PHILIPPINE JURISPRUDENCE - FULL TEXT

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G.R. No. 141707 May 7, 2002
CAYO G. GAMOGAMO vs. PNOC SHIPPING AND
TRANSPORT CORP.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 141707 May 7, 2002

CAYO G. GAMOGAMO, petitioner,

vs.
PNOC SHIPPING AND TRANSPORT CORP., respondent.

DAVIDE, JR., C.J.:

The pivotal issue raised in the petition in this case is whether, for the purpose of
computing an employee�s retirement pay, prior service rendered in a
government agency can be tacked in and added to the creditable service later
acquired in a government-owned and controlled corporation without original
charter.

On 23 January 1963, Petitioner Cayo F. Gamogamo was first employed with the
Department of Health (DOH) as Dental Aide. On 22 February 1967, he was
promoted to the position of Dentist 1. He remained employed at the DOH for
fourteen years until he resigned on 2 November 1977.1

On 9 November 1977, petitioner was hired as company dentist by Luzon

Stevedoring Corporation (LUSTEVECO), a private domestic corporation.2
Subsequently, respondent PNOC Shipping and Transport Corporation (hereafter
Respondent) acquired and took over the shipping business of LUSTEVECO, and
on 1 August 1979, petitioner was among those who opted to be absorbed by the
Respondent.3 Thus, he continued to work as company dentist. In a letter dated 1
August 1979, Respondent assumed without interruption petitioner�s service
credits with LUSTEVECO,4 but it did not make reference to nor assumed
petitioner�s service credits with the DOH.

On 10 June 1993, then President Fidel V. Ramos issued a memorandum5

approving the privatization of PNOC subsidiaries, including Respondent,
pursuant to the provisions of Section III(B) of the Guidelines and Regulations to
implement Executive Order No. 37.6 Accordingly, Respondent implemented a
Manpower Reduction Program to govern employees whose respective positions
have been classified as redundant as a result of Respondent�s decrease in
operations and the downsizing of the organization due to lay-up and sale of its
vessels pursuant to its direction towards privatization.7 Under this program,
retrenched employees shall receive a two-month pay for every year of service.

Sometime in 1995, petitioner requested to be included in the next retrenchment

schedule. However, his request was turned down for the following reasons:8

1. As a company dentist he was holding a permanent position;

2. He was already due for mandatory retirement in April 1995 under his
retirement plan (first day of the month following his 60th birthday which
was on 7 March 1995).

Eventually, petitioner retired after serving the Respondent and LUSTEVECO for
17 years and 4 months upon reaching his 60th birthday, on 1 April 1995. He
received a retirement pay of P512,524.15,9 which is equivalent to one month pay
for every year of service and other benefits.

On 30 August 1995, Admiral Carlito Y. Cunanan, Repondent�s president, died

of Dengue Fever and was forthwith replaced by Dr. Nemesio E. Prudente who
assumed office in December 1995. The new president implemented significant
cost-saving measures. In 1996, after petitioner�s retirement, the cases of Dr.
Rogelio T. Buena (company doctor) and Mrs. Luz C. Reyes (telephone operator),
who were holding permanent/non-redundant positions but were willing to be
retrenched under the program were brought to the attention of the new president
who ordered that a study on the cost-effect of the retrenchment of these
employees be conducted. After a thorough study, Respondent�s Board of
Directors recommended the approval of the retrenchment. These two employees
were retrenched and paid a 2-month separation pay for every year of service
under Respondent�s Manpower Reduction Program.10

In view of the action taken by Respondent in the retrenchment of Dr. Buena and
Mrs. Reyes, petitioner filed a complaint at the National Labor Relations
Commission (NLRC) for the full payment of his retirement benefits. Petitioner
argued that his service with the DOH should have been included in the
computation of his years of service. Hence, with an accumulated service of 32
years he should have been paid a two-month pay for every year of service per the
retirement plan and thus should have received at least P1,833,920.00.

The Labor Arbiter dismissed petitioner�s complaint.11 On appeal, however, the

NLRC reversed the decision of the Labor Arbiter. In its decision12 of 28
November 1997, the NLRC ruled:
 WHEREFORE, the Decision of the Labor Arbiter dated May 30, 1997 is
hereby SET ASIDE and another judgment is hereby rendered to wit:

(1) the government service of the complainant with the

Department of Health numbering fourteen (14) years is hereby
considered creditable service for purposes of computing his
retirement benefits;

(2) crediting his fourteen (14) years service with the Department
of Health, together with his nearly eighteen (18) years of service
with the respondent, complainant therefore has almost thirty-two
(32) years service upon which his retirement benefits would be
computed or based on;

(3) complainant is entitled to the full payment of his retirement

benefits pursuant to the respondent�s Retirement Law or the
retrenchment program (Manpower Reduction Program). In any
case, he is entitled to two (2) months retirement/separation pay for
every year of service.

(4) all other claims are DISMISSED.

SO ORDERED.

Respondent filed a motion for reconsideration but it was denied.13

Unsatisfied with the reversal, Respondent filed with the Court of Appeals a
special civil action for certiorari which was docketed as CA-G.R. SP No. 51152.
In its decision14 of 8 November 1999, the Court of Appeals set aside the NLRC
judgment and decreed:

WHEREFORE, the petition is hereby GIVEN DUE COURSE and the

writ prayed for GRANTED. Consequently, the Decision and Resolution
of the National Labor Relations Commission (Second Division) dated
November 28, 1997 and May 15, 1998, respectively, are hereby SET
ASIDE AND NULLIFIED, without prejudice to private respondent Cayo
F. Gamo-gamo�s recovery of whatever benefits he may have been
entitled to receive by reason of his fourteen (14) years of service with the
Department of Health.

No pronouncement as to costs.

His motion for reconsideration having been denied by the Court of Appeals,15
petitioner filed with us the petition in the case at bar. Petitioner contends that: (1)
his years of service with the DOH must be considered as creditable service for
the purpose of computing his retirement pay; and (2) he was discriminated
against in the application of the Manpower Reduction Program.16

Petitioner maintains that his government service with the DOH should be
recognized and tacked in to his length of service with Respondent because
LUSTEVECO, which was later bought by Respondent, and Respondent itself,
were government-owned and controlled corporations and were, therefore, under
the Civil Service Law. Prior to the separation of Respondent from the Civil
Service by virtue of the 1987 Constitution, petitioner�s length of service was
considered continuous. The effectivity of the 1987 Constitution did not interrupt
his continuity of service. He claims that he is supported by the opinion of 18
May 1993 of the Civil Service Commission in the case of Petron Corporation,
where the Commission allegedly opined:

� that all government services rendered by employees of the Petron

prior to 1987 Constitution are considered creditable services for purposes
of computation of retirement benefits. This must necessarily be so
considering that in the event that Petron would consider only those
services of an employee with Petron when it was excluded from the civil
service coverage (that is after the 1987 Constitution), it would render
nugatory his government agencies prior to his transfer to Petron. Hence,
Petron or any other PNOC subsidiary has to include in its retirement
scheme or in its Collective Bargaining Agreement a provision of the
inclusion of the other government services of its employees rendered
outside Petron, otherwise, it would be prejudicial to the interest of the
retireable employee concerned.

