Philippine British Assurance Co. Inc. vs. IAC [G.R. No. L-72005.

May 29, 1987]

FACTS: [P]rivate respondent Sycwin Coating & Wires, Inc., filed a complaint for collection of a sum of money against Varian
Industrial Corporation before the Regional Trial Court of Quezon City. During the pendency of the suit, private respondent
succeeded in attaching some of the properties of Varian Industrial Corporation upon the posting of a supersedeas bond. The
latter in turn posted a counterbond in the sum of P1,400,000.00 thru petitioner Philippine British Assurance Co., Inc., so the
attached properties were released. The trial court rendered judgment in favor of Sycwin. Varian Industrial Corporation
appealed the decision to the respondent Court. Sycwin then filed a petition for execution pending appeal against the
properties of Varian in respondent Court. The respondent Court granted the petition of Sycwin. Varian, thru its insurer and
petitioner herein, raised the issue to the Supreme Court. A temporary restraining order enjoining the respondents from
enforcing the order complaint of was issued.

ISSUE: Whether or not an order of execution pending appeal of any judgment maybe enforced on the counterbond of the
petitioner.

HELD: YES. Petition was dismissed for lack of merit and the restraining order dissolved with costs against petitioner.

RATIO: It is well recognized rule that where the law does not distinguish, courts should not distinguish. Ubi lex non distinguit
nec nos distinguere debemus. The rule, founded on logic, is a corollary of the principle that general words and phrases in a
statute should ordinarily be accorded their natural and general significance. The rule requires that a general term or phrase
should not be reduced into parts and one part distinguished from the other so as to justify its exclusion from the operation of
the law. In other words, there should be no distinction in the application of a statute where none is indicated. For courts are
not authorized to distinguish where the law makes no distinction. They should instead administer the law not as they think it
ought to be but as they find it and without regard to consequences.

The rule therefore, is that the counterbond to lift attachment that is issued in accordance with the provisions of Section 5,
Rule 57, of the Rules of Court, shall be charged with the payment of any judgment that is returned unsatisfied. It covers not
only a final and executory judgment but also the execution of a judgment pending appeal.

Cecilio de Villa vs. CA [G.R. No. 87416. April 08, 1991]

FACTS: [P]etitioner Cecilio S. de Villa was charged before the Regional Trial Court of the National Capital Judicial Region
(Makati, Branch 145) with violation of Batas Pambansa Bilang 22. Petitioner moved to dismiss the Information on the
following grounds: (a) Respondent court has no jurisdiction over the offense charged; and (b) That no offense was committed
since the check involved was payable in dollars, hence, the obligation created is null and void pursuant to Republic Act No. 529
(An Act to Assure Uniform Value of Philippine Coin and Currency). A petition for certiorari seeking to declare the nullity of the
RTC ruling was filed by the petitioner in the Court of Appeals. The Court of Appeals dismissed the petition with costs against
the petitioner. A motion for reconsideration of the said decision was filed by the petitioner but the same was denied by the
Court of Appeals, thus elevated to the Supreme Court.

ISSUES: Whether or not:

(1) The Regional Trial Court of Makati City has jurisdiction over the case; and,

(2) The check in question, drawn against the dollar account of petitioner with a foreign bank, is covered by the Bouncing
Checks Law (B.P. Blg. 22).

HELD: YES on both cases. Petition was dismissed for lack of merit.

RATIO: For the first issue: The trial court’s jurisdiction over the case, subject of this review, can not be questioned, as Sections
10 and 15(a), Rule 110 of the Rules of Court specifically provide. The information under consideration specifically alleged that
the offense was committed in Makati, Metro Manila and therefore, the same is controlling and sufficient to vest jurisdiction
upon the Regional Trial Court of Makati. The Court acquires jurisdiction over the case and over the person of the accused
upon the filing of a complaint or information in court which initiates a criminal action (Republic vs. Sunga, 162 SCRA 191
[1988]).

