G.R. No.

102199 January 28, 1997

AFP MUTUAL BENEFIT ASSOCIATION, INC., Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION and EUTIQUIO BUSTAMANTE,
Respondents.

PANGANIBAN, J.:

The determination of the proper forum is crucial because the filing of the petition or complaint in the wrong court or tribunal is fatal, even for a patently
meritorious claim. More specifically, labor arbiters and the National Labor Relations Commission have no jurisdiction to entertain and rule on money
claims where no employer-employee relations is involved. Thus, any such award rendered without jurisdiction is a nullity.

This petition for certiorari under Rule 65, Rules of Court seeks to annul the Resolution 1 of the National Labor Relations Commission, promulgated
September 27, 1991, in NLRC-NCR Case No. 00-02-01196-90, entitled "Eutiquio Bustamante vs. AFP Mutual Benefit Association, Inc.," affirming the
decision of the labor arbiter which ordered payment of the amount of P319,796.00 as insurance commissions to private respondent.

The Antecedent Facts

The facts are simple. Private respondent Eutiquio Bustamante had been an insurance underwriter of petitioner AFP Mutual Benefit Association, Inc. since
1975. The Sales Agent's Agreement between them provided: 2

B. Duties and Obligations:

1. During the lifetime of this Agreement, the SALES AGENT (private respondent) shall solicit exclusively for AFPMBAI (petitioner), and shall be bound by
the latter's policies, memo circulars, rules and regulations which it may from time to time, revise, modify or cancel to serve its business interests.

2. The SALES AGENT shall confine his business activities for AFPMBAI while inside any military camp, installation or residence of military personnel. He
is free to solicit in the area for which he/she is licensed and as authoriied, provided however, that AFPMBAI may from time to time, assign him a specific
area of responsibility and a production quota on a case to case basis.

C. Commission

1. The SALES AGENT shall be entitled to the commission due for all premiums actually due and received by AFPMBAI out of life insurance policies
solicited and obtained by the SALES AGENT at the rates set forth in the applicant's commission schedules hereto attached.

D. General Provisions

1. There shall be no employer-employee relationship between the parties, the SALES AGENT being hereby deemed an independent contractor.

As compensation, he received commissions based on the following percentages of the premiums paid:

30% of premium paid within the first year;

10% of premium paid with the second year;

5% of the premium paid during the third year;

3% of the premium paid during the fourth year; and

1% of the premium paid during the fifth year up to the tenth year:

On July 5, 1989, petitioner dismissed private respondent for misrepresentation and for simultaneously selling insurance for another life insurance
company in violation of said agreement.

At the time of his dismissal, private respondent was entitled to accrued commissions equivalent to twenty four (24) months per the Sales Agent Agreement
and as stated in the account summary dated July 5, 1989, approved by Retired Brig. Gen. Rosalino Alquiza, president of petitioner-company. Said
summary showed that private respondent had a total commission receivable of P438,835.00, of which only P78,039.89 had been paid to him.

Private respondent wrote petitioner seeking the release of his commissions for said 24 months. Petitioner, through Marketing Manager Juan Concepcion,
replied that he was entitled to only P75,000.00 to P100,000.00. Hence, believing Concepcion's computations, private respondent signed a quitclaim in
favor of petitioner.

Sometime in October 1989, private respondent was informed that his check was ready for release. In collecting his check, he discovered from a document
(account summary) attached to said check that his total commissions for the 24 months actually amounted to P354,796.09. Said document stated:

6. The total receivable for Mr. Bustamante out of the renewals and old business generated since 1983 grosses P438,835.00 less his outstanding
obligation in the amount of P78,039.89 as of June 30, 1989, total expected commission would amount to P354,796.09. From that figure at a 15%
compromise settlement this would mean P53,219.41 due him to settle his claim.
Private respondent, however, was paid only the amount of P35,000.00.

On November 23, 1989, private respondent filed a complaint with the Office of the Insurance Commissioner praying for the payment of the correct amount
of his commission. Atty. German C. Alejandria, Chief of the Public Assistance and Information Division, Office of the Insurance Commissioner, advised
private respondent that it was the Department of Labor and Employment that had jurisdiction over his complaint.

On February 26, 1990, private respondent filed his complaint with the Department of Labor claiming: (1) commission for 2 years from termination of
employment equivalent to 30% of premiums remitted during employment; (2) P354,796.00 as commission earned from renewals and old business
generated since 1983; (3) P100,000.00 as moral damages; and (4) P100,000.00 as exemplary damages.

After submission of position papers, Labor Arbiter Jose G. de Vera rendered his decision, dated August 24, 1990, the dispositive portion of which reads: 5

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered declaring the dismissal of the complainant as just and valid, and
consequently, his claim for separation pay is denied. On his money claim, the respondent company is hereby ordered to pay complainant the sum of
P319,796.00 plus attorney's fees in the amount of P31,976.60.

All other claims of the complainant are dismissed for want of merit.

The labor arbiter relied on the Sales Agent's Agreement proviso that petitioner could assign private respondent a specific area of responsibility and a
production quota, and read it as signalling the existence of employer- employee relationship between petitioner and private respondent.

On appeal, the Second Division 6 of the respondent Commission affirmed the decision of the Labor Arbiter. In the assailed Resolution, respondent
Commission found no reason to disturb said ruling of the labor arbiter and ruled:

WHEREFORE, in view of the foregoing considerations, the subject appeal should be as it is hereby, denied and the decision appealed from affirmed.

SO ORDERED. Hence, this petition.

The Issue

Petitioner contends that respondent Commission committed grave abuse of discretion in ruling that the labor arbiter had jurisdiction over this case. At the
heart of the controversy is the issue of whether there existed an employer-employee relationship between petitioner and private respondent.

Petitioner argues that, despite provisions B(1) and (2) of the Sales Agent's Agreement, there is no employer-employee relationship between private
respondent and itself. Hence, respondent commission gravely abused its discretion when it held that the labor arbiter had jurisdiction over the case.

The Court's Ruling

The petition is meritorious.

First Issue: Not All That Glitters Is Control

Well-settled is the doctrine that the existence of an employer-employee relationship is ultimately a question of fact and that the findings thereon by the
labor arbiter and the National Labor Relations Commission shall be accorded not only respect but even finality when supported by substantial evidence. 8
The determinative factor in such finality is the presence of substantial evidence to support said finding, otherwise, such factual findings cannot bind this
Court.

Respondent Commission concurred with the labor arbiter's findings that:

x x x The complainant's job as sales insurance agent is usually necessary and desirable in the usual business of the respondent company. Under the
Sales Agents Agreement, the complainant was required to solicit exclusively for the respondent company, and he was bound by the company policies,
memo circulars, rules and regulations which were issued from time to time. By such requirement to follow strictly management policies, orders, circulars,
rules and regulations, it only shows that the respondent had control or reserved the right to control the complainant's work as solicitor. Complainant was
not an independent contractor as he did not carry on an independent business other than that of the company's . . .

To this, respondent Commission added that the Sales Agent's Agreement specifically provided that petitioner may assign private respondent a specific
area of responsibility and a production quota. From there, it concluded that apparently there is that exercise of control by the employer which is the most
important element in determining employer- employee relationship.
We hold, however, that respondent Commission misappreciated the facts of the case. Time and again, the Court has applied the "four-fold" test in
determining the existence of employer-employee relationship. This test considers the following elements: (1) the power to hire; (2) the payment of wages;
(3) the power to dismiss; and (4) the power to control, the last being the most important element.

The difficulty lies in correctly assessing if certain factors or elements properly indicate the presence of control. Anent the issue of exclusivity in the case at
bar, the fact that private respondent was required to solicit business exclusively for petitioner could hardly be considered as control in labor jurisprudence.
Under Memo Circulars No. 2-81 12 and 2-85, dated December 17, 1981 and August 7, 1985, respectively, issued by the Insurance Commissioner,
insurance agents are barred from serving more than one insurance company, in order to protect the public and to enable insurance companies to exercise
exclusive supervision over their agents in their solicitation work. Thus, the exclusivity restriction clearly springs from a regulation issued by the Insurance
Commission, and not from an intention by petitioner to establish control over the method and manner by which private respondent shall accomplish his
work. This feature is not meant to change the nature of the relationship between the parties, nor does it necessarily imbue such relationship with the
quality of control envisioned by the law.

So too, the fact that private respondent was bound by company policies, memo/circulars, rules and regulations issued from time to time is also not
indicative of control. In its Reply to Complainant's Position Paper, petitioner alleges that the policies, memo/circulars, and rules and regulations referred to
in provision B(1) of the Sales Agent's Agreement are only those pertaining to payment of agents' accountabilities, availment by sales agents of cash
advances for sorties, circulars on incentives and awards to be given based on production, and other matters concerning the selling of insurance, in
accordance with the rules promulgated by the Insurance Commission. According to the petitioner, insurance solicitors are never affected or covered by the
rules and regulations concerning employee conduct and penalties for violations thereof, work standards, performance appraisals, merit increases,
promotions, absenteeism/attendance, leaves of absence, management-union matters, employee benefits and the like. Since private respondent failed to
rebut these allegations, the same are deemed admitted, or at least proven, thereby leaving nothing to support the respondent Commission's conclusion
that the foregoing elements signified an employment relationship between the parties.

In regard to the territorial assignments given to sales agents, this too cannot be held as indicative of the exercise of control over an employee. First of all,
the place of work in the business of soliciting insurance does not figure prominently in the equation. And more significantly, private respondent failed to
rebut petitioner's allegation that it had never issued him any territorial assignment at all. Obviously, this Court cannot draw the same inference from this
feature as did the respondent Commission.

To restate, the significant factor in determining the relationship of the parties is the presence or absence of supervisory authority to control the method and
the details of performance of the service being rendered, and the degree to which the principal may intervene to exercise such control. The presence of
such power of control is indicative of an employment relationship, while absence thereof is indicative of independent contractorship. In other words, the
test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work
according to his own methods and without being subject to the control of the employer except only as to the result of the work. Such is exactly the nature
of the relationship between petitioner and private respondent.

Further, not every form of control that a party reserves to himself over the conduct of the other party in relation to the services being rendered may be
accorded the effect of establishing an employer-employee relationship. The facts of this case fall squarely with the case of Insular Life Assurance Co., Ltd.
vs. NLRC. In said case, we held that:

Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating
the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such
means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the
means used to achieve it. The distinction acquires particular relevance in the case of an enterprise affected with public interest, as is the business of
insurance, and is on that account subject to regulation by the State with respect, not only to the relations between insurer and insured but also to the
internal affairs of the insurance company. Rules and regulations governing the conduct of the business are provided for in the Insurance Code and
enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurande company to promulgate a set of rules to guide its
commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. . . . None of these really invades the
agent's contractual prerogative to adopt his own selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to
establish an employer-employee relationship between him and the company.

Private respondent's contention that he was petitioner's employee is belied by the fact that he was free to sell insurance at any time as he was not subject
to definite hours or conditions of work and in turn was compensated according to the result of his efforts. By the nature of the business of soliciting
insurance, agents are normally left free to devise ways and means of persuading people to take out insurance. There is no prohibition, as contended by
petitioner, for private respondent to work for as long as he does not violate the Insurance Code. As petitioner explains:

(Private respondent) was free to solicit life insurance anywhere he wanted and he had free and unfettered time to pursue his business. He did not have to
punch in and punch out the bundy clock as he was not required to report to the (petitioner's) office regularly. He was not covered by any employee policies
or regulations and not subject to the disciplinary action of management on the basis of the Employee Code of Conduct. He could go out and sell insurance
at his own chosen time. He was entirely left to his own choices of areas or territories, with no definite, much less supervised, time schedule.

(Private respondent) had complete control over his occupation and (petitioner) did not exercise any right of Control and Supervision over his performance
except as to the payment of commission the amount of which entirely depends on the sole efforts of (private respondent). He was free to engage in other
occupation or practice other profession for as long as he did not commit any violation of the ethical standards prescribed in the Sales Agent's Agreement.

Although petitioner could have, theoretically, disapproved any of private respondent's transactions, what could be disapproved was only the result of the
work, and not the means by which it was accomplished.

The "control" which the above factors indicate did not sum up to the power to control private respondent's conduct in and mode of soliciting insurance. On
the contrary, they clearly indicate that the juridical element of control had been absent in this situation. Thus, the Court is constrained to rule that no
employment relationship had ever existed between the parties.
Second Issue: Jurisdiction of Respondent

Commission & Labor Arbiter

Under the contract invoked, private respondent had never been petitioner's employee, but only its commission agent. As an independent contractor, his
claim for unpaid commission should have been litigated in an ordinary civil action.

The jurisdiction of labor arbiters and respondent Commission is set forth in Article 217 of the Labor Code. 18 The unifying element running through
paragraphs (1) - (6) of said provision is the consistent reference to cases or disputes arising out of or in connection with an employer-employee
relationship. Prior to its amendment by Batas Pambansa Blg. 227 on June 1, 1982, this point was clear as the article included "all other cases arising from
employer-employee relation unless expressly excluded by this Code." 19 Without this critical element of employment relationship, the labor arbiter and
respondent Commission can never acquire jurisdiction over a dispute. As in the case at bar. It was serious error on the part of the labor arbiter to have
assumed jurisdiction and adjudicated the claim. Likewise, the respondent Commission's affirmance thereof.

Such lack of jurisdiction of a court or tribunal may be raised at any stage of the proceedings, even on appeal. The doctrine of estoppel cannot be properly
invoked by respondent Commission to cure this fatal defect as it cannot confer jurisdiction upon a tribunal that to begin with, was bereft of jurisdiction over
a cause of action. 20 Moreover, in the proceedings below, petitioner consistently challenged the jurisdiction of the labor arbiter 21 and respondent
Commission.

It remains a basic fact in law that the choice of the proper forum is crucial as the decision of a court or tribunal without jurisdiction is a total nullity. 23 A
void judgment for want of jurisdiction is no judgment at all. It cannot be the source of any right nor the creator of any obligation. All acts performed
pursuant to it and all claims emanating from it have no legal effect. Hence, it can never become final. ". . . (I)t may be said to be a lawless thing which can
be treated as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head."

The way things stand, it becomes unnecessary to consider the merits of private respondent's claim for unpaid commission. Be that as it may, this ruling is
without prejudice to private respondent's right to file a suit for collection of unpaid commissions against petitioner with the proper forum and within the
proper period.

WHEREFORE, the petition is hereby GRANTED, and the assailed Resolution is hereby SET ASIDE.

SO ORDERED.

G.R. No. L-48494 February 5, 1990

BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners, vs. RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of
the President, and DOROTEO R. ALEGRE, respondents.

NARVASA, J.:

The question presented by the proceedings at bar 1 is whether or not the provisions of the Labor Code, 2 as amended,3 have anathematized "fixed period
employment" or employment for a term.

The root of the controversy at bar is an employment contract in virtue of which Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at
a yearly compensation of P20,000.00. 4 The contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of
the agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974 reiterated the
same terms and conditions, including the expiry date, as those contained in the original contract of July 18, 1971.

Some three months before the expiration of the stipulated period, or more precisely on April 20,1976, Alegre was given a copy of the report filed by Brent
School with the Department of Labor advising of the termination of his services effective on July 16, 1976. The stated ground for the termination was
"completion of contract, expiration of the definite period of employment." And a month or so later, on May 26, 1976, Alegre accepted the amount of
P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of
contract."

However, at the investigation conducted by a Labor Conciliator of said report of termination of his services, Alegre protested the announced termination of
his employment. He argued that although his contract did stipulate that the same would terminate on July 17, 1976, since his services were necessary
and desirable in the usual business of his employer, and his employment had lasted for five years, he had acquired the status of a regular employee and
could not be removed except for valid cause. 6 The Regional Director considered Brent School's report as an application for clearance to terminate
employment (not a report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead required
the reinstatement of Alegre, as a "permanent employee," to his former position without loss of seniority rights and with full back wages. The Director
pronounced "the ground relied upon by the respondent (Brent) in terminating the services of the complainant (Alegre) . . . (as) not sanctioned by P.D.
442," and, quite oddly, as prohibited by Circular No. 8, series of 1969, of the Bureau of Private Schools.

Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded the case to the Secretary of Labor for review. 8
The latter sustained the Regional Director. 9 Brent appealed to the Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack
of merit and affirmed the Labor Secretary's decision, ruling that Alegre was a permanent employee who could not be dismissed except for just cause, and
expiration of the employment contract was not one of the just causes provided in the Labor Code for termination of services.

The School is now before this Court in a last attempt at vindication. That it will get here.

The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor Code of the Philippines (P.D. 442)
had not yet been promulgated. Indeed, the Code did not come into effect until November 1, 1974, some three years after the perfection of the employment
contract, and rights and obligations thereunder had arisen and been mutually observed and enforced.

At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity of term employment. It was impliedly but
nonetheless clearly recognized by the Termination Pay Law, R.A. 1052, 11 as amended by R.A. 1787. 12 Basically, this statute provided that—

In cases of employment, without a definite period, in a commercial, industrial, or agricultural establishment or enterprise, the employer or the employee
may terminate at any time the employment with just cause; or without just cause in the case of an employee by serving written notice on the employer at
least one month in advance, or in the case of an employer, by serving such notice to the employee at least one month in advance or one-half month for
every year of service of the employee, whichever is longer, a fraction of at least six months being considered as one whole year.

The employer, upon whom no such notice was served in case of termination of employment without just cause, may hold the employee liable for
damages.

The employee, upon whom no such notice was served in case of termination of employment without just cause, shall be entitled to compensation from the
date of termination of his employment in an amount equivalent to his salaries or wages corresponding to the required period of notice.

There was, to repeat, clear albeit implied recognition of the licitness of term employment. RA 1787 also enumerated what it considered to be just causes
for terminating an employment without a definite period, either by the employer or by the employee without incurring any liability therefor.

Prior, thereto, it was the Code of Commerce which governed employment without a fixed period, and also implicitly acknowledged the propriety of
employment with a fixed period. Its Article 302 provided that —

In cases in which the contract of employment does not have a fixed period, any of the parties may terminate it, notifying the other thereof one month in
advance.

The factor or shop clerk shall have a right, in this case, to the salary corresponding to said month.

The salary for the month directed to be given by the said Article 302 of the Code of Commerce to the factor or shop clerk, was known as the mesada (from
mes, Spanish for "month"). When Article 302 (together with many other provisions of the Code of Commerce) was repealed by the Civil Code of the
Philippines, Republic Act No. 1052 was enacted avowedly for the precise purpose of reinstating the mesada.

Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on August 30,1950, itself deals with obligations with a
period in section 2, Chapter 3, Title I, Book IV; and with contracts of labor and for a piece of work, in Sections 2 and 3, Chapter 3, Title VIII, respectively,
of Book IV. No prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise deducible therefrom.

It is plain then that when the employment contract was signed between Brent School and Alegre on July 18, 1971, it was perfectly legitimate for them to
include in it a stipulation fixing the duration thereof Stipulations for a term were explicitly recognized as valid by this Court, for instance, in Biboso v.
Victorias Milling Co., Inc., promulgated on March 31, 1977, 13 and J. Walter Thompson Co. (Phil.) v. NLRC, promulgated on December 29, 1983. 14 The
Thompson case involved an executive who had been engaged for a fixed period of three (3) years. Biboso involved teachers in a private school as
regards whom, the following pronouncement was made:

What is decisive is that petitioners (teachers) were well aware at the time that their tenure was for a limited duration. Upon its termination, both parties to
the employment relationship were free to renew it or to let it lapse. (p. 254)

Under American law the principle is the same. "Where a contract specifies the period of its duration, it terminates on the expiration of such period." "A
contract of employment for a definite period terminates by its own terms at the end of such period."

The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (Presidential Decree No. 442), which went
into effect on November 1, 1974. The Code contained explicit references to fixed period employment, or employment with a fixed or definite period.
Nevertheless, obscuration of the principle of licitness of term employment began to take place at about this time.

Article 320, entitled "Probationary and fixed period employment," originally stated that the "termination of employment of probationary employees and
those employed WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." The asserted objective to was
"prevent the circumvention of the right of the employee to be secured in their employment as provided . . . (in the Code)."

Article 321 prescribed the just causes for which an employer could terminate "an employment without a definite period."

And Article 319 undertook to define "employment without a fixed period" in the following manner:
An employment shall be deemed to be without a definite period for purposes of this Chapter where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of the season.

The question immediately provoked by a reading of Article 319 is whether or not a voluntary agreement on a fixed term or period would be valid where the
employee "has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer." The definition
seems a non sequitur. From the premise — that the duties of an employee entail "activities which are usually necessary or desirable in the usual business
or trade of the employer the" — conclusion does not necessarily follow that the employer and employee should be forbidden to stipulate any period of time
for the performance of those activities. There is nothing essentially contradictory between a definite period of an employment contract and the nature of
the employee's duties set down in that contract as being "usually necessary or desirable in the usual business or trade of the employer." The concept of
the employee's duties as being "usually necessary or desirable in the usual business or trade of the employer" is not synonymous with or identical to
employment with a fixed term. Logically, the decisive determinant in term employment should not be the activities that the employee is called upon to
perform, but the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being
understood to be "that which must necessarily come, although it may not be known when." Seasonal employment, and employment for a particular project
are merely instances employment in which a period, where not expressly set down, necessarily implied.

Of course, the term — period has a definite and settled signification. It means, "Length of existence; duration. A point of time marking a termination as of a
cause or an activity; an end, a limit, a bound; conclusion; termination. A series of years, months or days in which something is completed. A time of
definite length. . . . the period from one fixed date to another fixed date . . ." It connotes a "space of time which has an influence on an obligation as a
result of a juridical act, and either suspends its demandableness or produces its extinguishment." It should be apparent that this settled and familiar notion
of a period, in the context of a contract of employment, takes no account at all of the nature of the duties of the employee; it has absolutely no relevance
to the character of his duties as being "usually necessary or desirable to the usual business of the employer," or not.

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

Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the reference to persons "employed with a fixed period,"
and was renumbered (becoming Article 271). The article 22 now reads:

. . . Probationary employment.—Probationary employment shall not exceed six months from the date the employee started working, unless it is covered by
an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged in a probationary basis may be terminated
for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee
at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.

Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra) by (a) deleting mention of employment with a fixed or definite
period, (b) adding a general exclusion clause declaring irrelevant written or oral agreements "to the contrary," and (c) making the provision treat
exclusively of "regular" and "casual" employment. As revised, said article, renumbered 270, 23 now reads:

. . . Regular and Casual Employment.—The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the engagement of the employee or where the work or service to be employed is seasonal in
nature and the employment is for the duration of the season.

An employment shall be deemed to the casual if it is not covered by the preceding paragraph: provided, that, any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such actually exists.

The first paragraph is identical to Article 319 except that, as just mentioned, a clause has been added, to wit: "The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreements of the parties . . ." The clause would appear to be addressed inter alia to agreements
fixing a definite period for employment. There is withal no clear indication of the intent to deny validity to employment for a definite period. Indeed, not only
is the concept of regular employment not essentially inconsistent with employment for a fixed term, as above pointed out, Article 272 of the Labor Code,
as amended by said PD 850, still impliedly acknowledged the propriety of term employment: it listed the "just causes" for which "an employer may
terminate employment without a definite period," thus giving rise to the inference that if the employment be with a definite period, there need be no just
cause for termination thereof if the ground be precisely the expiration of the term agreed upon by the parties for the duration of such employment.

Still later, however, said Article 272 (formerly Article 321) was further amended by Batas Pambansa Bilang 130, to eliminate altogether reference to
employment without a definite period. As lastly amended, the opening lines of the article (renumbered 283), now pertinently read: "An employer may
terminate an employment for any of the following just causes: . . . " BP 130 thus completed the elimination of every reference in the Labor Code, express
or implied, to employment with a fixed or definite period or term.
It is in the light of the foregoing description of the development of the provisions of the Labor Code bearing on term or fixed-period employment that the
question posed in the opening paragraph of this opinion should now be addressed. Is it then the legislative intention to outlaw stipulations in employment
contracts laying down a definite period therefor? Are such stipulations in essence contrary to public policy and should not on this account be accorded
legitimacy?

On the one hand, there is the gradual and progressive elimination of references to term or fixed-period employment in the Labor Code, and the specific
statement of the rule 25 that—

. . . Regular and Casual Employment.— The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the engagement of the employee or where the work or service to be employed is seasonal in
nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: provided, that, any employee who has rendered at least one
year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed
and his employment shall continue while such actually exists.

There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the validity and propriety of contracts and
obligations with a fixed or definite period, and imposes no restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it
specie, goods or services, except the general admonition against stipulations contrary to law, morals, good customs, public order or public policy. Under
the Civil Code, therefore, and as a general proposition, fixed-term employment contracts are not limited, as they are under the present Labor Code, to
those by nature seasonal or for specific projects with pre-determined dates of completion; they also include those to which the parties by free choice have
assigned a specific date of termination.

Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for specific projects, but to which a fixed term
is an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the engagement, the concept of
regular employment will all that it implies does not appear ever to have been applied, Article 280 of the Labor Code not withstanding; also appointments to
the positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or
tradition rotated among the faculty members, and where fixed terms are a necessity, without which no reasonable rotation would be possible. Similarly,
despite the provisions of Article 280, Policy, Instructions No. 8 of the Minister of Labor 27 implicitly recognize that certain company officials may be elected
for what would amount to fixed periods, at the expiration of which they would have to stand down, in providing that these officials," . . . may lose their jobs
as president, executive vice-president or vice-president, etc. because the stockholders or the board of directors for one reason or another did not re-elect
them."

There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc. But where no such
intent to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist, e.g., where it is indeed the employee himself who
insists upon a period or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a
sine qua non, would an agreement fixing a period be essentially evil or illicit, therefore anathema? Would such an agreement come within the scope of
Article 280 which admittedly was enacted "to prevent the circumvention of the right of the employee to be secured in . . . (his) employment?"

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

It is a salutary principle in statutory construction that there exists a valid presumption that undesirable consequences were never intended by a legislative
measure, and that a construction of which the statute is fairly susceptible is favored, which will avoid all objecionable mischievous, undefensible, wrongful,
evil and injurious consequences.

Nothing is better settled than that courts are not to give words a meaning which would lead to absurd or unreasonable consequences. That s a principle
that does back to In re Allen decided oil October 27, 1903, where it was held that a literal interpretation is to be rejected if it would be unjust or lead to
absurd results. That is a strong argument against its adoption. The words of Justice Laurel are particularly apt. Thus: "The fact that the construction
placed upon the statute by the appellants would lead to an absurdity is another argument for rejecting it. . . ."

. . . We have, here, then a case where the true intent of the law is clear that calls for the application of the cardinal rule of statutory construction that such
intent of spirit must prevail over the letter thereof, for whatever is within the spirit of a statute is within the statute, since adherence to the letter would result
in absurdity, injustice and contradictions and would defeat the plain and vital purpose of the statute.
Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears
to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately
and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer
to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no
application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears
that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over
the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes
pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences.

Such interpretation puts the seal on Bibiso 31 upon the effect of the expiry of an agreed period of employment as still good rule—a rule reaffirmed in the
recent case of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served by her
school a notice of termination following the expiration of the last of three successive fixed-term employment contracts, the Court held:

Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was probationary, contractual in nature, and one with a
definitive period. At the expiration of the period stipulated in the contract, her appointment was deemed terminated and the letter informing her of the non-
renewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased in the employ of petitioner UST. The notice is a
mere reminder that Reyes' contract of employment was due to expire and that the contract would no longer be renewed. It is not a letter of termination.
The interpretation that the notice is only a reminder is consistent with the court's finding in Labajo supra.

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

WHEREFORE, the public respondent's Decision complained of is REVERSED and SET ASIDE. Respondent Alegre's contract of employment with Brent
School having lawfully terminated with and by reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement
and the other relief awarded and confirmed on appeal in the proceedings below. No pronouncement as to costs.

SO ORDERED.

Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortés, Griño-Aquino, Medialdea and Regalado, JJ., concur.

Fernan, C.J., took no part.

Separate Opinions

SARMIENTO, J., concurring and dissenting:

I am agreed that the Labor Code has not foresaken "term employments", held valid in Biboso V. Victorias Milling Company, Inc. (No. L-44360, March 31,
1977, 76 SCRA 250). That notwithstanding, I cannot liken employment contracts to ordinary civil contracts in which the relationship is established by
stipulations agreed upon. Under the very Civil Code:

Art. 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts are subject
to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar
subjects.

Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.

The courts (or labor officials) should nevertheless be vigilant as to whether or not the termination of the employment contract is done by reason of
expiration of the period or to cheat the employee out of office. The latter amounts to circumvention of the law.

Separate Opinions

SARMIENTO, J., concurring and dissenting:

I am agreed that the Labor Code has not foresaken "term employments", held valid in Biboso V. Victorias Milling Company, Inc. (No. L-44360, March 31,
1977, 76 SCRA 250). That notwithstanding, I cannot liken employment contracts to ordinary civil contracts in which the relationship is established by
stipulations agreed upon. Under the very Civil Code:

Art. 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts are subject
to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar
subjects.

Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.
The courts (or labor officials) should nevertheless be vigilant as to whether or not the termination of the employment contract is done by reason of
expiration of the period or to cheat the employee out of office. The latter amounts to circumvention of the law.

CHERRY J. PRICE, STEPHANIE G. DOMINGO AND LOLITA ARBILERA, Petitioners, vs INNODATA PHILS. INC.,/ INNODATA CORPORATION,
LEO RABANG AND JANE NAVARETTE, Respondents.

DECISION

CHICO-NAZARIO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision1 dated 25 September 2006 and Resolution2 dated 15 June
2007 of the Court of Appeals in CA-G.R. SP No. 72795, which affirmed the Decision dated 14 December 2001 of the National Labor Relations
Commission (NLRC) in NLRC NCR Case No. 30-03-01274-2000 finding that petitioners were not illegally dismissed by respondents.