Petitioner asserts that with the tacking in of his 14 years of service with the DOH
to his 17 years and 4 months service with LUSTEVECO and Respondent, he had
31 years and 4 months creditable service as basis for the computation of his
retirement benefits. Thus, pursuant to Respondent�s Manpower Reduction
Program, he should have been paid two months pay for every year of his 31
years of service.

Petitioner likewise asserts that the principle of tacking is anchored on Republic

Act No. 7699.17

Petitioner concludes that there was discrimination when his application for
coverage under the Manpower Reduction Program was disapproved. His
application was denied because he was holding a permanent position and that he
was due for retirement. However, Respondent granted the application of Dr.
Rogelio Buena, who was likewise holding a permanent position and was also
about to retire. Petitioner was only given one-month pay for every year of service
under the regular retirement plan while Dr. Buena was given a 2-month pay for
every year of service under the Manpower Reduction Program.

In its Comment to the petition, Respondent maintains that although it is a

government-owned and controlled corporation, it has no original charter. Hence,
it is not within the coverage of the Civil Service Law. It cites the decision in
PNOC-EDC v. Leogardo,18 wherein we held that only corporations created by
special charters are subject to the provisions of the Civil Service Law. Those
without original charters are covered by the Labor Code. Respondent also asserts
that R.A. No. 7699 is not applicable. Under this law an employee who has
worked in both the private and public sectors and has been covered by both the
Government Service Insurance System (GSIS) and the Social Security System
(SSS), shall have his creditable services or contributions in both Systems
credited to his service or contribution record in each of the Systems, which shall
be summed up for purposes of old age, disability, survivorship and other benefits
in case the covered member does not qualify for such benefits in either or both
Systems without the totalization.

Respondent further contends that petitioner was not discriminated upon when his
application under the Manpower Reduction Program was denied. At the time of
his retirement in 1995, redundancy was the main consideration for qualification
for the Manpower Reduction Program. Petitioner was not qualified. However in
1996, in order to solve the company�s business reversals, the new president, Dr.
Nemesio Prudente, found it necessary to implement cost-saving strategies,
among which was the retrenchment of willing employees. Thus, the applications
for retrenchment of Dr. Buena and Mrs. Reyes were approved. Respondent had
the prerogative to amend its policies to meet the contingencies of the business for
self-preservation.

We rule in the negative the issue of whether petitioner�s service with the DOH
should be included in the computation of his retirement benefits.

Respondent�s Retirement scheme19 pertinently provides:

ARTICLE IV

RETIREMENT BENEFITS

SEC 4.1. Normal Retirement Date/Eligibility. -- The normal retirement

date of an employee shall be the first day of the month next following the
employee�s sixtieth (60th) birthday. To be eligible for the retirement
benefit described under Sec. 4.2, the employee must have rendered at
least ten (10) years of continuous service with the Company. In case the
retiring employee has rendered less than ten (10) years of service with the
Company, he shall be entitled to one (1) month�s final monthly basic
 salary (12/12) for every year of service.

SEC. 4.2. Normal Retirement Benefit. -- The retirement benefit shall be

payable in lump sum upon retirement which shall be determined on the
basis of the retiree�s final monthly basic salary (14/12) as follows:

(a) One (1) month�s pay for every year of service for those who
have completed at least twenty (20) years of continuous service
with the Company.

(b) One and one-half (1 1/2) months� pay for every year of
service for those who have completed twenty-one (21) to thirty
(30) continuous years of service with the Company.

(c) Two (2) months� pay for every year of service for those who
have completed at least thirty-one (31) years of service with the
Company.

It is clear therefrom that the creditable service referred to in the Retirement Plan
is the retiree�s continuous years of service with Respondent.

Retirement results from a voluntary agreement between the employer and the
employee whereby the latter after reaching a certain age agrees to sever his
employment with the former.20

Since the retirement pay solely comes from Respondent�s funds, it is but
natural that Respondent shall disregard petitioner�s length of service in another
company for the computation of his retirement benefits.

Petitioner was absorbed by Respondent from LUSTEVECO on 1 August 1979.

Ordinarily, his creditable service shall be reckoned from such date. However,
since Respondent took over the shipping business of LUSTEVECO and agreed
to assume without interruption all the service credits of petitioner with
LUSTEVECO,21 petitioner�s creditable service must start from 9 November
1977 when he started working with LUSTEVECO22 until his day of retirement
on 1 April 1995. Thus, petitioner�s creditable service is 17.3333 years.

We cannot uphold petitioner�s contention that his fourteen years of service with
the DOH should be considered because his last two employers were government-
owned and controlled corporations, and fall under the Civil Service Law. Article
IX(B), Section 2 paragraph 1 of the 1987 Constitution states --

Sec. 2. (1) The civil service embraces all branches, subdivisions,

instrumentalities, and agencies of the Government, including
 government-owned or controlled corporations with original charters.

It is not at all disputed that while Respondent and LUSTEVECO are

government-owned and controlled corporations, they have no original charters;
hence they are not under the Civil Service Law. In Philippine National Oil
Company-Energy Development Corporation v. National Labor Relations
Commission,23 we ruled:

xxx "Thus under the present state of the law, the test in determining
whether a government-owned or controlled corporation is subject to the
Civil Service Law are [sic] the manner of its creation, such that
government corporations created by special charter(s) are subject to its
provisions while those incorporated under the General Corporation Law
are not within its coverage."

Consequently, Respondent was not bound by the opinion of the Civil Service
Commission of 18 May 1993.

Petitioner�s contention that the principle of tacking of creditable service is

mandated by Republic Act No. 7699 is baseless. Section 3 of Republic Act No.
7699 reads:

SEC 3. Provisions of any general or special law or rules and regulations

to the contrary notwithstanding, a covered worker who transfer(s)
employment from one sector to another or is employed in both sectors,
shall have his creditable services or contributions in both systems
credited to his service or contribution record in each of the Systems and
shall be totalized for purposes of old-age, disability, survivorship, and
other benefits in case the covered employee does not qualify for such
benefits in either or both Systems without totalization: Provided,
however, That overlapping periods of membership shall be credited only
once for purposes of totalization (underscoring, ours).

Obviously, totalization of service credits is only resorted to when the retiree does
not qualify for benefits in either or both of the Systems. Here, petitioner is
qualified to receive benefits granted by the Government Security Insurance
System (GSIS), if such right has not yet been exercised. The pertinent provisions
of law are:

SEC. 12 Old Age Pension. -- (a) xxx

(b) A member who has rendered at least three years but less than fifteen
years of service at the time of separation shall, upon reaching sixty years
of age or upon separation after age sixty, receive a cash payment
equivalent to one hundred percent of his average monthly compensation
 for every year of service with an employer (Presidential Decree No, 1146,
as amended, otherwise known as the Government Service Insurance Act
of 1977).