For the second issue: Exception in the Statute. It is a cardinal principle in statutory construction that where the law does not
distinguish courts should not distinguish. Parenthetically, the rule is that where the law does not make any exception, courts
may not except something unless compelling reasons exist to justify it (Phil. British Assurance Co., Inc. vs. IAC, 150 SCRA 520
[1987]). The records of the Batasan, Vol. III, unmistakably show that the intention of the lawmakers is to apply the law to
whatever currency may be the subject thereof. The discussion on the floor of the then Batasang Pambansa fully sustains this
view.

Colgate-Palmolive Phils. Inc. vs. Hon. Gimenez [G.R. No. L-14787 January 28 1961]

FACTS: The petitioner Colgate-Palmolive Philippines imported from abroad various materials such as irish moss extract,
sodium benzoate, sodium saccharinate precipitated calcium carbonate and dicalcium phosphate, for use as stabilizers and
flavoring of the dental cream it manufactures. For every importation made of these materials, the petitioner paid to the
Central Bank of the Philippines the 17% special excise tax on the foreign exchange used for the payment of the cost,
transportation and other charges incident thereto, pursuant to Republic Act No. 601, as amended, commonly known as the
Exchange Tax Law. The petitioner filed with the Central Bank three applications for refund of the 17% special excise tax it had
paid. The auditor of the Central Bank, refused to pass in audit its claims for refund fixed by the Officer-in-Charge of the
Exchange Tax Administration, on the theory that toothpaste stabilizers and flavors are not exempt under section 2 of the
Exchange Tax Law.

Petitioner appealed to the Auditor General, but the latter affirmed the ruling of the auditor of the Central Bank, maintaining
that the term “stabilizer and flavors” mentioned in section 2 of the Exchange Tax Law refers only to those used in the
preparation or manufacture of food or food products. Not satisfied, the petitioner brought the case to the Supreme Court thru
the present petition for review.

ISSUE: Whether or not the foreign exchange used by petitioner for the importation of dental cream stabilizers and flavors is
exempt from the 17% special excise tax imposed by the Exchange Tax Law (Republic Act No. 601).

HELD: YES. The decision under review was reversed.

RATIO: General and special terms. The ruling of the Auditor General that the term “stabilizer and flavors” as used in the law
refers only to those materials actually used in the preparation or manufacture of food and food products is based, apparently,
on the principle of statutory construction that “general terms may be restricted by specific words, with the result that the
general language will be limited by the specific language which indicates the statute’s object and purpose.” The rule, however,
is applicable only to cases where, except for one general term, all the items in an enumeration belong to or fall under one
specific class (ejusdem generis). In the case at bar, it is true that the term “stabilizer and flavors” is preceded by a number of
articles that may be classified as food or food products, but it is likewise true that the other items immediately following it do
not belong to the same classification.

The rule of construction that general and unlimited terms are restrained and limited by particular recitals when used in
connection with them, does not require the rejection of general terms entirely. It is intended merely as an aid in ascertaining
the intention of the legislature and is to be taken in connection with other rules of construction.

Republic of the Philippines vs. Hon. Migrinio and Troadio Tecson [G.R. No. 89483. August 30, 1990]

FACTS: The New Armed Forces Anti-Graft Board (Board) under the Presidential Commission on Good Government (PCGG)
recommended that private respondent Lt. Col. Troadio Tecson (ret.) be prosecuted and tried for violation of Rep. Act No.
3019, as amended, and Rep. Act No. 1379, as amended. Private respondent moved to dismiss. The Board opposed. Private
respondent filed a petition for prohibition with preliminary injunction with the Regional Trial Court in Pasig, Metro
Manila. According to petitioners, the PCGG has the power to investigate and cause the prosecution of private respondent
because he is a “subordinate” of former President Marcos. Respondent alleged that he is not one of the subordinates
contemplated in Executive Orders 1, 2, 14 and 14-A as the alleged illegal acts being imputed to him, that of alleged amassing
wealth beyond his legal means while Finance Officer of the Philippine Constabulary, are acts of his own alone, not connected
with his being a crony, business associate, etc. or subordinate as the petition does not allege so. Hence the PCGG has no
jurisdiction to investigate him.

