$12,537.00 or its peso equivalent at the time of payment.” 1.7
The Labor Arbiter found the first contract entered into by and between the complainant and
the respondents to have been novated by the execution of the second contract. In other words,
respondents cannot be held liable for the first contract but are clearly and definitely liable for the
breach of the second contract.8 However, he ruled that there was no substantial evidence to grant
the prayer for moral and exemplary damages.9
The petitioners appealed the adverse decision before the National Labor Relations
Commission assailing that they were denied due process, that the respondent cannot be considered
as dismissed from employment because he was not even deployed yet and the monetary award in
favor of the respondent was exorbitant and not in accordance with law.10
On 28 February 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter.
The dispositive portion reads:
“WHEREFORE, premises considered, the decision under review is hereby, MODIFIED BY
DELETING the award of overtime pay in the total amount of Three Thousand Six Hundred Thirty
Six US Dollars (US $3,636.00).
In all other respects, the assailed decision so stands as, AFFIRMED.”11
Before the NLRC, the petitioners assailed that they were not properly notified of the hearings
that were conducted before the Labor Arbiter. They further alleged that after the suspension of
proceedings before the POEA, the only notice they received was a copy of the decision of the Labor
Arbiter.12
The NLRC ruled that records showed that attempts to serve the various notices of hearing
were made on petitioners’ counsel on record but these failed on account of their failure to furnish
the Office of the Labor Arbiter a copy of any notice of change of address. There was also no
evidence that a service of notice of change of address was served on the POEA. 13
The NLRC upheld the finding of unjustified termination of contract for failure on the part of
the petitioners to present evidence that would justify their non-deployment of the respondent.14 It
denied the claim of the petitioners that the monetary award should be limited only to three (3)
months for every year of the unexpired term of the contract. It ruled that the factual incidents
material to the case transpired within 1991-1992 or before the effectivity of Republic Act No. 8042
or the Migrant Workers and Overseas Filipinos Act of 1995 which provides for such limitation.15
However, the NLRC upheld the reduction of the monetary award with respect to the deletion
of the overtime pay due to the non-deployment of the respondent.16
The Partial Motion for Reconsideration filed by the petitioners was denied by the NLRC in its
Resolution dated 27 July 2005.17
The petitioners filed a Petition for Certiorari before the Court of Appeals alleging grave abuse
of discretion on the part of NLRC when it affirmed with modification the ruling of the Labor
Arbiter. They prayed that the Decision and Resolution promulgated by the NLRC be vacated and
another one be issued dismissing the complaint of the respondent.
Finding no grave abuse of discretion, the Court of Appeals AFFIRMED the Decision of the
labor tribunal.
The Court’s Ruling
The following are the assignment of errors presented before this Court:
I.
THE COURT A QUO ERRED IN FINDING THAT THE SECOND CONTRACT NOVATED THE
FIRST CONTRACT.
THERE WAS NO NOVATION OF THE FIRST CONTRACT BY THE SECOND
CONTRACT; THE ALLEGATION OF ILLEGAL DISMISSAL UNDER THE FIRST
CONTRACT MUST BE RESOLVED SEPARATELY FROM THE ALLEGATION OF
FAILURE TO DEPLOY UNDER THE SECOND CONTRACT. A.
THE ALLEGED ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT TRANSPIRED
MORE THAN THREE (3) YEARS AFTER THE CASE WAS FILED AND THEREFORE
HIS CASE SHOULD HAVE BEEN DISMISSED FOR BEING BARRED BY
PRESCRIPTION. B.
II.
THE COURT A QUO ERRED IN RULING THAT THERE WAS CONSTRUCTIVE DISMISSAL
UNDER THE SECOND CONTRACT.
IT IS LEGALLY IMPOSSIBLE TO HAVE CONSTRUCTIVE DISMISSAL WHEN THE
EMPLOYMENT HAS NOT YET COMMENCED. A.
ASSUMING THERE WAS OMISSION UNDER THE SECOND CONTRACT,
PETITIONERS CAN ONLY BE FOUND AS HAVING FAILED IN DEPLOYING
PRIVATE RESPONDENT BUT WITH VALID REASON. B.
III.
THE COURT A QUO ERRED IN FAILING TO FIND THAT EVEN ASSUMING THERE WAS
BASIS FOR HOLDING PETITIONER LIABLE FOR “FAILURE TO DEPLOY” RESPONDENT,
THE POEA RULES PENALIZES SUCH OMISSION WITH A MERE “REPRIMAND.”18
The petitioners contend that the first employment contract between them and the private
respondent is different from and independent of the second contract subsequently executed upon
repatriation of respondent to Manila.
We do not agree.
Novation is the extinguishment of an obligation by the substitution or change of the obligation
by a subsequent one which extinguishes or modifies the first, either by changing the object or
principal conditions, or, by substituting another in place of the debtor, or by subrogating a third
person in the rights of the creditor. In order for novation to take place, the concurrence of the
following requisites is indispensable:
There must be a previous valid obligation, 1.
There must be an agreement of the parties concerned to a new contract, 2.
There must be the extinguishment of the old contract, and 3.
There must be the validity of the new contract. 4.19
In its ruling, the Labor Arbiter clarified that novation had set in between the first and second
contract. To quote:
“xxx [T]his office would like to make it clear that the first contract entered into by and
between the complainant and the respondents is deemed to have been novated by the execution of
the second contract. In other words, respondents cannot be held liable for the first contract but are
clearly and definitely liable for the breach of the second contract.” 20
This ruling was later affirmed by the Court of Appeals in its decision ruling that:
“Guided by the foregoing legal precepts, it is evident that novation took place in this particular
case. The parties impliedly extinguished the first contract by agreeing to enter into the second
contract to placate Medequillo, Jr. who was unexpectedly dismissed and repatriated to Manila. The
second contract would not have been necessary if the petitioners abided by the terms and
conditions of Madequillo, Jr.’s employment under the first contract. The records also reveal that
the 2nd contract extinguished the first contract by changing its object or principal. These contracts
were for overseas employment aboard different vessels. The first contract was for employment
aboard the MV “Stolt Aspiration” while the second contract involved working in another vessel, the
MV “Stolt Pride.” Petitioners and Madequillo, Jr. accepted the terms and conditions of the second
contract. Contrary to petitioners’ assertion, the first contract was a “previous valid contract” since
it had not yet been terminated at the time of Medequillo, Jr.’s repatriation to Manila. The legality
of his dismissal had not yet been resolved with finality. Undoubtedly, he was still employed under
the first contract when he negotiated with petitioners on the second contract. As such, the NLRC
correctly ruled that petitioners could only be held liable under the second contract.” 21
We concur with the finding that there was a novation of the first employment contract.
We reiterate once more and emphasize the ruling in Reyes v. National Labor Relations
Commission,22 to wit:
“x x x [F]indings of quasi-judicial bodies like the NLRC, and affirmed by the Court of Appeals in
due course, are conclusive on this Court, which is not a trier of facts.
xxxx
x x x Findings of fact of administrative agencies and quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only respect, but finality when affirmed by the Court of
Appeals. Such findings deserve full respect and, without justifiable reason, ought not to be
altered, modified or reversed.” (Emphasis supplied)23
With the finding that respondent “was still employed under the first contract when he
negotiated with petitioners on the second contract,”24 novation became an unavoidable conclusion.
Equally settled is the rule that factual findings of labor officials, who are deemed to have
acquired expertise in matters within their jurisdiction, are generally accorded not only respect but
even finality by the courts when supported by substantial evidence, i.e., the amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion. 25 But these
findings are not infallible. When there is a showing that they were arrived at arbitrarily or in
disregard of the evidence on record, they may be examined by the courts. 26 In this case, there was
no showing of any arbitrariness on the part of the lower courts in their findings of facts. Hence, we
follow the settled rule.
We need not dwell on the issue of prescription. It was settled by the Court of Appeals with its
ruling that recovery of damages under the first contract was already time-barred. Thus:
“Accordingly, the prescriptive period of three (3) years within which Medequillo Jr. may
initiate money claims under the 1st contract commenced on the date of his repatriation. xxx The
start of the three (3) year prescriptive period must therefore be reckoned on February 1992, which
by Medequillo Jr.’s own admission was the date of his repatriation to Manila. It was at this point
in time that Medequillo Jr.’s cause of action already accrued under the first contract. He had until
February 1995 to pursue a case for illegal dismissal and damages arising from the 1st contract.
With the filing of his Complaint-Affidavit on March 6, 1995, which was clearly beyond the
prescriptive period, the cause of action under the 1st contract was already time-barred.”27
The issue that proceeds from the fact of novation is the consequence of the non-deployment of
respondent.
The petitioners argue that under the POEA Contract, actual deployment of the seafarer is a
suspensive condition for the commencement of the employment.28 We agree with petitioners on
such point. However, even without actual deployment, the perfected contract gives rise to
obligations on the part of petitioners.
A contract is a meeting of minds between two persons whereby one binds himself, with respect
to the other, to give something or to render some service. 29 The contracting parties may establish
such stipulations, clauses, terms and conditions as they may deem convenient, provided they are
not contrary to law, morals, good customs, public order, or public policy. 30
The POEA Standard Employment Contract provides that employment shall commence “upon
the actual departure of the seafarer from the airport or seaport in the port of hire.” 31 We adhere to
the terms and conditions of the contract so as to credit the valid prior stipulations of the parties
before the controversy started. Else, the obligatory force of every contract will be useless. Parties
are bound not only to the fulfillment of what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping with good faith, usage and law.32
Thus, even if by the standard contract employment commences only “upon actual departure of
the seafarer,” this does not mean that the seafarer has no remedy in case of non-deployment
without any valid reason. Parenthetically, the contention of the petitioners of the alleged poor
performance of respondent while on board the first ship MV “Stolt Aspiration” cannot be sustained
to justify the non-deployment, for no evidence to prove the same was presented. 33
We rule that distinction must be made between the perfection of the employment contract and
the commencement of the employer-employee relationship. The perfection of the contract, which in
this case coincided with the date of execution thereof, occurred when petitioner and respondent
agreed on the object and the cause, as well as the rest of the terms and conditions therein. The
commencement of the employer-employee relationship, as earlier discussed, would have taken
place had petitioner been actually deployed from the point of hire. Thus, even before the start of
any employer-employee relationship, contemporaneous with the perfection of the employment
contract was the birth of certain rights and obligations, the breach of which may give rise to a WHEREFORE, the appeal is DENIED. The 31 January 2007 Decision of the Court of Appeals
cause of action against the erring party. Thus, if the reverse had happened, that is the seafarer in CA-G.R. SP. No. 91632 is hereby AFFIRMED. The Petitioners are hereby ordered to pay
failed or refused to be deployed as agreed upon, he would be liable for damages. 34 Sulpecio Medequillo, Jr., the award of actual damages equivalent to his salary for nine (9) months
Further, we do not agree with the contention of the petitioners that the penalty is a mere as provided by the Second Employment Contract.
reprimand. SO ORDERED.
The POEA Rules and Regulations Governing Overseas Employment35 dated 31 May 1991 Carpio (Chairperson), Sereno, Reyes and Perlas-Bernabe,** JJ., concur.
provides for the consequence and penalty against in case of non-deployment of the seafarer without
any valid reason. It reads: Petition denied, judgment affirmed.
4. “SectionWorker’s Deployment.—An agency shall deploy its recruits within the deployment
period as indicated below: Notes.—Novation may either be extinctive or modificatory, much being dependent on the
xxx nature of the change and the intention of the parties. (Azarcon vs. People, 622 SCRA 341 [2010])
Thirty (30) calendar days from the date of processing by the administration of the employment Article 291 of the Labor Code is the law governing the prescription of money claims of
contracts of seafarers. b. seafarers, a class of overseas contract workers; Article 291 prevails over Section 28 of the Standard
Failure of the agency to deploy a worker within the prescribed period without valid Employment Contract for Seafarers which provides for claims to be brought only within one year
reasons shall be a cause for suspension or cancellation of license or fine. In addition, from the date of the seafarer’s return to the point of hire; Section 28 insofar as it limits the
the agency shall return all documents at no cost to the worker.” (Emphasis and prescriptive period within which the seafarers may file their money claims, is hereby declared null
underscoring supplied) and void. (Medline Management, Inc. vs. Roslinda, 630 SCRA 471 [2010])
——o0o——
The appellate court correctly ruled that the penalty of reprimand36 provided under Rule IV,
Part VI of the POEA Rules and Regulations Governing the Recruitment and Employment of Land-
based Overseas Workers is not applicable in this case. The breach of contract happened on
February 1992 and the law applicable at that time was the 1991 POEA Rules and Regulations
Governing Overseas Employment. The penalty for non-deployment as discussed is suspension or
cancellation of license or fine.
Now, the question to be dealt with is how will the seafarer be compensated by reason of the
unreasonable non-deployment of the petitioners?