The factual antecedents of the case are as follows:

Respondent Innodata Philippines, Inc./Innodata Corporation (INNODATA) was a domestic corporation engaged in the data encoding and data conversion
business. It employed encoders, indexers, formatters, programmers, quality/quantity staff, and others, to maintain its business and accomplish the job
orders of its clients. Respondent Leo Rabang was its Human Resources and Development (HRAD) Manager, while respondent Jane Navarette was its
Project Manager. INNODATA had since ceased operations due to business losses in June 2002.

Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera were employed as formatters by INNODATA. The parties executed an employment
contract denominated as a "Contract of Employment for a Fixed Period," stipulating that the contract shall be for a period of one year,3 to wit:

CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD

WITNESSETH: That

WHEREAS, the EMPLOYEE has applied for the position of FORMATTER and in the course thereof and represented himself/herself to be fully qualified
and skilled for the said position;

WHEREAS, the EMPLOYER, by reason of the aforesaid representations, is desirous of engaging that the (sic) services of the EMPLOYEE for a fixed
period;

NOW, THEREFORE, for and in consideration of the foregoing premises, the parties have mutually agreed as follows:

TERM/DURATION

The EMPLOYER hereby employs, engages and hires the EMPLOYEE and the EMPLOYEE hereby accepts such appointment as FORMATTER effective
FEB. 16, 1999 to FEB. 16, 2000 a period of ONE YEAR.

TERMINATION

6.1 In the event that EMPLOYER shall discontinue operating its business, this CONTRACT shall also ipso facto terminate on the last day of the month on
which the EMPLOYER ceases operations with the same force and effect as is such last day of the month were originally set as the termination date of this
Contract. Further should the Company have no more need for the EMPLOYEE’s services on account of completion of the project, lack of work (sic)
business losses, introduction of new production processes and techniques, which will negate the need for personnel, and/or overstaffing, this contract
maybe pre-terminated by the EMPLOYER upon giving of three (3) days notice to the employee.

6.2 In the event period stipulated in item 1.2 occurs first vis-à-vis the completion of the project, this contract shall automatically terminate.

6.3 COMPANY’s Policy on monthly productivity shall also apply to the EMPLOYEE.

6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause, by giving at least Fifteen – (15) notice to that effect.
Provided, that such pre-termination shall be effective only upon issuance of the appropriate clearance in favor of the said EMPLOYEE.

6.5 Either of the parties may terminate this Contract by reason of the breach or violation of the terms and conditions hereof by giving at least Fifteen (15)
days written notice. Termination with cause under this paragraph shall be effective without need of judicial action or approval.

During their employment as formatters, petitioners were assigned to handle jobs for various clients of INNODATA, among which were CAS, Retro,
Meridian, Adobe, Netlib, PSM, and Earthweb. Once they finished the job for one client, they were immediately assigned to do a new job for another client.

On 16 February 2000, the HRAD Manager of INNODATA wrote petitioners informing them of their last day of work. The letter reads:

RE: End of Contract

Date: February 16, 2000

Please be informed that your employment ceases effective at the end of the close of business hours on February 16, 2000.

According to INNODATA, petitioners’ employment already ceased due to the end of their contract.

On 22 May 2000, petitioners filed a Complaint6 for illegal dismissal and damages against respondents. Petitioners claimed that they should be considered
regular employees since their positions as formatters were necessary and desirable to the usual business of INNODATA as an encoding, conversion and
data processing company. Petitioners also averred that the decisions in Villanueva v. National Labor Relations Commission7 and Servidad v. National
Labor Relations Commission,8 in which the Court already purportedly ruled "that the nature of employment at Innodata Phils., Inc. is regular," constituted
stare decisis to the present case. Petitioners finally argued that they could not be considered project employees considering that their employment was
not coterminous with any project or undertaking, the termination of which was predetermined.

On the other hand, respondents explained that INNODATA was engaged in the business of data processing, typesetting, indexing, and abstracting for its
foreign clients. The bulk of the work was data processing, which involved data encoding. Data encoding, or the typing of data into the computer, included
pre-encoding, encoding 1 and 2, editing, proofreading, and scanning. Almost half of the employees of INNODATA did data encoding work, while the other
half monitored quality control. Due to the wide range of services rendered to its clients, INNODATA was constrained to hire new employees for a fixed
period of not more than one year. Respondents asserted that petitioners were not illegally dismissed, for their employment was terminated due to the
expiration of their terms of employment. Petitioners’ contracts of employment with INNODATA were for a limited period only, commencing on 6 September
1999 and ending on 16 February 2000.10 Respondents further argued that petitioners were estopped from asserting a position contrary to the contracts
which they had knowingly, voluntarily, and willfully agreed to or entered into. There being no illegal dismissal, respondents likewise maintained that
petitioners were not entitled to reinstatement and backwages.

On 17 October 2000, the Labor Arbiter11 issued its Decision12 finding petitioners’ complaint for illegal dismissal and damages meritorious. The Labor
Arbiter held that as formatters, petitioners occupied jobs that were necessary, desirable, and indispensable to the data processing and encoding business
of INNODATA. By the very nature of their work as formatters, petitioners should be considered regular employees of INNODATA, who were entitled to
security of tenure. Thus, their termination for no just or authorized cause was illegal. In the end, the Labor Arbiter decreed:

FOREGOING PREMISES CONSIDERED, judgment is hereby rendered declaring complainants’ dismissal illegal and ordering respondent INNODATA
PHILS. INC./INNODATA CORPORATION to reinstate them to their former or equivalent position without loss of seniority rights and benefits. Respondent
company is further ordered to pay complainants their full backwages plus ten percent (10%) of the totality thereof as attorney’s fees. The monetary
awards due the complainants as of the date of this decision are as follows:

A. Backwages

1. Cherry J. Price

2/17/2000 – 10/17/2000 at 223.50/day

P5,811.00/mo/ x 8 mos. P46,488.00

2. Stephanie Domingo 46,488.00

(same computation)

3. Lolita Arbilera 46,488.00

(same computation)

Total Backwages P139,464.00

B. Attorney’s fees (10% of total award) 13,946.40

Total Award P153,410.40

Respondent INNODATA appealed the Labor Arbiter’s Decision to the NLRC. The NLRC, in its Decision dated 14 December 2001, reversed the Labor
Arbiter’s Decision dated 17 October 2000, and absolved INNODATA of the charge of illegal dismissal.

The NLRC found that petitioners were not regular employees, but were fixed-term employees as stipulated in their respective contracts of employment.
The NLRC applied Brent School, Inc. v. Zamora13 and St. Theresa’s School of Novaliches Foundation v. National Labor Relations Commission,14 in
which this Court upheld the validity of fixed-term contracts. The determining factor of such contracts is not the duty of the employee but the day certain
agreed upon by the parties for the commencement and termination of the employment relationship. The NLRC observed that the petitioners freely and
voluntarily entered into the fixed-term employment contracts with INNODATA. Hence, INNODATA was not guilty of illegal dismissal when it terminated
petitioners’ employment upon the expiration of their contracts on 16 February 2000.

The dispositive portion of the NLRC Decision thus reads:

WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and SET ASIDE and a new one entered DISMISSING the instant
complaint for lack of merit.

The NLRC denied petitioners’ Motion for Reconsideration in a Resolution dated 28 June 2002.

In a Petition for Certiorari under Rule 65 of the Rules of Court filed before the Court of Appeals, petitioners prayed for the annulment, reversal,
modification, or setting aside of the Decision dated 14 December 2001 and Resolution dated 28 June 2002 of the NLRC.

On 25 September 2006, the Court of Appeals promulgated its Decision sustaining the ruling of the NLRC that petitioners were not illegally dismissed.

The Court of Appeals ratiocinated that although this Court declared in Villanueva and Servidad that the employees of INNODATA working as data
encoders and abstractors were regular, and not contractual, petitioners admitted entering into contracts of employment with INNODATA for a term of only
one year and for a project called Earthweb. According to the Court of Appeals, there was no showing that petitioners entered into the fixed-term contracts
unknowingly and involuntarily, or because INNODATA applied force, duress or improper pressure on them. The appellate court also observed that
INNODATA and petitioners dealt with each other on more or less equal terms, with no moral dominance exercised by the former on latter. Petitioners were
therefore bound by the stipulations in their contracts terminating their employment after the lapse of the fixed term.

The Court of Appeals further expounded that in fixed-term contracts, the stipulated period of employment is governing and not the nature thereof.
Consequently, even though petitioners were performing functions that are necessary or desirable in the usual business or trade of the employer,
petitioners did not become regular employees because their employment was for a fixed term, which began on 16 February 1999 and was predetermined
to end on 16 February 2000.

The appellate court concluded that the periods in petitioners’ contracts of employment were not imposed to preclude petitioners from acquiring security of
tenure; and, applying the ruling of this Court in Brent, declared that petitioners’ fixed-term employment contracts were valid. INNODATA did not commit
illegal dismissal for terminating petitioners’ employment upon the expiration of their contracts.

The Court of Appeals adjudged:

WHEREFORE, the instant petition is hereby DENIED and the Resolution dated December 14, 2001 of the National Labor Relations Commission declaring
petitioners were not illegally dismissed is AFFIRMED.

The petitioners filed a Motion for Reconsideration of the afore-mentioned Decision of the Court of Appeals, which was denied by the same court in a
Resolution dated 15 June 2007.

Petitioners are now before this Court via the present Petition for Review on Certiorari, based on the following assignment of errors:

I. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND GRAVE ABUSE OF DISCRETION WHEN IT
DID NOT APPLY THE SUPREME COURT RULING IN THE CASE OF NATIVIDAD & QUEJADA THAT THE NATURE OF EMPLOYMENT
OF RESPONDENTS IS REGULAR NOT FIXED, AND AS SO RULED IN AT LEAST TWO OTHER CASES AGAINST INNODATA PHILS.
INC.
II. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN RULING THAT THE STIPULATION OF
CONTRACT IS GOVERNING AND NOT THE NATURE OF EMPLOYMENT AS DEFINED BY LAW.
III. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION
WHEN IT DID NOT CONSIDER THE EVIDENCE ON RECORD SHOWING THAT THERE IS CLEAR CIRCUMVENTION OF THE LAW
ON SECURITY OF TENURE THROUGH CONTRACT MANIPULATION.18

The issue of whether petitioners were illegally dismissed by respondents is ultimately dependent on the question of whether petitioners were hired by
INNODATA under valid fixed-term employment contracts.

After a painstaking review of the arguments and evidences of the parties, the Court finds merit in the present Petition. There were no valid fixed-term
contracts and petitioners were regular employees of the INNODATA who could not be dismissed except for just or authorized cause.

The employment status of a person is defined and prescribed by law and not by what the parties say it should be.19 Equally important to consider is that a
contract of employment is impressed with public interest such that labor contracts must yield to the common good.20 Thus, provisions of applicable
statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other.

Regular employment has been defined by Article 280 of the Labor Code, as amended, which reads:

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 engagement of the employee or where the work or services to be performed is seasonal in
nature and 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. (Underscoring ours).

Based on the afore-quoted provision, the following employees are accorded regular status: (1) those who are engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer, regardless of the length of their employment; and (2) those who were initially hired
as casual employees, but have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are
employed.

Undoubtedly, petitioners belong to the first type of regular employees.

Under Article 280 of the Labor Code, the applicable test to determine whether an employment should be considered regular or non-regular is the
reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer.

In the case at bar, petitioners were employed by INNODATA on 17 February 1999 as formatters. The primary business of INNODATA is data encoding,
and the formatting of the data entered into the computers is an essential part of the process of data encoding. Formatting organizes the data encoded,
making it easier to understand for the clients and/or the intended end users thereof. Undeniably, the work performed by petitioners was necessary or
desirable in the business or trade of INNODATA.

However, it is also true that while certain forms of employment require the performance of usual or desirable functions and exceed one year, these do not
necessarily result in regular employment under Article 280 of the Labor Code.23 Under the Civil Code, fixed-term employment contracts are not limited, as
they are under the present Labor Code, to those by nature seasonal or for specific projects with predetermined dates of completion; they also include
those to which the parties by free choice have assigned a specific date of termination.

The decisive determinant in term employment is the day certain agreed upon by the parties for the commencement and termination of their employment
relationship, a day certain being understood to be that which must necessarily come, although it may not be known when. Seasonal employment and
employment for a particular project are instances of employment in which a period, where not expressly set down, is necessarily implied.

Respondents maintain that the contracts of employment entered into by petitioners with INNDOATA were valid fixed-term employment contracts which
were automatically terminated at the expiry of the period stipulated therein, i.e., 16 February 2000.

The Court disagrees.

While this Court has recognized the validity of fixed-term employment contracts, it has consistently held that this is the exception rather than the general
rule. More importantly, a fixed-term employment is valid only under certain circumstances. In Brent, the very same case invoked by respondents, the
Court identified several circumstances wherein a fixed-term is an essential and natural appurtenance, to wit:

Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for specific projects, but to which a fixed term
is an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the engagement, the concept of
regular employment with all that it implies does not appear ever to have been applied, Article 280 of the Labor Code notwithstanding; also appointments to
the positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or
tradition rotated among the faculty members, and where fixed terms are a necessity without which no reasonable rotation would be possible. Similarly,
despite the provisions of Article 280, Policy Instructions No. 8 of the Minister of Labor implicitly recognize that certain company officials may be elected for
what would amount to fixed periods, at the expiration of which they would have to stand down, in providing that these officials, "x x may lose their jobs as
president, executive vice-president or vice president, etc. because the stockholders or the board of directors for one reason or another did not reelect
them."

As a matter of fact, the Court, in its oft-quoted decision in Brent, also issued a stern admonition that where, from the circumstances, it is apparent that the
period was imposed to preclude the acquisition of tenurial security by the employee, then it should be struck down as being contrary to law, morals, good
customs, public order and public policy.

After considering petitioners’ contracts in their entirety, as well as the circumstances surrounding petitioners’ employment at INNODATA, the Court is
convinced that the terms fixed therein were meant only to circumvent petitioners’ right to security of tenure and are, therefore, invalid.

The contracts of employment submitted by respondents are highly suspect for not only being ambiguous, but also for appearing to be tampered with.

Petitioners alleged that their employment contracts with INNODATA became effective 16 February 1999, and the first day they reported for work was on
17 February 1999. The Certificate of Employment issued by the HRAD Manager of INNODATA also indicated that petitioners Price and Domingo were
employed by INNODATA on 17 February 1999.

However, respondents asserted before the Labor Arbiter that petitioners’ employment contracts were effective only on 6 September 1999. They later on
admitted in their Memorandum filed with this Court that petitioners were originally hired on 16 February 1999 but the project for which they were employed
was completed before the expiration of one year. Petitioners were merely rehired on 6 September 1999 for a new project. While respondents submitted
employment contracts with 6 September 1999 as beginning date of effectivity, it is obvious that in one of them, the original beginning date of effectivity, 16
February 1999, was merely crossed out and replaced with 6 September 1999. The copies of the employment contracts submitted by petitioners bore
similar alterations.

The Court notes that the attempt to change the beginning date of effectivity of petitioners’ contracts was very crudely done. The alterations are very
obvious, and they have not been initialed by the petitioners to indicate their assent to the same. If the contracts were truly fixed-term contracts, then a
change in the term or period agreed upon is material and would already constitute a novation of the original contract.

Such modification and denial by respondents as to the real beginning date of petitioners’ employment contracts render the said contracts ambiguous. The
contracts themselves state that they would be effective until 16 February 2000 for a period of one year. If the contracts took effect only on 6 September
1999, then its period of effectivity would obviously be less than one year, or for a period of only about five months.

Obviously, respondents wanted to make it appear that petitioners worked for INNODATA for a period of less than one year. The only reason the Court can
discern from such a move on respondents’ part is so that they can preclude petitioners from acquiring regular status based on their employment for one
year. Nonetheless, the Court emphasizes that it has already found that petitioners should be considered regular employees of INNODATA by the nature
of the work they performed as formatters, which was necessary in the business or trade of INNODATA. Hence, the total period of their employment
becomes irrelevant.

Even assuming that petitioners’ length of employment is material, given respondents’ muddled assertions, this Court adheres to its pronouncement in
Villanueva v. National Labor Relations Commission,28 to the effect that where a contract of employment, being a contract of adhesion, is ambiguous, any
ambiguity therein should be construed strictly against the party who prepared it. The Court is, thus, compelled to conclude that petitioners’ contracts of
employment became effective on 16 February 1999, and that they were already working continuously for INNODATA for a year.

Further attempting to exonerate itself from any liability for illegal dismissal, INNODATA contends that petitioners were project employees whose
employment ceased at the end of a specific project or undertaking. This contention is specious and devoid of merit.

In Philex Mining Corp. v. National Labor Relations Commission, the Court defined "project employees" as those workers hired (1) for a specific project or
undertaking, and wherein (2) the completion or termination of such project has been determined at the time of the engagement of the employee.

Scrutinizing petitioners’ employment contracts with INNODATA, however, failed to reveal any mention therein of what specific project or undertaking
petitioners were hired for. Although the contracts made general references to a "project," such project was neither named nor described at all therein. The
conclusion by the Court of Appeals that petitioners were hired for the Earthweb project is not supported by any evidence on record. The one-year period
for which petitioners were hired was simply fixed in the employment contracts without reference or connection to the period required for the completion of
a project. More importantly, there is also a dearth of evidence that such project or undertaking had already been completed or terminated to justify the
dismissal of petitioners. In fact, petitioners alleged - and respondents failed to dispute that petitioners did not work on just one project, but continuously
worked for a series of projects for various clients of INNODATA.

In Magcalas v. National Labor Relations Commission, the Court struck down a similar claim by the employer therein that the dismissed employees were
fixed-term and project employees. The Court here reiterates the rule that all doubts, uncertainties, ambiguities and insufficiencies should be resolved in
favor of labor. It is a well-entrenched doctrine that in illegal dismissal cases, the employer has the burden of proof. This burden was not discharged in the
present case.

As a final observation, the Court also takes note of several other provisions in petitioners’ employment contracts that display utter disregard for their
security of tenure. Despite fixing a period or term of employment, i.e., one year, INNODATA reserved the right to pre-terminate petitioners’ employment
under the following circumstances:

6.1 x x x Further should the Company have no more need for the EMPLOYEE’s services on account of completion of the project, lack of work (sic)
business losses, introduction of new production processes and techniques, which will negate the need for personnel, and/or overstaffing, this contract
maybe pre-terminated by the EMPLOYER upon giving of three (3) days notice to the employee.

xxxx

6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause, by giving at least Fifteen – (15) [day] notice to that
effect. Provided, that such pre-termination shall be effective only upon issuance of the appropriate clearance in favor of the said EMPLOYEE.

Pursuant to the afore-quoted provisions, petitioners have no right at all to expect security of tenure, even for the supposedly one-year period of
employment provided in their contracts, because they can still be pre-terminated (1) upon the completion of an unspecified project; or (2) with or without
cause, for as long as they are given a three-day notice. Such contract provisions are repugnant to the basic tenet in labor law that no employee may be
terminated except for just or authorized cause.

Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of security of tenure and free them from the bondage of
uncertainty of tenure woven by some employers into their contracts of employment. This was exactly the purpose of the legislators in drafting Article 280
of the Labor Code – to prevent the circumvention by unscrupulous employers 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.
In all, respondents’ insistence that it can legally dismiss petitioners on the ground that their term of employment has expired is untenable. To reiterate,
petitioners, being regular employees of INNODATA, are entitled to security of tenure. In the words of Article 279 of the Labor Code:

ART. 279. Security of Tenure. – In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or
when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.

By virtue of the foregoing, an illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges, with full back
wages computed from the time of dismissal up to the time of actual reinstatement.

Considering that reinstatement is no longer possible on the ground that INNODATA had ceased its operations in June 2002 due to business losses, the
proper award is separation pay equivalent to one month pay31 for every year of service, to be computed from the commencement of their employment up
to the closure of INNODATA.

The amount of back wages awarded to petitioners must be computed from the time petitioners were illegally dismissed until the time INNODATA ceased
its operations in June 2002.32

Petitioners are further entitled to attorney’s fees equivalent to 10% of the total monetary award herein, for having been forced to litigate and incur
expenses to protect their rights and interests herein.

Finally, unless they have exceeded their authority, corporate officers are, as a general rule, not personally liable for their official acts, because a
corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders and members. Although as an exception, corporate
directors and officers are solidarily held liable with the corporation, where terminations of employment are done with malice or in bad faith,33 in the
absence of evidence that they acted with malice or bad faith herein, the Court exempts the individual respondents, Leo Rabang and Jane Navarette, from
any personal liability for the illegal dismissal of petitioners.

WHEREFORE, the Petition for Review on Certiorari is GRANTED. The Decision dated 25 September 2006 and Resolution dated 15 June 2007 of the
Court of Appeals in CA-G.R. SP No. 72795are hereby REVERSED and SET ASIDE. RespondentInnodata Philippines, Inc./Innodata Corporation is
ORDERED to pay petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera: (a) separation pay, in lieu of reinstatement, equivalent to one
month pay for every year of service, to be computed from the commencement of their employment up to the date respondent Innodata Philippines,
Inc./Innodata Corporation ceased operations; (b) full backwages, computed from the time petitioners’ compensation was withheld from them up to the time
respondent Innodata Philippines, Inc./Innodata Corporation ceased operations; and (3) 10% of the total monetary award as attorney’s fees. Costs against
respondent Innodata Philippines, Inc./Innodata Corporation.

SO ORDERED.

G.R. No. 108405. April 4, 2003

JAIME D. VIERNES, et al, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), and BENGUET ELECTRIC
COOPERATIVE, INC. (BENECO) respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for certiorari seeking to annul the decision promulgated by the National Labor Relations Commission (NLRC) on July 2, 1992 in
NLRC CA No. L-000384-92,1 and its resolution dated September 24, 1992 denying petitioners motion for reconsideration.

The factual background of this case, as summarized by the Labor Arbiter, is as follows:

Fifteen (15) in all, these are consolidated cases for illegal dismissal, underpayment of wages and claim for indemnity pay against a common respondent,
the Benguet Electric Cooperative, Inc., (BENECO for short) represented by its Acting General Manager, Gerardo P. Versoza.

Complainants services as meter readers were contracted for hardly a months duration, or from October 8 to 31, 1990. Their employment contracts,
couched in identical terms, read:

You are hereby appointed as METER READER (APPRENTICE) under BENECO-NEA Management with compensation at the rate of SIXTY-SIX PESOS
AND SEVENTY-FIVE CENTAVOS (P66.75) per day from October 08 to 31, 1990.

x x x. (Annex B, Complainants Joint Position Paper)

The said term notwithstanding, the complainants were allowed to work beyond October 31, 1990, or until January 2, 1991. On January 3, 1991, they were
each served their identical notices of termination dated December 29, 1990. The same read:
Please be informed that effective at the close of office hours of December 31, 1990, your services with the BENECO will be terminated. Your termination
has nothing to do with your performance. Rather, it is because we have to retrench on personnel as we are already overstaffed.

x x x. (Annex C, CJPP)

On the same date, the complainants filed separate complaints for illegal dismissal. And following the amendment of said complaints, they submitted their
joint position paper on April 4, 1991. Respondent filed its position paper on April 2, 1991.

It is the contention of the complainants that they were not apprentices but regular employees whose services were illegally and unjustly terminated in a
manner that was whimsical and capricious. On the other hand, the respondent invokes Article 283 of the Labor Code in defense of the questioned
dismissal.

On October 18, 1991, the Labor Arbiter rendered a decision, the dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby rendered:

1. Dismissing the complaints for illegal dismissal filed by the complainants for lack of merit. However in view of the offer of the respondent to enter into
another temporary employment contract with the complainants, the respondent is directed to so extend such contract to each complainant, with the
exception of Jaime Viernes, and to pay each the amount of P2,590.50, which represents a months salary, as indemnity for its failure to give complainants
the 30-day notice mandated under Article 283 of the Labor Code; or, at the option of the complainants, to pay each financial assistance in the amount of
P5,000.00 and the P2,590.50 above-mentioned.

2. Respondent is also ordered:

A. To pay complainants the amount representing underpayment of their wages:

a) Jaime Viernes, Carlos Garcia, Danilo Balanag, Edward Abellera, Francisco Bayuga, Arthur Oribello, Buenaventura de Guzman, Jr., Robert Ordoo,
Bernard Jularbal and Leodel Soriano, P1,994.25 each;

b) Bernard Bustillo and Domingo Asia, P1,838.50 each; and

c) Ferdinand Della, Alexander Abanag and Ignacio Alingbas, P1,816.25 each.

B. To extend to complainant Jaime Viernes an appointment as regular employee for the position of meter reader, the job he held prior to his termination,
and to pay him P2,590.50 as indemnity, plus the underpayment of his wages as above stated.

C. To pay P7,000.00 as and for attorneys fees.

No damages.

SO ORDERED.

Aggrieved by the Labor Arbiters decision, the complainants and the respondent filed their respective appeals to the NLRC.

On July 2, 1992, the NLRC modified its judgment, to wit:

WHEREFORE, premises considered, judgment is hereby rendered modifying the appealed decision by declaring complainants dismissal illegal, thus
ordering their reinstatement to their former position as meter readers or to any equivalent position with payment of backwages limited to one year and
deleting the award of indemnity and attorneys fees. The award of underpayment of wages is hereby AFFIRMED.

SO ORDERED.

On August 27, 1992, complainants filed a Motion for Clarification and Partial Reconsideration.5 On September 24, 1992, the NLRC issued a resolution
denying the complainants motion for reconsideration.

Hence, complainants filed herein petition.

Private respondent BENECO filed its Comment; the Office of the Solicitor General(OSG) filed a Manifestation and Motion in Lieu of Comment; public
respondent NLRC filed its own Comment; and petitioners filed their Manifestation and Motion In Lieu of Consolidated Reply. Public respondent NLRC,
herein petitioners, and private respondent filed their respective memoranda, and the OSG, its Manifestation in 1994.

Pursuant to our ruling in Rural Bank of Alaminos Employees Union vs. NLRC, to wit:

in the decision in the case of St. Martin Funeral Homes vs. National Labor Relations Commission, G.R. No. 130866, promulgated on September 16, 1998,
this Court pronounced that petitions for certiorari relating to NLRC decisions must be filed directly with the Court of Appeals, and labor cases pending
before this Court should be referred to the appellate court for proper disposition. However, in cases where the Memoranda of both parties have been filed
with this Court prior to the promulgation of the St. Martin decision, the Court generally opts to take the case itself for its final disposition.
…and considering that the parties have filed their respective memoranda as of 1994, we opt to resolve the issues raised in the present petition.

The parties raised the following issues:

1. Whether the respondent NLRC committed grave abuse of discretion in ordering the reinstatement of petitioners to their former position as meter
readers on probationary status in spite of its finding that they are regular employees under Article 280 of the Labor Code.

2. Whether the respondent NLRC committed grave abuse of discretion in limiting the backwages of petitioners to one year only in spite of its finding that
they were illegally dismissed, which is contrary to the mandate of full backwages until actual reinstatement but not to exceed three years.

3. Whether the respondent NLRC committed grave abuse of discretion in deleting the award of indemnity pay which had become final because it was not
appealed and in deleting the award of attorneys fees because of the absence of a trial-type hearing.

4. Whether the mandate of immediately executory on the reinstatement aspect even pending appeal as provided in the decision of Labor Arbiters equally
applies in the decision of the National Labor Relations Commission even pending appeal, by means of a motion for reconsideration of the order reinstating
a dismissed employee or pending appeal because the case is elevated on certiorari before the Supreme Court.9cräläwvirtualibräry

We find the petition partly meritorious.

As to the first issue: We sustain petitioners claim that they should be reinstated to their former position as meter readers, not on a probationary status, but
as regular employees.

Reinstatement means restoration to a state or condition from which one had been removed or separated.10 In case of probationary employment, Article
281 of the Labor Code requires the employer to make known to his employee at the time of the latters engagement of the reasonable standards under
which he may qualify as a regular employee.

A review of the records shows that petitioners have never been probationary employees. There is nothing in the letter of appointment, to indicate that their
employment as meter readers was on a probationary basis. It was not shown that petitioners were informed by the private respondent, at the time of the
latters employment, of the reasonable standards under which they could qualify as regular employees. Instead, petitioners were initially engaged to
perform their job for a limited duration, their employment being fixed for a definite period, from October 8 to 31, 1990.

Private respondents reliance on the case of Brent School, Inc. vs. Zamora, wherein we held as follows:

Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears
to have been, as already observed, to prevent circumvention of the employees right to be secure in his tenure, the clause in said article indiscriminately
and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer
to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no
application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears
that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over
the latter is misplaced.

The principle we have enunciated in Brent applies only with respect to fixed term employments. While it is true that petitioners were initially employed on a
fixed term basis as their employment contracts were only for October 8 to 31, 1990, after October 31, 1990, they were allowed to continue working in the
same capacity as meter readers without the benefit of a new contract or agreement or without the term of their employment being fixed anew. After
October 31, 1990, the employment of petitioners is no longer on a fixed term basis. The complexion of the employment relationship of petitioners and
private respondent is thereby totally changed. Petitioners have attained the status of regular employees.

Under Article 280 of the Labor Code, a regular employee is one who is engaged to perform activities which are necessary or desirable in the usual
business or trade of the employer, or a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the
activity in which he is employed.

In De Leon vs. NLRC,[13] and Abasolo vs. NLRC, we laid down the test in determining regular employment, to wit:

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 a 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.