ISSUE: Whether or not private respondent acted as a “subordinate” under E.O. No.1 and related executive orders.

HELD: NO. Civil Case decision dismissed and nullified. TRO was made permanent.
RATIO: Applying the rule in statutory construction known as ejusdem generis, that is – [w]here general words follow an
enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed
in their widest extent, but are to be held as applying only to persons or things of the same kind or class as those specifically
mentioned. The term “subordinate” as used in E.O. Nos. 1 and 2 would refer to one who enjoys a close association or relation
with former Pres. Marcos and/or his wife, similar to the immediate family member, relative, and close associate in E.O. No. 1
and the close relative, business associate, dummy, agent, or nominee in E.O. No. 2.

The PCGG is ENJOINED from proceeding with the investigation and prosecution of private respondent, without prejudice to his
investigation and prosecution by the appropriate prosecution agency.

San Pablo Manufacturing Corporation vs. CIR [G.R. No. 147749. June 22, 2006]

FACTS: San Pablo Manufacturing Corporation (SPMC) is a domestic corporation engaged in the business of milling,
manufacturing and exporting of coconut oil and other allied products. It was assessed and ordered to pay by the
Commissioner of Internal Revenue miller’s tax and manufacturer’s sales tax, among other deficiency taxes, for taxable year
1987 particularly on SPMC’s sales of crude oil to United Coconut Chemicals, Inc. (UNICHEM) while the deficiency sales tax was
applied on its sales of corn and edible oil as manufactured products. SPMC opposed the assessments. The Commissioner
denied its protest. SPMC appealed the denial of its protest to the Court of Tax Appeals (CTA) by way of a petition for review.
docketed as CTA Case No. 5423. It insists on the liberal application of the rules because, on the merits of the petition, SPMC
was not liable for the 3% miller’s tax. It maintains that the crude oil which it sold to UNICHEM was actually exported by
UNICHEM as an ingredient of fatty acid and glycerine, hence, not subject to miller’s tax pursuant to Section 168 of the 1987
Tax Code. Since UNICHEM, the buyer of SPMC’s milled products, subsequently exported said products, SPMC should be
exempted from the miller’s tax.

ISSUE: Whether or not SPMC’s sale of crude coconut oil to UNICHEM was subject to the 3% miller’s task.

HELD: NO. Petition was denied.

RATIO: The language of the exempting clause of Section 168 of the 1987 Tax Code was clear. The tax exemption applied only
to the exportation of rope, coconut oil, palm oil, copra by-products and dessicated coconuts, whether in their original state or
as an ingredient or part of any manufactured article or products, by the proprietor or operator of the factory or by the miller
himself.

Where the law enumerates the subject or condition upon which it applies, it is to be construed as excluding from its effects all
those not expressly mentioned. Expressio unius est exclusio alterius. Anything that is not included in the enumeration is
excluded therefrom and a meaning that does not appear nor is intended or reflected in the very language of the statute
cannot be placed therein. The rule proceeds from the premise that the legislature would not have made specific enumerations
in a statute if it had the intention not to restrict its meaning and confine its terms to those expressly mentioned.

The rule of expressio unius est exclusio alterius is a canon of restrictive interpretation. Its application in this case is consistent
with the construction of tax exemptions in strictissimi juris against the taxpayer. To allow SPMC’s claim for tax exemption will
violate these established principles and unduly derogate sovereign authority.