The POEA Rules Governing the Recruitment and Employment of Seafarers do not provide for
the award of damages to be given in favor of the employees. The claim provided by the same law
refers to a valid contractual claim for compensation or benefits arising from employer-employee
relationship or for any personal injury, illness or death at levels provided for within the terms and
conditions of employment of seafarers. However, the absence of the POEA Rules with regard to the
payment of damages to the affected seafarer does not mean that the seafarer is precluded from
claiming the same. The sanctions provided for non-deployment do not end with the suspension or
cancellation of license or fine and the return of all documents at no cost to the worker. As earlier
discussed, they do not forfend a seafarer from instituting an action for damages against the
employer or agency which has failed to deploy him.37
We thus decree the application of Section 10 of Republic Act No. 8042 (Migrant Workers Act)
which provides for money claims by reason of a contract involving Filipino workers for overseas
deployment. The law provides:
10. “Sec.Money Claims.—Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint,
the claims arising out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual, moral, exemplary
and other forms of damages. x x x” (Underscoring supplied)

Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the
second phrase of the provision.
Applying the rules on actual damages, Article 2199 of the New Civil Code provides that one is
entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly
proved. Respondent is thus liable to pay petitioner actual damages in the form of the loss of nine
(9) months’ worth of salary as provided in the contract.38 This is but proper because of the non-
deployment of respondent without just cause.

G.R. No. 93666. April 22, 1991.*
GENERAL MILLING CORPORATION and EARL TIMOTHY CONE, petitioners, vs. HON.
RUBEN D. TORRES, in his capacity as Secretary of Labor and Employment, HON. BIENVENIDO
E. LAGUESMA, in his capacity as Acting Secretary of Labor and Employment, and BASKETBALL
COACHES ASSOCIATION OF THE PHILIPPINES, respondents.
Contracts; Provisions of applicable laws especially those relating to matters affected with
public policy, are deemed written into contracts.—Neither can petitioners validly claim that
implementation of respondent Secretary’s decision would amount to an impairment of the
obligations of contracts. The provisions of the Labor Code and its Implementing Rules and
Regulations requiring alien employment permits were in existence long before petitioners entered
into their contract of employment. It is firmly settled that provisions of applicable laws, especially
provisions relating to matters affected with public policy, are deemed written into contracts.
Private parties cannot constitutionally contract away the otherwise applicable provisions of law.
Labor Law; The Department of Labor is the agency vested with jurisdiction to determine the
question of availability of local workers.—Petitioners’ contention that respondent Secretary of
Labor should have deferred to the findings of Commission on Immigration and Deportation as to
the necessity of employing petitioner Cone, is again, bereft of legal basis. The Labor Code itself
specifically empowers respondent Secretary to make a determination as to the availability of the
services of a “person in the Philippines who is competent, able and willing at the time of
application to perform the services for which an alien is desired.” In short, the Department of
Labor is the agency vested with jurisdiction to determine the question of availability of local
workers. The constitutional validity of legal provisions granting such jurisdiction and authority
and requiring proof of non-availability of local nationals able to carry out the duties of the position
involved, cannot be seriously questioned.
PETITION for certiorari to review the decision of the Department of Labor and Employment.
The facts are stated in the resolution of the Court.
Sobrevinas, Diaz, Hayudini & Bodegon Law Office for petitioners.
Rodrigo, Cuevas & De Borja for respondent BCAP.
RESOLUTION
FELICIANO, J.:
On 1 May 1989, the National Capital Region of the Department of Labor and Employment issued
Alien Employment Permit No. M-0689-3-535 in favor of petitioner Earl Timothy Cone, a United
States citizen, as sports consultant and assistant coach for petitioner General Milling Corporation
(“GMC”).
On 27 December 1989, petitioners GMC and Cone entered into a contract of employment
whereby the latter undertook to coach GMC’s basketball team.
On 15 January 1990, the Board of Special Inquiry of the Commission on Immigration and
Deportation approved petitioner Cone’s application for a change of admission status from
temporary visitor to prearranged employee.
On 9 February 1990, petitioner GMC requested renewal of petitioner Cone’s alien employment
permit. GMC also requested that it be allowed to employ Cone as full-fledged coach. The DOLE
Regional Director, Luna Piezas, granted the request on 15 February 1990.
On 18 February 1990, Alien Employment Permit No. M-0290-3-881, valid until 25 December
1990, was issued.
Private respondent Basketball Coaches Association of the Philippines (“BCAP”) appealed the
issuance of said alien employment permit to the respondent Secretary of Labor who, on 23 April
1990, issued a decision ordering cancellation of petitioner Cone’s employment permit on the
ground that there was no showing that there is no person in the Philippines who is competent, able
and willing to perform the services required nor that the hiring of petitioner Cone would redound
to the national interest.
Petitioner GMC filed a Motion for Reconsideration and two (2) Supplemental Motions for
Reconsideration but said Motions were denied by Acting Secretary of Labor Bienvenido E.
217
Laguesma in an Order dated 8 June 1990.
Petitioners are now before the Court on a Petition for Certiorari, dated 14 June 1990, alleging
that:
1.respondent Secretary of Labor gravely abused his discretion when he revoked
petitioner Cone’s alien employment permit; and
2.Section 6 (c), Rule XIV, Book I of the Omnibus Rules Implementing the Labor Code is
null and void as it is in violation of the enabling law as the Labor Code does not
empower respondent Secretary to determine if the employment of an alien would
redound to national interest.
Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed
to show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of
respondent Secretary of Labor in rendering his decision, dated 23 April 1990, revoking petitioner
Cone’s Alien Employment Permit.
The alleged failure to notify petitioners of the appeal filed by private respondent BCAP was
cured when petitioners were allowed to file their Motion for Reconsideration before respondent
Secretary of Labor.1
Petitioner GMC’s claim that hiring of a foreign coach is an employer’s prerogative has no legal
basis at all. Under Article 40 of the Labor Code, an employer seeking employment of an alien must
first obtain an employment permit from the Department of Labor. Petitioner GMC’s right to choose
whom to employ is, of course, limited by the statutory requirement of an alien employment permit.
Petitioners will not find solace in the equal protection clause of the Constitution. As pointed
out by the Solicitor-General, no comparison can be made between petitioner Cone and Mr. Norman
Black as the latter is “a long time resident of the country,” and thus, not subject to the provisions
of Article 40 of the Labor Code which apply only to “non-resident aliens.” In any case, the term
“non-resident alien” and its obverse “resident alien,” here must be given their technical
connotation under our law on immigration.
Neither can petitioners validly claim that implementation of respondent Secretary’s decision would
amount to an impairment of the obligations of contracts. The provisions of the Labor Code and its
Implementing Rules and Regulations requiring alien employment permits were in existence long
before petitioners entered into their contract of employment. It is firmly settled that provisions of
applicable laws, especially provisions relating to matters affected with public policy, are deemed
written into contracts.2 Private parties cannot constitutionally contract away the otherwise
applicable provisions of law.
Petitioners’ contention that respondent Secretary of Labor should have deferred to the findings
of Commission on Immigration and Deportation as to the necessity of employing petitioner Cone,
is, again, bereft of legal basis. The Labor Code itself specifically empowers respondent Secretary to
make a determination as to the availability of the services of a “person in the Philippines who is
competent, able and willing at the time of application to perform the services for which an alien is
desired.”3 In short, the Department of Labor is the agency vested with jurisdiction to determine the
question of availability of local workers. The constitutional validity of legal provisions granting
such jurisdiction and authority and requiring proof of non-availability of local nationals able to
carry out the duties of the position involved, cannot be seriously questioned.
Petitioners apparently also question the validity of the Implementing Rules and Regulations,
specifically Section 6 (c), Rule XIV, Book I of the Implementing Rules, as imposing a condition not
found in the Labor Code itself. Section 6 (c), Rule XIV, Book I of the Implementing Rules, provides
as follows:
“Section 6. Issuance of Employment Permit—The Secretary of Labor may issue an employment
permit to the applicant based on:
(a)Compliance by the applicant and his employer with the requirements of Section 2 hereof;
(b)Report of the Bureau Director as to the availability or non-
availability of any person in the Philippines who is competent and willing to do the job for
which the services of the applicant are desired.
(c)His assessment as to whether or not the employment of the applicant will redound to the
national interest;
(d)Admissibility of the alien as certified by the Commission on Immigration and
Deportation;
(e)The recommendation of the Board of Investments or other appropriate government
agencies if the applicant will be employed in preferred areas of investments or in accordance
with the imperative of economic development;
x x x x x x x x”
(Italics supplied)
Article 40 of the Labor Code reads as follows:
“ART. 40. Employment permit of non-resident aliens.—Any alien seeking admission to the
Philippines for employment purposes and any domestic or foreign employer who desires to engage
an alien for employment in the Philippines shall obtain an employment permit from the
Department of Labor.
The employment permit may be issued to a non-resident alien or to the applicant employer
after a determination of the non-availability of a person in the Philippines who is competent, able
and willing at the time of application to perform the services for which the alien is desired.
For an enterprise registered in preferred areas of investments, said employment permit may
be issued upon recommendation of the government agency charged with the supervision of said
registered enterprise.” (Italics supplied)
Petitioners apparently suggest that the Secretary of Labor is not authorized to take into account
the question of whether or not employment of an alien applicant would “redound to the national
interest” because Article 40 does not explicitly refer to such assessment. This argument (which
seems impliedly to concede that the relationship of basketball coaching and the national interest is
tenuous and unreal) is not persuasive. In the first place, the second paragraph of Article 40 says:
“[t]he employment permit may be issued to a non-resident alien or to the applicant employer after
a determination of the non-availability of a person in the Philippines who is competent, able and
willing at the time of application to perform the services for which the alien is desired.” The
permissive language employed in the Labor Code indicates that the authority granted involves the
exercise of discretion on the part of the issuing authority. In the second place, Article 12 of the
Labor Code sets forth a statement of objectives that the Secretary of Labor should, and indeed
must, take into account in exercising his authority and jurisdiction granted by the Labor Code:
“ART. 12. Statement of Objectives.—It is the policy of the State:
a)To promote and maintain a state of full employment through improved manpower
training, allocation and utilization;x x x x x x x x x
c)To facilitate a free choice of available employment by persons seeking work in conformity
with the national interest;
d)To facilitate and regulate the movement of workers in conformity with the national
interest;
e)To regulate the employment of aliens, including the establishment of a registration and/or
work permit system;x x x x x x x x x”
Thus, we find petitioners’ arguments on the above points of constitutional law too insubstantial to
require further consideration.
Petitioners have very recently manifested to this Court that public respondent Secretary of
Labor has reversed his earlier decision and has issued an Employment Permit to petitioner Cone.
Petitioners seek to withdraw their Petition for Certiorari on the ground that it has become moot
and academic.
While ordinarily this Court would dismiss a petition that clearly appears to have become moot
and academic, the circumstances of this case and the nature of the questions raised by petitioners
are such that we do not feel justified in leaving those questions unanswered.4 Moreover, assuming
that an alien employment permit has in fact been issued to petitioner Cone, the basis of the
reversal by the Secretary of Labor of his earlier decision does not appear in the record. If such
reversal is based on some view of constitutional law or labor law different from those here set out,
then such employment permit, if one has been issued, would appear open to serious legal
objections.
ACCORDINGLY, the Court Resolved to DISMISS the Petition for Certiorari for lack of merit.
Costs against petitioners.
Fernan (C.J., Chairman), Bidin and Davide, Jr., JJ., concur.
Gutierrez, Jr., J., In the result.
Petition dismissed.
Note.—The doctrine of sole and exclusive competence of the labor tribunal in cases involving
or originating from labor dispute has been constantly upheld by the Supreme Court. (Filipinas Life
Assurance Company, Inc. vs. Bleza, 139 SCRA 565.)
——o0o——
 must yield to the common good. Should such contracts contain stipulations that are contrary to
G.R. No. 128845. June 1, 2000.*
public policy, courts will not hesitate to strike down these stipulations.
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs. HON.
LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and Employment; HON.
CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary of Labor and Employment; SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
DR. BRIAN MACCAULEY in his capacity as the Superintendent of International School-Manila;
and INTERNATIONAL SCHOOL, INC., respondents. The facts are stated in the opinion of the Court.
Azcuna, Yorac, Sarmiento, Arroyo and Chua Law Offices for petitioner.
Labor Law; Constitutional Law; That public policy abhors inequality and discrimination is Bernas Law Offices for private respondents.
beyond contention.—That public policy abhors inequality and discrimination is beyond contention.