Clearly therefrom, there are two separate instances whereby it can be determined that an employment is regular: (1) The particular activity performed by
the employee is necessary or desirable in the usual business or trade of the employer; or (2) if the employee has been performing the job for at least a
year.
Herein petitioners fall under the first category. They were engaged to perform activities that are necessary to the usual business of private respondent. We
agree with the labor arbiters pronouncement that the job of a meter reader is necessary to the business of private respondent because unless a meter
reader records the electric consumption of the subscribing public, there could not be a valid basis for billing the customers of private respondent. The fact
that the petitioners were allowed to continue working after the expiration of their employment contract is evidence of the necessity and desirability of their
service to private respondents business. In addition, during the preliminary hearing of the case on February 4, 1991, private respondent even offered to
enter into another temporary employment contract with petitioners. This only proves private respondents need for the services of herein petitioners. With
the continuation of their employment beyond the original term, petitioners have become full-fledged regular employees. The fact alone that petitioners
have rendered service for a period of less than six months does not make their employment status as probationary.

Since petitioners are already regular employees at the time of their illegal dismissal from employment, they are entitled to be reinstated to their former
position as regular employees, not merely probationary.

As to the second issue, Article 279 of the Labor Code, as amended by R.A. No. 6715, which took effect on March 21, 1989, provides that an illegally
dismissed employee is entitled to full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement. Since petitioners were employed on October 8, 1990, the amended
provisions of Article 279 of the Labor Code shall apply to the present case. Hence, it was patently erroneous, tantamount to grave abuse of discretion on
the part of the public respondent in limiting to one year the backwages awarded to petitioners.

With respect to the third issue, an employer becomes liable to pay indemnity to an employee who has been dismissed if, in effecting such dismissal, the
employer fails to comply with the requirements of due process.16 The indemnity is in the form of nominal damages intended not to penalize the employer
but to vindicate or recognize the employees right to procedural due process which was violated by the employer.17 Under Article 2221 of the Civil Code,
nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.

We do not agree with the ruling of the NLRC that indemnity is incompatible with the award of backwages. These two awards are based on different
considerations. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work.18 On the other hand, the
award of indemnity, as we have earlier held, is meant to vindicate or recognize the right of an employee to due process which has been violated by the
employer.

In the present case, the private respondent, in effecting the dismissal of petitioners from their employment, failed to comply with the provisions of Article
283 of the Labor Code which requires an employer to serve a notice of dismissal upon the employees sought to be terminated and to the Department of
Labor, at least one month before the intended date of termination. Petitioners were served notice on January 3, 1991 terminating their services, effective
December 29, 1990, or retroactively, in contravention of Article 283. This renders the private respondent liable to pay indemnity to petitioners.

Thus, we find that the NLRC committed grave abuse of discretion in deleting the award of indemnity. In Del Val vs. NLRC,[19] we held that the award of
indemnity ranges from P1,000.00 to P10,000.00 depending on the particular circumstances of each case. In the present case, the amount of indemnity
awarded by the labor arbiter is P2,590.50, which is equivalent to petitioners one-month salary. We find no cogent reason to modify said award, for being
just and reasonable.

As to the award of attorneys fees, the same is justified by the provisions of Article 111 of the Labor Code, to wit:

Art. 111. Attorneys fees (a) In cases of unlawful withholding of wages the culpable party may be assessed attorneys fees equivalent to ten percent of the
amount of wages recovered.

(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of the wages, attorneys fees
which exceed ten percent of the amount of wages recovered.

As to the last issue, Article 223 of the Labor Code is plain and clear that the decision of the NLRC shall be final and executory after ten (10) calendar days
from receipt thereof by the parties. In addition, Section 2(b), Rule VIII of the New Rules of Procedure of the NLRC provides that should there be a motion
for reconsideration entertained pursuant to Section 14, Rule VII of these Rules, the decision shall be executory after ten calendar days from receipt of the
resolution on such motion.

We find nothing inconsistent or contradictory between Article 223 of the Labor Code and Section 2(b), Rule VIII, of the NLRC Rules of Procedure. The
aforecited provision of the NLRC Rules of Procedure merely provides for situations where a motion for reconsideration is filed. Since the Rules allow the
filing of a motion for reconsideration of a decision of the NLRC, it simply follows that the ten-day period provided under Article 223 of the Labor Code
should be reckoned from the date of receipt by the parties of the resolution on such motion. In the case at bar, petitioners received the resolution of the
NLRC denying their motion for reconsideration on October 22, 1992. Hence, it is on November 2, 1992 that the questioned decision became executory.

WHEREFORE, the petition is partially GRANTED. The decision of the National Labor Relations Commission dated July 2, 1992 is MODIFIED. Private
respondent Benguet Electric Cooperative, Inc. (BENECO) is hereby ordered to reinstate petitioners to their former or substantially equivalent position as
regular employees, without loss of seniority rights and other privileges appurtenant thereto, with full backwages from the time of their dismissal until they
are actually reinstated. The amount of P2,590.50 awarded by the labor arbiter as indemnity to petitioners is REINSTATED. Private respondent is also
ordered to pay attorneys fees in the amount of ten percent (10%) of the total monetary award due to the petitioners. In all other respects the assailed
decision and resolution are AFFIRMED.
Costs against private respondent BENECO.

[G.R. No. 122653. December 12, 1997]

PURE FOODS CORPORATON, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION, RODOLFO CORDOVA, VIOLETA CRUSIS, ET AL.,*
respondents.

DECISION

DAVIDE, JR., J.:

The crux of this petition for certiorari is the issue of whether employees hired for a definite period and whose services are necessary and desirable in the
usual business or trade of the employer are regular employees.

The private respondents (numbering 906) were hired by petitioner Pure Foods Corporation to work for a fixed period of five months at its tuna cannery
plant in Tambler, General Santos City. After the expiration of their respective contracts of employment in June and July 1991, their services were
terminated. They forthwith executed a Release and Quitclaim stating that they had no claim whatsoever against the petitioner.

On 29 July 1991, the private respondents filed before the National Labor Relations Commission (NLRC) Sub-Regional Arbitration Branch No. XI, General
Santos City, a complaint for illegal dismissal against the petitioner and its plant manager, Marciano Aganon. 1 This case was docketed as RAB-11-08-
50284-91.

On 23 December 1992, Labor Arbiter Arturo P. Aponesto handed down a decision 2 dismissing the complaint on the ground that the private respondents
were mere contractual workers, and not regular employees; hence, they could not avail of the law on security of tenure. The termination of their services
by reason of the expiration of their contracts of employment was, therefore, justified. He pointed out that earlier he had dismissed a case entitled Lakas ng
Anak-Pawis- NOWM v. Pure Foods Corp. (Case No. RAB-11-02-00088-88) because the complainants therein were not regular employees of Pure Foods,
as their contracts of employment were for a fixed period of five months. Moreover, in another case involving the same contractual workers of Pure Foods
(Case No. R-196-ROXI- MED- UR-55-89), then Secretary of Labor Ruben Torres held, in a Resolution dated 30 April 1990, that the said contractual
workers were not regular employees.

The Labor Arbiter also observed that an order for private respondents reinstatement would result in the reemployment of more than 10,000 former
contractual employees of the petitioner. Besides, by executing a Release and Quitclaim, the private respondents had waived and relinquished whatever
right they might have against the petitioner.

The private respondents appealed from the decision to the National Labor Relations Commission (NLRC), Fifth Division, in Cagayan de Oro City, which
docketed the case as NLRC CA No. M-001323-93.

On 28 October 1994, the NLRC affirmed the Labor Arbiter's decision. 3 However, on private respondents motion for reconsideration, the NLRC rendered
another decision on 30 January 1995 4 vacating and setting aside its decision of 28 October 1994 and holding that the private respondents and their co-
complainants were regular employees. It declared that the contract of employment for five months was a clandestine scheme employed by [the petitioner]
to stifle [private respondents] right to security of tenure and should therefore be struck down and disregarded for being contrary to law, public policy, and
morals. Hence, their dismissal on account of the expiration of their respective contracts was illegal.

Accordingly, the NLRC ordered the petitioner to reinstate the private respondents to their former position without loss of seniority rights and other
privileges, with full back wages; and in case their reinstatement would no longer be feasible, the petitioner should pay them separation pay equivalent to
one-month pay or one-half-month pay for every year of service, whichever is higher, with back wages and 10% of the monetary award as attorneys fees.

Its motion for reconsideration having been denied,5 the petitioner came to this Court contending that respondent NLRC committed grave abuse of
discretion amounting to lack of jurisdiction in reversing the decision of the Labor Arbiter.

The petitioner submits that the private respondents are now estopped from questioning their separation from petitioners employ in view of their express
conformity with the five-month duration of their employment contracts. Besides, they fell within the exception provided in Article 280 of the Labor Code
which reads: [E]xcept where the employment has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee.

Moreover, the first paragraph of the said article must be read and interpreted in conjunction with the proviso in the second paragraph, which reads:
Provided that any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed.... In the instant case, the private respondents were employed for a period of five months
only. In any event, private respondents' prayer for reinstatement is well within the purview of the Release and Quitclaim they had executed wherein they
unconditionally released the petitioner from any and all other claims which might have arisen from their past employment with the petitioner.

In its Comment, the Office of the Solicitor General (OSG) advances the argument that the private respondents were regular employees, since they
performed activities necessary and desirable in the business or trade of the petitioner. The period of employment stipulated in the contracts of
employment was null and void for being contrary to law and public policy, as its purpose was to circumvent the law on security of tenure. The expiration of
the contract did not, therefore, justify the termination of their employment.
The OSG further maintains that the ruling of the then Secretary of Labor and Employment in LAP-NOWM v. Pure Foods Corporation is not binding on this
Court; neither is that ruling controlling, as the said case involved certification election and not the issue of the nature of private respondents employment. It
also considers private respondents quitclaim as ineffective to bar the enforcement for the full measure of their legal rights.

The private respondents, on the other hand, argue that contracts with a specific period of employment may be given legal effect provided, however, that
they are not intended to circumvent the constitutional guarantee on security of tenure. They submit that the practice of the petitioner in hiring workers to
work for a fixed duration of five months only to replace them with other workers of the same employment duration was apparently to prevent the
regularization of these so-called casuals, which is a clear circumvention of the law on security of tenure.

We find the petition devoid of merit.

Article 280 of the Labor Code defines regular and casual employment as follows:

ART. 280. Regular and Casual Employment.-- The provisions of written agreement to the contrary notwithstanding and regardless of the oral argument of
the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph; Provided, That, any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.

Thus, the two kinds of regular employees are (1) those who are engaged to perform activities which are necessary or desirable in the usual business or
trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the
activity in which they are employed.

In the instant case, the private respondents activities consisted in the receiving, skinning, loining, packing, and casing-up of tuna fish which were then
exported by the petitioner. Indisputably, they were performing activities which were necessary and desirable in petitioners business or trade.

Contrary to petitioner's submission, the private respondents could not be regarded as having been hired for a specific project or undertaking. The term
specific project or undertaking under Article 280 of the Labor Code contemplates an activity which is not commonly or habitually performed or such type of
work which is not done on a daily basis but only for a specific duration of time or until completion; the services employed are then necessary and desirable
in the employers usual business only for the period of time it takes to complete the project.

The fact that the petitioner repeatedly and continuously hired workers to do the same kind of work as that performed by those whose contracts had
expired negates petitioners contention that those workers were hired for a specific project or undertaking only.

Now on the validity of private respondents' five-month contracts of employment. In the leading case of Brent School, Inc. v. Zamora, 8 which was
reaffirmed in numerous subsequent cases, 9 this Court has upheld the legality of fixed-term employment. It ruled that the decisive determinant in term
employment should not be the activities that the employee is called upon to perform but the day certain agreed upon by the parties for the commencement
and termination of their employment relationship. But, this Court went on to say that where from the circumstances it is apparent that the periods have
been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and
morals.

Brent also laid down the criteria under which term employment cannot be said to be in circumvention of the law on security of tenure:

1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent; or

2) It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by
the former or the latter.

None of these criteria had been met in the present case. As pointed out by the private respondents:

[I]t could not be supposed that private respondents and all other so-called casual workers of [the petitioner] KNOWINGLY and VOLUNTARILY agreed to
the 5-month employment contract. Cannery workers are never on equal terms with their employers. Almost always, they agree to any terms of an
employment contract just to get employed considering that it is difficult to find work given their ordinary qualifications. Their freedom to contract is empty
and hollow because theirs is the freedom to starve if they refuse to work as casual or contractual workers. Indeed, to the unemployed, security of tenure
has no value. It could not then be said that petitioner and private respondents "dealt with each other on more or less equal terms with no moral dominance
whatever being exercised by the former over the latter.

The petitioner does not deny or rebut private respondents' averments (1) that the main bulk of its workforce consisted of its so-called casual employees;
(2) that as of July 1991, casual workers numbered 1,835; and regular employees, 263; (3) that the company hired casual every month for the duration of
five months, after which their services were terminated and they were replaced by other casual employees on the same five-month duration; and (4) that
these casual employees were actually doing work that were necessary and desirable in petitioners usual business.

As a matter of fact, the petitioner even stated in its position paper submitted to the Labor Arbiter that, according to its records, the previous employees of
the company hired on a five-month basis numbered about 10,000 as of July 1990. This confirms private respondents allegation that it was really the
practice of the company to hire workers on a uniformly fixed contract basis and replace them upon the expiration of their contracts with other workers on
the same employment duration.

This scheme of the petitioner was apparently designed to prevent the private respondents and the other casual employees from attaining the status of a
regular employee. It was a clear circumvention of the employees right to security of tenure and to other benefits like minimum wage, cost-of-living
allowance, sick leave, holiday pay, and 13th month pay. 11 Indeed, the petitioner succeeded in evading the application of labor laws. Also, it saved itself
from the trouble or burden of establishing a just cause for terminating employees by the simple expedient of refusing to renew the employment contracts.

The five-month period specified in private respondents employment contracts having been imposed precisely to circumvent the constitutional guarantee
on security of tenure should, therefore, be struck down or disregarded as contrary to public policy or morals. 12 To uphold the contractual arrangement
between the petitioner and the private respondents would, in effect, permit the former to avoid hiring permanent or regular employees by simply hiring
them on a temporary or casual basis, thereby violating the employees security of tenure in their jobs.

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

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

The NLRC was, thus, correct in finding that the private respondents were regular employees and that they were illegally dismissed from their jobs. Under
Article 279 of the Labor Code and the recent jurisprudence, 17 the legal consequence of illegal dismissal is reinstatement without loss of seniority rights
and other privileges, with full back wages computed from the time of dismissal up to the time of actual reinstatement, without deducting the earnings
derived elsewhere pending the resolution of the case.

However, since reinstatement is no longer possible because the petitioner's tuna cannery plant had, admittedly, been closed in November 1994,18 the
proper award is separation pay equivalent to one month pay or one-half month pay for every year of service, whichever is higher, to be computed from the
commencement of their employment up to the closure of the tuna cannery plant. The amount of back wages must be computed from the time the private
respondents were dismissed until the time petitioner's cannery plant ceased operation.

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

SO ORDERED.

PHILEX MINING CORPORATION, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION, ROSELLA AUSTRIA, LINA TAMONDONG,
CORNELIO BORJA, JR., and GERALD DELA CRUZ, Respondents.

KAPUNAN, J.:

Before us is a petition for certiorari under Rule 65 of the Rules of Court seeking to annul the Decision dated May 31, 1995 and the Resolution dated
February 21, 1996, both issued by the National Labor Relations Commission in NLRC Cases No. 01-11-0707-90. The questioned decision reversed the
Decision dated November 21, 1991 of the Labor Arbiter, and directed the reinstatement of private respondents upon the finding that they had been
illegally dismissed by petitioner Philex Mining Corporation.

The facts of the case are as follows:

Private respondents Rosella Austria and Lina Tamondong, both licensed chemical engineers, alleged that they undertook training at the
Assay/Metallurgical Department of Philex Mining Corporation from October 1987 to March 1988. After completing their training, both Austria and
Tamondong were supposedly hired by petitioner in June 1988 as Geochemical Aides, performing the regular duties of the Atomic Absorption Spectometer
(AAS) technicians. Private respondents Cornelio Borja, an Electrical Technician graduate, and Gerald dela Cruz, a licensed Mechanical Engineer, on the
other hand, claimed that they were hired by petitioner on January 24 and 25, 1989, respectively. Borja and dela Cruz were assigned to work in petitioner’s
Metallurgical Department.

Each of the private respondents subsequently signed a "Contract of Temporary Employment" with petitioner. The contracts were all dated April 15, 1989
and contained similar provisions, to wit:

In connection with the special project of the Metallurgical Department on Geochemical Analysis, we confirm your temporary employment for a period of
one (1) year, effective April 16, 1989 up to April 16, 1990 unless sooner terminated for a cause.
The terms and conditions of your employment are as follows:

4. As a temporary employee, you are not entitled to the benefits being granted to members of the regular work force;

5. It has been made understood that you have engaged to work in an exploration project, which has specific completion date, and further understand that
the same is not part of the regular mining activity of the Company. As such, your employment will be terminated at the expiration date stated above
without the need of further notice.

If you are agreeable with the terms and conditions set forth above, please signify your conformity by affixing your signature on the space provided below.

The contract likewise defined the nature of private respondents’ respective functions. Austria and Tamondong were designated "Geochemical Aides"
tasked "to assist the Geochemist in the analyses of soil samples by micro-pippeting, extractions with MIBK, preparation of solutions, etc. for presentation
to AAS measurement" and to "prepare reports of analyses." Borja and dela Cruz’ designation was that of "utility" men whose functions were to "assist the
Geochemist in the analyses of samples particularly on weighing, acid digestion & filtration of samples," and in "washing & drying of Lab glasswares [sic]."

On June 27, 1989, private respondents were informed that they would not be allowed to work anymore. Prompting their institution of separate complaints
for illegal dismissal against petitioner before the Labor Arbiter

On November 21, 1991, Labor Arbiter Irenarco R. Rimando rendered his decision dismissing private respondents’ complaints. The Labor Arbiter ruled that
private respondents were merely contractual employees and the termination of their services was but a result of the expiration of their contracts of
employment.

On appeal, the National Labor Relations Commission (NLRC) reversed the decision of the Labor Arbiter. The NLRC declared the contracts between
petitioner and private respondents void for being violative of the provisions of Article 280 2 of the Labor Code. The NLRC likewise found that private
respondents were performing jobs usually necessary or desirable in the usual business or trade of the employer, and therefore deemed to be regular
employees. The dispositive portion of the decision of the NLRC reads:

WHEREFORE, premises considered, the appealed decision is hereby reversed in so far as the termination of Complainants is concerned, and
respondents are hereby ordered to reinstate Complainants to their former positions with salaries presently give [sic] to said positions, without loss of
seniority rights, with full backwages from the time of dismissal up to the time of actual reinstatement, less earnings elsewhere.

All other claims of complainants are hereby DENIED for lack of merit.

SO ORDERED.

Its motion for reconsideration having been denied, petitioner is now before this Court seeking the annulment of the decision of the NLRC.

Two issues are presented before this Court: (1) the validity of the "Contract of Temporary Employment," and (2) the status of private respondents’
employment.

Petitioner contends that private respondents are not regular, but project, employees. In 1989, petitioner allegedly embarked on a large-scale mining
exploration throughout the country. Thousands of ore samples were brought in from potential mining sites to petitioner’s laboratory for analysis. The lack
of regular personnel in petitioner’s laboratory necessitated the hiring of private respondents during this exploration phase.

The employment status of private respondents as project employees is, according to petitioner, apparent in the "Contracts of Temporary Employment."
Petitioner points out that said contract, at the outset, makes express reference to "the special project of the Metallurgical Department of Geochemical
Analysis." That the contracts stipulate a specific period of employment and that private respondents were allowed to work beyond said period did not
convert private respondents’ status to regular employees. Petitioner argues that the controlling factor in determining the term of private respondents’
employment is the duration of the project itself, not the period stipulated in the contract. Thus, upon the completion of the geochemical analysis activities
in conjunction with the exploration phase, private respondents’ services were terminated.

Petitioner further submits that contrary to the NLRC’s opinion, the above contracts are not void. In support of this contention, petitioner invokes the case of
Brent School v. Zamora 4 where this Court upheld the validity of the contract between petitioner school and private respondent, a teacher in said school,
fixing the latter’s period of employment. This Court laid down the following criteria for judging the validity of such contracts:

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

. . . It is apparent from Brent School that the critical consideration is the presence or absence of a substantial indication that the period specified in an
employment agreement was designed to circumvent the security of tenure of regular employees which is provided for in Articles 280 and 281 of the Labor
Code. This indication must ordinarily rest upon some aspect of the agreement other than the mere specification of a fixed term of the employment
agreement, or upon evidence aliunde of the intent to invade.

Thus, the Court, in Cielo v. NLRC, 6 did not hesitate to invalidate employment contracts stipulating a fixed term after finding that "the purpose behind
these individual contracts was to evade the application of the labor laws." In this case, petitioner’s intent to evade the application of Article 280 of the
Labor Code is evident.

Private respondents allege that they were actually hired before the date reflected in the contracts, i.e., April 16, 1989. Borja and de la Cruz claim that they
were hired on January 1989. Austria and Tamondong, on the other hand were supposedly hired on June 1988, after undergoing training at petitioner’s
assay department. To prove such claim, private respondent Austria presented before the Labor Arbiter Cash Vouchers 7 representing receipt of wages
and allowances from June 16, 1988 to April 10, 1989 from Philex Mining. Similarly, private respondent Tamondong offered in evidence Cash Vouchers 8
for her wages and allowances for the period beginning June 30, 1988 to April 10, 1989.

Petitioner, however, brushes off these allegations by stating that private respondents were hired on April 16, 1989. In the alternative, petitioner contends
that:

Assuming arguendo that Private Respondents worked for a short period of time for the Petitioner prior to the signing of the Contract of Temporary
Employment they subsequently entered into with the Company, still this does not in any way affect the binding effect of the terms or conditions of the
Contracts of Temporary Employment they subsequently entered into with the Company, in particular the duration of their employment, i.e., fixed-term
employment: In effect, private respondents voluntarily agreed to enter into a new employment status with petitioner, i.e., as a fixed term employee.
Accordingly, their employment with petitioner prior to the signing of the Contracts of Temporary Employment, if any, is irrelevant. 9

However, petitioner’s failure to refute private respondents’ evidence or even categorically deny private respondents’ allegations leads us to no other
conclusion than those private respondents were indeed hired before April 16, 1989.

The actual date of the hiring of private respondent is significant in the light of the collective bargaining agreement (CBA) between petitioner and its other
employees. It is not disputed that said CBA fixes the probationary period of Geochemical Aides at six (6) months, while that of Utility Men, at three (3)
months. This means that, as the Solicitor General correctly observes:

. . . at the time private respondents Tamondong and Austria were made to sign the subject contracts, they had already attained the status of regular
employees, having been allowed to work by petitioner beyond the probationary period of six (6) months. Private respondents Borja and Dela Cruz, on the
other hand, were just nine (9) days short of completing their probationary period of three (3) months when they were made to sign said contracts by
petitioner

Petitioner’s timing is indeed suspicious. The signing of the contracts at a time when private respondents had already attained, in the case of Austria and
Tamondong, or were about to attain, in the case of Borja and de la Cruz, regular employment status under the CBA is an indication of petitioner’s illegal
intent. The contracts appear to be a subterfuge, having been foisted upon private respondents to circumvent their right to be secure in their tenure.

The fact that private respondents were made to sign such agreement after they were hired is not as "absurd" as the Labor Arbiter thought. In finding that
petitioners were hired on April 16, 1989, the Labor Arbiter held that:

. . . It also sounds ridiculous for a company to hire a person first then require him to sign his contract of employment later. The hiring of employees verbally
may seem possible for small establishments. But it is rather improbable for the Philex Mining Corporation, a company with vast operations, with its own
personnel office, would also hire employees without any written employment contracts.

As even a cursory study of jurisprudence would show, companies "with vast operations" are not immune from the temptation of circumventing labor laws
for the sake of profit.

Petitioner’s contention that private respondents are project employees likewise lacks merit. Project employees are those workers hired (1) for a specific
project or undertaking, and (2) the completion or termination of such project has been determined at the time of the engagement of the employee. 12 The
principal test for determining whether particular employees as "project employees" as distinguished from "regular employees," is whether or not the
"project employees" were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the
employees were engaged for that project. 13 In this case, petitioner has not shown that private respondents were informed that they were to be assigned
to a "specific project or undertaking." Neither has it been established that they were informed of the duration and scope of such project or undertaking at
the time of their engagement, that is, on June 1988 on the part of Austria and Tamondong, and on January 1989 in the case of Borja and de la Cruz.
Private respondents were informed thereof only much later on April 1989. We likewise agree with the Solicitor General when he notes that:

. . . while the subject contracts purport to be for a specific project or undertaking only, the record is bereft of evidence as to what this specific project or
undertaking actually is. Neither is there any evidence that such project or undertaking had already been completed or terminated as could possibly justify
the dismissal of private respondents in accordance with said contracts. . . 14
Accordingly, we find private respondents to be regular employees of petitioner. Private respondents’ functions as described above are no doubt "usually
necessary or desirable in the usual business or trade" of petitioner-mining company. Consequently, the NLRC should not have denied private
respondents’ claim to rights and benefits attached to such status pursuant to petitioner’s collective bargaining agreement.

WHEREFORE, the petition is hereby dismissed. The decision of the National Labor Relations Commission is AFFIRMED WITH MODIFICATIONS.
Petitioner is ordered to pay private respondents the difference between the actual basic wages and benefits paid to private respondents and those paid to
its regular employees from the time said respondents attained regular employment status under the CBA.

E. GANZON, INC., Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION (Third Division)

BELLOSILLO, J.:

TWENTY-TWO (22) EMPLOYEES of petitioner E. Ganzon, Inc. — Rolando Reyes, Rene Permaran, Jonathan Sayco, Ernesto Guerra, Nerio Valenzuela,
Henry Sayco, Emiliano Telacas, Rodrigo Prado, Mario Plaquia, Gildardo Migabon, Ernesto Mateo, Felix Nicolasora, Joven Jordan, Alberto Bellingan,
Rommel Naadat, Vidal Gumanad, Jimmy Cañete, Carlito Moril, Artemio Agosto, Salvador Urbanozo, Cesar Castillo and Ponciano del Rosario filed on 9
January 1991 a complaint against the company for illegal deduction, non-payment of overtime pay, legal holiday, pay premium pay for holiday and rest
day, service incentive leave pay, vacation/sick leave pay and 13th month pay. On 25 January 1991 all the complainants, many of whom are private
respondents herein, were dismissed from employment thus prompting them to amend their compliant to include the charge of illegal dismissal.

Subsequently however, eight (8) of the complainants, namely, Rolando Reyes, Jonathan Sayco, Joven Jordan, Carlito Moril, Vidal Gumandad, Alberto
Bellingan, Henry Sayco and Felix Nicolasora signed a Release and Quitclaim; consequently, they moved for the dismissal of the complaint insofar as they
were concerned. Their motion was granted.

Petitioner E. Ganzon, Inc., is engaged in the construction business. It manufacturers its own building materials, e.g., slab runners, acropos, jack bases,
window grills, pulleys, sliding doors and all kinds of aluminum products. It has its own machine shop, five (5) mixer trucks, tower cranes, alimak, elevator
shaft, and others.

The remaining fourteen (14) complainants who did not sign the Release and Quitclaim were hired on various dates for different positions and salaries thus
—

Complainant Date Hired Position Latest Salary Emiliano Telacas 10-18-’89 Aluminum 12.50/hr.

Rene Permaran 04-14-’89 Machinist P18.75/hr. Fabricator/Installer

Ernesto Guerra 11-00-’87 Elec. Engr. P18.25/hr. Rodrigo Prado 06-00-’87 Aluminum 89.00/day/

Nerio Valenzuela 05-09-’89 Welder/ 13-75/hr. Installer/ 10 hrs work

Fabricator/Installer Fabricator /day

Mario Plaquia 10-03-’89 Laborer/ 100.00/day Marble Setter in Jan.’85

Trainer Artemio Agosto 05-11-’88 Helper-Welder 125.00/day then Warehouse-

10 hrs/day man, 17 July ‘88
Gildardo Migabon 09-10-’87 Aluminum 15.00/hr.
Salvador Urbanozo 01-18-’90 Laborer then 76.00/day
Installer/Fabricator
Machinist-Operator,
Ernesto Mateo 03-09-’87 Laborer 13.75/hr./
Oct.’90
10 hrs work/day
Cesar Castillo 10-19-’89 Laborer- 125.00/day
Rommel Naadat 05-16-’87 Aluminum 13.75/hr.
Trainee 10 hrs/day
Installer/Helper
Ponciano del 01-19-’89 Laborer then 12.50/hr.
Jimmy Cañete 07-20-’84 Laborer then 16.25/hr.
Rosario Machine Operator, July ‘89
Complainants claimed that during the period of their employment insurance premiums were deducted from their salaries without their consent, and they
were not given overtime pay for work performed ten (10) hours a day, legal holiday pay, premium pay for holiday and rest day, five (5) days incentive
leave pay despite having rendered services for more than a year, vacation/sick leave pay and 13th month pay. They claimed further that when they
reported for work on 25 January 1991 the security guards of petitioner informed them: "Hindi na kayo puedeng pumasok/magtrabaho dito, ‘yan ang order
galing sa itaas."cralaw virtua1aw library

Petitioner countered that the complainants were all contractual, project, temporary or casual employees as evidenced by their employment contracts
expressly providing that the acceptance of their services was based on the need for their skill such that upon completion of the project and/or when
reduction of the workforce was necessary, their services would be terminated. Their employment contracts were renewed every three (3) months.
Petitioner denied having dismissed the complainants from employment but that their employment contracts expired on 25 January 1991. Petitioner then
disputed their money claims as exaggerated, baseless and/or that they had already prescribed.