Dra. Brigida Buenaseda et. al. vs. Sec. Juan Flavier et. al. [G.R. No. 106719. September 21, 1993]

FACTS: The petition for Certiorari, Prohibition and Mandamus, with Prayer for Preliminary Injunction or Temporary Restraining
Order, under Rule 65 of the Revised Rules of Court, seeks to nullify the Order of the Ombudsman directing the preventive
suspension of petitioners Dr. Brigida S. Buenaseda et.al. The questioned order was issued in connection with the
administrative complaint filed with the Ombudsman (OBM-ADM-0-91-0151) by the private respondents against the
petitioners for violation of the Anti-Graft and Corrupt Practices Act. The Supreme Court required respondent Secretary to
comply with the aforestated status quo order. The Solicitor General, in his comment, stated that (a) “The authority of the
Ombudsman is only to recommend suspension and he has no direct power to suspend;” and (b) “Assuming the Ombudsman
has the power to directly suspend a government official or employee, there are conditions required by law for the exercise of
such powers; [and] said conditions have not been met in the instant case”
ISSUE: Whether or not the Ombudsman has the power to suspend government officials and employees working in offices
other than the Office of the Ombudsman, pending the investigation of the administrative complaints filed against said officials
and employees.

HELD: YES. Petition was dismissed, status quo lifted and set aside.

RATIO: When the constitution vested on the Ombudsman the power “to recommend the suspension” of a public official or
employees (Sec. 13 [3]), it referred to “suspension,” as a punitive measure. All the words associated with the word
“suspension” in said provision referred to penalties in administrative cases, e.g. removal, demotion, fine, censure. Under the
rule of noscitur a sociis, the word “suspension” should be given the same sense as the other words with which it is associated.
Where a particular word is equally susceptible of various meanings, its correct construction may be made specific by
considering the company of terms in which it is found or with which it is associated.

Section 24 of R.A. No. 6770, which grants the Ombudsman the power to preventively suspend public officials and employees
facing administrative charges before him, is a procedural, not a penal statute. The preventive suspension is imposed after
compliance with the requisites therein set forth, as an aid in the investigation of the administrative charges.

Fule vs. CA [G.R. No. L-79094. June 22, 1988]

FACTS: This is a Petition for Review on certiorari of the Decision of respondent Appellate Court, which affirmed the judgment
of the Regional Trial Court, Lucena City, Branch LIV, convicting petitioner (the accused-appellant) of Violation of Batas
Pambansa Blg. 22 (The Bouncing Checks Law) on the basis of the Stipulation of Facts entered into between the prosecution
and the defense during the pre-trial conference in the Trial Court. At the hearing of August 23, 1985, only the prosecution
presented its evidence. At the subsequent hearing on September 17, 1985, petitioner-appellant waived the right to present
evidence and, in lieu thereof, submitted a Memorandum confirming the Stipulation of Facts. The Trial Court convicted
petitioner-appellant.

On appeal, respondent Appellate Court upheld the Stipulation of Facts and affirmed the judgment of conviction. Hence, this
recourse, with petitioner-appellant contending that the Honorable Respondent Court of Appeals erred in the decision of the
Regional Trial Court convicting the petitioner of the offense charged, despite the cold fact that the basis of the conviction was
based solely on the stipulation of facts made during the pre-trial on August 8, 1985, which was not signed by the petitioner,
nor by his counsel. In Sec.4 of the Rules on Criminal Procedures:

SEC. 4. Pre-trial agreements must be signed. — No agreement or admission made or entered during the pre-trial conference
shall be used in evidence against the accused unless reduced to writing and signed by him and his counsel. (Rule 118)
[Emphasis supplied]

Having been effective since January 01, 1985, the above rule is applicable.

ISSUE: Whether or not the omission of the signature of the accused and his counsel, as mandatorily required by the Rules,
renders the Stipulation of Facts inadmissible in evidence.

HELD: YES. Judgment of respondent Appellate Court is REVERSED and this case is hereby ordered RE-OPENED and REMANDED
to the appropriate Branch of the Regional Trial Court of Lucena City, for further reception of evidence.