SEC. 4. All contributions paid by such member personally, and those that
were paid by his employers to both Systems shall be considered in the
processing of benefits which he can claim from either or both Systems:
Provided, however, That the amount of benefits to be paid by one System
shall be in proportion to the number of contributions actually remitted to
that System (Republic Act No. 7699).

In any case, petitioner�s fourteen years of service with the DOH may not
remain uncompensated because it may be recognized by the GSIS pursuant to the
aforequoted Section 12, as may be determined by the GSIS. Since petitioner may
be entitled to some benefits from the GSIS, he cannot avail of the benefits under
R.A. No. 7699.

It may also be pointed out that upon his receipt of the amount of P512,524.15
from Respondent as retirement benefit pursuant to its retirement scheme,
petitioner signed and delivered to Respondent a Release and Undertaking
wherein he waives all actions, causes of actions, debts, dues, monies and
accounts in connection with his employment with Respondent.24 This quitclaim
releases Respondent from any other obligation in favor of petitioner. While
quitclaims executed by employees are commonly frowned upon as contrary to
public policy and are ineffective to bar claims for the full measure of the
employees� legal rights, there are legitimate waivers that represent a voluntary
and reasonable settlement of laborers� claims which should be respected by the
courts as the law between the parties.25 Settled is the rule that not all quitclaims
are per se invalid or against public policy, except (1) where there is clear proof
that the waiver was wangled from an unsuspecting or gullible person; and (2)
where the terms of settlement are unconscionable on their face.26 We discern
nothing from the record that would suggest that petitioner was coerced,
intimidated or deceived into signing the Release and Undertaking. Neither are we
convinced that the consideration for the quitclaim is unconscionable because it is
actually the full amount of the retirement benefit provided for in the company�s
retirement plan.

In light of the foregoing, we need not discuss any further the issue of whether
petitioner was discriminated by Respondent in the implementation of the
Manpower Reduction Program. In any event, that issue is factual and petitioner
has failed to demonstrate that, indeed, he was discriminated upon.

WHEREFORE, no reversible error on the part of the Respondent Court of

Appeals having been shown, the petition in this case is DENIED and the
appealed decision in CA-G.R. SP No. 51152 is hereby AFFIRMED.

Costs against petitioner.

SO ORDERED.

Puno, Kapunan, Ynares-Santiago, and Austria-Martinez, JJ., concur.

Footnote
1
Annex "E," Rollo, CA-G.R. SP No. 51152, 77.
2
Annex "F," Rollo, CA-G.R. SP No. 51152, 78.
3
Annex "G," Id., 79.
4
Ibid.
5
Annex "C," Id., 64.
6
Entitled "Restating the Privatization Policy of the Government."
7
Annex "D," Id., 65-76.
8
Petition in the Court of Appeals, Id., 10.
9
Annex "I," Rollo, CA-G.R. SP No. 51152, 81.
10
Petition in the Court of Appeals, Rollo, CA-G.R. SP No. 51152, 12-14.
11
Rollo, CA-G.R. SP No. 51152, 90-97.
12
Id., 60-61.
13
Rollo, C.A.-G.R. SP No. 51152, 45-46.
14
Rollo, 22.
15
Rollo, CA-G.R. SP No. 51152, 232.
16
Rollo, 6-12.
17
An Act Instituting Limited Portability Scheme in the Social Security
 Insurance Systems by Totalizing the Worker�s Creditable Services or
Contributions in Each of the Systems.
18
175 SCRA 26 [1989].
19
Annex "H," Rollo, CA-G.R. SP No. 51152, 80.
20
Producers Bank of the Philippines v. National Labor Relations
Commission, 298 SCRA 517, 524 [1998].
21
Annex "G," Rollo, CA-G.R. SP No. 51152, 79.
22
Annex "F," Rollo, CA-G.R. SP No. 51152, 78.
23
201 SCRA 487, 493 [1991].
24
Annex "J," Rollo, CA-G.R. SP No. 51152, 82-83.
25
Alcosero v. National Labor Relations Commission, 288 SCRA 129, 143
[1998].
26
Bogo-Medellin Sugarcane Planters Association, Inc. v. National Labor
Relations Commission, 296 SCRA 108, 125 [1998].

G.R. No. 140102 February 9, 2006

UNION INDUSTRIES, INC. VS. GASPAR VALES, ET
AL.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 140102 February 9, 2006

UNION INDUSTRIES, INC., Petitioner,

vs.
GASPAR VALES and PRUDENCIO CERDENIA,1 Respondents.

RESOLUTION
CORONA, J.:

In this petition for review under Rule 45 of the Rules of Court, petitioner would
have us annul and set aside the May 21, 1999 decision2 of the Court of Appeals
finding no grave abuse of discretion on the part of the National Labor Relations
Commission3 (NLRC) in holding petitioner liable to pay respondents, Gaspar
Vales and Prudencio Cerdenia, separation benefits in the amounts of P27,885 and
P21,450, respectively.

The facts are not disputed.

Respondents Vales and Cerdenia were agency workers of Gotamco & Sons, Inc.
They were assigned to work for petitioner Union Industries, Inc. as carpenters
since 1983 and 1986, respectively.

In 1995, grievance meetings were held for the regularization of several

contractual employees, including respondents. This resulted in a compromise
agreement,4 the pertinent portion of which read:

1.) On the remaining issues, the parties agreed on the

following:1avvphil.net

xxx xxx xxx

(b) The following years of service of the remaining 8 complainants under

Gotamco shall be tacked in into their length of service as regular
employees of UII for purposes only of retirement or separation pay, to
wit:

xxx xxx xxx

2. GASPAR VALES - 6 years

3. PRUDENCIO CERDENIA - 5 years

2.) The complainants agree that this agreement embodies all their claims
and that they waive any other claims against UII which [they] could have
made or have made during the negotiations, but which are not embodied
in this agreement.

3.) The parties agree to sign the formal memorandum of agreement at a

later date to be agreed upon by them."5

In 1995, respondents joined petitioner�s mainstream of regular employees.

They underwent medical examination and were both diagnosed to be positive for
pulmonary tuberculosis (PTB). They were, however, allowed to continue
working for another year subject to medical re-examination. If still found
suffering from PTB, they were to take a leave to recuperate before reporting back
to work.

On June 14, 1996, respondents were again found positive for PTB. They were
required to go on sick leave. Instead, respondents filed a complaint for illegal
dismissal against petitioner before the arbitration branch of the NLRC.