On 24 June 1994 the Labor Arbiter ruled as follows: (a) the remaining complainants were declared regular employees of petitioner; (b) petitioner was
declared guilty of illegal dismissal; (c) petitioner was ordered to reinstate the remaining complainants to their former or equivalent positions without loss of
seniority rights and privileges, either physically or in the payroll, at the option of petitioner under the same terms and conditions obtaining at the time of
their illegal dismissal; (d) petitioner was ordered to pay the remaining complainants back wages and benefits, overtime pay, legal holiday pay, service
incentive leave pay and 13th month pay partially computed as amounting to P1,902,681.90; and, (e) the claims for illegal deduction, premium pay for
holiday and rest day and vacation/sick leave benefits were dismissed for lack of merit.

On appeal, Emiliano Telacas, Gildardo Migabon and Jimmy Cañete moved for the dismissal of their complaint on account of their having subsequently
executed a Release and Quitclaim. Public respondent National Labor Relations Commission granted the motion; consequently, the number of
complainants was further reduced to eleven (11).

On 24 October 1995 the decision of the Labor Arbiter was affirmed subject to the modification that the awards of overtime pay to Ernesto Mateo, Artemio
Agosto and Cesar Castillo were deleted for being unsubstantiated. 2 On 21 December 1995 reconsideration was denied.

Petitioner insists that private respondents were contractual and/or project employees, as borne by their respective employment contracts, the durations of
their employments being coterminous with the projects to which they were assigned.

Petitioner likewise insists that illegal dismissal is no longer an issue because what obtains herein is the expiration of their contracts on 25 January 1991.
But assuming that petitioner is liable to private respondents for their monetary claims, it assails the computation thereof as contrary to law which provides
that money claims prescribe in three (3) years, i.e., the Labor Arbiter awarded forty (40)-day holiday pay to Ernesto Mateo and Rommel Naadat, thirty-six
(36) to Rodrigo Prado and thirty-four (34) to Ernesto Guerra although they were entitled to only thirty (30)-day holiday pay for three (3) years there being
ten (10) legal holidays per year. Moreover the Labor Arbiter granted 19.48 days of service incentive leave pay to Ernesto Mateo, 19.42 to Rommel Naadat
and 18.34 to Rodrigo Prado notwithstanding that they were only entitled to a maximum of fifteen (15)-day service incentive leave pay for three (3) years at
five (5)-day service incentive leave per year.

We conclude that the NLRC did not commit grave abuse of discretion. Article 280 of the Labor Code provides—

ARTICLE 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed
is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.

This provision classifies regular employees into two (2) kinds: (a) regular employees by nature of work, and (b) regular employees by years of service.
Expounding thereon the Court said in De Leon v. NLRC

The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business
or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety. Also, if the employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is also considered regular, but only with respect to such activity and while such
activity exists.

Petitioner is engaged, as heretofore mentioned, in the construction business and manufactures its own building materials. It has its own machine shop
and construction equipment. In this kind of integrated business respondents were hired, some as early as 1987, as Machinist, Machinist-Operator,
Electrical Engineer, Aluminum Installer/Fabricator, Aluminum Installer/Helper, Welder, Warehouseman, Marble Setter, Fabricator/Welder or
Laborer/Helper until their dismissal on 25 January 1991. Private respondents were made to sign employment contracts purportedly as project employees
but which were renewed every three (3) months. With this backdrop, we agree with the finding of the Labor Arbiter that —

. . . with the successive contracts of employment where the complainants continued to perform the same kind of work throughout the entire period of their
employment, which was for more than one year, it is clear that complainants’ tasks were usually necessary or desirable in the usual business or trade of
the respondent company. There can be no escape from the conclusion that the complainants were regular employees of the respondent as provided by
Article 280 of the Labor Code . . .
We likewise agree with the Labor Arbiter, citing Magante v. NLRC, 6 that if petitioner’s submission that respondents were hired as project employees were
to be taken as true, then it should have submitted a report of termination to the nearest Public Employment Office every time their employment was
terminated due to completion of each construction project as required by Policy Instruction No. 20 of the Department of Labor and Employment Stabilizing
Employer-Employee Relations in the Construction Industry —

. . . . the company is not required to obtain a clearance from the Secretary of Labor in connection with such termination. What is required of the company
is a report to the nearest Public Employment Office for statistical purposes.

Moreover, the Labor Arbiter correctly ruled that the supposed fixed periods of employment of private respondents as stated in their employment contracts
precluded their acquisition of tenurial security. Caramol v. NLRC 7 is authoritative —

There is no question that a stipulation on an employment contract providing for a fixed period of employment such as "project-to-project" contract is valid
provided the period was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. However, where from the
circumstances it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down
as . . . contrary to public policy, morals, good custom or public order.

As in Caramol, sufficiently established in the present case are circumstances showing that the alleged fixed periods of employment by way of project-to-
project contracts were imposed to preclude acquisition of tenurial security by private respondents. We reiterate that private respondents performed
activities necessary or desirable in the usual business or trade of petitioner and that they rendered services for more than a year. Accordingly, the
arrangement on fixed periods of employment must be struck down as contrary to public policy.

Petitioner submitted the employment contracts of some private respondents to show, inter alia, the duration thereof and in the process prove that their
services were terminated due to expiration of their respective contracts: Rene Permaran, 6 November 1990; Ernesto Guerra, 29 September 1990; Ernesto
Mateo, 26 October 1990; Artemio Agosto, 20 July 1990 and Rommel Naadat, 3 March 1991.

Considering our finding however that private respondent are regular employees of petitioner, the expiry dates of their employment as shown in their
respective contracts are rendered meaningless. we also note that the employment contract of private respondent Naadat was yet to expire on 3 March
1991 so that particular circumstance cannot, by any stretch of the imagination, justify his termination on 25 January 1991 based on the expiration of his
contract. Clearly, there was no legal cause for private respondent’s termination from employment. Neither were the accorded due process since
petitioner’s security guards simply prevented them from reporting for work as it appears their termination was triggered off by their having sought relief
from the labor tribunal on 9 January 1999 regarding money claims. Petitioner received the notification and summons on 18 January 1991. It must have
resented their move such that after only a week they were eased out from its employ under the pretext of expiration of their employment contracts.

All money claims arising from employer-employee relationship shall be filed within three (3) years from the time the cause of action accrued, otherwise,
they shall be forever barred. 8 And so petitioner assails the award of holiday pay for more than thirty (30) days to Ernesto Mateo, Rommel Naadat,
Rodrigo Prado and Ernesto Guerra, and more than fifteen (15) days of service incentive leave pay to the same employees except Ernesto Guerra. We
agree with petitioner in this regard that the Labor Arbiter should not have awarded such money claims that went beyond three (3) years. There are ten
(10) regular holidays 9 and five (5) days of service incentive leave in a year. At most, private respondents can only claim thirty (30)-day holiday pay and
fifteen (15)-day service incentive leave pay with respect to their amended complaint of 25 January 1991. Any other claim is now barred by prescription.

WHEREFORE, the petition is PARTIALLY GRANTED. The questioned Decision of respondent National Labor Relations Commission of 24 October 1995,
which sustained with modification the decision of the Labor Arbiter, and its Resolution of 21 December 1995 denying reconsideration are AFFIRMED with
MODIFICATION.

Private respondents Rene Permaran, Ernesto Guerra, Nerio Valenzuela, Rodrigo Prado, Mario Plaquia; Ernesto Mateo, Rommel Naadat, Artemio Agosto,
Salvador Urbanozo, Cesar Castillo and Ponciano del Rosario are declared regular employees of petitioner E. Ganzon, Inc. They are likewise declared to
have been illegally dismissed by petitioner E. Ganzon, Inc.; consequently, petitioner is ordered to reinstate them without loss of seniority rights and other
privileges and to grant them full back wages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time
compensation was withheld from them up to actual reinstatement. 10 In addition, petitioner is ordered to pay private respondents their overtime pay,
except as to Ernesto Mateo, Cesar Castillo and Artemio Agosto who, as found by public respondent NLRC, were not entitled thereto, as well as legal
holiday pay, service incentive leave pay and 13th month pay.

The assailed Decision of the NLRC is MODIFIED in that with respect to the amended complaint of 26 January 1991 the entitlement to legal holiday pay of
private respondents Ernesto Mateo, Rommel Naadat, Rodrigo Prado and Ernesto Guerra and to service incentive leave pay of the same private
respondents, except Ernesto Guerra, is limited to three (3) years from the date of the amended complaint.

SO ORDERED.

G.R. No. 110524 - July 29, 2002

DOUGLAS MILLARES and ROGELIO LAGDA, Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, TRANS-GLOBAL MARITIME
AGENCY, INC. and ESSO INTERNATIONAL SHIPPING CO., LTD. respondents.
KAPUNAN, J.:

On March 14, 2000, the Court promulgated its decision in the above-entitled case, ruling in favor of the petitioners. The dispositive portion reads, as
follows:

WHEREFORE, premises considered, the assailed Decision, dated June 1, 1993, of the National Labor Relations Commission is hereby REVERSED and
SET ASIDE and a new judgment is hereby rendered ordering the private respondents to:

(1) Reinstate petitioners Millares and Lagda to their former positions without loss of seniority rights, and to pay full backwages computed from the time of
illegal dismissal to the time of actual reinstatement;

(2) Alternatively, if reinstatement is not possible, pay petitioners Millares and Lagda separation pay equivalent to one month's salary for every year of
service; and,

(3) Jointly and severally pay petitioners One Hundred Percent (100%) of their total credited contributions as provided under the Consecutive Enlistment
Incentive Plan.

SO ORDERED.

A motion for reconsideration was consequently filed2 by the private respondents to which petitioners filed an Opposition thereto.

In a Minute Resolution dated June 28, 2000, the Court resolved to deny the motion for reconsideration with finality.

Subsequently, the Filipino Association for Mariners Employment, Inc. (FAME) filed a Motion for Leave to Intervene and to Admit a Motion for
Reconsideration in Intervention.

Private respondents, meanwhile, also filed a Motion for Leave to File a Second Motion for Reconsideration of our decision.

In both motions, the private respondents and FAME respectively pray in the main that the Court reconsider its ruling that "Filipino seafarers are considered
regular employees within the context of Article 280 of the Labor Code." They claim that the decision may establish a precedent that will adversely affect
the maritime industry.

The Court resolved to set the case for oral arguments to enable the parties to present their sides.

To recall, the facts of the case are, as follows:

Petitioner Douglas Millares was employed by private respondent ESSO International Shipping Company LTD. (Esso International, for brevity) through its
local manning agency, private respondent Trans-Global Maritime Agency, Inc. (Trans-Global, for brevity) on November 16, 1968 as a machinist. In 1975,
he was promoted as Chief Engineer which position he occupied until he opted to retire in 1989. He was then receiving a monthly salary of US $1,939.00.

On June 13, 1989, petitioner Millares applied for a leave of absence for the period July 9 to August 7, 1989. In a letter dated June 14, 1989, Michael J.
Estaniel, President of private respondent Trans-Global, approved the request for leave of absence. On June 21, 1989, petitioner Millares wrote G.S.
Hanly, Operations Manager of Exxon International Co., (now Esso International) through Michael J. Estaniel, informing him of his intention to avail of the
optional retirement plan under the Consecutive Enlistment Incentive Plan (CEIP) considering that he had already rendered more than twenty (20) years of
continuous service. On July 13, 1989 respondent Esso International, through W.J. Vrints, Employee Relations Manager, denied petitioner Millares' request
for optional retirement on the following grounds, to wit: (1) he was employed on a contractual basis; (2) his contract of enlistment (COE) did not provide for
retirement before the age of sixty (60) years; and (3) he did not comply with the requirement for claiming benefits under the CEIP, i.e., to submit a written
advice to the company of his intention to terminate his employment within thirty (30) days from his last disembarkation date.

On August 9, 1989, petitioner Millares requested for an extension of his leave of absence from August 9 to 24, 1989. On August 19, 1989, Roy C.
Palomar, Crewing Manager, Ship Group A, Trans-global, wrote petitioner Millares advising him that respondent Esso International "has corrected the
deficiency in its manpower requirement specifically in the Chief Engineer rank by promoting a First Assistant Engineer to this position as a result of (his)
previous leave of absence which expired last August 8, 1989. The adjustment in said rank was required in order to meet manpower schedules as a result
of (his) inability."

On September 26, 1989, respondent Esso International, through H. Regenboog, Personnel Administrator, advised petitioner Millares that in view of his
absence without leave, which is equivalent to abandonment of his position, he had been dropped from the roster of crew members effective September 1,
1989.

On the other hand, petitioner Lagda was employed by private respondent Esso International as wiper/oiler in June 1969. He was promoted as Chief
Engineer in 1980, a position he continued to occupy until his last COE expired on April 10, 1989. He was then receiving a monthly salary of US$1,939.00.

On May 16, 1989, petitioner Lagda applied for a leave of absence from June 19, 1989 up to the whole month of August 1989. On June 14, 1989,
respondent Trans-Global's President, Michael J. Estaniel, approved petitioner Lagda's leave of absence from June 22, 1989 to July 20, 1989 and advised
him to report for re-assignment on July 21, 1989.
On June 26, 1989, petitioner Lagda wrote a letter to G.S. Stanley, Operations Manager of respondent Esso International, through respondent Trans-
Global's President Michael J. Estaniel, informing him of his intention to avail of the optional early retirement plan in view of his twenty (20) years
continuous service in the complaint.

On July 13, 1989, respondent Trans-global denied petitioner Lagda's request for availment of the optional early retirement scheme on the same grounds
upon which petitioner Millares request was denied.

On August 3, 1989, he requested for an extension of his leave of absence up to August 26, 1989 and the same was approved. However, on September
27, 1989, respondent Esso International, through H. Regenboog, Personnel Administrator, advised petitioner Lagda that in view of his "unavailability for
contractual sea service," he had been dropped from the roster of crew members effective September 1, 1989.

On October 5, 1989, petitioners Millares and Lagda filed a complaint-affidavit, docketed as POEA (M) 89-10-9671, for illegal dismissal and non-payment
of employee benefits against private respondents Esso International and Trans-Global, before the POEA.5

On July 17, 1991, the POEA rendered a decision dismissing the complaint for lack of merit.

On appeal to the NLRC, the decision of the POEA was affirmed on June 1, 1993 with the following disquisition:

The first issue must be decided in the negative. Complainants-appellants, as seamen and overseas contract workers are not covered by the term "regular
employment" as defined under Article 280 of the Labor Code. The POEA, which is tasked with protecting the rights of the Filipino workers for overseas
employment to fair and equitable recruitment and employment practices and to ensure their welfare, prescribes a standard employment contract for
seamen on board ocean-going vessels for a fixed period but in no case to exceed twelve (12) months (Part 1, Sec. C). This POEA policy appears to be in
consonance with the international maritime practice. Moreover, the Supreme Court in Brent School, Inc. vs. Zamora, 181 SCRA 702, had held that a fixed
term is essential and natural appurtenance of overseas employment contracts to which the concept of regular employment with all that it implies is not
applicable, Article 280 of the Labor Code notwithstanding. There is, therefore, no reason to disturb the POEA Administrator's finding that complainants-
appellants were hired on a contractual basis and for a definite period. Their employment is thus governed by the contracts they sign each time they are re-
hired and is terminated at the expiration of the contract period.6

Undaunted, the petitioners elevated their case to this Court7 and successfully obtained the favorable action, which is now vehemently being assailed.

At the hearing on November 15, 2000, the Court defined the issues for resolution in this case, namely:

I. ARE PETITIONERS REGULAR OR CONTRACTUAL EMPLOYEES WHOSE EMPLOYMENTS ARE TERMINATED EVERYTIME THEIR CONTRACTS
OF EMPLOYMENT EXPIRE?

II. ASSUMING THAT PETITIONERS ARE REGULAR EMPLOYEES, WERE THEY DISMISSED WITHOUT JUST CAUSE SO AS TO BE ENTITLED TO
REINSTATEMENT AND BACKWAGES, INCLUDING PAYMENT OF 100% OF THEIR TOTAL CREDITED CONTRIBUTIONS TO THE CONSECUTIVE
ENLISTMENT INCENTIVE PLAN (CEIP)?

III. DOES THE PROVISION OF THE POEA STANDARD CONTRACT FOR SEAFARERS ON BOARD FOREIGN VESSELS (SEC. C., DURATION OF
CONTRACT) PRECLUDE THE ATTAINMENT BY SEAMEN OF THE STATUS OF REGULAR EMPLOYEES?

IV. DOES THE DECISION OF THE COURT IN G.R. NO. 110524 CONTRAVENE INTERNATIONAL MARITIME LAW, ALLEGEDLY PART OF THE LAW
OF THE LAND UNDER SECTION 2, ARTICLE II OF THE CONSTITUTION?

V. DOES THE SAME DECISION OF THE COURT CONSTITUTE A DEPARTURE FROM ITS RULING IN COYOCA VS. NLRC (G.R. NO. 113658, March
31, 1995)?

In answer to the private respondents' Second Motion for Reconsideration and to FAME's Motion for Reconsideration in Intervention, petitioners maintain
that they are regular employees as found by the Court in the March 14, 2000 Decision. Considering that petitioners performed activities which are usually
necessary or desirable in the usual business or trade of private respondents, they should be considered as regular employees pursuant to Article 280,
Par. 1 of the Labor Code.9 Other justifications for this ruling include the fact that petitioners have rendered over twenty (20) years of service, as admitted
by the private respondents;10 that they were recipients of Merit Pay which is an express acknowledgment by the private respondents that petitioners are
regular and not just contractual employees;11 that petitioners were registered under the Social Security System (SSS).

The petitioners further state that the case of Coyoca v. NLRC12 which the private respondents invoke is not applicable to the case at bar as the factual
milieu in that case is not the same. Furthermore, private respondents' fear that our judicial pronouncement will spell the death of the manning industry is
far from real. Instead, with the valuable contribution of the manning industry to our economy, these seafarers are supposed to be considered as "Heroes
of the Republic" whose rights must be protected.13 Finally, the first motion for reconsideration has already been denied with finality by this Court and it is
about time that the Court should write finis to this case.

The private respondents, on the other hand, contend that: (a) the ruling holding petitioners as regular employees was not in accord with the decision in
Coyoca v. NLRC, 243 SCRA 190; (b) Art. 280 is not applicable as what applies is the POEA Rules and Regulations Governing Overseas Employment; (c)
seafarers are not regular employees based on international maritime practice; (d) grave consequences would result on the future of seafarers and
manning agencies if the ruling is not reconsidered; (e) there was no dismissal committed; (f) a dismissed seafarer is not entitled to back wages and
reinstatement, that being not allowed under the POEA rules and the Migrant Workers Act; and, (g) petitioners are not entitled to claim the total amount
credited to their account under the CEIP

Meanwhile, Intervenor Filipino Association of Mariners Employment (FAME) avers that our decision, if not reconsidered, will have negative consequences
in the employment of Filipino Seafarers overseas which, in turn, might lead to the demise of the manning industry in the Philippines. As intervenor FAME
puts it:

xxx

7.1 Foreign principals will start looking for alternative sources for seafarers to man their ships. AS reported by the BIMCO/ISF study, "there is an
expectancy that there will be an increasing demand for (and supply of) Chinese seafarers, with some commentators suggesting that this may be a long-
term alternative to the Philippines." Moreover, "the political changes within the former Eastern Bloc have made new sources of supply available to the
international market." Intervenor's recent survey among its members shows that 50 Philippine manning companies had already lost some 6,300 slots to
other Asian, East Europe and Chinese competition for the last two years;

7.2 The Philippine stands to lose an annual foreign income estimated at U.S. DOLLARS TWO HUNDRED SEVENTY FOUR MILLION FIVE HUNDRED
FORTY NINE THOUSAND (US$ 274,549,000.00) from the manning industry and another US DOLLARS FOUR BILLION SIX HUNDRED FIFTY MILLION
SEVEN HUNDRED SIX THOUSAND (US$ 4,650,760,000.00) from the land-based sector if seafarers and equally situated land-based contract workers
will be declared regular employees;

7.3 Some 195,917 (as of 1998) deployed overseas Filipino seafarers will be rendered jobless should we lose the market;

7.4 Some 360 manning agencies (as of 30 June 2000) whose principals may no longer be doing business with them will close their shops;

7.5 The contribution to the Overseas Worker's Welfare Administration by the sector, which is USD 25.00 per contract and translates to US DOLLARS
FOUR MILLION (US$ 4,000,000.00)annually, will be drastically reduced. This is not to mention the processing fees paid to POEA, Philippine Regulatory
Commission (PRC), Department of Foreign Affairs (DFA) and Maritime Industry Authority (MARINA) for the documentation of these seafarers;

7.6 Worst, some 195,917 (as of 1998) families will suffer socially and economically, as their breadwinners will be rendered jobless; and

7.7 It will considerably slow down the government's program of employment generation, considering that, as expected foreign employers will now avoid
hiring Filipino overseas contract workers as they will become regular employees with all its concomitant effects.

Significantly, the Office of the Solicitor General, in a departure from its original position in this case, has now taken the opposite view. It has expressed its
apprehension in sustaining our decision and has called for a re-examination of our ruling.

Considering all the arguments presented by the private respondents, the Intervenor FAME and the OSG, we agree that there is a need to reconsider our
position with respect to the status of seafarers which we considered as regular employees under Article 280 of the Labor Code. We, therefore, partially
grant the second motion for reconsideration.

In Brent School Inc. v. Zamora,17 the Supreme Court stated that Article 280 of the Labor Code does not apply to overseas employment.

In the light of the foregoing description of the development of the provisions of the Labor Code bearing on term or fixed-period employment that the
question posed in the opening paragraph of this opinion should now be addressed. Is it then the legislative intention to outlaw stipulations in employment
contracts laying down a definite period therefor? Are such stipulations in essence contrary to public policy and should not on this account be accorded
legitimacy?

On the other hand, there is the gradual and progressive elimination of references to term or fixed-period employment in the Labor Code, and the specific
statement of the rule that:

Regular and Casual Employment - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the engagement of the employee or where the work or service to be employee is seasonal in
nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph; provided that, any employee who has rendered at least one
year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed
and his employment shall continue while such actually exists.

There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the validity and propriety of contracts and
obligations with a fixed or definite period, and imposes no restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it
specific, goods or services, except the general admonition against stipulations contrary to law, morals, good customs, public order or public policy. Under
the Civil code, therefore, and as a general proposition, fixed-term employment contracts are not limited, as they are under the present Labor Code, to
those by natural seasonal or for specific projects with predetermined dates of completion; they also include those to which the parties by free choice have
assigned a specific date of termination.

Some familiar examples may be cited of employment contract which may be neither for seasonal work nor for specific projects, but to which a fixed term is
an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the engagement, the concept of regular
employment with all that it implies does not appear ever to have been applied. Article 280 of the Labor Code notwithstanding also appointments to the
positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or tradition
rotated among the faculty members, and where fixed terms are a necessity without which no reasonable rotation would be possible. Similarly, despite the
provisions of Article 280, Policy Instructions. No. 8 of the Minister of Labor implicitly recognize that certain company officials may be elected for what
would amount to fix periods, at the expiration of which they would have to stand down, in providing that these officials, xxx may lose their jobs as
president, executive vice-president or vice-president, etc. because the stockholders or the board of directors for one reason or another did not reelect
them.

There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck down or disregard as contrary to public policy, morals, etc. But where no such intent
to circumvent the law is shown, or stated otherwise, where the reason for the law does not exists, e.g., where it is indeed the employee himself who insists
upon a period or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine
qua non, would an agreement fixing a period be essentially evil or illicit, therefore anathema? Would such an agreement come within the scope of Article
280 which admittedly was enacted "to prevent the circumvention of the right of the employee to be secured in xxx his employment.

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

It is a salutary principle in statutory construction that there exists a valid presumption that undesirable consequences were never intended by a legislative
measure, and that a construction of which the statute is fairly susceptible is favored, which will avoid all objectionable, mischievous, indefensible,
wrongful, evil, and injurious consequences."

Nothing is better settled than that courts are not to give words a meaning which would lead to absurd or unreasonable consequences. That is a principle
that goes back to In re Allen decided on October 27, 1902, where it was held that a literal interpretation is to be rejected if it would be unjust or lead to
absurd results. That is a strong argument against its adoption. The words of Justice Laurel are particularly apt. Thus: "the appellants would lead to an
absurdity is another argument for rejecting it."

xxx We have, here, then a case where the true intent of the law is clear that calls for the application of the cardinal rule of statutory construction that such
intent of spirit must prevail over the letter thereof, for whatever is within the spirit of a statute is within the statute, since adherence to the letter would result
in absurdity, injustice and contradictions and would defeat the plain and vital purpose of the statute.

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

Again, in Pablo Coyoca v. NLRC,18 the Court also held that a seafarer is not a regular employee and is not entitled to separation pay. His employment is
governed by the POEA Standard Employment Contract for Filipino Seamen.

x x x. In this connection, it is important to note that neither does the POEA standard employment contract for Filipino seamen provide for such benefits.

As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing Overseas Employment and the said Rules do not provide for
separation or termination pay. What is embodied in petitioner's contract is the payment of compensation arising from permanent partial disability during
the period of employment. We find that private respondent complied with the terms of contract when it paid petitioner P42,315.00 which, in our opinion, is
a reasonable amount, as compensation for his illness.

Lastly, petitioner claims that he eventually became a regular employee of private respondent and thus falls within the purview of Articles 284 and 95 of the
Labor Code. In support of this contention, petitioner cites the case of Worth Shipping Service, Inc., et al. v. NLRC, et al., wherein we held that the crew
members of the shipping company had attained regular status and thus, were entitled to separation pay. However, the facts of said case differ from the
present. In Worth, we held that the principal and agent had "operational control and management" over the MV Orient Carrier and thus, were the actual
employers of their crew members.

From the foregoing cases, it is clear that seafarers are considered contractual employees. They can not be considered as regular employees under Article
280 of the Labor Code. Their employment is governed by the contracts they sign everytime they are rehired and their employment is terminated when the
contract expires. Their employment is contractually fixed for a certain period of time. They fall under the exception of Article 280 whose employment has
been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.19 We need not depart from the
rulings of the Court in the two aforementioned cases which indeed constitute stare decisis with respect to the employment status of seafarers.

Petitioners insist that they should be considered regular employees, since they have rendered services which are usually necessary and desirable to the
business of their employer, and that they have rendered more than twenty(20) years of service. While this may be true, the Brent case has, however, held
that there are certain forms of employment which also require the performance of usual and desirable functions and which exceed one year but do not
necessarily attain regular employment status under Article 280.20 Overseas workers including seafarers fall under this type of employment which are
governed by the mutual agreements of the parties.

In this jurisdiction and as clearly stated in the Coyoca case, Filipino seamen are governed by the Rules and Regulations of the POEA. The Standard
Employment Contract governing the employment of All Filipino seamen on Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C
specifically provides that the contract of seamen shall be for a fixed period. And in no case should the contract of seamen be longer than 12 months. It
reads:

Section C. Duration of Contract

The period of employment shall be for a fixed period but in no case to exceed 12 months and shall be stated in the Crew Contract. Any extension of the
Contract period shall be subject to the mutual consent of the parties.

Moreover, it is an accepted maritime industry practice that employment of seafarers are for a fixed period only. Constrained by the nature of their
employment which is quite peculiar and unique in itself, it is for the mutual interest of both the seafarer and the employer why the employment status must
be contractual only or for a certain period of time. Seafarers spend most of their time at sea and understandably, they can not stay for a long and an
indefinite period of time at sea.21 Limited access to shore society during the employment will have an adverse impact on the seafarer. The national,
cultural and lingual diversity among the crew during the COE is a reality that necessitates the limitation of its period.

Petitioners make much of the fact that they have been continually re-hired or their contracts renewed before the contracts expired (which has admittedly
been going on for twenty (20) years). By such circumstance they claim to have acquired regular status with all the rights and benefits appurtenant to it.

Such contention is untenable. Undeniably, this circumstance of continuous re-hiring was dictated by practical considerations that experienced crew
members are more preferred. Petitioners were only given priority or preference because of their experience and qualifications but this does not detract the
fact that herein petitioners are contractual employees. They can not be considered regular employees. We quote with favor the explanation of the NLRC
in this wise:

xxx The reference to "permanent" and "probationary" masters and employees in these papers is a misnomer and does not alter the fact that the contracts
for enlistment between complainants-appellants and respondent-appellee Esso International were for a definite periods of time, ranging from 8 to 12
months. Although the use of the terms "permanent" and "probationary" is unfortunate, what is really meant is "eligible for-re-hire". This is the only logical
conclusion possible because the parties cannot and should not violate POEA's requirement that a contract of enlistment shall be for a limited period only;
not exceeding twelve (12) months.

From all the foregoing, we hereby state that petitioners are not considered regular or permanent employees under Article 280 of the Labor Code.
Petitioners' employment have automatically ceased upon the expiration of their contracts of enlistment (COE). Since there was no dismissal to speak of, it
follows that petitioners are not entitled to reinstatement or payment of separation pay or backwages, as provided by law.

With respect to the benefits under the Consecutive Enlistment Incentive Plan (CEIP), we hold that the petitioners are still entitled to receive 100% of the
total amount credited to him under the CEIP. Considering that we have declared that petitioners are contractual employees, their compensation and
benefits are covered by the contracts they signed and the CEIP is part and parcel of the contract.

The CEIP was formulated to entice seamen to stay long in the company. As the name implies, the program serves as an incentive for the employees to
renew their contracts with the same company for as long as their services were needed. For those who remained loyal to them, they were duly rewarded
with this additional remuneration under the CEIP, if eligible. While this is an act of benevolence on the part of the employer, it can not, however, be denied
that this is part of the benefits accorded to the employees for services rendered. Such right to the benefits is vested upon them upon their eligibility to the
program.