RATIO: By its very language, the Rule is mandatory. Under the rule of statutory construction, negative words and phrases are
to be regarded as mandatory while those in the affirmative are merely directory (McGee vs. Republic, 94 Phil. 820 [1954]). The
use of the term “shall” further emphasizes its mandatory character and means that it is imperative, operating to impose a
duty which may be enforced (Bersabal vs. Salvador, No. L-35910, July 21, 1978, 84 SCRA 176). And more importantly, penal
statutes whether substantive and remedial or procedural are, by consecrated rule, to be strictly applied against the
government and liberally in favor of the accused (People vs. Terrado No. L-23625, November 25, 1983, 125 SCRA 648).

Bersabal vs. Hon. Judge Serafin Salvador [G.R. No. L-35910. July 21, 1978]

FACTS: [P]etitioner Purita Bersabal seeks to annul the orders of respondent Judge and to compel said respondent Judge to
decide petitioner’s perfected appeal on the basis of the evidence and records of the case submitted by the City Court of
Caloocan City plus the memorandum already submitted by the petitioner and respondents. The second paragraph of Section
45 of R.A. No. 296, otherwise known as the Philippine Judiciary Act of 1948, as amended by R.A. No. 6031 provides, in part, as
follows:

Courts of First Instance shall decide such appealed cases on the basis of the evidence and records transmitted from the city or
municipal courts: Provided, That the parties may submit memoranda and/or brief with oral argument if so requested … .
(Emphasis supplied).

A decision was rendered by said Court which decision was appealed by the petitioner to the respondent Court. The
respondent Judge dismissed petition on August 4, 1971 upon failure of defendant–appellant to prosecute her appeal, with
costs against her. Petitioner filed her memorandum. The respondent Court denied the motion for reconsideration on October
30, 1971. Petitioner filed a motion for leave to file second motion for reconsideration which was likewise denied by the
respondent court on March 15, 1972.

ISSUE: Whether or not, in the light of the provisions of the second paragraph of Section 45 of Republic Act No. 296, as
amended by R.A. No. 6031, the mere failure of an appellant to submit on time the memorandum mentioned in the same
paragraph would empower the Court of First Instance to dismiss the appeal on the ground of failure to Prosecute.

HELD: NO. The challenged orders of Respondent Judge dated August 4, 1971, October 30, 1971, and March 15, 1972 are set
aside as null and void.

RATIO: The above cited provision is clear and leaves no room for doubt. It cannot be interpreted otherwise than that the
submission of memoranda is optional on the part of the parties. Being optional on the part of the parties, the latter may so
choose to waive submission of the memoranda. And as a logical concomitant of the choice given to the Parties, the Court
cannot dismiss the appeal of the party waiving the submission of said memorandum the appellant so chooses not to submit
the memorandum, the Court of First Instance is left with no alternative but to decide the case on the basis of the evidence and
records transmitted from the city or municipal courts. In other words, the Court is not empowered by law to dismiss the
appeal on the mere failure of an appellant to submit his memorandum, but rather it is the Court’s mandatory duty to decide
the case on the basis of the available evidence and records transmitted to it.

As a general rule, the word “may” when used in a statute is permissive only and operates to confer discretion; while the
word “shall” is imperative, operating to impose a duty which may be enforced (Dizon vs. Encarnacion, L-18615, Dec. 24, 1963,
9 SCRA 714, 716-717). The implication is that the Court is left with no choice but to decide the appealed case either on the
basis of the evidence and records transmitted to it, or on the basis of the latter plus memoranda and/or brief with oral
argument duly submitted and/or made on request.