The labor arbiter6 dismissed the complaint for illegal dismissal but ordered the
payment of separation benefits based on the following:

After a thorough analysis of the evidence adduced to the records of the case at
bench, this Arbitration Branch finds that complainants7 were not illegally
dismissed from employment much less dismissed at all. They were both [merely
asked] to go on sick leave for further medical treatment of pulmonary
tuberculosis (PTB).

xxx xxx xxx

Considering that complainants [were] suffering from controlled PTB minimal

since the [latter] part of 1995 and their continued employment would be
prejudicial to their health and that of their co-workers and despite medication and
treatment for over a year, their medical condition showed that they are still
suffering from PTB minimal, the relief of separation pay of � month salary for
every year of credited and actual service is in order. xxx

The basis in the computation of their separation benefits should be reckoned

from the date that they were first hired/assigned at Union Industries, Inc. by
Gotamco & Sons, Inc. and not from the agreement forged between labor and
management as a result of the grievance hearing for the regularization of the
affected service contractual workers (including complainants herein). This is
based on the principle of equity since the record of employment is reckoned not
from the date of his appointment as such, but from the very first time that he
worked with the respondent establishment.

xxx xxx xxx

WHEREFORE, judgment is hereby rendered ordering Respondent, Union

Industries, Inc.8 to pay complainants, Gaspar Vales and Prudencio Cerdenia
separation benefits in the amounts of P27,885.00 and P21,450.00 respectively.

The complaint for illegal dismissal and other monetary claims are hereby
disallowed for lack of merit.9
On appeal, the NLRC affirmed the decision of the labor arbiter, reasoning that,
because of respondents� regularization, the number of years they actually
worked for petitioner should be considered in the computation of separation
benefits. Petitioner�s motion for reconsideration was denied.

On June 9, 1998, petitioner filed a petition for certiorari with this Court. It was,
however, referred to the Court of Appeals in line with our ruling in St. Martin
Funeral Homes v. NLRC, et al.10

On May 21, 1999, the Court of Appeals dismissed the petition on two grounds:
(1) petitioner failed to attach pertinent documents and pleadings and (2) there
was no grave abuse of discretion on the part of the NLRC. According to the
Court of Appeals, the decision of the labor arbiter, which the NLRC affirmed,
was in consonance with the principle that labor laws constitute social legislation
under which doubts are resolved in favor of labor.11 The motion for
reconsideration was denied. Hence, this recourse.

The petition lacks merit.

The Court of Appeals was correct in dismissing the petition for certiorari.
Petitioner�s failure to attach copies of pertinent pleadings and documents was a
violation of Rule 65, Section 1, paragraph 2 of the Rules of Court.

It is true that a litigation is not a game of technicalities and that the rules of
procedure should not be strictly enforced at the cost of substantial justice.
However, it does not mean that the Rules of Court may be ignored at will and at
random to the prejudice of the orderly presentation and assessment of the issues
and their just resolution. It must be emphasized that procedural rules should not
be belittled or dismissed simply because their non-observance may have resulted
in prejudice to a party�s substantial rights. Like all rules, they are required to be
followed except only for the most persuasive of reasons.12

Petitioner furthermore wants us to set aside the award of separation benefits to

respondents Vales and Cerdenia in the amounts of P27,885 and P21,450,
respectively ― a factual finding of the labor arbiter which was affirmed by the
NLRC and upheld by the Court of Appeals.

We deny the prayer. As a rule, factual findings of the labor arbiter, when affirmed
by the NLRC and the Court of Appeals, are binding on this Court. It is not our
function to analyze or weigh all over again the evidence already considered in
the proceedings below.13 Our jurisdiction in a petition for review under Rule 45
of the Rules of Court is limited to reviewing only errors of law.14

WHEREFORE, there being no reversible error on the part of the Court of

Appeals in rendering its May 21, 1999 decision, the instant petition is hereby
DENIED.

Costs against petitioner.

SO ORDERED.

RENATO C. CORONA
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Associate Justice
Chairman

ANGELINA SANDOVAL-GUTIERREZ ADOLFO S. AZCUNA

Associate Justice Asscociate Justice

CANCIO C. GARCIA
Associate Justice

ATTESTATION

I attest that the conclusions in the above resolution were reached in consultation
before the case was assigned to the writer of the opinion of the Court�s
Division.

REYNATO S. PUNO
Associate Justice
Chairman, Second Division

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the Division

Chairman�s Attestation, I hereby certify that the conclusions in the above
resolution were reached in consultation before the case was assigned to the writer
of the opinion of the Court.

ARTEMIO V. PANGANIBAN
Chief Justice

Footnotes
1
In the petition for review, the Court of Appeals and the National Labor
Relations Commission were named as respondents. This was not
necessary since this is a petition for review under Rule 45 of the Rules of
Court.
2
Penned by Associate Justice Conrado M. Vasquez, Jr., and concurred in
by Associate Justices Teodoro P. Regino and Renato C. Dacudao of the
Special Fourth Division of the Court of Appeals; Rollo, pp. 10-15.
3
Penned by Commissioner Rogelio I. Rayala, and concurred in by
Presiding Commissioner Raul T. Aquino and Commissioner Victoriano R.
Calaycay, Second Division of the NLRC, dated August 29, 1997; CA
Records, pp. 11-18.
4
Dated July 12, 1995.
5
NLRC decision, CA Records, pp. 12-13.
6
Labor Arbiter Pablo C. Espiritu, Jr., May 13, 1997.
7
Herein respondents.
8
Herein petitioner.
9
As quoted in the Manifestation and Motion filed by the Office of the
Solicitor General, dated October 23, 2000; Rollo, pp. 61-62.
10
356 Phil. 811 (1998).
11
CA decision, Rollo, p. 14.
12
Sea Power Shipping Enterprises, Inc. v. Court of Appeals, 412 Phil.
603 (2001).
13
Metro Transit Organization, Inc. v. Court of Appeals, 440 Phil. 743
(2002).
14
Pacific Airways Corporation v. Tonda, 441 Phil. 156 (2002).

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION
G.R. No. 105033 February 28, 1994

PHILIPPINE VILLAGE HOTEL, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) AND
TUPAS LOCAL CHAPTER NO. 1362, JUANITO ACUIN, MAMERTA
MANGUBAT, RAUL SONON, ELGAR PEMIS, ORLANDO PARAGUISON,
FERDINAND VELASCO, MIKE ASTULERO, MAGNO DECALSO, NENITA
OROSEA, JOSE TIMING, ANTONIO MANALILI, RODELIO QUERIA and
REYNALDO SANTOS, respondents.

Ponce Enrile, Cayetano, Reyes Manalastas for petitioner.

Tupaz & Associates and Alfredo L. Bentulan for private respondents.

NOCON, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court with a prayer
for the issuance of a temporary restraining order to annul and set aside the
decision 1 promulgated November 7, 1991 by the National Labor Relations
Commission (NLRC) of Manila reversing the decision dated December 19, 1989
of the Labor Arbiter Cornelio L. Linsangan.