The CEIP provides that an employee becomes covered under the Plan when he completes thirty-six (36) months or an equivalent of three (3) years of
credited service with respect to employment after June 30, 1973.24 Upon eligibility, an amount shall be credited to his account as it provides, among
others:
III. Distribution of Benefits

A. Retirement, Death and Disability

When the employment of an employee terminates because of his retirement, death or permanent and total disability, a percentage of the total amount
credited to his account will be distributed to him (or his eligible survivor(s) in accordance with the following:

Reason for Termination Percentage

a) Attainment of mandatory retirement age of 60. 100%

b) Permanent and total disability, while under contract, that is not due to accident or misconduct. 100%

c) Permanent and total disability, while under contract, that is due to accident, and not due to misconduct. 100%

xxx

B. Voluntary Termination

When an employee voluntary terminates his employment with at least 36 months of credited service without any misconduct on his part, 18 percent of the
total amount credited to his account, plus an additional of one percent for each month (up to a maximum of 164 months of credited service in excess of
36, will be distributed to him provided (1) the employee has completed his last Contract of Enlistment and (2) employee advises the company in writing,
within 30 days, from his last disembarkation date, of his intention to terminate his employment. (To advise the Company in writing means that the original
letter must be sent to the Company's agent in the Philippines, a copy sent to the Company in New York).

xxx

C. Other Terminations

When the employment of an employee is terminated by the Company for a reason other than one in A and B above, without any misconduct on his part, a
percentage of the total amount credited to his account will be distributed to him in accordance with the following.

Credited Service Percentage

36 months 50%

48 " 75%

60 " 100%

When the employment of an employee is terminated due to his poor-performance, misconduct, unavailability, etc., or if employee is not offered re-
engagement for similar reasons, no distribution of any portion of employee's account will ever be made to him (or his eligible survivor[s]).

It must be recalled that on June 21, 1989, Millares wrote a letter to his employer informing his intention to avail of the optional retirement plan under the
CEIP considering that he has rendered more than twenty (20) years of continuous service. Lagda, likewise, manifested the same intention in a letter dated
June 26, 1989. Private respondent, however, denied their requests for benefits under the CEIP since: (1) the contract of enlistment (COE) did not provide
for retirement before 60 years of age; and that (2) petitioners failed to submit a written notice of their intention to terminate their employment within thirty
(30) days from the last disembarkation date pursuant to the provision on Voluntary Termination of the CEIP. Petitioners were eventually dropped from the
roster of crew members and on grounds of "abandonment" and "unavailability for contractual sea service", respectively, they were disqualified from
receiving any benefits under the CEIP.

In our March 14, 2000 Decision, we, however, found that petitioners Millares and Lagda were not guilty of "abandonment" or "unavailability for contractual
sea service," as we have stated:

The absence of petitioners was justified by the fact that they secured the approval of private respondents to take a leave of absence after the termination
of their last contracts of enlistment. Subsequently, petitioners sought for extensions of their respective leaves of absence. Granting arguendo that their
subsequent requests for extensions were not approved, it cannot be said that petitioners were unavailable or had abandoned their work when they failed
to report back for assignment as they were still questioning the denial of private respondents of their desire to avail of the optional early retirement policy,
which they believed in good faith to exist.

Neither can we consider petitioners guilty of poor performance or misconduct since they were recipients of Merit Pay Awards for their exemplary
performances in the company.

Anent the letters dated June 21, 1989 (for Millares) and June 26, 1989 (for Lagda) which private respondent considered as belated written notices of
termination, we find such assertion specious. Notwithstanding, we could conveniently consider the petitioners eligible under Section III-B of the CEIP
(Voluntary Termination), but this would, however, award them only a measly amount of benefits which to our mind, the petitioners do not rightfully deserve
under the facts and circumstances of the case. As the CEIP provides:

III. Distribution of Benefits

xxx

E. Distribution of Accounts

When an employee terminates under conditions that would qualify for a distribution of more than one specified in A, B or C above, the largest single
amount, only, will be distributed.

Since petitioners' termination of employment under the CEIP do not fall under Section III-A (Retirement, Death and Disability) or Section III-B (Voluntary
Termination), nor could they be they be considered under the second paragraph of Section III-C, as earlier discussed; it follows that their termination falls
under the first paragraph of Section III-C for which they are entitled to 100% of the total amount credited to their accounts. The private respondents cannot
now renege on their commitment under the CEIP to reward deserving and loyal employees as the petitioners in this case.

In taking cognizance of private respondent's Second Motion for Reconsideration, the Court hereby suspends the rules to make them comformable to law
and justice and to subserve an overriding public interest.

IN VIEW OF THE FOREGOING, the Court Resolved to Partially GRANT Private Respondent's Second Motion for Reconsideration and Intervenor
FAMES' Motion for Reconsideration in Intervention. The Decision of the National Labor Relations Commission dated June 1, 1993 is hereby
REINSTATED with MODIFICATION. The Private Respondents, Trans-Global Maritime Agency, Inc. and Esso International Shipping Co., Ltd. are hereby
jointly and severally ORDERED to pay petitioners One Hundred Percent (100%) of their total credited contributions as provided under the Consecutive
Enlistment Incentive Plan(CEIP).

SO ORDERED.

[G.R. No. 122122. July 20, 1999.]

PHILIPPINE FRUIT & VEGETABLE INDUSTRIES, INC. and its President and General Manager, MR. PEDRO CASTILLO, Petitioners, v. NATIONAL
LABOR RELATIONS COMMISSION, and Philippine Fruit and Vegetable Workers Union-Tupas Local Chapter, Respondents.

DECISION

KAPUNAN, J.:

In this special civil action for certiorari, petitioners assail the Decision dated May 31, 1995 of public respondent National Labor Relations Commission
(NLRC) which upheld with modification the decision of Labor Arbiter Quintin C. Mendoza finding that the members of respondent union were illegally
dismissed and granting them, among others, their backwages and separation pay if their reinstatement is no longer feasible; and the Resolution dated
August 22, 1995 of the same public respondent, which denied petitioners’ motion for reconsideration of the above decision.

Petitioner Philippine Fruit and Vegetable Industries, Inc. (PFVII, for brevity) is a government-owned and controlled corporation engaged in the
manufacture and processing of fruit and vegetable purees for export. Petitioner Pedro Castillo is the former President and General Manager of petitioner
PFVII.

On September 5, 1988 herein private respondent Philippine Fruit and Vegetable Workers Union-Tupas Local Chapter, for and in behalf of 127 of its
members, filed a complaint for unfair labor practice and/or illegal dismissal with damages against petitioner corporation. Private respondent alleged that
many of its complaining members started working for San Carlos Fruits Corporation which later incorporated into PFVII in January or February 1983 until
their dismissal on different dates in 1985, 1986, 1987 and 1988. They further alleged that the dismissals were due to complainants’ involvement in union
activities and were without just cause.

On September 23, 1988, herein petitioners filed a motion to dismiss.

On October 13, 1988, respondent union filed its position paper wherein it added as complainants 33 more of its members, raising the number of
complainants to 160.

On November 21, 1988, respondent union filed a supplemental position paper alleging that there were actually 194 complainants. Respondent union
attached thereto a list of their names and the amounts of their claims.

On December 26, 1988, Labor Arbiter Ricardo Olairez rendered a decision holding petitioners liable for illegal dismissal.

On appeal, the third division of the NLRC, in its Resolution dated May 31, 1990, set aside the appealed decision and remanded the case to the Arbitration
Branch for further proceedings.
In the Arbitration Branch, Labor Arbiter Melquiades Sol D. del Rosario, and subsequently, Labor Arbiter Quintin C. Mendoza, received the evidence
presented by both parties.

On July 28, 1992, Labor Arbiter Mendoza rendered a decision finding petitioners liable for, among others, illegal dismissal. The dispositive portion of the
decision reads:

WHEREFORE, decision is hereby issued ordering the respondent Philippine Fruits and Vegetable, Industries Corporation and or its President/General
Manager Pedro Castillo to pay the aforementioned 190 complainants their full backwages and 13th month pay in the aforestated amounts, aggregating six
million one hundred forty two thousand fifty-one pesos and 37/100 centavos, (P6,142,051.37), plus separation pay of one-half month pay for every year of
service including 1991, at the option of respondent, if reinstatement is no longer feasible.

Likewise, attorney’s fee representing ten percent (10%) of the total award is hereby granted, the same to be shared proportionately between
complainant’s former counsel ALAR, COMIA, MANALO and ASSOCIATES LAW OFFICES, c/o Atty. Benjamin Alar, and counsel of record Atty. Alejandro
Villamil, the former having established its right and lien over the award.

SO ORDERED.

On appeal, respondent NLRC affirmed the decision of the Labor Arbiter "with. modification that the award of attorneys fees shall be based only on the
amounts corresponding to 13th month pay."

Petitioners filed a motion for reconsideration which was denied by respondent NLRC in a Resolution dated August 22, 1995. 3

Hence, this petition wherein petitioners raise the following issues:

THE QUESTIONED DECISION IS NOT SUPPORTED BY EVIDENCE, APPLICABLE LAWS AND JURISPRUDENCE.

II

PRIVATE RESPONDENTS ARE SEASONAL EMPLOYEES WHOSE EMPLOYMENTS CEASED DURING THE OFF-SEASON DUE TO NO WORK AND
NOT DUE TO ILLEGAL DISMISSAL.

III

THE LABOR ARBITER AND THE NLRC COMMITTED MANIFEST ERROR IN ORDERING PETITIONER TO PAY 194 INDIVIDUALS BACKWAGES,
13th MONTH PAY AND SEPARATION PAY BENEFITS.

Petitioners contend that the NLRC’s findings of fact are incorrect and unsubstantiated. They allege that the aforementioned San Carlos Fruits Corporation
is separate and distinct from herein petitioner PFVII; hence, it was arbitrary on the part of public respondent to hold petitioners liable to the employees of
San Carlos Fruits Corporation.

Petitioners further argue that PFVII operates on a seasonal basis and the complainants who are members of respondent union are seasonal workers
because they work only during the period that the company is in operation. According to petitioners, its operation starts only in February with the
processing of tomatoes into tomato paste and ceases by the end of the same month when the supply is consumed. It then resumes operations at the end
of April or early May, depending on the availability of supply with the processing of mangoes into purees and ceases operation in June. 5 The severance
of complainants’ employment from petitioner corporation was a necessary consequence of the nature of seasonal employment; and since complainants
are seasonal workers as defined by the Labor Code, they cannot invoke any tenurial benefit.

Petitioners further claim that many of the complainants failed or refused to undergo the medical examination required by petitioners as a prerequisite to
employment. They have legal right, petitioners argue, to prescribe their own rules and regulations; and, their right to require their employees to under a
medical examination is clearly legal.

Finally, petitioners allege that the Labor Arbiter and respondent NLRC erred in ordering them to pay backwages, 13th month pay and separation pay
benefits to the 194 respondents (union members) when only 78 of them were able to testify and substantiate their claims. This is contrary to the
agreement of both parties that those who will not be able to testify and substantiate their respective claims for actual damages will be considered to have
abandoned their complaints. 7 In fact, according to petitioners, it was by virtue of this agreement that petitioners limited the rebuttal evidence (only to
refute whatever may have been adduced by the said 78 union members).

The above arguments boil down to the issue of whether or not complaining members of respondent union are regular employees of PFVII or are seasonal
workers whose employment ceased during the off-season due to the non-availability of work.

Well-settled is the rule that findings of fact of the National Labor Relations Commission, affirming those of the Labor Arbiter are entitled to great weight
and will not be disturbed if they are supported by substantial evidence.
The questioned decision of the Labor Arbiter reads in part:

. . . (T)he employment of most started in Juanuary (sic) or February 1983 with the processing of the fruits, i.e. mangoes and calamansi from January to
July, tomatoes from January to April, then mangoes up to August and guyabano and others like papayas and pineapples until November or end of the
year, and that respondent corporation operates for the whole year. (TNS [sic], of April 11, 1991 hearing, pp. 10-11). . . . Their employments on the other
hand are spelled-out in complainants’ Annexes ‘A’ to ‘A-194’ and in their individual affidavits and detailed at times for those who were called to testify in
their direct testimony; and these positive testimonies are bolstered by their common but separate individual evidence, like the pay slips, apprentice
agreements before their appointments, identification cards, saving accounts and pass books . . .

Thus, we cannot give credence to the ‘Factory Workers Attendance Report’ of respondent (Annex ‘2’ marked as Exhibit ‘B’) where it is represented in
summary form or indicated that some of the complainants worked for one or several weeks or months only during some years they claimed to be
employed, or did not at all worked (sic) for Respondents. This exhibit is vissibly (sic) self-serving and not the best evidence to prove the insistence of
respondents. Rather, the best evidence should be some kind directly prepared or signed documents in the course of their normal relation indicating with
clarity the days, hours and months actually worked and signed by the workers to rebut the positive assertion in their affidavits, testimonies and the
messages of the Annexes. . . .

On the other hand, the NLRC’s findings of fact are as follows:chanrob1es virtual 1aw library

As culled from the records, it appears that herein 194 individual complainants are members of complainant union in respondent company which is
engaged in the manufacture and processing of fruit . . . and vegetable purees for export. They were employed as seeders, operators, sorters, slicers,
janitors, drivers, truck helpers, mechanics and office personnel.

x x x

By the very nature of things in a business enterprise like respondent company’s, to our mind, the services of herein complainants are, indeed, more than
six (6) months a year. We take note of the undisputed fact that the company did not confine itself just to the processing of tomatoes and mangoes. It also
processed guyabano, calamansi, papaya, pineapple, etc. Besides, there is the office administrative functions, cleaning and upkeeping of machines and
other duties and tasks to keep up (sic) a big food processing corporation.

Considering, therefore, that under of (sic) Article 280 of the Labor Code "the provisions of written agreement to the contrary notwithstanding and
considering further that the tasks which complainants performed were usually necessary and desirable in the employer’s usual business or trade, we hold
that complainants are regular seasonal employees, thus, entitled to security of tenure.

The findings of both the Labor Arbiter and the NLRC are supported by substantial evidence. There is, therefore, no circumstance that would warrant a
reversal of their decisions.

Article 280 of the Labor Code provides:

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 employers, except where the employment has been fixed for a specific project. . . .

An employment shall be deemed to be casual if it is not covered by the preceding paragraph; provided, that, any employee who has rendered at least one
year of service whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed
and his employment shall continue while such actually exists.

Under the above provision, an employment shall be deemed regular where the employee: a) has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; or b) has rendered at least one year of service, whether such service is continuous
or broken, with respect to the activity in which he is employed.

In the case at bar, the work of complainants as seeders, operators, sorters, slicers, janitors, drivers, truck helpers, mechanics and office personnel is
without doubt necessary in the usual business of a food processing company like petitioner PFVII.

It should be noted that complainants’ employment has not been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of their appointment or hiring. 13 Neither is their employment seasonal in nature. While it may be true that some phases of
petitioner company’s processing operations is dependent on the supply of fruits for a particular season, the other equally important aspects of its
business, such as manufacturing and marketing are not seasonal. The fact is that large-scale food processing companies such as petitioner company
continue to operate and do business throughout the year even if the availability of fruits and vegetables is seasonal.

Having determined that private respondents are regular employees under the first paragraph, we need not dwell on the question of whether or not they
had rendered one year of service. This Court has clearly stated in Mercado, Sr. v. NLRC, 14 that:

The second paragraph of Article 280 demarcates as "casual" employees, all other employees who do not fall under the definition of the preceding
paragraph. The proviso, in said second paragraph, deems as regular employees those "casual" employees who have rendered at least one year of
service regardless of the fact that such service may be continuous or broken.
. . . Hence, the proviso is applicable only to the employees who are deemed "casuals" but not to the "project" employees nor the regular employees
treated in paragraph one of Art. 280.

As correctly noted by the Office of the Solicitor General, private respondents in this case are deemed regular employees by virtue of the fact that they
performed functions which are necessary and desirable in the usual business of PFVII as provided under the first paragraph of Art. 280 of the Labor Code.

Finally, on the issue of whether or not the NLRC committed manifest error in ordering petitioners to pay backwages, 13th month pay and separation pay
benefits to 194 members of respondent union, we have to rule in the affirmative.

A careful examination of the records shows that only 80 of the 194 union members presented evidence to support and prove their claims in the form of
affidavits and/or testimonies, pay slips, passbooks, identification cards and other relevant documents. The other 114 members did not present any kind of
evidence whatsoever.

It is a basic rule in evidence that each party must prove his affirmative allegation — the plaintiff or complainant has to prove his affirmative allegations in
the complaints and the defendant or respondent has to prove the affirmative allegations in his affirmative defenses and counterclaims.

Hence, as correctly noted by the Solicitor General, the Labor Arbiter erred in appreciating the evidence presented by the complaining union members in
favor of the other 114 because the evidence is personal to each of them. Whatever testimony or other proof of employment submitted by any of them
proves only the status of his own employment and not that of any other complainant. Thus, only those members of respondent union who were able to
prove their claims are entitled to awards of backwages, 13th month pay and separation pay. They are as follows:

1. Antonio Cayabyab 21. Ramil de Guzman 41. Eligida D. Montilla 61. Dionisio Gutie

2. Ricardo Malicdem 22. Roberto Lomibao 42. Rodolfo Rosario 62. Natividad P. Velasquez

3. Raymundo De Guzman 23. Rolando Aquino 43. Alex Bautista 63. Lourdes Arenas

4. Virgilio M. Sison 24. Adoracion de Guzman 44. Remegio Alcantara 64. Lydia Clemente

5. Marilou R. Sabangan 25. Violeta Antonio 45. Domingo Bautista 65. Alfonso Manzon

6. Antonio Calixto 26. Elena N. Diaz 46. Romulo G. Gural 66. Francisco Bautista

7. Marietta A. Sabangan 27. Priscilla Vinoya 47. Romulo Bautista 67. Adelaida Ramirez

8. Divina S. Mandapat 28. Julita Macaraeg 48. Lolita A. Malicdem 68. Bienvenido Resuello

9. Silverio G. Tamondong 29. Fe Vilma S. Mandapat 49. Jose D. Diaz 69. Melanda Albarida

10. Pepito P. Bulatao 30. Fidel B. Tamondong 50. Eleno Bulatao 70. Marino Cayabyab

11. Orlando Salangad 31. Julita V. Gamboa 51. Juliana M. Saplan 71. Cecilia Bautista

12. Servillano Reyes 32. Leonora Castro 52. Felicidad A. Rosario 72. Herminia Arizabal

13. Corazon Leocadio 33. Roberto C. Angeles 53. Eugenio A. Macaraeg 73. Gaudencio Castro

14. Myrna R. Vistro 34. Corazon Muñoz 54. Helen A. Diaz 74. Elizabeth Valdez

15. Nicanor R. Turingan 35. Brigida de Guzman 55. Betty Grace V. Lolarga 75. Douglas Dalisay

16. Gerondio M. Magat 36. Isabelita S. Mandapat 56. Rebecca C. Fernandez 76. Teresita Velasco

17. Jose Sabangan, Jr. 37. Emma Macam 57. Narcisa M. Malicdem 77. Jaime T. Aquino

18. Francisca Bautista 38. Reynaldo C. de Guzman 58. Manuel Velasco 78. Virginia Cayabyab

19. Loreta Pidlaoan 39. Jimmy D. Montilla 59. Jose S. Untalan 79. Romeo Macam

20. Francisco Cuison 40. Romeo Macam 60. Rodolfo Soriano 80. Romeo D. de Vera

ACCORDINGLY, the questioned decision of the NLRC is hereby AFFIRMED insofar as the 80 union members who were able to prove their respective
claims are concerned, but REVERSED with respect to the other 114 union members, who did not adduce evidence in support of their claims.

[G.R. No. 118475. November 29, 2000.]

ELVIRA ABASOLO, et. al. Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER RICARDO N. OLAIREZ, LA UNION
TOBACCO REDRYING CORPORATION and SEE LIN CHAN, Respondents.

DE LEON, JR., J.:

Before us is a petition for certiorari seeking to annul two Resolutions of the National Labor Relations Commission (NLRC), Third Division, dated July 6,
1994 1 and September 23, 1994, 2 in its affirmance of the Decision 3 of Labor Arbiter Ricardo N. Olairez dated December 29, 1993 dismissing petitioners’
consolidated complaint for separation pay for lack of merit.

The facts are as follows:

Private respondent La Union Tobacco Redrying Corporation (LUTORCO), which is owned by private respondent See Lin Chan, is engaged in the
business of buying, selling, redrying and processing of tobacco leaves and its by-products. Tobacco season starts sometime in October of every year
when tobacco farmers germinate their seeds in plots until they are ready for replanting in November. The harvest season starts in mid-February. Then, the
farmers sell the harvested tobacco leaves to redrying plants or do the redrying themselves. The redrying plant of LUTORCO receives tobacco for redrying
at the end of February and starts redrying in March until August or September.

Petitioners have been under the employ of LUTORCO for several years until their employment with LUTORCO was abruptly interrupted sometime in
March 1993 when Compania General de Tabaccos de Filipinas (also known as TABACALERA) took over LUTORCO’s tobacco operations. New
signboards were posted indicating a change of ownership and petitioners were then asked by LUTORCO to file their respective applications for
employment with TABACALERA. Petitioners were caught unaware of the sudden change of ownership and its effect on the status of their employment,
though it was alleged that TABACALERA would assume and respect the seniority rights of the petitioners.

On March 17, 1993, the disgruntled employees instituted before the NLRC Regional Arbitration Branch No. 1, San Fernando, La Union a complaint 4 for
separation pay against private respondent LUTORCO on the ground that there was a termination of their employment due to the closure of LUTORCO as
a result of the sale and turnover to TABACALERA. Other equally affected employees filed two additional complaints 5 , also for separation pay, which
were consolidated with the first complaint.

Private respondent corporation raised as its defense that it is exempt from paying separation pay and denied that it terminated the services of the
petitioners; and that it stopped its operations due to the absence of capital and operating funds caused by losses incurred from 1990 to 1992 and absence
of operating funds for 1993, coupled with adverse financial conditions and downfall of prices. 6 It alleged further that LUTORCO entered into an
agreement with TABACALERA to take over LUTORCO’s tobacco operations for the year 1993 in the hope of recovering from its serious business losses
in the succeeding tobacco seasons and to create a continuing source of income for the petitioners. 7 Lastly, it manifested that LUTORCO, in good faith
and with sincerity, is willing to grant reasonable and adjusted amounts to the petitioners, as financial assistance, if and when LUTORCO could recover
from its financial crisis.

On December 29, 1993, Labor Arbiter Ricardo N. Olairez rendered his decision dismissing the complaint for lack of merit. In upholding private respondent
LUTORCO’s position, the Labor Arbiter declared that the petitioners are not entitled to the benefits under Article 283 9 of the Labor Code since LUTORCO
ceased to operate due to serious business losses and, furthermore, TABACALERA, the new employer of the petitioner has assumed the seniority rights of
the petitioners and other employment liabilities of the LUTORCO.

Petitioners appealed 11 then the decision of the Labor Arbiter to the public respondent NLRC where it was assigned to the Third Division.

In its Opposition to Appeal 12 dated February 5, 1994 private respondent LUTORCO presented new allegations and a different stand for denying
separation pay. It alleged that LUTORCO never ceased to operate but continues to operate even after TABACALERA took over the operations of its
redrying plaint in Aringay, La Union. Petitioners were not terminated from employment but petitioners instead refused to work with TABACALERA, despite
the notice to petitioners to return to work in view of LUTORCO’s need for workers at its Agoo plant which had approximately 300,000 kilos of Virginia
tobacco for processing and redrying. Furthermore, petitioners are not entitled to separation pay because petitioners are seasonal workers.

Adopting these arguments of private respondent, the NLRC, in a Resolution 13 dated July 6, 1994, affirmed the dismissal of the consolidated complaints
for separation pay. Public respondent held that petitioners are not entitled to the protection of Article 283 of the Labor Code providing for separation pay
since there was no closure of establishment or termination of services to speak of. It declared that there was no dismissal but a "non-hiring due mainly to
[petitioners] own volition." 14 Moreover, the benefits of Article 283 of the Labor Code apply only to regular employees, not seasonal workers like
petitioners. 15 Inasmuch as public respondent in its Resolution 16 dated September 23, 1994 denied petitioners’ motion for reconsideration, petitioners
now assail the correctness of the NLRC’s resolution via the instant petition.

Petitioners anchor their petition on the following grounds, to wit:

I. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN RULING
THAT THERE WAS NO DISMISSAL OR TERMINATION OF SERVICES.

II. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN RULING
THAT PETITIONERS WERE NOT REGULAR EMPLOYEES.
III. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN NOT
AWARDING SEPARATION PAY TO THE PETITIONERS.

Petitioners vigorously maintain that they are regular workers of respondent LUTORCO since they worked continuously for many years with LUTORCO,
some of them even for over 20 years, and that they performed functions necessary and desirable in the usual business of LUTORCO. 17 According to
them, the fact that some of them work only during the tobacco season does not affect their status as regular workers since they have been repeatedly
called back to work for every season, year after year. 18 Thus, petitioners take exception to the factual findings and conclusions of the NLRC, stressing
that the conclusions of the NLRC were based solely on the new theory advanced by private respondent LUTORCO only on appeal, that is, that it was only
LUTORCO’s tobacco re-drying operation that was sold, and hence, diametrically opposed to its theory before the Labor Arbiter, i.e., that it is the entire
company (LUTORCO) itself that was sold.

Private respondent LUTORCO, on the other hand, insists that petitioners’ employment was not terminated; that it never ceased to operate, and that it was
petitioners themselves who severed their employer-employee relationship when they chose employment with TABACALERA because petitioners found
more stability working with TABACALERA than with LUTORCO. 19 It likewise insists that petitioners are seasonal workers since almost all of petitioners
never continuously worked in LUTORCO for any given year 20 and they were required to reapply every year to determine who among them shall be given
work for the season. To support its argument that petitioners are seasonal workers, private respondent LUTORCO cites the case of Mercado, Sr. v. NLRC
21 wherein this Court held that "the employment of [seasonal workers] legally ends upon the completion of the . . . season."

Clearly, the crux of the dispute boils down to two issues, namely, (a) whether petitioners’ employment with LUTORCO was terminated, and (b) whether
petitioners are regular or seasonal workers, as defined by law. Both issues are clearly factual in nature as they involved appreciation of evidence
presented before the NLRC whose finding of facts and conclusions thereon are entitled to respect and finality in the absence of proof that they were
arrived at arbitrarily or capriciously. 22 In the instant case, however, cogent reasons exist to apply the exception, to wit:

First, upon a thorough review, the records speak of a sale to TABACALERA in 1993 under conditions evidently so concealed that petitioners were not
formally notified of the impending sale of LUTORCO’s tobacco re-drying operations to TABACALERA and its attendant consequences with respect to their
continued employment status under TABACALERA. They came to know of the fact of that sale only when TABACALERA took over the said tobacco re-
drying operations. Thus, under those circumstances, the employment of petitioners with respondent LUTORCO was technically terminated when
TABACALERA took over LUTORCO’s tobacco re-drying operations in 1993.

Moreover, private respondent LUTORCO’s allegation that TABACALERA assured the seniority rights of petitioners deserves scant consideration
inasmuch as the same is not supported by documentary evidence nor was it confirmed by TABACALERA. Besides, there is no law requiring that the
purchaser of an entire company should absorb the employees of the selling company. The most that the purchasing company can do, for reasons of
public policy and social justice, is to give preference to the qualified separated employees of the selling company, who in its judgment are necessary in the
continued operation of the business establishment. In the instant case, the petitioner employees were clearly required to file new applications for
employment. In reality then, they were hired as new employees of TABACALERA.

Second, private respondent LUTORCO’s contention that petitioners themselves severed the employer-employee relationship by choosing to work with
TABACALERA is bereft of merit considering that its offer to return to work was made more as an afterthought when private respondent LUTORCO later
realized it still had tobacco leaves for processing and redrying. The fact that petitioners ultimately chose to work with TABACALERA is not adverse to
petitioners’ cause. To equate the more stable work with TABACALERA and the temporary work with LUTORCO is illogical. Petitioners’ untimely
separation in LUTORCO was not of their own making and therefore, not construable as resignation therefrom inasmuch as resignation must be voluntary
and made with the intention of relinquishing the office, accompanied with an act of relinquishment.

Third, the test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, 25 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 is entirety. Also if the employee has been performing the job for at least a 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.

Thus, the nature of one’s employment does not depend solely on the will or word of the employer. Nor on the procedure for hiring and the manner of
designating the employee, but on the nature of the activities to be performed by the employee, considering the employees nature of business and the
duration and scope of work to be done.

In the case at bar, while it may appear that the work of petitioners is seasonal, inasmuch as petitioners have served the company for many years, some
for over 20 years, performing services necessary and indispensable to LUTORCO’s business, serve as badges of regular employment. 27 Moreover, the
fact that petitioners do not work continuously for one whole year but only for the duration of the tobacco season does not detract from considering them in
regular employment since in a litany of cases 28 this Court has already settled that seasonal workers who are called to work from time to time and are
temporarily laid off during off-season are not separated from service in said period, but are merely considered on leave until re-employed.
Private respondent’s reliance on the case of Mercado v. NLRC is misplaced considering that since in said case of Mercado, although the respondent
company therein consistently availed of the services of the petitioners therein from year to year, it was clear that petitioners therein were not in respondent
company’s regular employ. Petitioners therein performed different phases of agricultural work in a given year. However, during that period, they were free
to contract their services to work for other farm owners, as in fact they did. Thus, the Court ruled in that case that their employment would naturally end
upon the completion of each project or phase of farm work for which they have been contracted.