Loyola Grand Villas Homeowners (South) Association Inc. vs. CA [G.R. No. 117188. August 07, 1997]

FACTS: [T]his is a petition for review on certiorari of the Decision of the Court of Appeals affirming the decision of the Home
Insurance and Guaranty Corporation (HIGC). This quasi-judicial body recognized Loyola Grand Villas Homeowners Association
(LGVHA) as the sole homeowners’ association in Loyola Grand Villas, a duly registered subdivision in Quezon City and Marikina
City that was owned and developed by Solid Homes, Inc. For unknown reasons, however, LGVHAI did not file its corporate by-
laws. LGVHAI was informed by HIGC that they had been automatically dissolved. LGVHAI lodged a complaint with the HIGC.
They questioned the revocation of LGVHAI’s certificate of registration without due notice and hearing and concomitantly
prayed for the cancellation of the certificates of registration of the North and South Associations by reason of the earlier
issuance of a certificate of registration in favor of LGVHAI. After due notice and hearing, private respondents obtained a
favorable ruling from HIGC recognizing them as the duly registered and existing homeowners association for Loyola Grand
Villas homeowners and declaring the Certificates of Registration of Loyola Grand Villas Homeowners (North) Association, Inc.
and Loyola Grand Villas Homeowners (South) Association, Inc. as hereby revoked or cancelled.

The South Association appealed to the Appeals Board of the HIGC but was dismissed for lack of merit. Rebuffed, the South
Association in turn appealed to the Court of Appeals, but it simply reiterated HIGC’s ruling.

ISSUE: Whether or not the failure of a corporation to file its by-laws within one month from the date of its incorporation, as
mandated by Section 46 of the Corporation Code, result in its automatic dissolution.

HELD: NO. Petition DENIED. Decision of the Court of Appeals AFFIRMED.

RATIO: [U]nder the principle that the best interpreter of a statute is the statute itself (optima statuli interpretatix est ipsum
statutum), Section 46 of the Corporation Code reveals the legislative intent to attach a directory, and not mandatory, meaning
for the word “must” in the first sentence thereof. Note should be taken of the second paragraph of the law which allows the
filing of the by-laws even prior to incorporation. This provision in the same section of the Code rules out mandatory
compliance with the requirement of filing the by-laws “within one (1) month after receipt of official notice of the issuance of
its certificate of incorporation by the Securities and Exchange Commission.” It necessarily follows that failure to file the by-
laws within that period does not imply the “demise” of the corporation. By-laws may be necessary for the “government” of
the corporation but these are subordinate to the articles of incorporation as well as to the Corporation Code and related
statutes.

[I]f the languages of a statute considered as a whole and with due regard to its nature and object reveals that the legislature
intended to use the words “shall” and “must” to be directory, they should be given that meaning.

PNB vs. CA et al

Facts: Spouses Antonio and Asuncion Chua were the owners of a parcel of land covered by a TCT and registered in their
names. Upon the death of Antonio, the probate court appointed his son, private respondent Allan Chua as special
administrator of the intestate estate. The court also authorized Allan to obtain a loan accommodation from PNB to be secured
by a real estate mortgage over the above-mentioned parcel of land, which Allan did for P450,000.00 with interest.

For failure to pay the loan in full, the bank extrajudicially foreclosed the real estate mortgage. During the auction, PNB was the
highest bidder. However, the loan had a payable balance. To claim this deficiency, PNB instituted an action with the RTC
against Asuncion and Allan. The RTC dismissed PNB’s complaint. The CA affirmed the decision. PNB appealed contending that
under prevailing jurisprudence, when the proceeds from an extrajudicial foreclosure is not enough to pay off the loan, the
mortgagee can file a civil case against the mortgagor to satisfy the deficiency.

Issue: May PNB still pursue by civil action the recovery of the balance of indebtedness after having foreclosed the property
securing the same?

Held: No. Under Section 7, Rule 89, once the deed of real estate mortgage is recorded in the proper Registry of Deeds,
together with the corresponding court order authorizing the administrator to mortgage the property, said deed shall be valid
as if it has been executed by the deceased himself.