Our Constitution and laws reflect the policy against these evils. The Constitution in the Article on KAPUNAN, J.:
Social Justice and Human Rights exhorts Congress to “give highest priority to the enactment of
measures that protect and enhance the right of all people to human dignity, reduce social,
Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent
economic, and political inequalities.” The very broad Article 19 of the Civil Code requires every
School, mostly Filipinos, cry discrimination. We agree. That the local-hires are paid more than
person, “in the exercise of his rights and in the performance of his duties, [to] act with justice, give
their colleagues in other schools is, of course, beside the point. The point is that employees should
everyone his due, and observe honesty and good faith.”
be given equal pay for work of equal value. That is a principle long honored in this jurisdiction.
Same; Same; International law, which springs from general principles of law, likewise
That is a principle that rests on fundamental notions of justice. That is the principle we uphold
proscribes discrimination.—International law, which springs from general principles of law,
today.
likewise proscribes discrimination. General principles of law include principles of equity, i.e., the
Private respondent International School, Inc. (the School, for short), pursuant to Presidential
general principles of fairness and justice, based on the test of what is reasonable. The Universal
Decree 732, is a domestic educational institution established primarily for dependents of foreign
Declaration of Human Rights, the International Covenant on Economic, Social, and Cultural
diplomatic personnel and other temporary residents.1 To enable the School to continue carrying out
Rights, the International Convention on the Elimination of All Forms of Racial Discrimination, the
its educational program and improve its standard of instruction, Section 2(c) of the same decree
Convention against Discrimination in Education, the Convention (No. 111) Concerning
authorizes the School to
Discrimination in Respect of Employment and Occupation—all embody the general principle
employ its own teaching and management personnel selected by it either locally or abroad,
against discrimination, the very antithesis of fairness and justice. The Philippines, through its
from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws
Constitution, has incorporated this principle as part of its national laws.
and regulations attending their employment, except laws that have been or will be enacted for the
Same; Same; State directed to promote “equality of employment opportunities for all.”—The
protection of employees.
Constitution also directs the State to promote “equality of employment opportunities for all.”
Accordingly, the School hires both foreign and local teachers as members of its faculty,
Similarly, the Labor Code provides that the State shall “ensure equal work opportunities
classifying the same into two:
regardless of sex, race or creed.” It would be an affront to both the spirit and letter of these
(1) foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty
provisions if the State, in spite of its primordial obligation to promote and ensure equal
member should be classifled as a foreign-hire or a local hire:
employment opportunities, closes its eyes to unequal and discriminatory terms and conditions of
a.What is one’s domicile?
employment.
b.Where is one’s home economy?
Same; Same; Discrimination, particularly in terms of wages, is frowned upon by the Labor
c.To which country does one owe economic allegiance?
Code.—Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article
d.Was the individual hired abroad specifically to work in the School and was the School
135, for example, prohibits and penalizes the payment of lesser compensation to a female employee
responsible for bringing that individual to the Philippines?2
as against a male employee for work of equal value. Article 248 declares it an unfair labor practice
Should the answer to any of these queries point to the Philippines, the faculty member is classified
for an employer to discriminate in regard to wages in order to encourage or discourage
as a local hire; otherwise, he or she is deemed a foreign-hire.
membership in any labor organization.
The School grants foreign-hires certain benefits not accorded local-hires. These include
Same; Same; If an employer accords employees the same position and rank, the presumption
housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are
is that these employees perform equal work.—The School contends that petitioner has not adduced
also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the
evidence that local-hires perform work equal to that of foreign-hires. The Court finds this
difference on two “significant economic disadvantages” foreign-hires have to endure, namely: (a)
argument a little cavalier. If an employer accords employees the same position and rank, the
the “dislocation factor” and (b) limited tenure. The School explains:
presumption is that these employees perform equal work. This presumption is borne by logic and
A foreign-hire would necessarily have to uproot himself from his home country, leave his family
human experience. If the employer pays one employee less than the rest, it is not for that employee
and friends, and take the risk of deviating from a promising career path—all for the purpose of
to explain why he receives less or why the others receive more. That would be adding insult to
pursuing his profession as an educator, but this time in a foreign land The new foreign hire is
injury. The employer has discriminated against that employee; it is for the employer to explain
faced with economic realities: decent abode for oneself and/or for one’s family, effective means of
why the employee is treated unfairly.
transportation allowance for the education of one’s children, adequate insurance against illness
Same; Same; The State has the right and duty to regulate the relations between labor and
and death, and of course the primary benefit of a basic salary/retirement compensation.
capital.—The Constitution enjoins the State to “protect the rights of workers and promote their
Because of a limited tenure, the foreign hire is confronted again with the same economic
welfare,” “to afford labor full protection.” The State, therefore, has the right and duty to regulate
reality after his term: that he will eventually and inevitably return to his home country where he
the relations between labor and capital. These relations are not merely contractual but are so
will have to confront the uncertainty of obtaining suitable employment after a long period in a
impressed with public interest that labor contracts, collective bargaining agreements included,
foreign land.
The compensation scheme is simply the School’s adaptive measure to remain competitive on an
international level in terms of attracting competent professionals in the field of international
education.3
When negotiations for a new collective bargaining agreement were held on June 1995, petitioner
International School Alliance of Educators, “a legitimate labor union and the collective bargaining
representative of all faculty members”4 of the School, contested the difference in salary rates
between foreign and local-hires. This issue, as well as the question of whether foreign-hires should
be included in the appropriate bargaining unit, eventually caused a deadlock between the parties.
On September 7, 1995, petitioner filed a notice of strike. The failure of the National
Conciliation and Mediation Board to bring the parties to a compromise prompted the Department
of Labor and Employment (DOLE) to assume jurisdiction over the dispute. On June 10, 1996, the
DOLE Acting Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and
representation issues in favor of the School. Then DOLE Secretary Leonardo A. Quisumbing
subsequently denied petitioner’s motion for reconsideration in an Order dated March 19, 1997.
Petitioner now seeks relief in this Court.
Petitioner claims that the point-of-hire classification employed by the School is discriminatory
to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination.
The School disputes these claims and gives a breakdown of its faculty members, numbering 38
in all, with nationalities other than Filipino, who have been hired locally and classified as local
hires.5 The Acting Secretary of Labor found that these non-Filipino local-hires received the same
benefits as the Filipino local-hires:
The compensation package given to local-hires has been shown to apply to all, regardless of
race. Truth to tell, there are foreigners who have been hired locally and who are paid equally as
Filipino local hires.6
The Acting Secretary upheld the point-of-hire classification for the distinction in salary rates:
The principle “equal pay for equal work” does not find application in the present case. The
international character of the School requires the hiring of foreign personnel to deal with different
nationalities and different cultures, among the student population.
We also take cognizance of the existence of a system of salaries and benefits accorded to
foreign hired personnel which system is universally recognized. We agree that certain amenities
have to be provided to these people in order to entice them to render their services in the
Philippines and in the process remain competitive in the international market.
Furthermore, we took note of the fact that foreign hires have limited contract of employment
unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and other
benefits would also require parity in other terms and conditions of employment which include the
employment contract.
A perusal of the parties’ 1992-1995 CBA points us to the conditions and provisions for salary and
professional compensation wherein the parties agree as follows:
All members of the bargaining unit shall be compensated only in accordance with Appendix C
hereof provided that the Superintendent of the School has the discretion to recruit and hire,
expatriate teachers from abroad, under terms and conditions that are consistent with accepted
international practice. Appendix C of said CBA further provides:
The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary
schedule. The 25% differential is reflective of the agreed value of system displacement and
contracted status of the OSRS as differentiated from the tenured status of Locally Recruited Staff
(LRS).
To our mind, these provisions demonstrate the parties’ recognition of the difference in the
status of two types of employees, hence, the difference in their salaries.
The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an
established principle of constitutional law that the guarantee of equal protection of the laws is not
violated by legislation or private covenants based on reasonable classification. A classification is
reasonable if it is based on substantial distinctions and apply to all members of the same class.
Verily, there is a substantial distinction between foreign hires and local hires, the former enjoying
only a limited tenure, having no amenities of their own in the Philippines and have to be given a
good compensation package in order to attract them to join the teaching faculty of the School. 7
We cannot agree.
That public policy abhors inequality and discrimination is beyond contention. Our
Constitution and laws reflect the policy against these evils. The Constitution8 in the Article on
Social Justice and Human Rights exhorts Congress to “give highest priority to the enactment of
measures that protect and enhance the right of all people to human dignity, reduce social,
economic, and political inequalities.” The very broad Article 19 of the Civil Code requires every
person, “in the exercise of his rights and in the performance of his duties, [to] act with justice, give
everyone his due, and observe honesty and good faith.”
International law, which springs from general principles of law,9 likewise proscribes
discrimination. General principles of law include principles of equity, 10 i.e., the general principles
of fairness and justice, based on the test of what is reasonable. 11 The Universal Declaration of
Human Rights,12 the International Covenant on Economic, Social, and Cultural Rights,13 the
International Convention on the Elimination of All Forms of Racial Discrimination, 14 the
Convention against Discrimination in Education,15 the Convention (No. 111) Concerning
Discrimination in Respect of Employment and Occupation16—all embody the general principle
against discrimination, the very antithesis of fairness and justice. The Philippines, through its
Constitution, has incorporated this principle as part of its national laws.
In the workplace, where the relations between capital and labor are often skewed in favor of
capital, inequality and discrimination by the employer are all the more reprehensible.
The Constitution17 specifically provides that labor is entitled to “humane conditions of work.”
These conditions are not restricted to the physical workplace—the factory, the office or the field—
but include as well the manner by which employers treat their employees.
The Constitution18 also directs the State to promote “equality of employment opportunities for
all.” Similarly, the Labor Code19 provides that the State shall “ensure equal work opportunities
regardless of sex, race or creed.” It would be an State, in spite of its primordial obligation to
promote and ensure equal employment opportunities, closes its eyes to unequal and discriminatory
terms and conditions of employment.20
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article
135, for example, prohibits and penalizes21 the payment of lesser compensation to a female
employee as against a male employee for work of equal value. Article 248 declares it an unfair
labor practice for an employer to discriminate in regard to wages in order to encourage or
discourage membership in any labor organization.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in
Article 7 thereof, provides:
The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just
and favorable conditions of work, which ensure, in particular:
a.Remuneration which provides all workers, as a minimum, with:
i.Fair wages and equal remuneration for work of equal value without distinction of any
kind, in particular women being guaranteed conditions of work not inferior to those
enjoyed by men, with equal pay for equal work;
x x x.
The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal
truism of “equal pay for equal work.” Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar salaries.22 This rule
applies to the School, its “international character” notwithstanding.
The School contends that petitioner has not adduced evidence that local-hires perform work
equal to that of foreignhires.23 The Court finds this argument a little cavalier. If an employer
accords employees the same position and rank, the presumption is that these employees perform
equal work. This presumption is borne by logic and human experience. If the employer pays one
employee less than the rest, it is not for that employee to explain why he receives less or why the
others receive more. That would be adding insult to injury.
The employer has discriminated against that employee; it is for the employer to explain why
the employee is treated unfairly.
The employer in this case has failed to discharge this burden. There is no evidence here that
foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have
similar functions and responsibilities, which they perform under similar working conditions.
The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize
the distinction in salary rates without violating the principle of equal work for equal pay.
“Salary” is defined in Black’s Law Dictionary (5th ed.) as “a reward or recompense for services
performed.” Similarly, the Philippine Legal Encyclopedia states that “salary” is the
“[c]onsideration paid at regular intervals for the rendering of services.” In Songco v. National Labor
Relations Commission,24 we said that:
“salary” means a recompense or consideration made to a person for his pains or industry in
another man’s business. Whether it be derived from “salarium,” or more fancifully from “sal,” the
pay of the Roman soldier, it carries with it the fundamental idea of compensation for services
rendered. (Emphasis supplied.)
It does not appear that foreign-hires have indicated their intention to be grouped together with
local-hires for purposes of collective bargaining. The collective bargaining history in the School also
shows that these groups were always treated separately. Foreign-hires have limited tenure; local-
hires enjoy security of tenure. Although foreign-hires perform similar functions under the same
working conditions as the local-hires, foreign-hires are accorded certain benefits not granted to
local-hires. These benefits, such as housing, transportation, shipping costs, taxes, and home leave
travel allowance, are reasonably related to their status as foreign-hires, and justify the exclusion of
the former from the latter. To include foreign-hires in a bargaining unit with local-hires would not
assure either group the exercise of their respective collective bargaining rights.
WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN
PART. The Orders of the Secretary of Labor and Employment dated June 10, 1996 and March 19,
1997, are hereby REVERSED and SET ASIDE insofar as they uphold the practice of respondent
School of according foreign-hires higher salaries than local-hires.
SO ORDERED.
Puno (Actg. Chairman) and Pardo, JJ., concur.
Davide, Jr. (C.J., Chairman), On official leave.
Ynares-Santiago, J., On leave.
Petition granted in part. Orders of June 10, 1996 and March 19, 1997 reversed and set aside.