All the foregoing considered, the public respondent NLRC in the case at bar erred in its total affirmance of the dismissal of the consolidated complaint, for
separation pay, against private respondents LUTORCO and See Lin Chan considering that petitioners are regular seasonal employees entitled to the
benefits of Article 283 of the Labor Code which applies to closures or cessation of an establishment or undertaking, whether it be a complete or partial
cessation or closure of business operation.

In the case of Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC 30 this Court, when faced with the question of whether the separation pay
of a seasonal worker, who works for only a fraction of a year, should be equated with the separation pay of a regular worker, resolved that question in this
wise:

The amount of separation pay is based on two factors: the amount of monthly salary and the number of years of service. Although the Labor Code
provides different definitions as to what constitutes "one year of service," Book Six 31 does not specifically define "one year of service" for purposes of
computing separation pay. However, Articles 283 and 284 both state in connection with separation pay that a fraction of at least six months shall be
considered one whole year. Applying this case at bar, we hold that the amount of separation pay which respondent members . . . should receive is one-
half (1/2) their respective average monthly pay during the last season they worked multiplied by the number of years they actually rendered service,
provided that they worked for at least six months during a given year.

Thus, in the said case, the employees were awarded separation pay equivalent to one (1) month, or to one half (1/2) month pay for every year they
rendered service, whichever is higher, provided they rendered service for at least six (6) months in a given year. As explained in the text of the decision in
the said case, "month pay" shall be understood as "average monthly pay during the last season they worked." 32 An award of ten percent (10%) of the
total amount due petitioners as attorney’s fees is legally and morally justifiable under Art. 111 of the Labor Code, 33 Sec. 8, Rule VIII, Book III of its
Implementing Rules, 34 and par. 7, Art. 2208 35 of the Civil Code.

WHEREFORE, the petition is hereby GRANTED, and the assailed Resolutions dated July 6, 1994 and September 23, 1994 of public respondent NLRC
are REVERSED and SET ASIDE. Private respondent La Union Tobacco Redrying Corporation is ORDERED: (a) to pay petitioners separation pay
equivalent to one (1) month, or one-half (1/2) month pay for each year that they rendered service, whichever is higher, provided that they rendered service
for at least six (6) months in a given year, and; (b) to pay ten percent (10%) of the total amount due to petitioners, as and for attorney’s fees.
Consequently, public respondent NLRC is ORDERED to COMPUTE the total amount of separation pay which each petitioner who has rendered service to
private respondent LUTORCO for at least six (6) months in a given year is entitled to receive in accordance with this decision, and to submit its
compliance thereon within forty-five (45) days from notice of this decision.chanrob1es virtua1 1aw 1ibrary

G.R. No. 79869 September 5, 1991

FORTUNATO MERCADO, SR., et al petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC), respondents.

PADILLA, J.:

Assailed in this petition for certiorari is the decision * of the respondent national Labor Relations Commission (NLRC) dated 8 August 1984 which affirmed
the decision of respondent Labor Arbiter Luciano P. Aquino with the slight modification of deleting the award of financial assistance to petitioners, and the
resolution of the respondent NLRC dated 17 August 1987, denying petitioners' motion for reconsideration.

This petition originated from a complaint for illegal dismissal, underpayment of wages, non-payment of overtime pay, holiday pay, service incentive leave
benefits, emergency cost of living allowances and 13th month pay, filed by above-named petitioners against private respondents Aurora L. Cruz,
Francisco Borja, Leticia C. Borja and Sto. Niño Realty Incorporated, with Regional Arbitration Branch No. III, National Labor Relations Commission in San
Fernando, Pampanga.

Petitioners alleged in their complaint that they were agricultural workers utilized by private respondents in all the agricultural phases of work on the 7 1/2
hectares of ace land and 10 hectares of sugar land owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan worked in the farm of private
respondents since 1949, Fortunato Mercado, Jr. and Antonio Mercado since 1972 and the rest of the petitioners since 1960 up to April 1979, when they
were all allegedly dismissed from their employment; and that, during the period of their employment, petitioners received the following daily wages:

From 1962-1963 — P1.50 1970-1973 — P5.00

1963-1965 — P2.00 1973-1975 — P5.00

1965-1967 — P3.00 1975-1978 — P6.00

1967-1970 — P4.00 1978-1979 — P7.00

Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said petitioners were her regular employees and instead averred that
she engaged their services, through Spouses Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is, persons who take charge in supplying
the number of workers needed by owners of various farms, but only to do a particular phase of agricultural work necessary in rice production and/or sugar
cane production, after which they would be free to render services to other farm owners who need their services.

The other private respondents denied having any relationship whatsoever with the petitioners and state that they were merely registered owners of the
land in question included as correspondents in this case.

The dispute in this case revolves around the issue of whether or not petitioners are regular and permanent farm workers and therefore entitled to the
benefits which they pray for. And corollary to this, whether or not said petitioners were illegally dismissed by private respondents.

Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents and held that petitioners were not regular and permanent workers of the
private respondents, for the nature of the terms and conditions of their hiring reveal that they were required to perform phases of agricultural work for a
definite period of time after which their services would be available to any other farm owner.4 Respondent Labor Arbiter deemed petitioners' contention of
working twelve (12) hours a day the whole year round in the farm, an exaggeration, for the reason that the planting of lice and sugar cane does not entail
a whole year as reported in the findings of the Chief of the NLRC Special Task Force.5 Even the sworn statement of one of the petitioners, Fortunato
Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably show that said petitioners were hired only as casuals, on an "on
and off" basis, thus, it was within the prerogative of private respondent Aurora Cruz either to take in the petitioners to do further work or not after any
single phase of agricultural work had been completed by them.

Respondent Labor Arbiter was also of the opinion that the real cause which triggered the filing of the complaint by the petitioners who are related to one
another, either by consanguinity or affinity, was the filing of a criminal complaint for theft against Reynaldo Mercado, son of spouses Fortunate Mercado,
Sr. and Rosa Mercado, for they even asked the help of Jesus David, Zone Chairman of the locality to talk to private respondent, Aurora Cruz regarding
said criminal case.7 In his affidavit, Jesus David stated under oath that petitioners were never regularly employed by private respondent Aurora Cruz but
were, on-and-off hired to work and render services when needed, thus adding further support to the conclusion that petitioners were not regular and
permanent employees of private respondent Aurora Cruz.

Respondent Labor Arbiter further held that only money claims from years 1976-1977, 1977-1978 and 1978-1979 may be properly considered since all the
other money claims have prescribed for having accrued beyond the three (3) year period prescribed by law.9 On grounds of equity, however, respondent
Labor Arbiter awarded petitioners financial assistance by private respondent Aurora Cruz, in the amount of Ten Thousand Pesos (P10,000.00) to be
equitably divided among an the petitioners except petitioner Fortunato Mercado, Jr. who had manifested his disinterest in the further prosecution of his
complaint against private respondent.

Both parties filed their appeal with the National Labor Relations Commissions (NLRC). Petitioners questioned respondent Labor Arbiter's finding that they
were not regular and permanent employees of private respondent Aurora Cruz while private respondents questioned the award of financial assistance
granted by respondent Labor Arbiter.

The NLRC ruled in favor of private respondents affirming the decision of the respondent Labor Arbiter, with the modification of the deletion of the award
for financial assistance to petitioners. The dispositive portion of the decision of the NLRC reads:

WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino dated March 3, 1983 is hereby modified in that the award of P10,000.00 financial
assistance should be deleted. The said Decision is affirmed in all other aspects.

SO ORDERED.

Petitioners filed a motion for reconsideration of the Decision of the Third Division of the NLRC dated 8 August 1984; however, the NLRC denied tills
motion in a resolution dated 17 August 1987.

In the present Petition for certiorari, petitioners seek the reversal of the above-mentioned rulings. Petitioners contend that respondent Labor Arbiter and
respondent NLRC erred when both ruled that petitioners are not regular and permanent employees of private respondents based on the terms and
conditions of their hiring, for said findings are contrary to the provisions of Article 280 of the Labor Code.13 They submit that petitioners' employment,
even assuming said employment were seasonal, continued for so many years such that, by express provision of Article 280 of the Labor Code as
amended, petitioners have become regular and permanent employees.

Moreover, they argue that Policy Instruction No. 1215 of the Department of Labor and Employment clearly lends support to this contention, when it states:

PD 830 has defined the concept of regular and casual employment. What determines regularity or casualness is not the employment contract, written or
otherwise, but the nature of the job. If the job is usually necessary or desirable to the main business of the employer, then employment is regular. If not,
then the employment is casual. Employment for a definite period which exceeds one (1) year shall be considered re for the duration of the definite period.

This concept of re and casual employment is designed to put an end to casual employment in regular jobs which has been abused by many employers to
prevent so-called casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions.

This new concept should be strictly enforced to give meaning to the constitutional guarantee of employment tenure.
Tested under the laws invoked, petitioners submit that it would be unjust, if not unlawful, to consider them as casual workers since they have been doing
all phases of agricultural work for so many years, activities which are undeniably necessary, desirable and indispensable in the rice and sugar cane
production business of the private respondents.

In the Comment filed by private respondents, they submit that the decision of the Labor Arbiter, as aimed by respondent NLRC, that petitioners were only
hired as casuals, is based on solid evidence presented by the parties and also by the Chief of the Special Task Force of the NLRC Regional Office and,
therefore, in accordance with the rule on findings of fact of administrative agencies, the decision should be given great weight.18 Furthermore, they
contend that the arguments used by petitioners in questioning the decision of the Labor Arbiter were based on matters which were not offered as evidence
in the case heard before the regional office of the then Ministry of Labor but rather in the case before the Social Security Commission, also between the
same parties.

Public respondent NLRC filed a separate comment prepared by the Solicitor General. It submits that it has long been settled that findings of fact of
administrative agencies if supported by substantial evidence are entitled to great weight.20 Moreover, it argues that petitioners cannot be deemed to be
permanent and regular employees since they fall under the exception stated in Article 280 of the Labor Code, which reads:

The provisions of written agreements to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.

The Court resolved to give due course to the petition and required the parties to submit their respective memoranda after which the case was deemed
submitted for decision.

The petition is not impressed with merit.

The invariable rule set by the Court in reviewing administrative decisions of the Executive Branch of the Government is that the findings of fact made
therein are respected, so long as they are supported by substantial evidence, even if not overwhelming or preponderant; that it is not for the reviewing
court to weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own judgment for that of the administrative
agency on the sufficiency of the evidence;23 that the administrative decision in matters within the executive's jurisdiction can only be set aside upon proof
of gross abuse of discretion, fraud, or error of law.

The questioned decision of the Labor Arbiter reads:

Focusing the spotlight of judicious scrutiny on the evidence on record and the arguments of both parties, it is our well-discerned opinion that the
petitioners are not regular and permanent workers of the respondents. The very nature of the terms and conditions of their hiring reveal that the petitioners
were required to perform p of cultural work for a definite period, after which their services are available to any farm owner. We cannot share the arguments
of the petitioners that they worked continuously the whole year round for twelve hours a day. This, we feel, is an exaggeration which does not deserve any
serious consideration inasmuch as the plan of rice and sugar cane does not entail a whole year operation, the area in question being comparatively small.
It is noteworthy that the findings of the Chief of the Special Task Force of the Regional Office are similar to this.

In fact, the sworn statement of one of the petitioners Fortunato Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably
shows that said petitioners were only hired as casuals, on-and-off basis. With this kind of relationship between the petitioners and the respondent Aurora
Cruz, we feel that there is no basis in law upon which the claims of the petitioners should be sustained, more specially their complaint for illegal dismissal.
It is within the prerogative of respondent Aurora Cruz either to take in the petitioners to do further work or not after any single phase of agricultural work
has been completed by them. We are of the opinion that the real cause which triggered the filing of this complaint by the petitioners who are related to one
another, either by consanguinity or affinity was due to the filing of a criminal complaint by the respondent Aurora Cruz against Reynaldo Mercado, son of
spouses Fortunato Mercado, Sr. and Rosa Mercado. In April 1979, according to Jesus David, Zone Chairman of the locality where the petitioners and
respondent reside, petitioner Fortunato Mercado, Sr. asked for help regarding the case of his son, Reynaldo, to talk with respondent Aurora Cruz and the
said Zone Chairman also stated under oath that the petitioners were never regularly employed by respondent Aurora Cruz but were on-and-off hired to
work to render services when needed.

A careful examination of the foregoing statements reveals that the findings of the Labor Arbiter in the case are ably supported by evidence. There is,
therefore, no circumstance that would warrant a reversal of the questioned decision of the Labor Arbiter as affirmed by the National Labor Relations
Commission.

The contention of petitioners that the second paragraph of Article 280 of the Labor Code should have been applied in their case presents an opportunity to
clarify the afore-mentioned provision of law.

Article 280 of the Labor Code reads in full:

Article 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed
is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least
one year of service whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such actually exists.

The first paragraph answers the question of who are employees. It states that, regardless of any written or oral agreement to the contrary, an employee is
deemed regular where he is engaged in necessary or desirable activities in the usual business or trade of the employer, except for project employees.

A project employee has been defined to be one whose employment has been fixed for a specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season26 as in the present case.

The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fan under the definition of the preceding paragraph.
The proviso, in said second paragraph, deems as regular employees those "casual" employees who have rendered at least one year of service regardless
of the fact that such service may be continuous or broken.

Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their case and that the Labor Arbiter should have
considered them regular by virtue of said proviso. The contention is without merit.

The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it or restrain or limit the generality of the clause
that it immediately follows.27 Thus, it has been held that a proviso is to be construed with reference to the immediately preceding part of the provision to
which it is attached, and not to the statute itself or to other sections thereof.28 The only exception to this rule is where the clear legislative intent is to
restrain or qualify not only the phrase immediately preceding it (the proviso) but also earlier provisions of the statute or even the statute itself as a whole.

Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of regular and casual employees was designed to put an
end to casual employment in regular jobs, which has been abused by many employers to prevent called casuals from enjoying the benefits of regular
employees or to prevent casuals from joining unions. The same instructions show that the proviso in the second paragraph of Art. 280 was not designed
to stifle small-scale businesses nor to oppress agricultural land owners to further the interests of laborers, whether agricultural or industrial. What it seeks
to eliminate are abuses of employers against their employees and not, as petitioners would have us believe, to prevent small-scale businesses from
engaging in legitimate methods to realize profit. Hence, the proviso is applicable only to the employees who are deemed "casuals" but not to the "project"
employees nor the regular employees treated in paragraph one of Art. 280.

Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally ends upon completion of
the project or the season. The termination of their employment cannot and should not constitute an illegal dismissal.

WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations Commission affirming that of the Labor Arbiter, under review, is
AFFIRMED. No pronouncement as to costs.

SO ORDERED.

G.R. No. 109902 August 2, 1994

ALU-TUCP vs. NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL CORPORATION (NSC), respondents.

FELICIANO, J.:

In this Petition for Certiorari, petitioners assail the Resolution of the National Labor Relations Commission ("NLRC") dated 8 January 1993 which declared
petitioners to be project employees of private respondent National Steel Corporation ("NSC"), and the NLRC's subsequent Resolution of 15 February
1993, denying petitioners' motion for reconsideration.

Petitioners plead that they had been employed by respondent NSC in connection with its Five Year Expansion Program (FAYEP I & II) 1 for varying
lengths of time when they were separated from NSC's service:

Employee Date Nature of Separated

Employed Employment

1. Alan Barinque 5-14-82 Engineer 1 8-31-91 5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92

2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92 6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91

3. Edgar Bontuyan 11-03-82 Chairman to present 7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized

4. Osias Dandasan 9-21-82 Utilityman 1991 8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
9. Russell Gacus 1-30-85 Engineer 1 6-30-92 12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992

10. Jose Garguena 3-02-81 Warehouseman to present 13. Romeo Sarona 2-26-83 Machine Operator 8-31-912

11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91

On 5 July 1990, petitioners 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 in a Decision dated 7 June 1991, 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. 3

Both parties appealed to the NLRC from that decision. Petitioners argued that they were regular, not project, employees. Private respondent, on the other
hand, claimed that petitioners are project employees as they were employed to undertake a specific project — NSC's Five Year Expansion Program
(FAYEP I & II).

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.

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 the NLRC in rendering its questioned resolutions of 8 January 1993 and 15 February 1993.

The law on the matter is Article 280 of the Labor Code which reads in full:

Art. 280. Regular and Casual Employment — The provisions of the written agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, and 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 service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such actually exists. (Emphasis supplied)

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. 4

The basic issue is thus whether or not petitioners are properly characterized as "project employees" rather than "regular employees" of NSC. This issue
relates, of course, to an important consequence: the services of project employees are co-terminous with the project and may be terminated upon the end
or completion of the project for which they were hired. 5 Regular employees, in contract, are legally entitled to remain in the service of their employer until
that service is terminated by one or another of the recognized modes of termination of service under the Labor Code. 6

It is evidently important to become clear about the meaning and scope of the term "project" in the present context. The "project" for the carrying out of
which "project employees" are hired would ordinarily have some relationship to the usual business of the employer. Exceptionally, the "project"
undertaking might not have an ordinary or normal relationship to the usual business of the employer. In this latter case, the determination of the scope and
parameeters of the "project" becomes fairly easy. It is unusual (but still conceivable) for a company to undertake a project which has absolutely no
relationship to the usual business of the company; thus, for instance, it would be an unusual steel-making company which would undertake the breeding
and production of fish or the cultivation of vegetables. From the viewpoint, however, of the legal characterization problem here presented to the Court,
there should be no difficulty in designating the employees who are retained or hired for the purpose of undertaking fish culture or the production of
vegetables as "project employees," as distinguished from ordinary or "regular employees," so long as the duration and scope of the project were
determined or specified at the time of engagement of the "project employees." 7 For, as is evident from the provisions of Article 280 of the Labor Code,
quoted earlier, the principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from
"regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration (and scope) of
which were specified at the time the employees were engaged for that project.

In the realm of business and industry, we note that "project" could refer to one or the other of at least two (2) distinguishable types of activities. Firstly, a
project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and
separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable
times. The typical example of this first type of project is a particular construction job or project of a construction company. A construction company
ordinarily carries out two or more discrete identifiable construction projects: e.g., a twenty-five- storey hotel in Makati; a residential condominium building
in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects, the scope and
duration of which has been determined and made known to the employees at the time of employment, are properly treated as "project employees," and
their services may be lawfully terminated at completion of the project.

The term "project" could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation. Such a job or
undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also
begins and ends at determined or determinable times. The case at bar presents what appears to our mind as a typical example of this kind of "project."

NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate end in view of expanding the volume and increasing the kinds of
products that it may offer for sale to the public. The Five Year Expansion Program had a number of component projects: e.g., (a) the setting up of a "Cold
Rolling Mill Expansion Project"; (b) the establishment of a "Billet Steel-Making Plant" (BSP); (c) the acquisition and installation of a "Five Stand TDM"; and
(d) the "Cold Mill Peripherals Project." 8 Instead of contracting out to an outside or independent contractor the tasks of constructing the buildings with
related civil and electrical works that would house the new machinery and equipment, the installation of the newly acquired mill or plant machinery and
equipment and the commissioning of such machinery and equipment, NSC opted to execute and carry out its Five Yeear Expansion Projects "in house,"
as it were, by administration. The carrying out of the Five Year Expansion Program (or more precisely, each of its component projects) constitutes a
distinct undertaking identifiable from the ordinary business and activity of NSC. Each component project, of course, begins and ends at specified times,
which had already been determined by the time petitioners were engaged. We also note that NSC did the work here involved — the construction of
buildings and civil and electrical works, installation of machinery and equipment and the commissioning of such machinery — only for itself. Private
respondent NSC was not in the business of constructing buildings and installing plant machinery for the general business community, i.e., for unrelated,
third party, corporations. NSC did not hold itself out to the public as a construction company or as an engineering corporation.

Whichever type of project employment is found in a particular case, a common basic requisite is that 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.

Thus, the particular component projects embraced in the Five Year Expansion Program, to which petitioners were assigned, were distinguishable from the
regular or ordinary business of NSC which, of course, is the production or making and marketing of steel products. During the time petitioners rendered
services to NSC, their work was limited to one or another of the specific component projects which made up the FAYEP I and II. There is nothing in the
record to show that petitioners were hired for, or in fact assigned to, other purposes, e.g., for operating or maintaining the old, or previously installed and
commissioned, steel-making machinery and equipment, or for selling the finished steel products.

We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the petitioners were indeed "project employees:"

It is well established by the facts and evidence on record that herein 13 complainants were hired and engaged for specific activities or undertaking the
period of which has been determined at time of hiring or engagement. It is of public knowledge and which this Commission can safely take judicial notice
that the expansion program (FAYEP) of respondent NSC consist of various phases [of] project components which are being executed or implemented
independently or simultaneously from each other . . .

In other words, the employment of each "project worker" is dependent and co-terminous with the completion or termination of the specific activity or
undertaking [for which] he was hired which has been pre-determined at the time of engagement. Since, there is no showing that they (13 complainants)
were engaged to perform work-related activities to the business of respondent which is steel-making, there is no logical and legal sense of applying to
them the proviso under the second paragraph of Article 280 of the Labor Code, as amended.

xxx xxx xxx

The present case therefore strictly falls under the definition of "project employees" on paragraph one of Article 280 of the Labor Code, as amended.
Moreover, it has been held that the length of service of a project employee is not the controlling test of employment tenure but whether or not "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". (See Hilario Rada v. NLRC, G.R. No. 96078, January 9, 1992; and Sandoval Shipping, Inc. v. NLRC, 136 SCRA 674
(1985).

Petitioners next claim that their service to NSC of more than six (6) years should qualify them as regular employees. We believe 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. 10 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.

In the case of Mercado, Sr. vs. National Labor Relations Commission, 11 this Court ruled that the proviso in the second paragraph of Article 280 relates
only to casual employees and is not applicable to those who fall within the definition of said Article's first paragraph, i.e., project employees. The familiar
grammatical rule is that a proviso is to be construed with reference to the immediately preceding part of the provision to which it is attached, and not to
other sections thereof, unless the clear legislative intent is to restrict or qualify not only the phrase immediately preceding the proviso but also earlier
provisions of the statute or even the statute itself as a whole. No such intent is observable in Article 280 of the Labor Code, which has been quoted earlier.

ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby DISMISSED for lack of merit. The Resolutions of the NLRC dated 8 January
1993 and 15 February 1993 are hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.

[G.R. No. 116781. September 5, 1997]

TOMAS LAO CONSTRUCTION, LVM CONSTRUCTION CORPORATION, THOMAS and JAMES DEVELOPERS (PHIL.), INC., Petitioners, v. NATIONAL
LABOR RELATIONS COMMISSION, Respondents.

BELLOSILLO, J.:

From October to December 1990 private respondents individually filed complaints for illegal dismissal against petitioners with the National Labor Relations
Commission Regional Arbitration Branch No. VIII (NLRC - RAB VIII), Tacloban City. Alleging that they were hired for various periods as construction
workers in different capacities they described their contractual terms as follows: (a) Roberto Labendia, general construction foreman, from 1971 to 17
October 1990 at P3,700/month; (b) Narciso Adan, tireman, from October 1981 to November 1990 at P75.00/day; (c) Florencio Gomez, welder, from July
1983 to July 1990 at P60.00/day; (d) Ernesto Bagatsolon leadman/checker, from June 1982 to October 1990 at P2,800/month; (e) Salvador Babon,
clerk/timekeeper/paymaster, from June 1982 to October 1990 at P3,200/month; (f) Paterno Bisnar, road grader operator, from January 1979 to October
1990 at P105/day; (g) Cipriano Bernales, instrument man, from February 1980 to November 1990 at P3,200/month; (h) Angel Mabulay, Sr., dump truck
driver, from August 1974 to October 1990 at P90/day; (I) Leo Surigao, payloader operator, from March 1975 to January 1978 at P100/day; (J) Mario
Labendia, Sr. surveyor/foreman, from August 1971 to July 1990 at P2,900/month; and, (k) Roque Morillo, company watchman, from August 1983 to
October 1990 at P3,200/month.

Within the periods of their respective employments, they alternately worked for petitioners Tomas Lao Corporation (TLC), Thomas and James Developers
(T&J) and LVM Construction Corporation (LVM), altogether informally referred to as the Lao Group of Companies, the three (3) entities comprising a
business conglomerate exclusively controlled and managed by members of the Lao family.

TLC, T&J and LVM are engaged in the construction of public roads and bridges. Under joint venture agreements they entered into among each other, they
would undertake their projects either simultaneously or successively so that, whenever necessary, they would lease tools and equipment to one another.
Each one would also allow the utilization of their employees by the other two (2). With this arrangement, workers were transferred whenever necessary to
on-going projects of the same company or of the others, or were rehired after the completion of the project or project phase to which they were assigned.
Soon after, however, TLC ceased its operations2 while T&J and LVM stayed on.

Sometime in 1989 Andres Lao, Managing Director of LVM and President of T&J,3 issued a memorandum4 requiring all workers and company personnel
to sign employment contract forms and clearances which were issued on 1 July 1989 but antedated 10 January 1989. These were to be used allegedly for
audit purposes pursuant to a joint venture agreement between LVM and T&J. To ensure compliance with the directive, the company ordered the
withholding of the salary of any employee who refused to sign. Quite notably, the contracts expressly described the construction workers as project
employees whose employments were for a definite period, i.e., upon the expiration of the contract period or the completion of the project for which the
workers was hired.

Except for Florencio Gomez5 all private respondents refused to sign contending that this scheme was designed by their employer to downgrade their
status from regular employees to mere project employees. Resultantly, their salaries were withheld. They were also required to explain why their services
should not be terminated for violating company rules and warned that failure to satisfactorily explain would be construed as disinterest in continued
employment with the company. Since the workers stood firm in their refusal to comply with the directives their services were terminated.

NLRC RAB VIII dismissed the complaints lodged before it, finding that private respondents were project employees whose employments could be
terminated upon completion of the projects or project phase for which they were hired. It upheld petitioners contention that the execution of their
employment contracts was to forestall the eventuality of being compelled to pay the workers their salaries even if there was no more work to be done due
to the completion of the projects or project phases. The labor court however granted each employee a separation pay of P6,435.00 computed at one-half
(1/2) month salary for every year of service, uniformly rounded at five (5) years.

The decision of Labor Arbiter Gabino A. Velasquez, Jr., was reversed on appeal by the Fourth Division of the National Labor Relations Commission
(NLRC) of Cebu City which found that private respondents were regular employees who were dismissed without just cause and denied due process. The
NLRC also overruled the fixing by the Labor Arbiter of the term of employment of complainants uniformly at five (5) years since the periods of employment
of the construction workers as alleged in their complaints were never refuted by petitioners. In granting monetary awards to complainants, NLRC
disregarded the veil of corporate fiction and treated the three (3) corporations as forming only one entity on the basis of the admission of petitioners that
the three (3) operated as one (1), intermingling and commingling all its resources, including manpower facility.

Petitioners now lay their cause before us and assign the following errors: (a) NLRC erred in classifying the employees as regular instead of project
employees; (b) assuming that the workers were regular employees, NLRC failed to consider that they were terminated for cause; (c) assuming further that
the employees were illegally dismissed, NLRC erred in awarding back wages in excess of three (3) years; and, (d) assuming finally that the decision is
correct, NLRC erred when it pierced the veil of corporate personality of petitioner-corporations.

The main thrust of petitioners expostulation is that respondents have no valid cause to complain about their employment contracts since these documents
merely formalized their status as project employees. They cite Policy Instruction No. 20 of the Department of Labor which defines project employees as
those employed in connection with a particular construction project, adding that the ruling in Sandoval Shipyards, Inc. v. NLRC8 applies squarely to the
instant case because there the Court declared that the employment of project employees is co-terminous with the completion of the project regardless of
the number of projects in which they have worked. And as their employment is one for a definite period, they are not entitled to separation pay nor is their
employer required to obtain clearance from the Secretary of Labor in connection with their termination. Petitioners thus argue that their dismissal from the
service of private respondents was legal since the projects for which they were hired had already been completed. As additional ground, they claim that
Mario Labendia and Roberto Labendia had absented themselves without leave giving management no choice but to sever their employment.

We are not convinced. The principal test in determining whether particular employees are project employees distinguished from regular employees is
whether the project employees are assigned to carry out specific project or undertaking, the duration (and scope) of which are specified at the time the
employees are engaged for the project. Project in the realm of business and industry refers to a particular job or undertaking that is within the regular or
usual business of employer, but which is distinct and separate and identifiable as such from the undertakings of the company. Such job or undertaking
begins and ends at determined or determinable times.

While it may be allowed that in the instant case the workers were initially hired for specific projects or undertakings of the company and hence can be
classified as project employees, the repeated re-hiring and the continuing need for their services over a long span of time (the shortest, at seven [7] years)
have undeniably made them regular employees. Thus, we held that where the employment of project employees is extended long after the supposed
project has been finished, the employees are removed from the scope of project employees and considered regular employees.

While length of time may not be a controlling test for project employment, it can be a strong factor in determining whether the employee was hired for a
specific undertaking or in fact tasked to perform functions which are vital, necessary and indispensable to the usual business or trade of the employer. In
the case at bar, private respondents had already gone through the status of project employees. But their employments became non-coterminous with
specific projects when they started to be continuously re-hireddue to the demands of petitioners business and were re-engaged for many more projects
without interruption. We note petitioners own admission -

[t]hese construction projects have been prosecuted by either of the three petitioners, either individually or in a joint venture with one another. Likewise,
these construction projects have been prosecuted by either of the three petitioners, either simultaneously, one construction project overlapping another
and/or one project commencing immediately after another project has been completed or terminated. Perhaps because of their capacity to prosecute
government projects and their good record and performance, at least one of the three petitioners had an on-going construction project and/or one of the
three petitioners construction project overlapped that of another.