It appears on record that private respondents Juanito Acuin, Mamerta Mangubat,

Raul Sonon, Elgar Pemis, Orlando Paraguison, Ferdinand Velasco, Mike
Astulero, Magno Decalso, Nenita Orosea, Jose Timing, Antonio Manalili, Rodelio
Queria and Reynaldo Santos were employees of petitioner Philippine Village
Hotel. However, on May 19, 1986, petitioner had to close and totally discontinue
its operations due to serious financial and business reverses resulting in the
termination of the services of its employees.

Thereafter, the Philippine Village Hotel Employees and Workers Union filed
against petitioner a complaint for separation pay, unfair labor practice and illegal
lock-out.

On May 27, 1987, the Labor Arbiter issued and Order finding the losses suffered
by petitioner to be actual, genuine and of such magnitude as to validly terminate
the services of private respondents but directed petitioner "to give priority to the
complainants (herein private respondents) in [the] hiring of personnel should they
resume their business operations in the future." 2

On appeal, the NLRC affirmed the validity of the closure of petitioner but ordered
petitioner to pay private respondent separation pay at the rate of 1/2 month pay
every year of service. However, there is nothing in the records to show that
private respondents received their separation pay as the decision of the NLRC
remained unenforced as of this date.

On February 1, 1989, petitioner decided to have a one (1) month dry-run

operation to ascertain the feasibility of resuming its business operations. In order
to carry out its dry-run operation, petitioner hired casual workers, including
private respondents, for a one (1) month period, or from February 1, 1989 to
March 1, 1989, as evidenced by the latter's Contract of Employment. 3

After evaluating the individual performance of all the employees and upon the
lapse of the contractual one-month period or on March 2, 1989, petitioner
terminated the services of private respondents.

On April 6, 1989, private respondents and Tupas Local Chapter No. 1362 filed a
complaint against petitioner for illegal dismissal and unfair labor practice with the
NLRC-NCR Arbitration Branch in NLRC Case No.
00-04-01665-89.

On December 19, 1989, the Labor Arbiter rendered a decision, the dispositive
portion of which reads, as follows:

WHEREFORE, finding the above-entitled complaint to be without factual and

legal basis, judgment is hereby rendered dismissing the same. 4

Thereafter, private respondents appealed to the public respondent NLRC.

On November 7, 1991, public NLRC reversed the decision of the Labor Arbiter,
the dispositive portion of which reads as follows:

WHEREFORE, under the premises, let the decision appealed from be, as it is
hereby reversed, and a new judgment rendered, hereby ordering the respondent
Philippine Village Hotel to reinstate the above-named complainants to their
former or substantially equivalent positions without loss of seniority rights plus full
backwages from the time they were actually dismissed on 02 March 1989 up to
the time of their actual reinstatement, but which period of time should not exceed
three (3) years.

The complaint for unfair labor practice is hereby dismissed for lack of adequate
factual basis. 5

On March 5, 1992, petitioners Motion for Reconsideration was denied for lack of
merit.

Hence, this petition alleging grave abuse of discretion on the part of the public
respondent NLRC in finding that private respondents are regular employees of
petitioner considering that the latter's services were already previously
terminated in 1986 and that their employment contracts specifically provided only
for a temporary one-month period of employment.

The petition is impressed with merit.

An examination of the contents of the private respondents' contracts of

employment shows that indeed private respondents voluntarily and knowingly
agreed to be employed only for a period of one (1) month or from February 1,
1989 to March 1, 1989.

The fact that private respondents were required to render services usually
necessary or desirable in the operation of petitioner's business for the duration of
the one (1) month dry-run operation period does not in any way impair the validity
of the contractual nature of private respondents' contracts of employment which
specifically stipulated that the employment of the private respondents was only
for one (1) month.

In upholding the validity of a contract of employment with a fixed or specific

period, we have held 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, a day certain being understood to be that which
must necessarily come, although it may not be known when. The term period
was further defined to be the 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. 6 This ruling is only in consonance with Article 280 of the Labor Code
which provides:

Art. 280. Regular and Casual Employment. � The provisions of written

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

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed and his
employment shall continue while such actually exists.

Inasmuch as private respondents' contracts of employment categorically

provided a fixed period and their termination had already been agreed upon at
the time of their engagement, private respondents' employment was one with a
specific period or day certain agreed upon by the parties. In Philippine National
Oil Company-Energy Development Corporation vs. NLRC, 7 we held that:

As can be gleaned from the said case (Brent School, Inc. vs. Zamora, 181 SCRA
702), the two guidelines by which fixed contracts of employments can be said
NOT to circumvent security of tenure, are either:

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 employee dealt with each other
on more or less equal terms with no moral dominance whatever being exercised
by the former on the latter."

In the instant case, private respondents were validly terminated by the petitioner
when the latter had to close its business due to financial losses. Following the
directives of the NLRC to give priority in hiring private respondents should it
resume its business, petitioner hired private respondents during their one (1)
month dry-run operation. However, this does not mean that private respondents
were deemed to have continued their regular employment status, which they had
enjoyed before their aforementioned termination due to petitioner's financial
losses. As stated by the Labor Arbiter in his decision:

It should be borne in mind that when complainants were first terminated as a

result of the company's cessation from operation in May, 1986 the employer-
employee relationship between the parties herein was totally and completely
severed. Such being the case, respondent acted well within its discretion when in
rehiring the complainants (herein private respondents) it made them casual and
for a specific period. The complainants are no better than the new employees of
respondent (petitioner) for the matter of what status or designation to be given
them exclusively rests in the discretion of management. 8

Besides, the previous decision of the public respondent NLRC in Case No. 8-
3277-86 finding the termination of private respondents' employment to be valid
has long become final and executory. Public respondent NLRC cannot anymore
argue that the temporary cessation of the petitioner's operation due to financial
reverses merely suspended private respondents' employment. The employee-
employer relationship had come to an end when the employer had closed its
business and ceased operations. The hiring of new employees when it re-opened
after three (3) years is valid and to be expected. The prior employment which
was terminated cannot be joined or tacked to the new employment for purposes
of security of tenure.

While it is true that security of tenure is a constitutionally guaranteed right of the

employees, it does not, however, mean perpetual employment for the employee
because our law, while affording protection to the employee, does not authorize
oppression or destruction of an employer. It is well settled that the employer has
the right or is at liberty to choose who will be hired and who will be denied
employment. The right of a laborer to sell his labor to such persons as he may
choose is, in its essence, the same as the right of an employer to purchase labor
from any person whom it chooses. The employer and the employee have an
equality of right guaranteed by the Constitution. If the employer can compel the
employee to work against the latter's will, this is servitude. If the employee can
compel the employer to give him work against the employer's will, this is
oppression. 9

Thus, public respondent NLRC had indubitably committed grave abuse of

discretion when it modified the final decision of the NLRC Case No. 8-3277-86
which remain unenforced as of this date. Private respondents' remedy is to file a
motion for execution, if it is still within the reglementary 5-year period, or to file an
action to enforce said decision. (Article 224(a), Labor Code)

WHEREFORE, this petition for certiorari is GRANTED and the questioned of the
public respondent NLRC is hereby SET ASIDE thereby dismissing the complaint
against petitioner.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.