Note.—The constitutional policy of providing full protection to labor is not intended to oppress
or destroy management. (Capili vs. National Labor Relations Commission, 270 SCRA 488 [1997])
——o0o——

While we recognize the need of the School to attract foreign-hires, salaries should not be used as
an enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-
hires and they ought to be paid the same salaries as the latter. For the same reason, the
“dislocation factor” and the foreign-hires’ limited tenure also cannot serve as valid bases for the
distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are
adequately compensated by certain benefits accorded them which are not enjoyed by local-hires,
such as housing, transportation, shipping costs, taxes and home leave travel allowances.
The Constitution enjoins the State to “protect the rights of workers and promote their
welfare,”25 “to afford labor full protection.”26 The State, therefore, has the right and duty to
regulate the relations between labor and capital.27 These relations are not merely contractual but
are so impressed with public interest that labor contracts, collective bargaining agreements
included, must yield to the common good.28 Should such contracts contain stipulations that are
contrary to public policy, courts will not hesitate to strike down these stipulations.
In this case, we find the point-of-hire classification employed by respondent School to justify the
distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There
is no reasonable distinction between the services rendered by foreign-hires and local-hires. The
practice of the School of according higher salaries to foreign-hires contravenes public policy and,
certainly, does not deserve the sympathy of this Court.
We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-
hires.
A bargaining unit is “a group of employees of a given employer, comprised of all or less than
all of the entire body of employees, consistent with equity to the employer, indicate to be the best
suited to serve the reciprocal rights and duties of the parties under the collective bargaining
provisions of the law.”29 The factors in determining the appropriate collective bargaining unit are
(1) the will of the employees (Globe Doctrine); (2) affinity and unity of the employees’ interest, such
as substantial similarity of work and duties, or similarity of compensation and working conditions
(Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of
employment status.30 The basic test of an asserted bargaining unit’s acceptability is whether or not
it is fundamentally the combination which will best assure to all employees the exercise of their
collective bargaining rights.31
 Later that same day, after office hours, private respondent entered a workshop within the
G.R. No. 114337. September 29, 1995.*
office premises which was not his work station. There, he operated one of the power press
NITTO ENTERPRISES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, and
machines without authority and in the process injured his left thumb. Petitioner spent the amount
ROBERTO CAPILI, respondents.
of P1,023.04 to cover the medication of private respondent.
The following day, Roberto Capili was asked to resign in a letter 3 which reads:
Labor Law; Apprenticeship Agreements; Prior approval by the Department of Labor and
August 2, 1990
Employment of the proposed apprenticeship program is a condition sine qua non before an
Wala siyang tanggap ng utos mula sa superbisor at wala siyang experiensa kung papaano gamitin
apprenticeship agreement can be validly entered into.—In the case at bench, the apprenticeship
and “TOOL” sa pagbuhat ng salamin, sarili niyang desisyon ang paggamit ng tool at may
agreement between petitioner and private respondent was executed on May 28, 1990 allegedly
disgrasya at nadamay pa ang isang sekretarya ng kompanya.
employing the latter as an apprentice in the trade of “care maker/molder.” On the same date, an
Sa araw ding ito limang (5) minuto ang nakalipas mula alas-singko ng hapon siya ay pumasok
apprenticeship program was prepared by petitioner and submitted to the Department of Labor and
sa shop na hindi naman sakop ng kanyang trabaho. Pinakialaman at kinalikot ang makina at
Employment. However, the apprenticeship Agreement was filed only on June 7, 1990.
nadisgrasya niya ang kanyang sariling kamay.
Notwithstanding the absence of approval by the Department of Labor and Employment, the
Nakagastos ang kompanya ng mga sumusunod:
apprenticeship agreement was enforced the day it was signed. Based on the evidence before us,
petitioner did not comply with the requirements of the law. It is mandated that apprenticeship
Bibigyan siya ng kompanya ng Siyam na araw na libreng sahod hanggang matanggal ang tahi
agreements entered into by the employer and apprentice shall be entered only in accordance with
ng kanyang kamay.
the apprenticeship program duly approved by the Minister of Labor and Employment. Prior
Tatanggapin niya ang sahod niyang anim na araw, mula ika-30 ng Hulyo at ika-4 ng Agosto,
approval by the Department of Labor and Employment of the proposed apprenticeship program is,
1990.
therefore, a condition sine qua non before an apprenticeship agreement can be validly entered into.
Ang kompanya ang magbabayad ng lahat ng gastos pagtanggal ng tahi ng kanyang kamay,
Same; Same; Where the apprenticeship agreement has no force and effect, the worker hired as
pagkatapos ng siyam na araw mula ika-2 ng Agosto.
apprentice should be considered as a regular employee.—Hence, since the apprenticeship
Sa lahat ng nakasulat sa itaas, hinihingi ng kompanya ang kanyang resignasyon, kasama ng
agreement between petitioner and private respondent has no force and effect in the absence of a
kanyang confirmasyon at pag-ayon na ang lahat ng nakasulat sa itaas ay totoo.
valid apprenticeship program duly approved by the DOLE, private respondent’s assertion that he
was hired not as an apprentice but as a delivery boy (“kargador” or “pahinante”) deserves credence.
He should rightly be considered as a regular employee of petitioner as defined by Article 280 of the *****************
Labor Code.
Same; Dismissals; Due Process; The twin requirements of due process, substantive and Naiintindihan ko ang lahat ng nakasulat sa itaas, at ang lahat ng ito ay aking pagkakasala sa
procedural, must be complied with before valid dismissal exists, otherwise the dismissal becomes hindi pagsunod sa alintuntunin ng kompanya.
void.—There is an abundance of cases wherein the Court ruled that the twin requirements of due (Sgd.) Roberto Capili
process, substantive and procedural, must be complied with, before valid dismissal exists. Without Roberto Capili
which, the dismissal becomes void. The twin requirements of notice and hearing constitute the
essential elements of due process. This simply means that the employer shall afford the worker On August 3, 1990 private respondent executed a Quitclaim and Release in favor of petitioner for
ample opportunity to be heard and to defend himself with the assistance of his representative, if he and in consideration of the sum of P1,912.79.4
so desires. Ample opportunity connotes every kind of assistance that management must accord the Three days after, or on August 6, 1990, private respondent formally filed before the NLRC
employee to enable him to prepare adequately for his defense including legal representation. Arbitration Branch, National Capital Region a complaint for illegal dismissal and payment of
other monetary benefits.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. On October 9, 1991, the Labor Arbiter rendered his decision finding the termination of private
respondent as valid and dismissing the money claim for lack of merit. The dispositive portion of
the ruling reads:
The facts are stated in the opinion of the Court.
WHEREFORE, premises considered, the termination is valid and for cause, and the money claims
Sinforoso R. Pagunsan for petitioner.
dismissed for lack of merit.
Ma. Elena Enly B. Nazareta representative of private respondent.
KAPUNAN, J.:
The respondent however is ordered to pay the complainant the amount of P500.00 as financial
This is a petition for certiorari under Rule 65 of the Rules of Court seeking to annul the
assistance.
decision1 rendered by public respondent National Labor Relations Commission, which reversed the
decision of the Labor Arbiter.
Briefly, the facts of the case are as follows: SO ORDERED.5
Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum products,
hired Roberto Capili sometime in May 1990 as an apprentice machinist, molder and core maker as Labor Arbiter Patricio P. Libo-on gave two reasons for ruling that the dismissal of Roberto Capili
evidenced by an apprenticeship agreement2 for a period of six (6) months from May 28, 1990 to was valid. First, private respondent who was hired as an apprentice violated the terms of their
November 28, 1990 with a daily wage rate of P66.75 which was 75% of the applicable minimum agreement when he acted with gross negligence resulting in the injury not only to himself but also
wage. to his fellow worker. Second, private respondent had shown that “he does not have the proper
At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which attitude in employment particularly the handling of machines without authority and proper
he was working on, accidentally hit and injured the leg of an office secretary who was treated at a training.”6
nearby hospital.
 On July 26, 1993, the National Labor Relations Commission issued an order reversing the
decision of the Labor Arbiter, the dispositive portion of which reads:
WHEREFORE, the appealed decision is hereby set aside. The respondent is hereby directed to
reinstate complainant to his work last performed with backwages computed from the time his
wages were withheld up to the time he is actually reinstated. The Arbiter of origin is hereby
directed to further hear complainant’s money claims and to dispose them on the basis of law and
evidence obtaining.
SO ORDERED.7
The NLRC declared that private respondent was a regular employee of petitioner by ruling thus:
As correctly pointed out by the complainant, we cannot understand how an apprenticeship
agreement filed with the Department of Labor only on June 7, 1990 could be validly used by the
Labor Arbiter as basis to conclude that the complainant was hired by respondent as a plain
‘apprentice’ on May 8, 1990. Clearly, therefore, the complainant was respondent’s regular
employee under Article 280 of the Labor Code, as early as May 28, 1990, who thus enjoyed the
security of tenure guaranteed in Section 3, Article XIII of our 1987 Constitution.
The complaint being for illegal dismissal (among others) it then behooves upon respondent,
pursuant to Art. 277(b) and as ruled in Edwin Gesulgon vs. NLRC, et al. (G.R. No. 90349, March 5,
1993, 3rd Div., Feliciano, J.) to prove that the dismissal of complainant was for a valid cause.
Absent such proof, we cannot but rule that the complainant was illegally dismissed. 8
On January 28, 1994, Labor Arbiter Libo-on called for a conference at which only private
respondent’s representative was present.
On April 22, 1994, a Writ of Execution was issued, which reads:
NOW, THEREFORE, finding merit in [private respondent’s] Motion for Issuance of the Writ, you
are hereby commanded to proceed to the premises of [petitioner] Nitto Enterprises and Jovy Foster
located at No. 1 74 Araneta Avenue, Potrero, Malabon, Metro Manila or at any other places where
their properties are located and effect the reinstatement of herein [private respondent] to his work
last performed or at the option of the respondent by payroll reinstatement.
You are also to collect the amount of P122,690.85 representing his backwages as called for in
the dispositive portion, and turn over such amount to this Office for proper disposition.
Petitioner filed a motion for reconsideration but the same was denied.
Hence, the instant petition for certiorari.
The issues raised before us are the following:
I private respondent’s assertion that he was hired not as an apprentice but as a delivery boy
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN APPRENTICE.
II
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN HOLDING THAT PETITIONER HAD NOT ADEQUATELY PROVEN THE
EXISTENCE OF A VALID CAUSE IN TERMINATING THE SERVICE OF PRIVATE
RESPONDENT.
We find no merit in the petition.
Petitioner assails the NLRC’s finding that private respondent Roberto Capili cannot plainly be
considered an apprentice since no apprenticeship program had yet been filed and approved at the
time the agreement was executed.
Petitioner further insists that the mere signing of the apprenticeship agreement already
established an employer-apprentice relationship.
Petitioner’s argument is erroneous.
The law is clear on this matter. Article 61 of the Labor Code provides:
Contents of apprenticeship agreement.—Apprenticeship agreements, including the main rates of
apprentices, shall conform to the rules issued by the Minister of Labor and Employment. The
period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for
wage rates below the legal minimum wage, which in no case shall start below 75% per cent of the
applicable minimum wage, may be entered into only in accordance with apprenticeship program
duly approved by the Minister of Labor and Employment . The Ministry shall develop standard
model programs of apprenticeship. (emphasis supplied)
In the case at bench, the apprenticeship agreement between petitioner and private respondent was
executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of “care
maker/molder.” On the same date, an apprenticeship program was prepared by petitioner and
submitted to the Department of Labor and Employment. However, the apprenticeship Agreement
was filed only on June 7, 1990. Notwithstanding the absence of approval by the Department of
Labor and Employment, the apprenticeship agreement was enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with the requirements of the law. It
is mandated that apprenticeship agreements entered into by the employer and apprentice shall be
entered only in accordance with the apprenticeship program duly approved by the Minister of
Labor and Employment.
Prior approval by the Department of Labor and Employment of the proposed apprenticeship
program is, therefore, a condition sine qua non before an apprenticeship agreement can be validly
entered into.
The act of filing the proposed apprenticeship program with the Department of Labor and
Employment is a preliminary step towards its final approval and does not instantaneously give
rise to an employer-apprentice relationship.
Article 57 of the Labor Code provides that the State aims to “establish a national
apprenticeship program through the participation of employers, workers and government and non-
government agencies” and “to establish apprenticeship standards for the protection of
apprentices.” To translate such objectives into existence, prior approval of the DOLE to any
apprenticeship program has to be secured as a condition sine qua non before any such
apprenticeship agreement can be fully enforced. The role of the DOLE in apprenticeship programs
and agreements cannot be debased.