In the present case, it is undisputed that the conditions under the aforecited rule have been complied with. It follows that Sec.
7 of Rule 86, appropriately applies to the controversy at hand. Case law holds that this rule grants to the mortgagee three
distinct, independent and mutually exclusive remedies that can be alternatively pursued by the mortgage creditor for the
satisfaction of his credit in case the mortgagor dies, among them:

(1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim;

(2) to foreclose the mortgage judicially and prove any deficiency as an ordinary claim; and

(3) to rely on the mortgage exclusively, foreclosing the same at any time before it is barred by prescription without right to file
a claim for any deficiency.

Petitioner herein has chosen the mortgage-creditors option of extrajudicially foreclosing the mortgaged property of the
Chuas. This choice now bars any subsequent deficiency claim against the estate of the deceased, Antonio M. Chua. Petitioner
may no longer avail of the complaint for the recovery of the balance of indebtedness against said estate, after petitioner
foreclosed the property securing the mortgage in its favor. It follows that in this case no further liability remains on the part of
respondents and the late Antonio M. Chuas estate.

Petitioner cited Prudential Bank v. Martinez as precedent for holding that in extrajudicial foreclosure of mortgage, when the
proceeds of the sale are insufficient to pay the debt, the mortgagee has the right to recover the deficiency from the
mortgagor. However, it must be pointed out the cited cases involve ordinary debts secured by a mortgage. The case at bar, we
must stress, involves a foreclosure of mortgage arising out of a settlement of estate, wherein the administrator mortgaged a
property belonging to the estate of the decedent, pursuant to an authority given by the probate court. As the Court of Appeals
correctly stated, the Rules of Court on Special Proceedings comes into play decisively
ALU-TUCP vs. NLRC and NSC [G.R. No. 109902. August 02, 1994]

FACTS: [P]etitioners, as employees of private respondent National Steel Corporation (NSC), filed separate complaints for unfair
labor practice, regularization and monetary benefits with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City. The
complaints were consolidated and after hearing, the Labor Arbiter declared petitioners “regular project employees who shall
continue their employment as such for as long as such [project] activity exists,” but entitled to the salary of a regular
employee pursuant to the provisions in the collective bargaining agreement. It also ordered payment of salary differentials.

The NLRC in its questioned resolutions modified the Labor Arbiter’s decision. It affirmed the Labor Arbiter’s holding that
petitioners were project employees since they were hired to perform work in a specific undertaking — the Five Years
Expansion Program, the completion of which had been determined at the time of their engagement and which operation was
not directly related to the business of steel manufacturing. The NLRC, however, set aside the award to petitioners of the same
benefits enjoyed by regular employees for lack of legal and factual basis.

The law on the matter is Article 280 of the Labor Code, where the petitioners argue that they are “regular” employees of NSC
because: (i) their jobs are “necessary, desirable and work-related to private respondent’s main business, steel-making”; and
(ii) they have rendered service for six (6) or more years to private respondent NSC.

ISSUE:Whether or not petitioners are considered “permanent employees” as opposed to being only “project employees” of
NSC.

HELD: NO. Petition for Certiorari dismissed for lack of merit. NLRC Resolutions affirmed.

RATIO: Function of the proviso. Petitioners are not considered “permanent employees”. However, contrary to petitioners’
apprehensions, the designation of named employees as “project employees” and their assignment to a specific project are
effected and implemented in good faith, and not merely as a means of evading otherwise applicable requirements of labor
laws.

On the claim that petitioners’ service to NSC of more than six (6) years should qualify them as “regular employees”, the
Supreme Court believed this claim is without legal basis. The simple fact that the employment of petitioners as project
employees had gone beyond one (1) year, does not detract from, or legally dissolve, their status as “project employees”. The
second paragraph of Article 280 of the Labor Code, quoted above, providing that an employee who has served for at least one
(1) year, shall be considered a regular employee, relates to casual employees, not to project employees.