# Footnotes

1 Penned by Commissioner Edna Bonto-Perez with the concurrence of

Commissioner Domingo H. Zapanta and Commissioner Rustico L. Diokno.

2 Rollo, p. 24.

3 Id., at pp. 35-41, Annex "C", "I".

4 Id., at 45.

5 Id., at pp. 32-33.

6 Escareal vs. National Labor Relations Commission, 213 SCRA 472 [1992].

7 G.R. No. 97747, promulgated on March 31, 1993.

8 Rollo, pp. 44-45.

9 International Catholic Migration Commission vs. NLRC 169 SCRA 606, January
30, 1989.

The Lawphil Project - Arellano Law Foundation

The Lawphil Project - Arellano Law Foundation
G.R. No. 172038 April 14, 2008
DANTE D. DE LA CRUZ vs. MAERSK FILIPINAS
CREWING, INC., ET AL.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 172038 April 14, 2008

DANTE D. DE LA CRUZ, petitioner,

vs.
MAERSK FILIPINAS CREWING, INC. and ELITE SHIPPING A.S.,
respondents.

DECISION

CORONA, J.:

This petition for review on certiorari1 seeks to set aside the November 26, 2004
decision2 and March 9, 2006 resolution3 of the Court of Appeals (CA) in CA-
G.R. SP No. 74097.

Respondent Elite Shipping A.S. hired petitioner Dante D. de la Cruz as third

engineer for the vessel M/S Arktis Morning through its local agency in the
Philippines, co-respondent Maersk Filipinas Crewing Inc. The contract of
employment was for a period of nine months, starting April 19, 1999, with a
monthly basic salary of US$1,004.00 plus other benefits.

Petitioner was deployed to Jebel Ali, United Arab Emirates and boarded M/S
Arktis Morning on May 14, 1999.

In a logbook entry dated June 18, 1999, chief engineer Normann Per Nielsen
expressed his dissatisfaction over petitioner's performance:

3rd Eng. Dante D. de la Cruz has[,] since he signed on[,] not been able to
live up to the company's SMS job describtion (sic) for 3rd Engineer[.]
Today he has been informed that if he do[es] not improve his
Job/Working performance within [a] short time he will be signed off
according to CBA Article 1 (7).

Said Article 1 (7) of the collective bargaining agreement (CBA) between

respondent Elite Shipping A.S. and its employees reads:

(7) The first sixty (60) days of service is to be considered a probationary

period which entitles a shipowner or his representative, i.e.[,] the master
of the vessel[,] to terminate the contract by giving fourteen (14) days of
written notice.

This entry was followed by another one dated June 26, 1999 which was similar
in content.

On June 27, 1999, petitioner was informed of his discharge through a notice
captioned "Notice according to CBA Article 1 (7)," to wit:

To: 3rd engineer Dante D. de la Cruz

Pls. be informed that you will be discharged according to CBA article 1

(7) in first possible port. Reason for the decision is, as you have been
informed by chief engineer Per Nielsen on several occasions, he [does]
not find you qualified for the position as 3rd engineer onboard this vessel.
The chief engineer has also made 2 entries in the engine logbook,
regarding your insufficient job/working, which you are well aware of.

Petitioner was then made to disembark at the port of Houston, Texas and was
repatriated to Manila on July 17, 1999.

Petitioner thereafter filed a complaint for illegal dismissal with claims for the
monetary equivalent of the unexpired portion of his contract, damages and
attorney's fees in the National Labor Relations Commission (NLRC) on
September 21, 1999.

The labor arbiter (LA) ruled that petitioner was dismissed without just cause and
due process as the logbook entry (which respondents claimed to be the first
notice to petitioner) was vague. It failed to expound on or state the details of
petitioner's shortcomings or infractions. As such, petitioner was deprived of a
real or meaningful opportunity to explain his side. Hence, the LA ruled that
petitioner was entitled to a monetary equivalent of salaries for three months,
moral and exemplary damages and attorney's fees.

On appeal, the NLRC upheld the LA's finding of illegal dismissal but deleted the
award of moral and exemplary damages. Respondents moved for
reconsideration. It was denied.

Thereafter, respondents filed a petition for certiorari (under Rule 65) with the
CA. It granted the petition. It held that, although the findings of fact of the LA
and NLRC were entitled to great respect, this rule was inapplicable because the
NLRC committed grave abuse of discretion in upholding the LA's decision. The
findings were not only unsupported by substantial evidence but were also based
solely on the ground that the logbook entries were vague and without concrete
standards.

The CA deemed the logbook entries to be sufficient compliance with the first
notice requirement of the law. It was a written appraisal of petitioner's poor job
performance coupled with a warning that should he fail to improve his
performance, he would be signed off in accordance with the provisions of the
CBA. It reasoned that a probationary employee may be dismissed at anytime
during the probationary period for failure to live up to the expectations of the
employer.

Petitioner filed a motion for reconsideration of the CA decision. It was denied.

Hence, this petition.

The main issue raised before us is whether or not petitioner was illegally
dismissed by respondents.

Before addressing the merits of the controversy, we need to settle two

preliminary issues. First, respondents interposed in their comment that the
present petition should be dismissed outright as the motion for extension of time
to file this petition for review was filed late.

In his petition, petitioner indicated that he received a copy of the CA resolution

(dated March 9, 2006) denying his motion for reconsideration on March 24,
2006. He, therefore, had until April 8, 2006 to appeal said resolution to this Court
or to file a motion for extension of time to file the petition. However, as April 8,
2006 fell on a Saturday, petitioner deemed it sufficient compliance to file his
motion for extension on April 10, 2006, in accordance with Section 1, Rule 22 of
the Rules of Court:

SECTION 1. How to compute time. - xxx If the last day of the period, as
thus computed, falls on a Saturday, a Sunday, or a legal holiday in the
place where the court sits, the time shall not run until the next working
day.

Respondents countered that A.M. No. 00-2-14-SC dated February 29, 2000 (Re:
Computation of Time When the Last Day Falls on Saturday, Sunday or Legal
Holiday and a Motion for Extension on Next Working Day is Granted) clarified
that the aforementioned rule is applicable only to the filing of pleadings other
than motions for extension of time, such that when a party seeks an extension to
file a desired pleading, the provision no longer applies and the motion should be
filed on the due date itself, regardless of the fact that it falls on a Saturday,
Sunday or legal holiday.

Respondents' contention is incorrect.

A.M. No. 00-2-14-SC provides:

xxx

Whereas, the aforecited provision [Section 1, Rule 22 of the Rules of

Court] applies in the matter of filing of pleadings in courts when the due
date falls on a Saturday, Sunday or legal holiday, in which case, the filing
of the said pleading on the next working day is deemed on time;

Whereas, the question has been raised if the period is extended ipso jure
to the next working day immediately following where the last day of the
period is a Saturday, Sunday or legal holiday so that when a motion for
extension of time is filed, the period of extension is to be reckoned from
the next working day and not from the original expiration of the period.