Hence, since the apprenticeship agreement between petitioner and private respondent has no
force and effect in the absence of a valid apprenticeship program duly approved by the DOLE,
(“kargador” or “pahinante”) deserves credence. He should rightly be considered as a regular
employee of petitioner as defined by Article 280 of the Labor Code:
ART. 280. Regular and Casual Employment.—The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer , except where the employment
has been fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or services to be
performed in seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year of service, whether such service
is continuous or broken, shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such activity exists. (Emphasis
supplied and pursuant to the constitutional mandate to “protect the rights of workers and promote
their welfare.”9
Petitioner further argues that, there is a valid cause for the dismissal of private respondent.
 There is an abundance of cases wherein the Court ruled that the twin requirements of due
process, substantive and procedural, must be complied with, before valid dismissal
exists.10 Without which, the dismissal becomes void.
The twin requirements of notice and hearing constitute the essential elements of due process.
This simply means that the employer shall afford the worker ample opportunity to be heard and to
defend himself with the assistance of his representative, if he so desires.
Ample opportunity connotes every kind of assistance that management must accord the
employee to enable him to prepare adequately for his defense including legal representation. 11
As held in the case of Pepsi-Cola Bottling Co., Inc. v. NLRC:12
The law requires that the employer must furnish the worker sought to be dismissed with two (2)
written notices before termination of employee can be legally effected: (1) notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought; and (2) the
subsequent notice which informs the employee of the employer’s decision to dismiss him (Sec. 13,
BP 130; Sec. 2-6 Rule XIV, Book V, Rules and Regulations Implementing the Labor Code as
amended). Failure to comply with the requirements taints the dismissal with illegality. This
procedure is mandatory; in the absence of which, any judgment reached by management is void
and inexistent (Tingson, Jr. vs. NLRC, 185 SCRA 498 [1990]; National Service Corp. vs.
NLRC, 168 SCRA 122; Ruffy vs. NLRC, 182 SCRA 365 [1990]).

The fact is private respondent filed a case of illegal dismissal with the Labor Arbiter only three
days after he was made to sign a Quitclaim, a clear indication that such resignation was not
voluntary and deliberate.
Private respondent averred that he was actually employed by petitioner as a delivery boy
(“kargador” or “pahinante”).
He further asserted that petitioner “strong-armed” him into signing the aforementioned
resignation letter and quitclaim without explaining to him the contents thereof. Petitioner made it
clear to him that anyway, he did not have a choice.13
Petitioner cannot disguise the summary dismissal of private respondent by orchestrating the
latter’s alleged resignation and subsequent execution of a Quitclaim and Release. A judicious
examination of both events belies any spontaneity on private respondent’s part.
WHEREFORE, finding no abuse of discretion committed by public respondent National Labor
Relations Commission, the appealed decision is hereby AFFIRMED.
SO ORDERED.
Padilla (Chairman), Davide, Jr., Bellosillo and Hermosisima, Jr., JJ., concur.

Judgment affirmed.
Notes.—An employee who is forced to resign is considered to have been illegally dismissed.
(Guatson International Travel and Tours, Inc. vs. National Labor Relations Commission, 230
SCRA 815 [1994])
In job contracting, the principal is jointly and severally liable with the contractor and
insolvency or unwillingness to pay by the contractor or direct employer is not a prerequisite for the
joint and severally liability of the principal. (Development Bank of the Philippines vs. National
Labor Relations Commission, 233 SCRA 250 [1994])

——o0o——
 January 26, 2011. G.R. No. 187320.*
ATLANTA INDUSTRIES, INC. and/or ROBERT CHAN, petitioners, vs. APRILITO R.
SEBOLINO, KHIM V. COSTALES, ALVIN V. ALMOITE, and JOSEPH S. SAGUN, respondents.
Labor Law; Illegal Dismissals; When they were dismissed without just or authorized cause,
without notice, and without the opportunity to be heard, their dismissal was illegal under the
law.—This reality is highlighted by the CA finding that the respondents occupied positions such as
machine operator, scaleman and extruder operator—tasks that are usually necessary and
desirable in Atlanta’s usual business or trade as manufacturer of plastic building materials. These
tasks and their nature characterized the four as regular employees under Article 280 of the Labor
Code. Thus, when they were dismissed without just or authorized cause, without notice, and
without the opportunity to be heard, their dismissal was illegal under the law.
Same; Regular Employees; With the expiration of the first agreement and the retention of the
employees, Atlanta recognized the completion of their training and their acquisition of a regular
employee status.—Even if we recognize the company’s need to train its employees through
apprenticeship, we can only consider the first apprenticeship agreement for the purpose. With the
expiration of the first agreement and the retention of the employees, Atlanta had, to all intents
and purposes, recognized the completion of their training and their acquisition of a regular
employee status. To foist upon them the second apprenticeship agreement for a second skill which
was not even mentioned in the agreement itself, is a violation of the Labor Code’s implementing
rules and is an act manifestly unfair to the employees, to say the least.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Dela Rosa & Nograles for petitioners.
Sentro ng Alternatibong Lingap Panligal [Saligan] for respondents.
BRION,J.:
For resolution is the petition for review on certiorari1 assailing the decision2 and the
resolution3 of the Court of Appeals (CA) rendered on November 4, 2008 and March 25, 2009,
respectively, in CA-G.R. SP. No. 99340.4
The Antecedents
The facts are summarized below.
In the months of February and March 2005, complainants Aprilito R. Sebolino, Khim V.
Costales, Alvin V. Almoite, Joseph S. Sagun, Agosto D. Zaño, Domingo S. Alegria, Jr., Ronie
Ramos, Edgar Villagomez, Melvin Pedregoza, Teofanes B. Chiong, Jr., Leonardo L. dela Cruz,
Arnold A. Magalang, and Saturnino M. Mabanag filed several complaints for illegal dismissal,
regularization, underpayment, nonpayment of wages and other money claims, as well as claims for
moral and exemplary damages and attorney’s fees against the petitioners Atlanta Industries, Inc.
(Atlanta) and its President and Chief Operating Officer Robert Chan. Atlanta is a domestic
corporation engaged in the manufacture of steel pipes.
The complaints were consolidated and were raffled to Labor Arbiter Daniel Cajilig, but were
later transferred to Labor Arbiter Dominador B. Medroso, Jr.
The complainants alleged that they had attained regular status as they were allowed to work
with Atlanta for more than six (6) months from the start of a purported apprenticeship agreement
between them and the company. They claimed that they were illegally dismissed when the
apprenticeship agreement expired.
In defense, Atlanta and Chan argued that the workers were not entitled to regularization and
to their money claims because they were engaged as apprentices under a government-approved
apprenticeship program. The company offered to hire them as regular employees in the event
vacancies for regular positions occur in the section of the plant where they had trained. They also
claimed that their names did not appear in the list of employees (Master List)5 prior to their
engagement as apprentices.
On May 24, 2005, dela Cruz, Magalang, Zaño and Chiong executed a Pagtalikod at
Pagwawalang Saysay before Labor Arbiter Cajilig.
The Compulsory Arbitration Rulings
On April 24, 2006, Labor Arbiter Medroso dismissed the complaint with respect to dela Cruz,
Magalang, Zaño and Chiong, but found the termination of service of the remaining nine to be
illegal.6 Consequently, the arbiter awarded the dismissed workers backwages, wage differentials,
holiday pay and service incentive leave pay amounting to P1,389,044.57 in the aggregate.
Atlanta appealed to the National Labor Relations Commission (NLRC). In the meantime, or on
October 10, 2006, Ramos, Alegria, Villagomez, Costales and Almoite allegedly entered into a
compromise agreement with Atlanta.7The agreement provided that except for Ramos, Atlanta
agreed to pay the workers a specified amount as settlement, and to acknowledge them at the same
time as regular employees.
On December 29, 2006,8 the NLRC rendered a decision, on appeal, modifying the ruling of the
labor arbiter, as follows: (1) withdrawing the illegal dismissal finding with respect to Sagun,
Mabanag, Sebolino and Pedregoza; (2) affirming the dismissal of the complaints of dela Cruz, Zaño,
Magalang and Chiong; (3) approving the compromise agreement entered into by Costales, Ramos,
Villagomez, Almoite and Alegria, and (4) denying all other claims.
Sebolino, Costales, Almoite and Sagun moved for the reconsideration of the decision, but the
NLRC denied the motion in its March 30, 20079 resolution. The four then sought relief from the CA
through a petition for certiorari under Rule 65 of the Rules of Court. They charged that the NLRC
committed grave abuse of discretion in: (1) failing to recognize their prior employment with
Atlanta; (2) declaring the second apprenticeship agreement valid; (3) holding that the dismissal of
Sagun, Mabanag, Sebolino and Melvin Pedregoza is legal; and (4) upholding the compromise
agreement involving Costales, Ramos, Villagomez, Almoite and Alegria.
The CA Decision
The CA granted the petition based on the following findings:10
The respondents were already employees of the company before they entered into the first and
second apprenticeship agreements—Almoite and Costales were employed as early as December
2003 and, subsequently, entered into a first apprenticeship agreement from May 13, 2004 to
October 12, 2004; before this first agreement expired, a second apprenticeship agreement, from
October 9, 2004 to March 8, 2005 was executed. The same is true with Sebolino and Sagun, who
were employed by Atlanta as early as March 3, 2004. Sebolino entered into his first apprenticeship
agreement with the company from March 20, 2004 to August 19, 2004, and his second
apprenticeship agreement from August 20, 2004 to January 19, 2005. Sagun, on the other hand,
entered into his first agreement from May 28, 2004 to October 8, 2004, and the second agreement
from October 9, 2004 to March 8, 2005. 1.
The first and second apprenticeship agreements were defective as they were executed in
violation of the law and the rules. 2.11 The agreements did not indicate the trade or occupation in
which the apprentice would be trained; neither was the apprenticeship program approved by the
Technical Education and Skills Development Authority (TESDA).
The positions occupied by the respondents—machine operator, extruder operator and
scaleman—are usually necessary and desirable in the manufacture of plastic building materials,
the company’s main business. Costales, Almoite, Sebolino and Sagun were, therefore, regular
employees whose dismissals were illegal for lack of a just or authorized cause and notice. 3.
The compromise agreement entered into by Costales and Almoite, together with Ramos,
Villagomez and Alegria, was not binding on Costales and Almoite because they did not sign the
agreement. 4.
 The petitioners themselves admitted that Costales and Almoite were initially planned to be a The respondent workers contend that the petition failed to comply with Section 4, Rule 45 of
part of the compromise agreement, but their employment has been regularized as early as January the Rules of Court which requires that the petition be accompanied by supporting material
11, 2006; hence, the company did not pursue their inclusion in the compromise agreement. 12 portions of the records. The petitioners failed to attach to the petition a copy of the Production and
The CA faulted the NLRC for failing to appreciate the evidence regarding the respondents’ Work Schedule despite their submission that the CA relied heavily on the document in finding the
prior employment with Atlanta. The NLRC recognized the prior employment of Costales and respondent workers’ prior employment with Atlanta. They also did not attach a copy of the
Almoite on Atlanta’s monthly report for December 2003 for the CPS Department/Section dated compromise agreement purportedly executed by Costales and Almoite. For this reason, the
January 6, 2004.13 This record shows that Costales and Almoite were assigned to the company’s respondent workers submit that the petition should be dismissed.
first shift from 7:00 a.m. to 3:00 p.m. The NLRC ignored Sebolino and Sagun’s prior employment The respondents posit that the CA committed no error in holding that they were already
under the company’s Production and Work Schedule for March 7 to 12, 2005 dated March 3, Atlanta’s employees before they were engaged as apprentices, as confirmed by the company’s
2004,14 as they had been Atlanta’s employees as early as March 3, 2004, with Sebolino scheduled to Production and Work Schedule.24 They maintain that the Production and Work Schedule meets the
work on March 7-12, 2005 at 7:00 a.m. to 7:00 p.m., while Sagun was scheduled to work for the requirement of substantial evidence as the petitioners failed to question its authenticity. They
same period but from 7:00 p.m. to 7:00 a.m. The CA noted that Atlanta failed to challenge the point out that the schedule was prepared by Rose A. Quirit and approved by Adolfo R. Lope, head
authenticity of the two documents before it and the labor authorities. of the company’s PE/Spiral Section. They argue that it was highly unlikely that the head of a
Atlanta and Chan moved for reconsideration, but the CA denied the motion in a resolution production section of the company would prepare and assign work to the complainants if the latter
rendered on March 25, 2009.15 Hence, the present petition. had not been company employees.