The denial by petitioners of the existence of a work pool in the company because their projects were not continuous is amply belied by petitioners
themselves who admit that -

All the employees of either of the three petitioners were actually assigned to a particular project to remain in said project until the completion or
termination of that project. However, after the completion of that particular project or when their services are no longer needed in the project or particular
phase of the project where they were assigned, they were transferred and rehired in another on-going project.

A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the
business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this
set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer
and employee for it prevents the unjust situation of coddling labor at the expense of capital and at the same time enables the workers to attain the status
of regular employees. Clearly, the continuous rehiring of the same set of employees within the framework of the Lao Group of Companies is strongly
indicative that private respondents were an integral part of a work pool from which petitioners drew its workers for its various projects.

In a final attempt to convince the Court that private respondents were indeed project employees, petitioners point out that the workers were not regularly
maintained in the payroll and were free to offer their services to other companies when there were no on-going projects. This argument however cannot
defeat the workers status of regularity. We apply by analogy the case of Industrial-Commercial-Agricultural Workers Organization v. CIR 13 which deals
with regular seasonal employees. There we held -

That during the temporary layoff the laborers are free to seek other employment is natural, since the laborers are not being paid, yet must find means of
support. A period during which the Central is forced to suspend or cease operation for a time xxx should not mean starvation for employees and their
families.

Truly, the cessation of construction activities at the end of every project is a foreseeable suspension of work. Of course, no compensation can be
demanded from the employer because the stoppage of operations at the end of a project and before the start of a new one is regular and expected by
both parties to the labor relations. Similar to the case of regular seasonal employees, the employment relation is not severed by merely being suspended.
14 The employees are, strictly speaking, not separated from services but merely on leave of absence without pay until they are reemployed. 15 Thus we
cannot affirm the argument that non-payment of salary or non-inclusion in the payroll and the opportunity to seek other employment denote project
employment.

Contrary to petitioners assertion, our ruling in Sandoval Shipyards is inapplicable considering the special circumstances attendant to the present case. In
Sandoval, the hiring of construction workers, unlike in the instant case, was intermittent and not continuous for the shipyard merely accepts contracts for
shipbuilding or for repair of vessels from third parties and, only on occasions when it has work contract of this nature that it hires workers to do the job
which, needless to say, lasts only for less than a year or longer. 16chanroblesvirtuallawlibrary
Moreover, if private respondents were indeed employed as project employees, petitioners should have submitted a report of termination to the nearest
public employment office every time their employment was terminated due to completion of each construction project. 17 The records show that they did
not. Policy Instruction No. 20 is explicit that employers of project employees are exempted from the clearance requirement but not from the submission of
termination report. We have consistently held that failure of the employer to file termination reports after every project completion proves that the
employees are not project employees. 18 Nowhere in the New Labor Code is it provided that the reportorial requirement is dispensed with. The fact is that
Department Order No. 19 superseding Policy Instruction No. 20 expressly provides that the report of termination is one of the indicators of project
employment.

We agree with the NLRC that the execution of the project employment contracts was farcical. 20 Obviously, the contracts were a scheme of petitioners to
prevent respondents from being considered as regular employees. It imposed time frames into an otherwise flexible employment period of private
respondents some of whom were employed as far back as 1969. Clearly, here was an attempt to circumvent labor laws on tenurial security. Settled is the
rule that when periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to
public morals, good customs or public order. 21 Worth noting is that petitioners had engaged in various joint venture agreements in the past without
having to draft project employment contracts. That they would require execution of employment contracts and waivers at this point, ostensibly to be used
for audit purposes, is a suspect excuse, considering that petitioners enforced the directive by withholding the salary of any employee who spurned the
order.

We likewise reject petitioners justification in re-hiring private respondents i.e., that it is much cheaper and economical to re-hire or re-employ the same
workers than to train a new set of employees. It is precisely because of this cost-saving benefit to the employer that the law deems it fair that the
employees be given a regular status. We need not belabor this point.

The NLRC was correct in finding that the workers were illegally dismissed. The rule is that in effecting a valid dismissal, the mandatory requirements of
substantive and procedural due process must be strictly complied with. These were wanting in the present case. Private respondents were dismissed
allegedly because of insubordination or blatant refusal to comply with a lawful directive of their employer. But willful disobedience of the employers lawful
orders as a just cause for the dismissal of the employees envisages the concurrence of at least two (2) requisites: (a) the employees assailed conduct
must have been willful or intentional, the willfulness being characterized by a wrongful and perverse attitude; and, (b) the order violated must have been
reasonable, lawful, made known to the employee and must pertain to the duties which he has been engaged to discharge. 22 The refusal of private
respondents was willful but not in the sense of plain and perverse insubordination. It was dictated by necessity and justifiable reasons - for what appeared
to be an innocent memorandum was actually a veiled attempt to deny them their rightful status as regular employees. The workers therefore had no
option but to disobey the directive which they deemed unreasonable and unlawful because it would result in their being downsized to mere project
workers. This act of self-preservation should not merit them the extreme penalty of dismissal.

The allegation of petitioners that private respondents are guilty of abandonment of duty is without merit. The elements of abandonment are: (a) failure to
report for work or absence without valid or justifiable reason, and, (b) a clear intention to sever the employer-employee relationship, with the second
element as the more determinative factor manifested by some overt acts. 23 In this case, private respondents Roberto Labendia and Mario Labendia were
forced to leave their respective duties because their salaries were withheld. They could not simply sit idly and allow their families to starve. They had to
seek employment elsewhere, albeit temporarily, in order to survive. On the other hand, it would be the height of injustice to validate abandonment in this
particular case as a ground for dismissal of respondents thereby making petitioners benefit from a gross and unjust situation which they themselves
created. 24 Private respondents did not intend to sever ties with petitioner and permanently abandon their jobs; otherwise, they would not have filed this
complaint for illegal dismissal.

Petitioners submit that since private respondents were only project employees, they are not entitled to security of tenure. This is incorrect. In Archbuild
Masters and Construction, Inc. v. NLRC 26 we held -

x x x a project employee hired for a specific task also enjoys security of tenure. A termination of his employment must be for a lawful cause and must be
done in a manner which affords him the proper notice and hearing x x x x To allow employers to exercise their prerogative to terminate a project workers
employment based on gratuitous assertions of project completion would destroy the constitutionally protected right of labor to security of tenure (emphasis
supplied).

The burden of proving that an employee has been lawfully dismissed therefore lies with the employer. In the case at bar, the assertions of petitioners were
self-serving and insufficient to substantiate their claim of proximate project completion. The services of the employees were terminated not because of
contract expiration but as sanction for their refusal to sign the project employment forms and quitclaims.

Finding that the dismissal was without just cause, we find it unnecessary to dwell on the non-observance of procedural due process. Suffice it to state that
private respondents were not priorly notified of their impending dismissal and that they were not provided ample opportunity to defend themselves.

Petitioners charge as erroneous the grant to private respondents by NLRC of back wages in excess of three (3) years or, in the alternative, to an award of
separation pay if reinstatement is no longer feasible.

We disagree. Since the illegal dismissal was made in 1990 or after the effectivity of the amendatory provision of RA No. 6715 on 21 March 1989, private
respondents back wages should be computed on the basis of Art. 279 of the Labor Code which states that (a)n employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full back wages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
Conformably with our ruling in Bustamante v. NLRC 27 the illegally dismissed employees are entitled to full back wages, undiminished by earnings
derived elsewhere during the period of their illegal dismissal. In the event that reinstatement is no longer feasible, back wages shall be computed from the
time of illegal termination until the time of the finality of the decision. 28 The award shall be based on the documents submitted by private respondents, i.e.
affidavits, SSS and Medicare documents, since petitioners failed to adduce competent evidence to the contrary. The separation pay shall be equivalent to
"at least one (1) month salary or to one (1) month salary for every year of service, whichever is higher, a fraction of at least six (6) months being
considered as one whole year."

Finally, public respondent NLRC did not err in disregarding the veil of separate corporate personality and holding petitioners jointly and severally liable for
private respondents back wages and separation pay. The records disclose that the three (3) corporations were in fact substantially owned and controlled
by members of the Lao family composed of Lao Hian Beng alias Tomas Lao, Chiu Siok Lian (wife of Tomas Lao), Andrew C. Lao, Lao Y. Heng, Vicente
Lao Chua, Lao E. Tin, Emmanuel Lao and Ismaelita Maluto. A majority of the outstanding shares of stock in LVM and T&J is owned by the Lao family.
T&J is 100% owned by the Laos as reflected in its Articles of Incorporation. The Lao Group of Companies therefore is a closed corporation where the
incorporators and directors belong to a single family. Lao Hian Beng is the same Tomas Lao who owns Tomas Lao Corporation and is the majority
stockholder of T&J. Andrew C. Lao is the Managing Director of LVM Construction, and President and Managing Director of the Lao Group of Companies.
Petitioners are engaged in the same line of business under one management and use the same equipment including manpower services. Where it
appears that [three] business enterprises are owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect
the rights of third persons, disregard the legal fiction that the [three] corporations are distinct entities, and treat them as identical.

Consonant with our earlier ruling, 31 we hold that the liability of petitioners extends to the responsible officers acting in the interest of the corporations. In
view of the peculiar circumstances of this case, we disregard the separate personalities of the three (3) corporations and at the same time declare the
members of the corporations jointly and severally liable with the corporations for the monetary awards due to private respondents. It should always be
borne in mind that the fiction of law that a corporation as a juridical entity has a distinct and separate personality was envisaged for convenience and to
serve justice; therefore it should not be used as a subterfuge to commit injustice and circumvent labor laws.

WHEREFORE, the petition is DENIED and the decision of the National Labor Relations Commission dated 05 August 1994 is AFFIRMED. Petitioners are
ordered to reinstate private respondents to their former positions without loss of seniority rights and other privileges with full back wages, inclusive of
allowances, computed from the time compensation was withheld up to the time of actual reinstatement. In the event that reinstatement is no longer
feasible, petitioners are directed to pay private respondents separation pay equivalent to one month salary for every year of service, a fraction of at least
six (6) months being considered one (1) year in the computation thereof, and full back wages computed from the time compensation was withheld until the
finality of this decision. All other claims of the parties are DISMISSED for lack of merit. Costs against petitioners.

[G.R. No. 114734. March 31, 2000.]

VIVIAN Y. IMBUIDO, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION, Respondents.

DECISION

BUENA, J.:

This special civil action for certiorari seeks to set aside the Decision 1 of the National Labor Relations Commission (NLRC) promulgated on September 27,
1993 and its Order dated January 11, 1994, which denied petitioner’s motion for reconsideration.

Petitioner was employed as a data encoder by private respondent International Information Services, Inc., a domestic corporation engaged in the
business of data encoding and keypunching, from August 26, 1988 until October 18, 1991 when her services were terminated. From August 26, 1988 until
October 18, 1991, petitioner entered into thirteen (13) separate employment contracts with private respondent, each contract lasting only for a period of
three (3) months. Aside from the basic hourly rate, specific job contract number and period of employment, each contract contains the following terms and
conditions:

"a. This Contract is for a specific project/job contract only and shall be effective for the period covered as above-mentioned unless sooner terminated
when the job contract is completed earlier or withdrawn by client, or when employee is dismissed for just and lawful causes provided by law The
happening of any of these events will automatically terminate this contract of employment.

"b. Subject shall abide with the Company’s rules and regulations for its employees attached herein to form an integral part hereof.

"c. The nature of your job may require you to render overtime work with pay so as not to disrupt the Company’s commitment of scheduled delivery dates
made on said job contract."

In September 1991, petitioner and twelve (12) other employees of private respondent allegedly agreed to the filing of a petition for certification election
involving the rank-and-file employees of private Respondent. 3 Thus, on October 8, 1991, Lakas Manggagawa sa Pilipinas (LAKAS) filed a petition for
certification election with the Bureau of Labor Relations (BLR), docketed as NCR-OD-M-9110-128.

Subsequently, on October 18, 1991, petitioner received a termination letter from Edna Kasilag, Administrative Officer of private respondent, allegedly "due
to low volume of work."
Thus, on May 25, 1992, petitioner filed a complaint for illegal dismissal with prayer for service incentive leave pay and 13th month differential pay, with the
National Labor Relations Commission, National Capital Region, Arbitration Branch, docketed as NLRC-NCR Case No. 05--02912-92.

In her position paper dated August 3, 1992 and filed before labor arbiter Raul T. Aquino, petitioner alleged that her employment was terminated not due to
the alleged low volume of work but because she "signed a petition for certification election among the rank and file employees of respondents," thus
charging private respondent with committing unfair labor practices. Petitioner further complained of non-payment of service incentive leave benefits and
underpayment of 13th month pay.

On the other hand, private respondent, in its position paper filed on July 16, 1992, maintained that it had valid reasons to terminate petitioners
employment and disclaimed any knowledge of the existence or formation of a union among its rank-and-file employees at the time petitioner’s services
were terminated. 8 Private respondent stressed that its business." . . relies heavily on companies availing of its services. Its retention by client companies
with particular emphasis on data encoding is on a project to project basis," 9 usually lasting for a period of "two (2) to five (5) months." Private respondent
further argued that petitioner’s employment was for a "specific project with a specified period of engagement." According to private respondent,." . . the
certainty of the expiration of complainant’s engagement has been determined at the time of their (sic) engagement (until 27 November 1991) or when the
project is earlier completed or when the client withdraws," as provided in the contract. 10 "The happening of the second event [completion of the project]
has materialized, thus, her contract of employment is deemed terminated per the Brent School ruling." 11 Finally, private respondent averred that
petitioner’s "claims for non-payment of overtime time (sic) and service incentive leave [pay] are without factual and legal basis."

In a decision dated August 25, 1992, labor arbiter Raul T. Aquino, ruled in favor of petitioner and accordingly ordered her reinstatement without loss of
seniority rights and privileges, and the payment of backwages and service incentive leave pay. The dispositive part of the said decision reads:

"WHEREFORE, responsive to the foregoing, judgment is hereby rendered ordering respondents to immediately reinstate complainant [petitioner herein]
as a regular employee to her former position without loss of seniority rights and privileges and to pay backwages from the time of dismissal up to the date
of this decision, the same to continue until complainant [’s] [petitioner herein] actual reinstatement from (sic) the service. Respondents are likewise
ordered to pay complainant [petitioner herein] service incentive leave pay computed as follows:

Backwages:

10/18/91 - 8/25/92 = 10.23 mos.

P118.00 x 26 x 10.23 mos. = P31, 385.64

Service Incentive Leave Pay

1989=P89.00 x 5 days=P445.00

1990 =106 x 5 days = P530.00

1991 =118 x 5 days = P590 00

————

P1,565.00

Total P32,950.64

=========

SO ORDERED."

In his decision, the labor arbiter found petitioner to be a regular employee, ruling that [e]ven if herein complainant [petitioner herein] had been obstensively
(sic) hired for a fixed period or for a specific undertaking, she should be considered as [a] regular] employee of the respondents in conformity with the
provisions (sic) laid down under Article 280 of the Labor Code," 14 after finding that." . . [i]t is crystal clear that herein complainant [petitioner herein]
performed a job which are (sic) usually necessary or desirable in the usual business of respondent [s]." 15 The labor arbiter further denounced" ...the
purpose behind the series of contracts which respondents required complainant to execute as a condition of employment was to evade the true intent and
spirit of the labor laws for the working men . . ." 16 Furthermore, the labor arbiter concluded that petitioner was illegally dismissed because the alleged
reason for her termination, that is, low volume of work, is "not among the just causes for termination recognized by law," 17 hence, he ordered her
immediate reinstatement without loss of seniority rights and with full backwages. With regard to the service incentive leave pay, the labor arbiter decided .
. . to grant the same for failure of the respondents to fully controvert said claims." 18 Lastly, the labor arbiter rejected petitioner’s claim for 13th month pay"
...since complainant [petitioner herein] failed to fully substantiate and argued (sic) the same."

On appeal, the NLRC reversed the decision of the labor arbiter in a decision 20 promulgated on September 27, 1993, the dispositive part of which reads:

"WHEREFORE, the appealed decision is hereby set aside. The complaint for illegal dismissal is hereby dismissed for being without merit. Complainant’s
[petitioner herein] claim for service incentive leave pay is hereby remanded for further arbitration.
SO ORDERED."

The NLRC ruled that" [t]here is no question that the complainant [petitioner herein], viewed in relation to said Article 280 of the [Labor] Code, is a regular
employee judging from the function and/or work for which she was hired. . . . But this does not necessarily mean that the complainant [petitioner herein]
has to be guaranteed a tenurial security beyond the period for which she was hired." 22 The NLRC held that ‘. . . the complainant [petitioner herein], while
hired as a regular worker, is statutorily guaranteed, in her tenurial security, only up to the time the specific project for which she was hired is completed."
23 Hence, the NLRC concluded that" [w]ith the specific project "at RCBC 014" admittedly completed, the complainant [petitioner herein] has therefore no
valid basis in charging illegal dismissal for her concomitant (sic) dislocation."

In an Order dated January 11, 1994, the NLRC denied petitioner’s motion for reconsideration.

In this petition for certiorari, Petitioner, for and in her behalf, argues that (1) the public respondent "committed grave abuse of discretion when it ignored
the findings of Labor Arbiter Raul Aquino based on the evidence presented directly before him, and when it made findings of fact that are contrary to or
not supported by evidence," 26 (2)" [p]etitioner was a "regular employee," NOT a "project employee" as found by public respondent NLRC," 27 (3)" [t]he
termination of petition (sic) was tainted with unfair labor practice," 28 and (4) the public respondent "committed grave abuse of discretion in remanding the
awarded service incentive leave pay for further arbitration."

The petition is impressed with merit.

We agree with the findings of the NLRC that petitioner is a project employee. The principal test for determining whether an employee is a project
employee or a regular employee is whether the project employee was assigned to carry out a specific project or undertaking, the duration and scope of
which were specified at the time the employee was engaged for that project. 30 A project employee is one whose employment has been fixed for a
specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the employment is for the duration of the season. 31 In the instant case, petitioner was engaged
to perform activities which were usually necessary or desirable in the usual business or trade of the employer, as admittedly, petitioner worked as a data
encoder for private respondent a corporation engaged in the business of data encoding and keypunching, and her employment was fixed for a specific
project or undertaking the completion or termination of which had been determined at the time of her engagement, as may be observed from the series of
employment contracts 32 between petitioner and private respondent, all of which contained a designation of the specific job contract and a specific period
of employment.

However, even as we concur with the NLRC’s findings that petitioner is a project employee, we have reached a different conclusion. In the recent case of
Maraguinot, Jr. v. NLRC, 33 we held that" [a] project employee or a member of a work pool may acquire the status of a regular employee when the
following concur:

1) There is a continuous rehiring of project employees even after [the] cessation of a project; and

2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer."

The evidence on record reveals that petitioner was employed by private respondent as a data encoder, performing activities which are usually necessary
or desirable in the usual business or trade of her employer, continuously for a period of more than three (3) years, from August 26, 1988 to October 18,
1991 36 and contracted for a total of thirteen (13) successive projects. We have previously ruled that" [h]owever, the length of time during which the
employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment." 37 Based on the foregoing, we conclude that
petitioner has attained the status of a regular employee of private Respondent.

At this point, we reiterate with emphasis that:

"At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty to re-hire a project employee even after
completion of the project for which he was hired. The import of this decision is not to impose a positive and sweeping obligation upon the employer to re-
hire project employees. What this decision merely accomplishes is a judicial recognition of the employment status of a project or work pool employee in
accordance with what is fait accompli, i.e., the continuous re-hiring by the employer of project or work pool employees who perform tasks necessary or
desirable to the employers usual business or trade. Let it not be said that this decision "coddles" labor, for as Lao 38 has ruled, project or work pool
employees who have gained the status of regular employees are subject to the "no work-no pay" principle, to repeat:

"A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the
business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this
set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer
and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the same time enables the workers to attain the status
of regular employees.

"The Court’s ruling here is meant precisely to give life to the constitutional policy of strengthening the labor sector, but, we stress, not at the expense of
management. Lest it be misunderstood, this ruling does not mean that simply because an employee is a project or work pool employee even outside the
construction industry, he is deemed, ipso jure, a regular employee. All that we hold today is that once a project or work pool employee has been: 1)
continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary
and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee, pursuant to Article 280 of the
Labor Code and jurisprudence. To rule otherwise would allow circumvention of labor laws in industries not falling within the ambit of Policy Instruction No.
20/Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by project or work pool employees who have already gained
the status of regular employees by the employer’s conduct." 39 (Emphasis supplied).

Being a regular employee, petitioner is entitled to security of tenure and could only be dismissed for a just or authorized cause, as provided in Article 279
of the Labor Code, as amended:

"ARTICLE 279. Security of Tenure. — In cases of regular employment, the employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement."

The alleged causes of petitioner’s dismissal (low volume of work: and belatedly, completion of project) are not valid causes for dismissal under Articles
282 and 283 of the Labor Code. Thus, petitioner is entitled to reinstatement without loss of seniority rights and other privileges, and to her full backwages,
inclusive of allowances, and to her other benefits or their monetary equivalent computed from the time her compensation was withheld from her up to the
time of her actual reinstatement. However, complying with the principles of "suspension of work’’ and "no work, no pay" between the end of one project
and the start of a new one, in computing petitioner’s backwages, the amounts corresponding to what could have been earned during the periods from the
date petitioner was dismissed until her reinstatement when private respondent was not undertaking any project, should be deducted.

With regard to petitioner’s claim for service incentive leave pay, we agree with the labor arbiter that petitioner is entitled to service incentive leave pay, as
provided in Article 95 of the Labor Code, which reads:

"ARTICLE 95. Right to service incentive leave. —

(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.

Having already worked for more than three (3) years at the time of her unwarranted dismissal, petitioner is undoubtedly entitled to service incentive leave
benefits, computed from 1989 until the date of her actual reinstatement. As we ruled in the recent case of Fernandez v. NLRC, 40" [s]ince a service
incentive leave is clearly demandable after one year of service — whether continuous or broken — or its equivalent period, and it is one of the "benefits"
which would have accrued if an employee was not otherwise illegally dismissed, it is fair and legal that its; computation should be up to the date of
reinstatement as provided under Section [Article] 279 of the Labor Code, as amended, which reads:

"ARTICLE 279. Security of Tenure. — An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation is withheld from him up to the time of his actual reinstatement."

WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations Commission in NLRC NCR CA No. 003845-92
dated September 27, 1993, as well as its Order dated January 11, 1994, are hereby ANNULLED and SET ASIDE for having been rendered with grave
abuse of discretion and the decision of the Labor Arbiter in NLRC NCR Case No. 05-02912-92 is REINSTATED) with MODIFICATION as above-stated,
with regard to the computation of back wages and service incentive leave pay.

SO ORDERED.

[G.R. No. 114671. November 24, 1999.]

AURELIO SALINAS, JR., ARMANDO SAMULDE, ALEJANDRO ALONZO and AVELINO CORTEZ, Petitioner, v. NATIONAL LABOR RELATIONS
COMMISSION and ATLANTIC GULF AND PACIFIC CO. of MANILA, INC., Respondents.

DECISION

PURISIMA, J.:

This petition for review should have been properly initiated and is therefore treated as a special civil action for certiorari under Rule 65. The herein
petitioners, Aurelio Salinas, Jr., Armando Samulde, Alejandro Alonzo and Avelino Cortez, assail the Resolution 1 dated January 31, 1994 of the National
Labor Relations Commission (NLRC, for brevity) which dismissed their complaint, and affirming, in effect, the Decision 2 of the Labor Arbiter declaring
them project employees and not regular employees of respondent Atlantic Gulf and Pacific Company of Manila, Inc. (hereinafter referred to as AG & P).

Petitioner Alejandro Alonzo had been employed with AG & P in the several construction projects of the latter from 1982 to 1989, in the course of which he
essentially performed the same job, initially as a laborer, and later as bulk cement operator, bulk cement plant/carrier operator, and crane driver. Under
similar circumstances, petitioner Avelino Cortez had been employed with AG & P from 1979 to 1988 as carpenter/forklift operator; petitioner Armando
Samulde served as lubeman/stationary operator from 1982 to 1989; while petitioner Aurelio Salinas, Jr., used to work as carpenter/finishing carpenter
from 1983 to 1988.

On May 29, June 6, July 4 and July 5 of 1989, respectively, petitioners Salinas, Samulde, Alonzo and Cortez filed against the respondent corporation
separate complaints for illegal dismissal, which cases were consolidated and jointly heard by Labor Arbiter Manuel P. Asuncion.
In his Order of dismissal, Labor Arbiter Asuncion found that petitioners are project employees whose work contracts with AG & P indicate that they were
employed in such category; that they have been assigned to different work projects, not just to one and that their work relation with AG & P, relative to
termination, is governed by Policy Instruction No. 20.

On appeal, NLRC affirmed the said findings of the Labor Arbiter and dismissed the complaint for want of merit, ratiocinating thus:

"In the first place, examining the contract of employment of complainants herein presented as evidence by respondent, we found that a) they were
employed for a specific project and for a specific period; b) that they were assigned to different projects and not just one as earlier claimed by them. In
short, from the evidence adduced by respondent which complainants miserably failed to rebut with their one page position paper containing sweeping
statements, there appears to be no doubt that they are project employees hired for a specific project. Their subsequent separation from service, therefore,
as a result of the completion of the project or its phase did not result in illegal dismissal."

Dissatisfied with the aforesaid disposition below, petitioners found their way to this Court via the present petition posing as the sole issue whether they are
regular or project employee.

Petitioners principally argue that following the ruling in the Caramol case, 4 NLRC gravely erred in dismissing their complaint and declaring them project
employees. According to them, they had been covered by a number of contracts renewed continuously, with periods ranging from five (5) to nine (9)
years, and they performed the same kind of work through out their employment, and such was usually necessary and desirable in the trade or business of
the respondent corporation; and their work did not end on a project-to-project basis, although the contrary was made to appear by the employer through
the signing of separate employment contracts.

Petitioners emphatically stressed that no report even a single one, was ever submitted by the respondent corporation to the nearest public employment
office every time petitioners’ employment was terminated pursuant to Policy Instruction No. 20. There being no report, NLRC’s insistence that they
(petitioners) were respondents corporation’s project employees is without any legal basis; petitioners maintain.

In its Manifestation and Motion in Lieu of Comment, 5 the Office of the Solicitor General agrees with the contention of petitioners, to wit:

"5. Thus, since petitioners had continuously performed the same kind of work during the whole course of their employment . . . their jobs were indeed
necessary and desirable to the private respondent’s main line of business. And this should be the main consideration in classifying the nature of
employment afforded the herein workers.

"6. Furthermore, if private respondent really employed the herein petitioners on a project-to-project basis, it should have submitted a series of reports to
the nearest public employment office every time the employment of the workers were terminated, in line with Policy Instruction No. 20 of the Department
of Labor. (Citation omitted) Private respondent miserably failed to do its obligation under the set-up. This failure effectively belies its assertion that herein
petitioners are project employees."

Respondent corporation preliminary contends that the present petition for review should have been brought under Rule 65, Rule 45 not being the proper
remedy. Assuming arguendo that the petition should be treated under Rule 65, the petition would still fail for failure of the petitioners to present a motion
for reconsideration. It maintains that the instant petition should not be given due course due to non-exhaustion of administrative remedies as required by
Section 14, Rule VII (sic). It theorizes further that the questioned Resolution had already become final and executory on March 20, 1994, ten days after
receipt thereof by petitioners on March 9, 1994. Respondent corporation also claims that the present petition is insufficient in form, for failure to attach
thereto a duplicate original or certified true copies of the complainants-petitioners’ position paper, respondent corporation’s position paper, and the
questioned resolution of the public Respondent.

AG & P staunchly claims that the petitioners are mere project employees; that the questioned resolution of public respondent is supported by substantial
evidence and therefore, conclusive and binding. According to respondent corporation, factual findings of the NLRC are generally accorded not only
respect but, at times, finality as long as such findings are based on substantial evidence; that the doctrinal cases cited by petitioners have no applicability
in the case under scrutiny and that the Magante case 7 does not apply because it was therein established that Magante was never deployed from project
to project but had been regularly assigned to perform carpentry work; and on the other hand, the Baguio Country Club case 8 pertains to "entertainment-
service."

Meanwhile the De Leon case, 9 claims the respondent corporation, bolsters instead, its position since it recognizes the legality of project employment,
which is not deemed regular but a separate and distinct category, particularly in the construction business. It also attempts to create a chasm between the
doctrinal case of Caramol and the present case, allegedly due to different circumstances involved, and citing the implementation of Department Order No.
19, amending Policy Instruction No. 20, which allows the rehiring of project workers on a project-to-project basis (Section 2.3.b), and which considers the
report of termination of employment a mere "indicator" of project employment. (Section 2.2)

The petition is impressed with merit.

The present case is on all fours with the cases of Caramol v. NLRC (penned by Justice Bellosillo) and Samson v. NLRC 10 (with Justice Regalado as
ponente), both of which involved the same private Respondent.
In the case of Caramol, petitioner Rogelio Caramol was hired as a rigger by AG & P on a "project-to-project" basis but whose employment was renewed
forty-four (44) times by the latter. In holding that Caramol was a regular worker, the Court declared that the successive employment contracts where he
was made to perform the same kind of work as a rigger, would clearly manifest that Caramol’s tasks were usually necessary or desirable in the usual
trade or business of AG & P.

The Court likewise upheld the validity of a "project-to-project" basis contract of employment, provided that "the period was agreed upon knowingly and
voluntarily by the parties, without any force, duress or improper pressure brought to bear upon the employee and absent any other circumstances vitiating
his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance
whatever being exercised by the former . . . ." 12 However, this Court warned, where from the circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy, morals, good custom or
public order.