NOW THEREFORE, the Court Resolves, for the guidance of the Bench
and the Bar, to declare that Section 1, Rule 22 speaks only of "the last day
of the period" so that when a party seeks an extension and the same is
granted, the due date ceases to be the last day and hence, the provision no
longer applies. Any extension of time to file the required pleading
should therefore be counted from the expiration of the period
regardless of the fact that said due date is a Saturday, Sunday or
legal holiday. (emphasis supplied)

Section 1, Rule 22, as clarified by the circular, is clear. Should a party desire to
file any pleading, even a motion for extension of time to file a pleading, and the
last day falls on a Saturday, Sunday or a legal holiday, he may do so on the next
working day. This is what petitioner did in the case at bar.

However, according to the same circular, the petition for review on certiorari was
indeed filed out of time. The provision states that in case a motion for extension
is granted, the due date for the extended period shall be counted from the original
due date, not from the next working day on which the motion for extension was
filed. In Luz v. National Amnesty Commission,4 we had occasion to expound on
the matter. In that case, we held that the extension granted by the court should be
tacked to the original period and commences immediately after the expiration of
such period.

In the case at bar, although petitioner's filing of the motion for extension was
within the period provided by law, the filing of the petition itself was not on
time. Petitioner was granted an additional period of 30 days within which to file
the petition. Reckoned from the original period, he should have filed it on May 8,
2006. Instead, he did so only on May 11, 2006, that is, 3 days late.

Nevertheless, we will gloss over this technicality and resolve the case on its
merits in the exercise of this Court's equity jurisdiction as we have done in a
number of cases.5

Well settled is the rule that litigations should, as much as possible, be decided on
their merits and not on technicalities.6 In accordance with this legal precept, this
Court has ruled that being a few days late in the filing of the petition for review
does not automatically warrant the dismissal thereof,7 specially where strong
considerations of substantial justice are manifest in the petition.8 Such is the case
here.

The second preliminary issue we need to address is the matter of this Court's
jurisdiction in petitions for review on certiorari under Rule 45. It should be noted
that our jurisdiction in such cases is limited only to questions of law. It does not
extend to questions of fact. This doctrine applies with greater force in labor
cases.9 As such, the findings of fact of the CA are binding and conclusive upon
this Court. However, this rule is not absolute but admits of certain exceptions.
Factual findings may be reviewed in a case when the findings of fact of the LA
and the NLRC are in conflict with those of the CA.10 In this case, the LA and the
NLRC held that respondents did not comply with the notice requirement; the CA
found otherwise. Thus, although the instant petition involves a question of fact,
that is, whether or not the notice requirement was met, we can still rule on it.

Now, the merits of the instant controversy.

The CA committed an error in holding that petitioner was not illegally dismissed.
The contrary findings and conclusions made by the LA and the NLRC were
supported by jurisprudence and the evidence on record.

An employer has the burden of proving that an employee's dismissal was for a
just cause. Failure to show this necessarily means that the dismissal was
unjustified and therefore illegal.11 Furthermore, not only must the dismissal be
for a cause provided by law, it should also comply with the rudimentary
requirements of due process, that is, the opportunity to be heard and to defend
oneself.12

These requirements are of equal application to cases of Filipino seamen recruited

to work on board foreign vessels. Procedural due process requires that a seaman
must be given a written notice of the charges against him and afforded a formal
investigation where he can defend himself personally or through a representative
before he can be dismissed and disembarked from the vessel.13 The employer is
bound to furnish him two notices: (1) the written charge and (2) the written
notice of dismissal (in case that is the penalty imposed).14 This is in accordance
with the POEA Revised Standard Employment Terms and Conditions Governing
the Employment of Filipino Seafarers on Board Ocean-Going Vessels (POEA
Revised Standard Employment Terms and Conditions).

Section 17 of the POEA Revised Standard Employment Terms and Conditions

laid down the disciplinary procedures to be taken against erring seafarers:

Section 17. DISCIPLINARY PROCEDURES

The Master shall comply with the following disciplinary procedures

against an erring seafarer:

A. The Master shall furnish the seafarer with a written notice containing
the following:

1. Grounds for the charges as listed in Section 31 of this Contract.

2. Date, time and place for a formal investigation of the charges

against the seafarer concerned.

B. The Master or his authorized representative shall conduct the

investigation or hearing, giving the seafarer the opportunity to explain or
defend himself against the charges. An entry on the investigation shall be
entered into the ship's logbook.

C. If, after the investigation or hearing, the Master is convinced that

imposition of a penalty is justified, the Master shall issue a written notice
of penalty and the reasons for it to the seafarer, with copies furnished to
the Philippine agent.

xxx xxx xxx

Furthermore, the notice must state with particularity the acts or omissions for
which his dismissal is being sought.15

Contrary to respondents' claim, the logbook entries did not substantially comply
with the first notice, or the written notice of charge(s). It did not state the
particular acts or omissions for which petitioner was charged. The statement
therein that petitioner had "not been able to live up to the company's SMS job
description for 3rd Engineer" and that he had "been informed that if he [does] not
improve his job/working performance within [a] short time he will have to be
signed off according to CBA Article 1 (7)" was couched in terms too general for
legal comfort.
The CA held that the logbook entries were sufficient to enable petitioner to
explain his side or to contest the negative assessment of his performance and
were clearly intended to inform him to improve the same. We cannot fathom how
the CA arrived at such a conclusion. The entries did not contain any information
at all as to why he was even being warned of discharge in the first place. Even
we were left to speculate as to what really transpired, calling for such an extreme
course of action from the chief engineer. The entries raised more questions than
answers.

How exactly was he unable to live up to the company's SMS job description of a
third engineer? Respondents should have indicated the grounds for the threatened
termination, the specific acts or omissions illustrating the same, along with the
date and the approximate time of their occurrence. For how else could petitioner
be expected to meet the charges against him if all he was given as reason for his
discharge was a vague and general accusation such as that handed down by the
chief engineer? Even if the chief engineer verbally informed him of what his
specific shortcomings were, as insisted upon by respondents, the POEA Revised
Standard Employment Terms and Conditions and jurisprudence require that the
charges be put in writing.

The same thing may be said of the written notice of dismissal. It sorely lacked
the necessary details that should accompany it. Instead of delving into the
grounds for petitioner's discharge, it merely echoed the logbook entries by
nebulously justifying his dismissal on the ground that the chief engineer "[did]
not find [petitioner] qualified for the position as 3rd engineer." Much like the first
notice, it barely made mention of the grounds for his discharge. Again, we were
left in the dark as to the nature of the acts or omissions relied upon as basis for
the termination of petitioner's employment.