The respondent workers reiterate their mistrust of the Master List25 as evidence that they
The Petition were not employees of the company at the time they became apprentices. They label the Master
List as “self-serving, dubious and even if considered as authentic, its content contradicts a lot of
petitioner’s claim and allegations,”26 thus—
Atlanta seeks a reversal of the CA decision, contending that the appellate court erred in (1)
Aside from the fact that the Master List is not legible, it contains only the names of inactive
concluding that Costales, Almoite, Sebolino and Sagun were employed by Atlanta before they were
employees. Even those found by the NLRC to have been employed in the company 1. (such as
engaged as apprentices; (2) ruling that a second apprenticeship agreement is invalid; (3) declaring
Almoite, Costales and Sagun) do not appear in the list. If Costales and Almoite had been employed
that the respondents were illegally dismissed; and (4) disregarding the compromise agreement
with Atlanta since January 11, 2006, as the company claimed,27 their names would have been in
executed by Costales and Almoite. It submits the following arguments:
the list, considering that the Master List accounts for all employees “as of May 2006”—the notation
First. The CA’s conclusion that the respondent workers were company employees before they
carried on top of each page of the document.
were engaged as apprentices was primarily based on the Monthly Report16 and the Production and
There were no entries of employees hired or resigned in the years 2005 and 2006 despite the
Work Schedule for March 7-12, 2005,17 in total disregard of the Master List18 prepared by the
“as of May 2006” notation; several pages making up the Master List contain names of employees
company accountant, Emelita M. Bernardo. The names of Costales, Almoite, Sebolino and Sagun
for the years 1999-2004. 2.
do not appear as employees in the Master List which “contained the names of all the persons who
The fact that Atlanta presented the purported Master List instead of the payroll raised serious
were employed by and at petitioner.”19
doubts on the authenticity of the list. 3.
Atlanta faults the CA for relying on the Production and Work Schedule and the Monthly
In sum, the respondent workers posit that the presentation of the Master List revealed the
Report which were not sworn to, and in disregarding the Master List whose veracity was sworn to
“intention of the herein petitioner[s] to perpetually hide the fact of [their] prior employment.” 28
by Bernardo and by Alex Go who headed the company’s accounting division. It maintains that the
On the supposed apprenticeship agreements they entered into, Costales, Almoite, Sebolino and
CA should have given more credence to the Master List.
Sagun refuse to accept the agreements’ validity, contending that the company’s apprenticeship
Second. In declaring invalid the apprenticeship agreements it entered into with the
program is merely a ploy “to continually deprive [them] of their rightful wages and benefits which
respondent workers, the CA failed to recognize the rationale behind the law on apprenticeship. It
are due them as regular employees.”29 They submit the following “indubitable facts and
submits that under the law,20 apprenticeship agreements are valid, provided they do not exceed six
ratiocinations:”30
(6) months and the apprentices are paid the appropriate wages of at least 75% of the applicable
The apprenticeship agreements were submitted to TESDA only in 2005 (with dates of receipt
minimum wage.
on “1/4/ 1.05” & “2/22/05”31), when the agreements were supposed to have been executed in April
The respondents initially executed a five-month apprenticeship program with Atlanta, at the
or May 2004. Thus, the submission was made long after the starting date of the workers’
end of which, they “voluntarily and willingly entered into another apprenticeship agreement with
apprenticeship or even beyond the agreement’s completion/termination date, in violation of Section
the petitioner for the training of a second skill”21 for five months; thus, the petitioners committed
23, Rule VI, Book II of the Labor Code.
no violation of the apprenticeship period laid down by the law.
The respondent workers were made to undergo apprenticeship for occupations different from
Further, the apprenticeship agreements, entered into by the parties, complied with the
those allegedly approved by TESDA. TESDA approved Atlanta’s apprenticeship program on
requisites under Article 62 of the Labor Code; the company’s authorized representative and the
“Plastic Molder” 2.32 and not for extrusion molding process, engineering, pelletizing process and
respondents signed the agreements and these were ratified by the company’s apprenticeship
mixing process.
committee. The apprenticeship program itself was approved and certified by the TESDA. 22 The CA,
The respondents were already skilled workers prior to the apprenticeship program as they had
thus, erred in overturning the NLRC’s finding that the apprenticeship agreements were valid.
been employed and made to work in the different job positions where they had undergone training.
Third. There was no illegal dismissal as the respondent workers’ tenure ended with the
Sagun and Sebolino, together with Mabanag, Pedregoza, dela Cruz, Chiong, Magalang and Alegria
expiration of the apprenticeship agreement they entered into. There was, therefore, no regular
were even given production assignments and work schedule at the PE/Spiral Section from May 11,
employer-employee relationship between Atlanta and the respondent workers.
2004 to March 23, 2005, and some of them were even assigned to the 3:00 p.m.-11:00 p.m. and
The Case for Costales, Almoite, Sebolino and Sagun
graveyard shifts (11:00 p.m.-7:00 a.m.) during the period. 3.33
In a Comment filed on August 6, 2009,23 Costales, Almoite, Sebolino and Sagun pray for a
denial of the petition for being procedurally defective and for lack of merit.
 The respondent workers were required to continue as apprentices beyond six months. The 25-31, 2004;47 November 8-14, 2004;48 November 16-22, 2004;49 January 3-9, 2005;50 January 10-15,
TESDA certificate of completion indicates that the workers’ apprenticeship had been completed 2005;51 March 7-12, 200552 and March 17-23, 2005.53
after six months. Yet, they were suffered to work as apprentices beyond that period. 4. We stress that the CA correctly recognized the authenticity of the operational documents, for
Costales, Almoite, Sebolino and Sagun resolutely maintain that they were illegally dismissed, the failure of Atlanta to raise a challenge against these documents before the labor arbiter, the
as the reason for the termination of their employment—notice of the completion of the second NLRC and the CA itself. The appellate court, thus, found the said documents sufficient to establish
apprenticeship agreement—did not constitute either a just or authorized cause under Articles 282 the employment of the respondents before their engagement as apprentices.
and 283 of the Labor Code. Second. The Master List54 (of employees) that the petitioners heavily rely upon as proof of
Finally, Costales and Almoite refuse to be bound by the compromise agreement 34 that Atlanta their position that the respondents were not Atlanta’s employees, at the time they were engaged as
presented to defeat the two workers’ cause of action. They claim that the supposed agreement is apprentices, is unreliable and does not inspire belief.
invalid as against them, principally because they did not sign it. The list, consisting of several pages, is hardly legible. It requires extreme effort to sort out the
names of the employees listed, as well as the other data contained in the list. For this reason alone,
The Court’s Ruling the list deserves little or no consideration. As the respondents also pointed out, the list itself
contradicts a lot of Atlanta’s claims and allegations, thus: it lists only the names of inactive
employees; even the names of those the NLRC found to have been employed by Atlanta, like
The procedural issue
Costales and Almoite, and those who even Atlanta claims attained regular status on January 11,
The respondent workers ask that the petition be dismissed outright for the petitioners’ failure
2006,55 do not appear in the list when it was supposed to account for all employees “as of May 6,
to attach to the petition a copy of the Production and Work Schedule and a copy of the compromise
2006.” Despite the “May 6, 2006” cut off date, the list contains no entries of employees who were
agreement Costales and Almoite allegedly entered into—material portions of the record that
hired or who resigned in 2005 and 2006. We note that the list contains the names of employees
should accompany and support the petition, pursuant to Section 4, Rule 45 of the Rules of Court.
from 1999 to 2004.
In Mariners Polytechnic Colleges Foundation, Inc. v. Arturo J. Garchitorena35 where the Court
We cannot fault the CA for ignoring the Master List even if Bernardo, its head office
addressed essentially the same issue arising from Section 2(d), Rule 42 of the Rules of Court, 36 we
accountant, swore to its correctness and authenticity.56 Its substantive unreliability gives it very
held that the phrase “of the pleadings and other material portions of the record x x x as would
minimal probative value. Atlanta would have been better served, in terms of reliable evidence, if
support the allegation of the petition clearly contemplates the exercise of discretion on the part of
true copies of the payroll (on which the list was based, among others, as Bernardo claimed in her
the petitioner in the selection of documents that are deemed to be relevant to the petition. The
affidavit) were presented instead.
crucial issue to consider then is whether or not the documents accompanying the petition
Third. The fact that Costales, Almoite, Sebolino and Sagun were already rendering service to the
sufficiently supported the allegations therein.”37
company when they were made to undergo apprenticeship (as established by the evidence) renders
As in Mariners, we find that the documents attached to the petition sufficiently support the
the apprenticeship agreements irrelevant as far as the four are concerned. This reality is
petitioners’ allegations. The accompanying CA decision38 and resolution,39 as well as those of the
highlighted by the CA finding that the respondents occupied positions such as machine operator,
labor arbiter40 and the NLRC,41 referred to the parties’ position papers and even to their replies
scaleman and extruder operator—tasks that are usually necessary and desirable in Atlanta’s usual
and rejoinders. Significantly, the CA decision narrates the factual antecedents, defines the
business or trade as manufacturer of plastic building materials. 57 These tasks and their nature
complainants’ cause of action, and cites the arguments, including the evidence the parties adduced.
characterized the four as regular employees under Article 280 of the Labor Code. Thus, when they
If any, the defect in the petition lies in the petitioners’ failure to provide legible copies of some of
were dismissed without just or authorized cause, without notice, and without the opportunity to be
the material documents mentioned, especially several pages in the decisions of the labor arbiter
heard, their dismissal was illegal under the law.58
and of the NLRC. This defect, however, is not fatal as the challenged CA decision clearly
Even if we recognize the company’s need to train its employees through apprenticeship, we can
summarized the labor tribunal’s rulings. We, thus, find no procedural obstacle in resolving the
only consider the first apprenticeship agreement for the purpose. With the expiration of the first
petition on the merits.
agreement and the retention of the employees, Atlanta had, to all intents and purposes, recognized
The merits of the case
the completion of their training and their acquisition of a regular employee status. To foist upon
We find no merit in the petition. The CA committed no reversible error in nullifying the
them the second apprenticeship agreement for a second skill which was not even mentioned in the
NLRC decision42 and in affirming the labor arbiter’s ruling,43 as it applies to Costales, Almoite,
agreement itself,59 is a violation of the Labor Code’s implementing rules60 and is an act manifestly
Sebolino and Sagun. Specifically, the CA correctly ruled that the four were illegally dismissed
unfair to the employees, to say the least. This we cannot allow.
because (1) they were already employees when they were required to undergo apprenticeship and
Fourth. The compromise agreement61 allegedly entered into by Costales and Almoite, together
(2) apprenticeship agreements were invalid.
with Ramos, Villagomez and Alegria, purportedly in settlement of the case before the NLRC, is not
The following considerations support the CA ruling.
binding on Costales and Almoite because they did not sign it. The company itself admitted62 that
First. Based on company operations at the time material to the case, Costales, Almoite,
while Costales and Almoite were initially intended to be a part of the agreement, it did not pursue
Sebolino and Sagun were already rendering service to the company as employees before they were
their inclusion “due to their regularization as early as January 11, 2006.”63
made to undergo apprenticeship. The company itself recognized the respondents’ status through
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. The
relevant operational records—in the case of Costales and Almoite, the CPS monthly report for
assailed decision and resolution of the Court of Appeals are AFFIRMED. Costs against the
December 200344 which the NLRC relied upon and, for Sebolino and Sagun, the production and
petitioner Atlanta Industries, Inc.
work schedule for March 7 to 12, 200545 cited by the CA.
SO ORDERED.
Under the CPS monthly report, Atlanta assigned Costales and Almoite to the first shift (7:00
Carpio-Morales, Bersamin, Villarama, Jr. and Sereno, JJ., concur.
a.m. to 3:00 p.m.) of the Section’s work. The Production and Work Schedules, in addition to the one
noted by the CA, showed that Sebolino and Sagun were scheduled on different shifts vis-à-vis the
Petition denied, judgment and resolution affirmed.
production and work of the company’s PE/Spiral Section for the periods July 5-10, 2004;46 October
 G.R. No. 122917. July 12, 1999.*
MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P. PASCUAL,
RAQUEL ESTILLER, ALBERT HALLARE, EDMUND M. CORTEZ, JOSELITO O. AGDON,
GEORGE P. LIGUTAN, JR., CELSO M. YAZAR, ALEX G. CORPUZ, RONALD M. DELFIN,
ROWENA M. TABAQUERO, CORAZON C. DELOS REYES, ROBERT G. NOORA, MILAGROS O.
LEQUIGAN, ADRIANA F. TATLONGHARI, IKE CABANDUCOS, COCOY NOBELLO,
DORENDA CANTIMBUHAN, ROBERT MARCELO, LILIBETH Q. MARMOLEJO, JOSE E.
SALES, ISABEL MAMAUAG, VIOLETA G. MONTES, ALBINO TECSON, MELODY V. GRUELA,
BERNADETH D. AGERO, CYNTHIA DE VERA, LANI R. CORTEZ, MA. ISABEL B.