The case of Samson on the other hand, concerned Ismail Samson who served initially as a rigger, as a laborer and finally as a rigger foreman for AG & P,
for approximately 28 years. He was also covered by successive employment contracts with gaps of from one (1) day up to one (1) week. Noting the
successive contracts of employment, the repeated re-hiring, and petitioner’s performance of essentially the same tasks, this Court held that Samson was
a regular employee, because these were sufficient evidence that he was performing tasks usually necessary and desirable in the ordinary course of
business of AG & P. 14 Thus the Court pronounced:

"The mandate in Article 281 of the Labor Code, which pertinently prescribes that the ‘provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer’ and that ‘any employee who has rendered at least one
year of service, whether such service is continuous or broken shall be considered a regular employee with respect to the activity in which he is employed
and his employment shall continue while such actually exists,’ should apply in the case of petitioner (Samson)."

In the case under consideration, the Court likewise rules that failure to report the termination to Public Employment Office is a clear indication that
petitioners were not and are not project employees.

When these consolidated complaints were filed in 1989, and while petitioners were serving the respondent corporation, the rule in force then was Policy
Instruction (P.I.) No. 20, which required the employer company to report to the nearest Public Employment Office the fact of termination of project
employee as a result of the completion of the project or any phase thereof, in which he is employed. Further, Department Order (D.O.) No. 19, which was
issued on April 1, 1993, did not totally dispense with the notice requirement but, instead, made provisions therefor, and considered it as one of the
"indicators" that a worker is a project employee.

It is significant to note that the notice of termination requirement has been retained under Section 6.1 of D.O. No. 19, viz:

"6.1. Requirements of labor and social legislations. — (a) The construction company and the general contractor and/or subcontractor referred to in Sec.
2.5 shall be responsible for the workers in its employ on matters of compliance with the requirements of existing laws and regulations on hours of work,
wages, wage-related benefits, health, safety and social welfare benefits, including submission to the DOLE-Regional Office of Work Accident/Illness
Report, Monthly Report on Employees’ Terminations/Dismissals/Suspensions and other reports. . . ."

In light of the cases of Caramol and Samson and the application of P.I. No. 20 as amended by D.O. No. 19, the retroactive or prospective effect of D.O.
No. 19 is of no moment. Nevertheless, it was held in Samson v. NLRC that it is prospective in effect. Otherwise, it would be prejudicial to the employees
and would run counter to the constitutional mandate on social justice and protection to labor and furthermore, such view is more in accord with the
avowed purpose of said Department Order.

It is basic and irrefragable rule that in carrying out and interpreting the provisions of the Labor Code and its implementing regulations, the workingman’s
welfare should be the primordial and paramount consideration. The interpretation herein made gives meaning and substance to the liberal and
compassionate spirit of the law enunciated in Article 4 of Labor Code that "all doubts in the implementation and interpretation of the provisions of the
Labor Code including its implementing rules and regulations shall be resolved in favor of labor."

It is beyond cavil that petitioners had been providing the respondent corporation with continuous and uninterrupted services, except for a day or so gap in
their successive employment contracts. Their contracts had been renewed several times, with the total length of their services ranging from five (5) to nine
(9) years. Throughout the duration of their contracts, they had been performing the same kinds of work (e.g., as lubeman, bulk cement operator and
carpenter), which were usually necessary and desirable in the construction business of AG & P, its usual trade or business.

Undoubtedly, periods in the present case have been imposed to preclude the acquisition of tenurial security by petitioners, and must be struck down for
being contrary to public policy, morals, good customs or public order.

Anent the issue that the petition should have been brought under Rule 65 and not under Rule 45 of the Revised Rules of Court, this rule is not inflexible.
20 In the interest of justice, often the Court has judiciously treated as special civil actions for certiorari petitions erroneously captioned as petitions for
review on certiorari.

With regard to the issue on non-exhaustion of administrative remedies, the Court hold that the failure of petitioners to interpose a motion for
reconsideration of the NLRC decision before coming to this Court was not a fatal omission. The exhaustion of administrative remedies doctrine is not a
hard and fast rule and does not apply where the issue is purely a legal one. 22 A motion for reconsideration as a prerequisite for the bringing of an action
under Rule 65 may be dispensed with where the issue is purely of law, as in this case. 23 At all events and in the interest of substantial justice, especially
in cases involving the rights of workers, procedural lapses, if any, may be disregarded to enable the Court to examine and resolve the conflicting rights
and responsibilities of the parties. This liberality is warranted in the case at bar, especially since it has been shown that the intervention of the Court is
necessary for the protection of the herein petitioner(s).

WHEREFORE, the questioned Resolution of the NLRC in NLRC NCR Case No. 00-05-02489-89; NLRC NCR Case No. 00-06-02621-89; NLRC NCR
Case No. 00-06-02815-89; NLRC NCR Case No. 00-07-03095-89; and NLRC NCR Case No. 00-07-03129-89, is SET ASIDE and another one is hereby
ENTERED ordering the respondent corporation to reinstate petitioners without loss of seniority and with full backwages. Costs against the respondent
corporation.

[G.R. No. 119523. October 10, 1997.]

ISABELO VIOLETA and JOVITO BALTAZAR, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION, Respondents.

REGALADO, J.:

Petitioners Isabelo Violeta and Jovito Baltazar were former employees of private respondent Dasmariñas Industrial Steelworks Corporation (DISC). Their
records of service and employment, insofar as the same are material to this case, are not in dispute.

Petitioner Violeta worked in Construction and Development Corporation of the Philippines (CDCP), a sister corporation of private respondent, at its project
in CDCP Mines, Basay, Negros Oriental from December 15, 1980 up to February 15, 1981. Private respondent then hired him as Erector II at the former’s
project for Philphos in Isabel, Leyte on November 10, 1982 until the termination of the project on December 3, 1984. On January 21, 1985, he was
reassigned as Erector II for Five Stand TCM Project, with vacation and sick leaves, and was designated as a regular project employee at private
respondent’s project for National Steel Corporation (NSC) in Iligan City. After receiving a salary adjustment, he was again hired on June 6, 1989 as
Handyman for the civil works of a construction project for NSC. 1 On February 10, 1992, he was appointed for project employment, again as Handyman,
to NSC ETL #3 Civil Works by private Respondent. Due to the completion of the particular item of work he was assigned to, private respondent terminated
the services of petitioner Violeta on March 15, 1992.

Petitioner Baltazar started in the employ of CDCP on June 23, 1980. He was hired by private respondent as Lead Carpenter for project Agua VII on
October 1, 1981. Like petitioner Violeta, he was transferred from one project to another as a regular project employee. 3 On November 28, 1991, he was
hired as Leadman II in ETL #3 Civil Works by private respondent in its project for NSC, but he was separated from such employment on December 20,
1991 as a result of the completion of said item of work.

Upon their separation, petitioners executed a quitclaim wherein they declared that they have no claim against private respondent and supposedly
discharged private respondent from any liability arising from their employment.

Contending that they are already regular employees who cannot be dismissed on the ground of completion of the particular project where they are
engaged, petitioners filed two separate complaints for illegal dismissal against private respondent, with a prayer for reinstatement and back wages plus
damages.

Private respondent admitted that it is engaged in the development and construction of infrastructure projects and maintained that Violeta was hired on
June 6, 1989 to March 15, 1992 as Handyman while Baltazar was employed on June 6, 1989 to December 20, 1991 as Leadman II. 6 It argued that both
are project employees based on their declaration in their Appointments for Project Employment that they are employed only for the period and specific
works stated in their respective appointments, in addition to their admission that they are project employees who are subject to the provisions of Policy
Instruction No. 20.

Labor Arbiter Guardson A. Siao dismissed the claims of petitioners for lack of merit but ordered private respondent to grant them separation pay. 8 The
labor arbiter concluded that petitioners are project employees based on their admission that they are regular project employees. Thus, their employment
was deemed coterminous with the project for which their employer engaged them. Their separation was declared valid and their claims for reinstatement
and back wages were denied. The award of separation pay was based on the findings of the labor arbiter that it is the policy of private respondent to pay
employees who have rendered at least one year of continuous service.

Petitioners and private respondent duly appealed the ruling of the labor arbiter to respondent NLRC.

Finding petitioners to be non-project employees in its resolution dated August 17, 1994, 9 the Fifth Division of the NLRC reversed the decision of the labor
arbiter and declared petitioners’ dismissal as illegal. Private respondent company was thereafter ordered to reinstate petitioners to their former positions
without loss of seniority rights and to pay them back wages operative from the date of petitioners’ dismissal. In the event that reinstatement can no longer
be made due to any lawful supervening event, the labor tribunal directed private respondent to further give petitioners the corresponding separation pay.
Private respondent was also required to pay attorney’s fees to petitioners.

According to the NLRC, although the appointment contracts of petitioners specified fixed terms or periods of employment, the fact that they were hired
and transferred from one project to another made both petitioners non-project employees who cannot be terminated by reason alone of the completion of
the project. They were hired not only for one particular project but different projects, one after the other.
However, on November 15, 1994, 10 the same division of the NLRC reversed itself upon motion of private respondent and set aside its earlier resolution.
Reportedly, a reexamination of the same evidence before it led the labor court to conclude that the employment of petitioners in ETL #3 Civil Works was
allegedly for a specific or fixed period thus making petitioners project employees. This time, it held that since the termination of petitioners’ employment
was due to the completion of the project, petitioners are therefore not entitled to separation pay. It ruled that this would hold true even if petitioners were
categorized as regular project employees because their employment was not permanent but coterminous with the projects to which they were assigned.
No other substantial reason was given for the adjudicative turnabout.

In this petition for certiorari, petitioners contend that public respondent (NLRC) committed grave abuse of discretion amounting to lack of jurisdiction when
it granted the motion for reconsideration of private respondents in its November 15, 1994 resolution. Such novatory resolution, petitioners contend, was
not only too abbreviated but actually disregarded applicable laws and jurisprudence governing the characterization of employees in the construction
industry.

We have held that the services of project employees are coterminous with the project and may be terminated upon the end or completion of that project
for which they were hired. Regular employees, in contrast, are legally entitled to remain in the service of their employer until their services are terminated
by one or another of the recognized modes of termination of service under the Labor Code.

Foremost for our resolution then is the issue of whether petitioners are regular (non-project) employees or project employees. Upon the resolution of this
query rests the validity of petitioners’ dismissal.

The source of the definition of a regular employee vis-a-vis a project employee is found in 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 service to be performed is seasonal in
nature and the employment is for the duration of the season.

An employee 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.

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. 12 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.

As Handyman and Erector II, respectively, petitioners’ services are both necessary and vital to the operation of the business of private Respondent. This
is not at all traversed, but is even confirmed by the fact that they were continually and successively assigned to the different projects of private respondent
and its sister company, CDCP.

In order to properly characterize petitioners’ employment, we now proceed to ascertain whether or not their employment falls under the exceptions
provided in Article 280 of the Code.

The principal test for determining whether particular employees are properly characterized as "project employees," as distinguished from "regular
employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration (and scope) of which
were specified at the time the employees were engaged for that project. As defined, project employees are those workers hired (1) for a specific project or
undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee.

Based on the above criteria, we find petitioners to be regular employees of private respondent, and not project employees as postulated by respondent
NLRC. Petitioners’ dismissal, therefore, could not be justified by the completion of their items of work.

The predetermination of the duration or period of a project employment is important in resolving whether one is a project employee or not. On this score,
the term period has been defined to be "a length of existence; duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a
bound; conclusion; termination. A series of years, months or days in which something is completed. A time of definite length or the period from one fixed
date to another fixed date."

There is no debate that petitioners were hired for a specific project or undertaking. Their Appointments for Project Employment clearly state that their
employment is for NSC ETL #3 Civil Works. The fact of the completion of said item of work is also undisputed. However, the records are barren of any
definite period or duration for the expiration of the assigned items of work of petitioners at the time of their engagement. An examination of said
appointments reveal that the completion or termination of the project for which petitioners were hired was not determined at the start of their employment.
There is no specific mention of the period or duration when the project will be completed or terminated. In fact, the lines for "DATE OF COVERAGE" in the
appointments (referring to the particular items of work for which petitioners are engaged) are left blank.
While the word "co-terminus" was adopted in the appointments of petitioners, it cannot readily be concluded that their employment with private respondent
is for a definite duration, that is, until the completion of their items of work, because there are other words used in the aforesaid appointments affecting
their entitlement to stay in their job. To be concrete, the pertinent terms of the Appointments For Project Employment of petitioners are quoted below,
thus:

Your herein Appointments will be co-terminus with the need of _________________ as it will necessitate personnel in such number and

(State Item of Work)

duration contingent upon the progress accomplishment from time to time. The company shall determine the personnel and the number as work
progresses.

An interpretation of the above provisions is important for the correct labeling of petitioners’ employment with private Respondent. Propitiously, this Court
has already been confronted with contracts of employment of the same and exact tenor as above in De Jesus v. Philippine National Construction Corp.
and National Labor Relations Commission, Et. Al. 17 The contracts involved in said case also provided as follows:

Your herein Appointment Employment will be co-terminus with the need of Structures [of North. Luzon Expressway (Stage) II] as it will necessitate
personnel in such number and duration contingent upon the progress accomplishment from time to time. The company shall determine the personnel and
the number as the work progresses.

On such premises, the Court declared:

Without question, the petitioner, a carpenter, performs work "necessary, or desirable" in the construction business, the corporation’s field of activity. The
fact however that he had been involved in project works will not alter his status because the law requires "specific project or undertaking the completion or
termination of which has been determined at the time of engagement" in order to make a project employee a true project employee. . . we cannot say that
the petitioner’s engagement has been predetermined because the duration of the work is "contingent upon the progress accomplishment" and secondly,
the company, under the contract, is free to "determine the personnel and the number as the work progresses." Clearly, the employment is subject to no
term but rather, a condition, that is, "progress accomplishment." It cannot therefore be said to be definite that will therefore exempt the respondent
company from the effects of Article 280.

Following the rule on precedents, we once again hold that the respective employments of the present petitioners is not subject to a term but rather to a
condition, that is, "progress accomplishment." As we have stated in De Jesus, it cannot be said that their employment had been pre-determined because,
firstly, the duration of their work is "contingent upon the progress accomplishment" and, secondly, the contract gives private respondent the liberty to
"determine the personnel and the number as the work progresses." It is ineluctably not definite so as to exempt private respondent from the strictures and
effects of Article 280.

To add our own observation, the appointments of petitioners herein were not coterminous with NSC ETL #3 Civil Works but with the "need" for such
particular items of work as were assigned to them, as distinguished from the completion of the project.

With such ambiguous and obscure words and conditions, petitioners’ employment was not co-existent with the duration of their particular work
assignments because their employer could, at any stage of such work, determine whether their services were needed or not. Their services could then be
terminated even before the completion of the phase of work assigned to them.

We find this explication necessary and in accord with the principle that in controversies between a laborer and his master, doubts reasonably arising from
the evidence, or in the interpretation of agreements and writings should be resolved in the former’s favor.

To be exempted from the presumption of regularity of employment, therefore, the agreement between a project employee and his employer must strictly
conform with the requirements and conditions provided in Article 280. It is not enough that an employee is hired for a specific project or phase of work.
There must also be a determination of or a clear agreement on the completion or termination of the project at the time the employee is engaged if the
objective of Article 280 is to be achieved. Since this second requirement was not met in petitioners’ case, they should be considered as regular employees
despite their admissions and declarations that they are project employees made under circumstances unclear to us.

Parenthetically, it is relevant to observe that the similarities in the stipulations of the employment/appointment contracts can be explained by the indirect
relationship of the Philippine National Construction Corporation (PNCC) and private Respondent. CDCP was the predecessor of PNCC which, in turn, is
an existing sister company of private Respondent. Apparently, private respondent ignored the mistake committed by its said sister company. Also, if only
the NLRC had thoroughly read the De Jesus decision, it would have discovered that the PNCC also raised as a defense the admission of therein
petitioner De Jesus that he was a project employee, but to no avail.

There is another reason why we should rule in favor of petitioners. Nowhere in the records is there any showing that private respondent reported the
completion of its projects and the dismissal of petitioners in its finished projects to the nearest Public Employment Office in compliance with Policy
Instruction No. 20 of then Labor Secretary Blas F. Ople.
Jurisprudence abounds with the consistent rule that the failure of an employer to report to the nearest Public Employment Office the termination of its
workers’ services every time a project or a phase thereof is completed indicates that said workers are not project employees. 19 In the case at bar, only
the last and final termination of petitioners was reported to the aforementioned labor office.

Private respondent should have filed as many reports of termination as there were construction projects actually finished if petitioners were indeed project
employees, considering that petitioners were hired and again rehired for various projects or the phases of work therein. Its failure to submit reports of
termination cannot but sufficiently convince us further that petitioners are truly regular employees. Just as important, the fact that petitioners had rendered
more than one year of service at the time of their dismissal overturns private respondent’s allegations that petitioners were hired for a specific or a fixed
undertaking for a limited period of time.

Even if we disregard the stints of petitioners with CDCP, it cannot be disclaimed that they have rendered long years of service in private respondent’s
business affairs. Beginning his service in 1982, petitioner Violeta served in the employ of private respondent up to 1992. In the case of petitioner Baltazar,
he worked for private respondent from 1981 to 1991. Private respondent repeatedly appointed petitioners to new projects after the completion of every
project or item of work in which they were previously employed, each over a span of about 10 years.

Public respondent contends that the gaps in the employment of petitioners, consisting of the periods in between the completion of one project and the
engagement of petitioners in the next, show that they could not have been regular employees under the control of private respondent, and that petitioners
could have applied for or accepted employment from other employers during those periods. This is puerile and speculative.

In the first place, Article 280 of the Labor Code contemplates both continuous and broken services. In the second place, there is absolutely no evidence of
petitioners having applied for or accepted such other or outside employment during the brief interregna in the continuity of their work with private
Respondent. Their undertaking in the "Employment Terms and Conditions" of their service to private respondent bound them "to work in such place of
work or project as DISC may assign or transfer" them, with the further agreement that they would so "work during rest day, holidays, night time and night
shift or during emergencies."

These are self-evident refutations of private respondent’ s theory and further bolster petitioners’ position that they were not mere employees engaged for a
single or particular project. They were thus removed from the scope of project employment and considered as regular employees since their employment
as so-called project employees was extended long after the termination of different projects.

The fact that petitioners signed quitclaims will not bar them from pursuing their claims against private respondent because quitclaims executed by laborers
are frowned upon as contrary to public policy, and are ineffective to bar claims for the full measure of the workers’ legal rights. 23 The so-called quitclaims
signed by petitioners were actually pro forma provisions printed in the clearance certificate they had to get from private Respondent. These were not in the
nature of a compromise but a compulsory general release required from them, for which no consideration was either given or even stated.

In answer to private respondent’ s reliance on Department of Labor and Employment (DOLE) Order No. 19, Series of 1993, which took effect on April 1,
1993, we have ruled in Samson v. National Labor Relations Commission, Et. Al. 24 that said administrative order does not have retroactive effect. Since
the termination of petitioners’ services and the filing of their complaints took place long before the effectivity of the said regulation, it cannot be applied in
favor of private Respondent.

Besides, as expounded earlier, contrary to private respondent’s insistence, the following badges of project employment are lacking in this particular case,
viz.: (1) the duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable, and (2) such duration, as well as
the specific work/service to be performed, is defined in an employment agreement and made clear to the employee at the time of hiring. Hence, even
assuming for the moment that DOLE Order No. 19 is effectual in the case at bar, private respondent cannot successfully invoke the Order in its favor
because the absence of the above indicia persuades us all the more that petitioners are really regular employees of private Respondent.

WHEREFORE, the instant petition for certiorari is GRANTED. The challenged resolution of the Fifth Division of respondent National Labor Relations
Commission dated November 15, 1994 in NLRC CA No. M-001233 is REVERSED and SET ASIDE, and its earlier resolution therein dated August 17,
1994 is hereby REINSTATED.

SO ORDERED.

G.R. No. 108142 December 26, 1995

ARCHBUILD MASTERS AND CONSTRUCTION, INC., and JOAQUIN C. REGALA, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION
and ROGELIO CAYANGA, respondents.

This is a petition for certiorari filed by Archbuild-Masters and Construction, Inc. (ARMACON), and its president Joaquin C. Regala against respondents
National Labor Relations Commission and Rogelio Cayanga1 for grave abuse of discretion in holding that the latter respondent was illegally dismissed by
petitioners.

Sometime in August 1988, petitioners entered into a contract with the government of the United States of America to lay water pipes inside the U.S. Naval
Base in Subic, Zambales. This undertaking involved the digging of ditches, laying of pipes and the filling up of all excavations resulting therefrom. On 20
March 1989, considering that the project would require the transporting of men and construction materials, petitioners hired the services of drivers one of
whom was private respondent Rogelio Cayanga. His employment papers specifically provided that he was being hired as driver for the Subic project.
According to petitioners, in December 1989 the phase of work for which private respondent was hired neared its completion so that a lesser number of
workers and construction materials were required to be transported to the digging sites, which meant fewer trips to the construction site and a reduction in
the number of drivers. Thus on 26 December 1989 petitioners posted a list of employees whose services were no longer needed by reason of the
reduction in manpower due to the completion of a phase of the Subic project. The list included private respondent.

In a letter dated 26 December 1989 petitioners asked for clearance from Regional Office No. III, Zambales District Labor Office, Olongapo City, to
terminate the services of private respondent and six (6) other employees to reduce the work force resulting from the completion of the phase of the project
for which private respondent and six (6) others were employed.3 Petitioners likewise submitted the necessary Employer's Monthly Report on Employees'
Termination or Suspension required by Sec. 2, Rule 14, of the Rules Implementing B.P. Blg. 130, for the month of January 1990.

On 22 January 1990 private respondent filed a complaint against petitioners for illegal dismissal.5 He asserted that his dismissal was done in bad faith
and that the real reason for his removal was not the supposed proximate completion of the Subic project but his alleged absences without leave.
According to him, when he first reported for work on 27 December 1989 after a six-day vacation (20 to 26 December 1989), of which petitioners were
properly informed, he was verbally notified by his supervising engineer that his employment was already terminated because of his absences without
proper leave. After vehemently denying that his vacation was unauthorized, he alleged that he was then allowed by petitioners to continue his employment
for two more days when they realized that he could not be validly dismissed on such ground. Then on 29 December 1989 private respondent found
himself in a quandary when he unexpectedly read in the company bulletin board that his employment had already been terminated due to project
completion. He contended that the supposed "project completion" cited by petitioners as the ground for his dismissal was just used by the latter to
immediately terminate his employment. He insisted that the real reason for his dismissal was his absences allegedly incurred by him without proper leave,
and that the latter only used "project completion" to camouflage his unlawful removal so that he could no longer be heard on the real reason for his
dismissal.

Private respondent argued that there could not have been any completion of a phase or stage of the construction project because some employees who
were previously dismissed were in fact either re-hired or replaced by petitioners,7 and that their bad faith in effecting his dismissal was further
demonstrated by their inconsistent explanations for his dismissal. According to him, the Employer's Monthly Report submitted by petitioners to the
Department of Labor and Employment expressly stated that the nature of his termination was due to "shutdown/retrenchment" while the list of dismissed
project employees posted in the company premises as well as the request to terminate these employees submitted to the district labor office declared
"project completion" as the ground for dismissal. Under these circumstances, according to private respondent, if petitioners would instead invoke
"shutdown/retrenchment" as the proper ground for his dismissal they would have again violated his rights under Art. 283 of the Labor Code which
mandates that in order to dismiss an employee due to "shutdown/retrenchment" he must first be furnished a written notice of his dismissal at least one (1)
month before its effectivity.

On 2 October 1990 Labor Arbiter Manuel R. Caday dismissed the complaint of private respondent for lack of merit. He ruled that private respondent's
separation from work was anchored on a just and valid ground and that it was not effected in a wanton or malevolent manner. However, he ordered
petitioners to pay private respondent P396.00 for unpaid wage differentials from 1 July 1989 to 1 January 1990.8 On appeal, the NLRC reversed the
Labor Arbiter. It ruled that private respondent was illegally dismissed and directed petitioners to pay him back wages from 1 January 1990 up to the
closure of the Subic Naval Base. The NLRC found that petitioners failed to refute the claim of private respondent that there was no project completion to
speak of when they did not deny his allegation that another driver was hired to replace him after his dismissal. The NLRC also gave considerable weight
to the established fact that the Employer's Monthly Report of petitioners expressly stated that private respondent's termination was due to
"shutdown/retrenchment" and not to the completion of the project. According to the NLRC, this circumstance belied the claim of petitioners that they
dismissed private respondent due to project completion. The NLRC then concluded that if indeed "shutdown/retrenchment" was the reason for private
respondent's dismissal petitioners should have complied with the 30-day notice requirement under Art. 283 of the Labor Code9 Petitioners motion for
reconsideration was denied; hence, this appeal.

We affirm the decision of the NLRC as we find private respondent illegally dismissed by ARMACON.

It is not disputed that private respondent was a project employee of ARMACON. As such he was employed in connection with a particular project the
completion of which had been determined at the time of his employment. 10 Consequently, as a project employee of ARMACON, his employment may be
terminated upon the completion of the project as there would be no further need for his services. 11 Since a project employee's work depends on the
availability of projects, necessarily the duration of his employment is not permanent but coterminous with the work to which he is assigned. 12 It would be
extremely burdensome for the employer, who depends on the availability of projects, to carry him as a permanent employee and pay him wages even if
there are no projects for him to work on. 13 The rationale behind this is that once the project is completed it would be unjust to require the employer to
maintain these employees in their payroll. To do so would make the employee a privileged retainer who collects payment from his employer for work not
done. This is extremely unfair and amounts to labor coddling at the expense of management.

However, for project workers employed in the construction industry like the one before us, employers are allowed to reduce their work force into a number
suited for the remaining work to be done upon the completion or proximate accomplishment of the construction project. The employment of a project
worker hired for a specific phase of a construction project is understood to be coterminus with the completion of such phase and not upon the
accomplishment of the whole project. Thus, a worker hired for a particular phase of a construction project can be dismissed upon the completion of such
phase. Project workers in the construction industry may also be terminated as the phase of a construction project draws nearer to completion when their
services are no longer needed provided they are not replaced. 15 Policy Instruction No. 20 16 expressly recognizes these peculiar employment
arrangements in the construction industry because each phase in these projects requires a varied number of workers. It is recognized in this jurisdiction
that the number of maintained workers in a particular construction project must be flexible and must conform with the requirements of each phase that
remains unaccomplished.

However, if a project employee is dismissed his removal must still comply with the substantive and procedural requirements of due process. Sec. 3, Art.
XIII, of the Constitution mandates that the State shall afford full protection to labor and declares that all workers shall be entitled to security of tenure. The
fundamental guarantee of security of tenure and due process dictates that no worker shall be dismissed except for a just and authorized cause provided
by law and after due process has been properly complied with. 17 Therefore, a project employee hired for a specific task also enjoys security of tenure. A
termination of his employment must be for a lawful cause and must be done in a manner which affords him the proper notice and hearing. Thus, a project
employee must be duly furnished a written notice of his impending dismissal and must be given the opportunity to dispute the legality of his removal. 18

In the case before us, we are convinced that private respondent Rogelio Cayanga was illegally dismissed by petitioners. In pursuing this appeal
petitioners rely on Policy Instruction No. 20 to justify the dismissal of private respondent. They maintain that private respondent's discharge was necessary
because as the Subic project neared completion less and less employees were needed to finish the undertaking. They insist that Policy Instruction No. 20
provides the legal basis for his removal and assert that they faithfully complied with all the legal requirements therefor.

Although it is acknowledged that the employment of private respondent is terminable upon the completion or proximate accomplishment of the Subic
project or a phase thereof under Policy Instruction No. 20, we nonetheless cannot sustain petitioners' assertion that Rogelio Cayanga's dismissal was
lawful. To justly dismiss private respondent under Policy Instruction No. 20 it is incumbent upon petitioners to show proof of the proximate completion of
the Subic project when respondent Cayanga questioned the veracity of such an allegation. In the case at bench, petitioners failed to present substantial
evidence to prove the proximate completion of the Subic project. The affidavit executed by petitioners' personnel officer and the manpower schedule,
which supposedly proves that private respondent's services were no longer necessary for the remaining duration of the project, are mere self-serving
assertions that are not enough to substantiate their claim of proximate project completion. We find it in the interest of justice to require employers to state
the reason for their project employees' dismissal and prove this ground once its veracity is challenged. Employers who hire project employees are
mandated to prove the actual basis for the latter's dismissal. A mere claim of project completion is not sufficient to terminate a project worker's
employment without adequate proof to demonstrate such claims. In termination cases, like the one at bench, the burden of proving that an employee has
been lawfully dismissed lies with the employer. 19 Moreover, to allow employers to exercise their prerogative to terminate a project worker's employment
based on gratuitous assertions of project completion would destroy the constitutionally protected right of labor to security of tenure.

The facts and circumstances surrounding the dismissal of private respondent likewise cast serious doubt on whether project completion was the true
reason behind the termination of his employment. As correctly observed by the NLRC as well as private respondent, petitioners have not been consistent
in citing project completion as the basis for the dismissal. After a careful perusal of the Employer's Monthly Report on Employees' Termination
accomplished and submitted by petitioners we cannot help entertaining serious doubt, as the NLRC did, on the proper cause for private respondent's
dismissal from his employment.

WHEREFORE, the petition for certiorari is DENIED. The assailed Resolution of the National Labor Relations Commission dated 25 August 1992 directing
petitioners "to pay complainant (private respondent) back wages computed from January 1, 1990 up to the closure of the Subic Naval Base that has been
of public knowledge" is AFFIRMED. Costs against petitioners.

SO ORDERED.