CONCEPCION, DINDO VALERIO, ZENAIDA MATA, ARIEL DEL PILAR, MARGARET CECILIA
CANOZA, THELMA SEBASTIAN, MA. JEANETTE CERVANTES, JEANNIE RAMIL, ROZAIDA
PASCUAL, PINKY BALOLOA, ELIZABETH VENTURA, GRACE S. PARDO and RICO TIMOSA,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and FAR EAST BANK AND
TRUST COMPANY, respondents.
Labor Law; Labor Code; The facts, viewed in light of the Labor Code and the Magna Carta
for Disabled Persons, indubitably show that the petitioners, except sixteen of them, should be
deemed regular employees.—At the outset, let it be known that this Court appreciates the nobility
of private respondent’s effort to provide employment to physically impaired individuals and to
make them more productive members of society. However, we cannot allow it to elude the legal
consequences of that effort, simply because it now deems their employment irrelevant. The facts,
viewed in light of the Labor Code and the Magna Carta for Disabled Persons, indubitably show
that the petitioners, except sixteen of them, should be deemed regular employees. As such, they
have acquired legal rights that this Court is duty-bound to protect and uphold, not as a matter of
compassion but as a consequence of law and justice.
Same; Same; Since the Magna Carta accords them the rights of qualified able-bodied
persons, they are thus covered by Article 280 of the Labor Code.—The fact that the employees were
qualified disabled persons necessarily removes the employment contracts from the ambit of Article
80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus
covered by Article 280 of the Labor Code.
Same; Same; The test of whether an employee is regular was laid down in De Leon vs.
National Labor Relations Commission.—The test of whether an employee is regular was laid down
in De Leon v. NLRC, in which this Court held: “The primary standard, therefore, of determining
regular employment is the reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The test is whether the former
is usually necessary or desirable in the usual business or trade of the employer. The connection can
be determined by considering the nature of the work performed and its relation to the scheme of
the particular business or trade in its entirety. Also if the employee has been performing the job for
at least one year, even if the performance is not continuous and merely intermittent, the law
deems repeated and continuing need for its performance as sufficient evidence of the necessity if
not indispensability of that activity to the business. Hence, the employment is considered regular,
but only with respect to such activity, and while such activity exists.”
Same; Same; When the bank renewed the contract after the lapse of the six-month
probationary period, the employees thereby became regular employees.—As held by the Court,
“Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making permanent
casuals of our lowly employees by the simple expedient of extending to them probationary
appointments, ad infinitum.” The contract signed by petitioners is akin to a probationary
employment, during which the bank determined the employees’ fitness for the job. When the bank
renewed the contract after the lapse of the six-month probationary period, the employees thereby
became regular employees. No employer is allowed to determine indefinitely the fitness of its
employees.
Same; Same; As regular employees, the twenty-seven petitioners are entitled to security of
tenure; that is, their services may be terminated only for a just or authorized cause.—As regular
employees, the twenty-seven petitioners are entitled to security of tenure; that is, their services
may be terminated only for a just or authorized cause. Because respondent failed to show such
cause, these twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back
wages and reinstatement without loss of seniority rights and other privileges. Considering the
allegation of respondent that the job of money sorting is no longer available because it has been
assigned back to the tellers to whom it originally belonged, petitioners are hereby awarded
separation pay in lieu of reinstatement.
Same; Same; An employee is regular because of the nature of work and the length of service,
not because of the mode or even the reason for hiring them.—Respondent argues that petitioners
were merely “accommodated” employees. This fact does not change the nature of their
employment. As earlier noted, an employee is regular because of the nature of work and the length
of service, not because of the mode or even the reason for hiring them.
Same; Same; The determination of whether employment is casual or regular does not depend
on the will or word of the employer, and the procedure of hiring x x x but on the nature of the
activities performed by the employee, and to some extent, the length of performance and its
continued existence.—Equally unavailing are private respondent’s arguments that it did not go out
of its way to recruit petitioners, and that its plantilla did not contain their positions. In L. T. Datu
v. NLRC, the Court held that “the determination of whether employment is casual or regular does
not depend on the will or word of the employer, and the procedure of hiring x x x but on the nature
of the activities performed by the employee, and to some extent, the length of performance and its
continued existence.”
Same; Same; The well-settled rule is that the character of employment is determined not by
stipulations in the contract, but by the nature of the work performed.—Private respondent argues
that the petitioners were informed from the start that they could not become regular employees. In
fact, the bank adds, they agreed with the stipulation in the contract regarding this point. Still, we
are not persuaded. The well-settled rule is that the character of employment is determined not by
stipulations in the contract, but by the nature of the work performed. Otherwise, no employee can
become regular by the simple expedient of incorporating this condition in the contract of
employment.
Same; Same; The noble objectives of Magna Carta for Disabled Persons are not based merely
on charity or accommodation, but on justice and the equal treatment of qualified persons, disabled
or not.—In rendering this decision, the Court emphasizes not only the constitutional bias in favor
of the working class, but also the concern of the State for the plight of the disabled. The noble
objectives of Magna Carta for Disabled Persons are not based merely on charity or accommodation,
but on justice and the equal treatment of qualified persons, disabled or not. In the present case,
the handicap of petitioners (deaf-mutes) is not a hindrance to their work. The eloquent proof of this
statement is the repeated renewal of their employment contracts. Why then should they be
dismissed, simply because they are physically impaired? The Court believes, that, after showing
their fitness for the work assigned to them, they should be treated and granted the same rights
like any other regular employees.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
Sentro ng Alternatibong Lingap Panlegal (SALIGAN) for petitioners.
Picazo, Buyco, Tan, Fider & Santos for private respondent.
PANGANIBAN, J.:
The Magna Carta for Disabled Persons mandates that qualified disabled persons be granted
the same terms and conditions of employment as qualified able-bodied employees. Once they have
attained the status of regular workers, they should be accorded all the benefits granted by law,
notwithstanding written or verbal contracts to the contrary. This treatment is rooted not merely on
charity or accommodation, but on justice for all.
The Case

Challenged in the Petition for Certiorari1 before us is the June 20, 1995 Decision2 of the
National Labor Relations Commission (NLRC),3 which affirmed the August, 22 1994 ruling of
Labor Arbiter Cornelio L. Linsangan. The labor arbiter’s Decision disposed as follows: 4
“WHEREFORE, judgment is hereby rendered dismissing the above-mentioned complaint for
lack of merit.”
Also assailed is the August 4, 1995 Resolution5 of the NLRC, which denied the Motion for
Reconsideration.
The Facts
The facts were summarized by the NLRC in this wise:6
“Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired on various
periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as Money Sorters and
Counters through a uniformly worded agreement called ‘Employment Contract for Handicapped
Workers.’ (pp. 68 & 69, Records) The full text of said agreement is quoted below:
‘EMPLOYMENT CONTRACT FOR
HANDICAPPED WORKERS
This Contract, entered into by and between:
FAR EAST BANK AND TRUST COMPANY, a universal banking corporation duly organized
and existing under and by virtue of the laws of the Philippines, with business address at FEBTC
Building, Muralla, Intramuros, Manila, represented herein by its Assistant Vice President, MR.
FLORENDO G. MARANAN, (hereinafter referred to as the ‘BANK’);
- and -
_________________, _________________ years old, of legal age,
_____________________, and residing at _________________
(hereinafter referred to as the (‘EMPLOYEE’).
WITNESSETH: That
WHEREAS, the BANK, cognizant of its social responsibility, realizes that there is a need to
provide disabled and handicapped persons gainful employment and opportunities to realize their
potentials, uplift their socio-economic well being and welfare and make them productive, self-
reliant and useful citizens to enable them to fully integrate in the mainstream of society;
WHEREAS, there are certain positions in the BANK which may be filled-up by disabled and
handicapped persons, particularly deaf-mutes, and the BANK ha[s] been approached by some
civic-minded citizens and authorized government agencies [regarding] the possibility of hiring
handicapped workers for these positions;
WHEREAS, the EMPLOYEE is one of those handicapped workers who [were] recommended
for possible employment with the BANK;
NOW, THEREFORE, for and in consideration of the foregoing premises and in compliance
with Article 80 of the Labor Code of the Philippines as amended, the BANK and the EMPLOYEE
have entered into this Employment Contract as follows:
1.The BANK agrees to employ and train the EMPLOYEE, and the EMPLOYEE agrees to
diligently and faithfully work with the BANK, as Money Sorter and Counter.
2.The EMPLOYEE shall perform among others, the following duties and responsibilities:
i.Sort out bills according to color;
ii.Count each denomination per hundred, either manually or with the aid of a counting
machine;
iii.Wrap and label bills per hundred;
iv.Put the wrapped bills into bundles; and
v.Submit bundled bills to the bank teller for verification.
3.The EMPLOYEE shall undergo a training period of one (1) month, after which the BANK
shall determine whether or not he/she should be allowed to finish the remaining term of this
Contract.
4.The EMPLOYEE shall be entitled to an initial compensation of P118.00 per day, subject to
adjustment in the sole judgment of the BANK, payable every 15th and end of the month.
5.The regular work schedule of the EMPLOYEE shall be five (5) days per week, from
Mondays thru Fridays, at eight (8) hours a day. The EMPLOYEE may be required to
perform overtime work as circumstance may warrant, for which overtime work he/she
[shall] be paid an additional compensation of 125% of his daily rate if performed during
ordinary days and 130% if performed during Saturday or [a] rest day.
6.The EMPLOYEE shall likewise be entitled to the following benefits:
i.Proportionate 13th month pay based on his basic daily wage.
ii.Five (5) days incentive leave.
iii.SSS premium payment.
7.The EMPLOYEE binds himself/herself to abide [by] and comply with all the BANK Rules
and Regulations and Policies, and to conduct himself/herself in a manner expected of all
employees of the BANK.
8.The EMPLOYEE acknowledges the fact that he/she had been employed under a special
employment program of the BANK, for which reason the standard hiring requirements of
the BANK were not applied in his/her case. Consequently, the EMPLOYEE acknowledges
and accepts the fact that the terms and conditions of the employment generally observed by
the BANK with respect to the BANK’s regular employee are not applicable to the
EMPLOYEE, and that therefore, the terms and conditions of the EMPLOYEE’s employment
with the BANK shall be governed solely and exclusively by this Contract and by the
applicable rules and regulations that the Department of Labor and Employment may issue
in connection with the employment of disabled and handicapped workers. More specifically,
the EMPLOYEE hereby acknowledges that the provisions of Book Six of the Labor Code of
the Philippines as amended, particularly on regulation of employment and separation pay
are not applicable to him/her.
9.The Employment Contract shall be for a period of six (6) months or from ____ to ____
unless earlier terminated by the BANK for any just or reasonable cause. Any continuation
or extension of this Contract shall be in writing and therefore this Contract will
automatically expire at the end of its terms unless renewed in writing by the BANK.
 IN WITNESS WHEREOF, the parties, have hereunto affixed their signature[s] this ____ day
of _________________,____________ at Intramuros, Manila, Philippines.’
“In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two (2); in
1990, nineteen (19); in 1991 six (6); in 1992, six (6) and in 1993, twenty-one (21). Their
employment[s] were renewed every six months such that by the time this case arose, there were
fifty-six (56) deaf-mutes who were employed by respondent under the said employment agreement.
The last one was Thelma Malindoy who was employed in 1992 and whose contract expired on July
1993.
xxx xxx xxx
“Disclaiming that complainants were regular employees, respondent Far East Bank and Trust
Company maintained that complainants who are a special class of workers—the hearing impaired
employees were hired temporarily under [a] special employment arrangement which was a result
of overtures made by some civic and political personalities to the respondent Bank; that complain-
ant[s] were hired due to ‘pakiusap’ which must be considered in the light of the context of the
respondent Bank’s corporate philosophy as well as its career and working environment which is to
maintain and strengthen a corps of professionals trained and qualified officers and regular
employees who are baccalaureate degree holders from excellent schools which is an unbending
policy in the hiring of regular employees; that in addition to this, training continues so that the
regular employee grows in the corporate ladder; that the idea of hiring handicapped workers was
acceptable to them only on a special arrangement basis; that it adopted the special program to help
tide over a group of handicapped workers such as deaf-mutes like the complainants who could do
manual work for the respondent Bank; that the task of counting and sorting of bills which was
being performed by tellers could be assigned to deaf-mutes; that the counting and sorting of money
are tellering works which were always logically and naturally part and parcel of the tellers’ normal
functions; that from the beginning there have been no separate items in the respondent Bank
plantilla for sorters or counters; that the tellers themselves already did the sorting and counting
chore as a regular feature and integral part of their duties (p. 97, Records); that through the
‘pakiusap’ of Arturo Borjal, the tellers were relieved of this task of counting and sorting bills in
favor of deaf-mutes without creating new positions as there is no position either in the
195
respondent or in any other bank in the Philippines which deals with purely counting and sorting of
bills in banking operations.”
Petitioners specified when each of them was hired and dismissed, viz.:7
As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein petitioners.
Hence, this recourse to this Court.9
The Ruling of the NLRC
In affirming the ruling of the labor arbiter that herein petitioners could not be deemed regular
employees under Article 280 of the Labor Code, as amended, Respondent Commission ratiocinated
as follows:
“We agree that Art. 280 is not controlling herein. We give due credence to the conclusion that
complainants were hired as an accommodation to [the] recommendation of civic oriented
personalities whose employment[s] were covered by x x x Employment Contract[s] with special
provisions on duration of contract as specified under Art. 80. Hence, as correctly held by the Labor
Arbiter a quo, the terms of the contract shall be the law between the parties.”10
The NLRC also declared that the Magna Carta for Disabled Persons was not applicable,
“considering the prevailing circumstances/milieu of the case.”
Issues
In their Memorandum, petitioners cite the following grounds in support of their cause:
1. “I.The Honorable Commission committed grave abuse of discretion in holding that the
petitioners—money sorters and counters working in a bank—were not regular
employees.
2. “II.The Honorable Commission committed grave abuse of discretion in holding that the
employment contracts signed and renewed by the petitioners—which provide for a
period of six (6) months—were valid.
3. “III.The Honorable Commission committed grave abuse of discretion in not applying the
provisions of the Magna Carta for the Disabled (Republic Act No. 7277), on proscription
against discrimination against disabled persons.”11
In the main, the Court will resolve whether petitioners have become regular employees.
This Court’s Ruling
The petition is meritorious. However, only the employees, who worked for more than six
months and whose contracts were renewed are deemed regular. Hence, their dismissal from
employment was illegal.
Preliminary Matter:
Propriety of Certiorari
Respondent Far East Bank and Trust Company argues that a review of the findings of facts of
the NLRC is not allowed in a petition for certiorari. Specifically, it maintains that the Court cannot
pass upon the findings of public respondents that petitioners were not regular employees.
True, the Court, as a rule, does not review the factual findings of public respondents in a
certiorari proceeding. In resolving whether the petitioners have become regular employees, we
shall not change the facts found by the public respondent. Our task is merely to determine
whether the NLRC committed grave abuse of discretion in applying the law to the established
facts, as above-quoted from the assailed Decision.
Main Issue:
Are Petitioners Regular Employees?
Petitioners maintain that they should be considered regular employees, because their task as
money sorters and counters was necessary and desirable to the business of respondent bank. They
further allege that their contracts served merely to preclude the application of Article 280 and to
bar them from becoming regular employees.
Private respondent, on the other hand, submits that petitioners were hired only as “special
workers and should not in any way be considered as part of the regular complement of the
Bank.”12 Rather, they were “special” workers under Article 80 of the Labor Code. Private
respondent contends that it never solicited the services of petitioners, whose employment was
merely an “accommodation” in response to the requests of government officials and civic-minded
citizens. They were told from the start, “with the assistance of government representatives,” that
they could not become regular employees because there were no plantilla positions for “money
sorters,” whose task used to be performed by tellers. Their contracts were renewed several times,
not because of need “but merely for humanitarian reasons.” Respondent submits that “as of the
present, the ‘special position’ that was created for the petitioners no longer exist[s] in private
respondent [bank], after the latter had decided not to renew anymore their special employment
contracts.”
At the outset, let it be known that this Court appreciates the nobility of private respondent’s
effort to provide employment to physically impaired individuals and to make them more productive
members of society. However, we cannot allow it to elude the legal consequences of that effort,
simply because it now deems their employment irrelevant. The facts, viewed in light of the Labor
Code and the Magna Carta for Disabled Persons, indubitably show that the petitioners, except
sixteen of them, should be deemed regular employees. As such, they have acquired legal rights
that this Court is duty-bound to protect and uphold, not as a matter of compassion but as a
consequence of law and justice.
The uniform employment contracts of the petitioners stipulated that they shall be trained for a
period of one month, after which the employer shall determine whether or not they should be
allowed to finish the 6-month term of the contract. Furthermore, the employer may terminate the
contract at any time for a just and reasonable cause. Unless renewed in writing by the employer,
the contract shall automatically expire at the end of the term.
According to private respondent, the employment contracts were prepared in accordance with
Article 80 of the Labor Code, which provides:
“ART. 80. Employment agreement.—Any employer who employs handicapped workers shall
enter into an employment agreement with them, which agreement shall include:
(a)The names and addresses of the handicapped workers to be employed;
(b)The rate to be paid the handicapped workers which shall be not less than seventy five
(75%) per cent of the applicable legal minimum wage;
(c)The duration of employment period; and
(d)The work to be performed by handicapped workers.
The employment agreement shall be subject to inspection by the Secretary of Labor or his duly
authorized representatives.”
The stipulations in the employment contracts indubitably conform with the aforecited
provision. Succeeding events and the enactment of RA No. 7277 (the Magna Carta for Disabled
Persons),13 however, justify the application of Article 280 of the Labor Code.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers
and renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the
renewal of the contracts of the handicapped workers and the hiring of others lead to the conclusion
that their tasks were beneficial and necessary to the bank. More important, these facts show that
they were qualified to perform the responsibilities of their positions. In other words, their
disability did not render them unqualified or unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled
employee should be given the same terms and conditions of employment as a qualified able-bodied
person. Section 5 of the Magna Carta provides:
“Section 5. Equal Opportunity for Employment.—No disabled person shall be denied access to
opportunities for suitable employment. A qualified disabled employee shall be subject to the same
terms and conditions of employment and the same compensation, privileges, benefits, fringe
benefits, incentives or allowances as a qualified able bodied person.”
The fact that the employees were qualified disabled persons necessarily removes the employment
contracts from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified
able-bodied persons, they are thus covered by Article 280 of the Labor Code, which provides:
“ART. 280. Regular and Casual Employment.—The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall
be deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the
season.
“An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year of service, whether such service
is continuous or broken, shall be considered as regular employee with respect to the activity in
which he is employed and his employment shall continue while such activity exists.”
The test of whether an employee is regular was laid down in De Leon v. NLRC,14 in which this
Court held:
“The primary standard, therefore, of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the usual
trade or business of the employer. The test is whether the former is usually necessary or desirable
in the usual business or trade of the employer. The connection can be determined by considering
the nature of the work performed and its relation to the scheme of the particular business or trade
in its entirety. Also if the employee has been performing the job for at least one year, even if the
performance is not continuous and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered regular, but only with respect to
such activity, and while such activity exists.”
Without a doubt, the task of counting and sorting bills is necessary and desirable to the
business of respondent bank. With the exception of sixteen of them, petitioners performed these
tasks for more than six months. Thus, the following twenty-seven petitioners should be deemed
regular employees: Marites Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual,
Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr.,
Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino Tecson, Melody
V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B. Concepcion,
Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida
Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo.
As held by the Court, “Articles 280 and 281 of the Labor Code put an end to the pernicious
practice of making permanent casuals of our lowly employees by the simple expedient of extending
to them probationary appointments, ad infini-tum.”15 The contract signed by petitioners is akin to
a probationary employment, during which the bank determined the employees’ fitness for the job.
When the bank renewed the contract after the lapse of the six-month probationary period, the
employees thereby became regular employees.16 No employer is allowed to determine indefinitely
the fitness of its
employees. As regular employees, the twenty-seven petitioners are entitled to security of
tenure; that is, their services may be terminated only for a just or authorized cause. Because
respondent failed to show such cause,17 these twenty-seven petitioners are deemed illegally
dismissed and therefore entitled to back wages and reinstatement without loss of seniority rights
and other privileges.18 Considering the allegation of respondent that the job of money sorting is no
longer available because it has been assigned back to the tellers to whom it originally
belonged,19 petitioners are hereby awarded separation pay in lieu of reinstatement. 20
Because the other sixteen worked only for six months, they are not deemed regular employees
and hence not entitled to the same benefits.
Applicability of the
Brent Ruling
Respondent bank, citing Brent School v. Zamora21 in which the Court upheld the validity of an
employment contract with a fixed term, argues that the parties entered into the contract on equal
footing. It adds that the petitioners had in fact an advantage, because they were backed by then
DSWD Secretary Mita Pardo de Tavera and Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was premised on the fact that the
petitioners were disabled, and that the bank had to determine their fitness for the position.
Indeed, its validity is based on Article 80 of the Labor Code. But as noted earlier, petitioners
proved themselves to be qualified disabled persons who, under the Magna Carta for Disabled
Persons, are entitled to terms and conditions of employment enjoyed by qualified able-bodied
individuals; hence, Article 80 does not apply because petitioners are qualified for their positions. objectives of Magna Carta for Disabled Persons are not based merely on charity or accommodation,
The validation of the limit imposed on their contracts, imposed by reason of their disability, was a but on justice and the equal treatment of qualified persons, disabled or not. In the present case,
glaring instance of the very mischief sought to be addressed by the new law. the handicap of petitioners (deaf-mutes) is not a hindrance to their work. The eloquent proof of this
Moreover, it must be emphasized that a contract of employment is impressed with public statement is the repeated renewal of their employment contracts. Why then should they be
interest.22 Provisions of applicable statutes are deemed written into the contract, and the “parties dismissed, simply because they are physically impaired? The Court believes, that, after showing
are not at liberty to insulate themselves and their relationships from the impact of labor laws and their fitness for the work assigned to them, they should be treated and granted the same rights
regulations by simply contracting with each other.”23 Clearly, the agreement of the parties like any other regular employees.
regarding the period of employment cannot prevail over the provisions of the Magna Carta for In this light, we note the Office of the Solicitor General’s prayer joining the petitioners’
Disabled Persons, which mandate that petitioners must be treated as qualified able-bodied cause.28
employees. WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20, 1995
Respondent’s reason for terminating the employment of petitioners is instructive. Because the Decision and the August 4, 1995 Resolution of the NLRC are REVERSED and SET ASIDE.
Bangko Sentral ng Pilipinas (BSP) required that cash in the bank be turned over to the BSP Respondent Far East Bank and Trust Company is hereby ORDERED to pay back wages and
during business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to nighttime sorting and separation pay to each of the following twenty-seven (27) petitioners, namely, Marites Bernardo,
counting of money. Thus, it reasons that this task “could not be done by deaf mutes because of Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare, Edmund
their physical limitations as it is very risky for them to travel at night.”24 We find no basis for this M. Cortez, Joselito O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel
argument. Travelling at night involves risks to handicapped and able-bodied persons alike. This Mamauag, Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de
excuse cannot justify the termination of their employment. Vera, Lani R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma.
Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace
Other Grounds Cited by Respondent
S. Pardo. The NLRC is hereby directed to compute the exact amount due each of said employees,
pursuant to existing laws and regulations, within fifteen days from the finality of this Decision. No
Respondent argues that petitioners were merely “accommodated” employees. This fact does
costs.
not change the nature of their employment. As earlier noted, an employee is regular because of the
SO ORDERED.
nature of work and the length of service, not because of the mode or even the reason for hiring
Romero (Chairman), Vitug, Purisima and Gonzaga-Reyes, JJ., concur.
them.
Petition granted; Appealed decision and resolution reversed and set aside.
Equally unavailing are private respondent’s arguments that it did not go out of its way to
Note.—Where workers were tasked to undertake activities usually desirable or necessary in
recruit petitioners, and that its plantilla did not contain their positions. In L. T. Datu v.
the usual business of their employer, and such service was rendered for almost two years, they
NLRC,25 the Court held that “the determination of whether employment is casual or regular does
have attained the status of regular employees. (Guinnux Interiors, Inc. vs. National Labor
not depend on the will or word of the employer, and the procedure of hiring x x x but on the nature
Relations Commission, 272 SCRA 689 [1997])
of the activities performed by the employee, and to some extent, the length of performance and its
continued existence.”
Private respondent argues that the petitioners were informed from the start that they could
not become regular employees. In fact, the bank adds, they agreed with the stipulation in the
contract regarding this point. Still, we are not persuaded. The well-settled rule is that the ——o0o——
character of employment is determined not by stipulations in the contract, but by the nature of the
work performed.26 Otherwise, no employee can become regular by the simple expedient of
incorporating this condition in the contract of employment.
In this light, we iterate our ruling in Romares v. NLRC:27
“Article 280 was emplaced in our statute books to prevent the circumvention of the employee’s
right to be secure in his tenure by indiscriminately and completely ruling out all written and oral
agreements inconsistent with the concept of regular employment defined therein. Where an
employee has been engaged to perform activities which are usually necessary or desirable in the
usual business of the employer, such employee is deemed a regular employee and is entitled to
security of tenure notwithstanding the contrary provisions of his contract of employment.
“x x x xxx xxx
“At this juncture, the leading case of Brent School, Inc. v. Zamora proves instructive. As
reaffirmed in subsequent cases, 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 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.”
In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of
the working class, but also the concern of the State for the plight of the disabled. The noble