These ambiguities, attributable solely to respondents, should be resolved against

them.

Moreover, we observed that the records were devoid of any proof indicating that
petitioner was ever given an opportunity to present his side. In their comment,
respondents in fact admitted not having conducted any formal investigation:

A formal investigation in this case was not necessary because the findings
against petitioner were not in the form of infractions that ought to be
investigated. The issue against petitioner was the quality of his work as
3rd Engineer. Having been duly notified of his shortcomings, it devolved
upon the petitioner to improve the quality of his work in order to pass his
probationary period and be a regular employee. But petitioner did not.

They also insisted that as petitioner was served notice of his termination, the
same constituted sufficient compliance with the requirement of notice and due
process as the notice gave him an opportunity to defend himself.16

Clearly, respondents were unmindful of the requirements explicitly laid down by

law and jurisprudence. Anything short of complying with the same amounts to a
dismissal. Thus, no amount of justification from respondents can move us now to
declare the dismissal as being in accordance with the procedural requirements
provided for by law. It cannot be overemphasized that sufficient notice should be
given as part of due process because a worker's employment is his property in
the constitutional sense.17

As to the substantive aspect of the requirement, suffice it to say that respondents

dismally failed to prove that petitioner's termination from employment was for
cause. As the logbook entries were too general and vague, we cannot even reach
any conclusion on whether or not respondents had a valid cause to discharge
petitioner. Not only was petitioner's dismissal procedurally flawed, it was also
without just cause.

Lastly, petitioner and respondents were at odds over the former's employment
status when he was discharged from the vessel. It was petitioner's position that he
was already a regular employee when his services were terminated; respondents,
on the other hand, insisted that he was then still on probationary status. This,
according to respondents, entitled them to dismiss him in accordance with the
provisions of Article 1 (7) of the CBA (which allows the master to terminate the
contract of one under probation by merely serving a written notice 14 days prior
to the contemplated discharge) and the requirements on the termination of a
probationary employee's employment as laid down in Manila Hotel Corporation
v. NLRC.18

It is well to remind both parties that, as early as Brent School, Inc. v. Zamora,19
we already held that seafarers are not covered by the term regular employment,
as defined under Article 280 of the Labor Code. This was reiterated in Coyoca v.
National Labor Relations Commission.20 Instead, they are considered contractual
employees whose rights and obligations are governed primarily by the POEA
Standard Employment Contract for Filipino Seamen (POEA Standard
Employment Contract), the Rules and Regulations Governing Overseas
Employment, and, more importantly, by Republic Act No. 8042, otherwise
known as The Migrant Workers and Overseas Filipinos Act of 1995.21 Even the
POEA Standard Employment Contract itself mandates that in no case shall a
contract of employment concerning seamen exceed 12 months.

It is an accepted maritime industry practice that the employment of seafarers is

for a fixed period only. The Court acknowledges this to be for the mutual interest
of both the seafarer and the employer. Seafarers cannot stay for a long and
indefinite period of time at sea as limited access to shore activity during their
employment has been shown to adversely affect them. Furthermore, the diversity
in nationality, culture and language among the crew necessitates the limitation of
the period of employment.22

While we recognize that petitioner was a registered member of the Associated

Marine Officers and Seamen's Union of the Philippines which had a CBA with
respondent Elite Shipping A.S. providing for a probationary period of
employment, the CBA cannot override the provisions of the POEA Standard
Employment Contract. The law is read into, and forms part of, contracts. And
provisions in a contract are valid only if they are not contrary to law, morals,
good customs, public order or public policy.23

In Millares v. NLRC,24 this Court had occasion to rule on the use of the terms
"permanent and probationary masters and employees" vis-à-vis contracts of
enlistment of seafarers. In that case, petitioners made much of the fact that they
were continually re-hired for 20 years by private respondent Esso International.
By such circumstances, they claimed to have acquired regular status with all the
rights and benefits appurtenant thereto. The Court quoted with favor the NLRC's
explanation that the reference to permanent and probationary masters and
employees was a misnomer. It did not change the fact that the contract for
employment was for a definite period of time. In using the terms
"probationary" and "permanent" vis-à-vis seafarers, what was really meant
was "eligible for re-hire."

This is the only logical explanation possible as the parties cannot and should not
violate the POEA's directive that a contract of enlistment must not exceed 12
months.

WHEREFORE, the petition is hereby GRANTED. The November 26, 2004

decision and March 9, 2006 resolution of the Court of Appeals in CA-G.R. SP
No. 74097 are REVERSED and SET ASIDE. The March 22, 2002 resolution of
the National Labor Relations Commission in NLRC NCR CA No. 029139-01 is
REINSTATED.

SO ORDERED.

Puno, C.J., Chairperson, Carpio, Azcuna*, Leonardo-de Castro, JJ., concur.

Footnotes
*
On Official Leave.
1
Under Rule 45 of the Rules of Court.
2
Penned by Associate Justice Portia Alino-Hormachuelos and concurred
in by Associate Justices Rebecca De Guia-Salvador and Aurora Santiago-
Lagman of the Seventh Division of the Court of Appeals. Rollo, pp. 311-
324.
3
Id., pp. 341-343.
4
G.R. No. 159708, 24 September 2004, 439 SCRA 111, 115.
5
Orata v. IAC, G.R. No. 73471, 8 May 1990, 185 SCRA 148, 152, citing
St. Peter Memorial Park, Inc. v. Cleofas, 206 Phil 224, 233-234 (1983).
In Ramos v. Bagasao, No. L-51552, 28 February 1980, 96 SCRA 395, we
held that the delay of four (4) days in filing a notice of appeal and a
motion for an extension of time to file a record on appeal can be excused
on the basis of equity with the additional consideration that said record
was then already with respondent judge.
6
Id., citing Galdo v. Rosete, No. L-47342, 25 July 1978, 84 SCRA 239,
242-243.
7
Id., citing Serrano v. CA, No. L-46307, 9 October 1985, 139 SCRA 179,
186.
8
Id.
9
Skippers United Pacific, Inc. v. NLRC, G.R. No. 148893, 12 July 2006,
494 SCRA 661, 667.
10
Bernardo v. CA, G.R. No. 124261, 27 May 2004, 429 SCRA 285, 299-
300. In that case, we held that the findings of fact of administrative
bodies, if based on substantial evidence, are controlling on the reviewing
authority. It is not for the appellate court to substitute its own judgment
for that of the administrative agency on the sufficiency of the evidence
and the credibility of the witnesses. Administrative decisions on matters
within their jurisdiction are entitled to respect and can only be set aside
on proof of grave abuse of discretion, fraud or error of law.
11
Skippers United Pacific, Inc. v. NLRC, supra, citing Pascua v. NLRC,
351 Phil 48, 62 (1998).
12
Pascua v. NLRC, supra, 62-63.
13
See Seahorse Maritime Corporation v. NLRC, G.R. No. 84712, 15 May
1989, 173 SCRA 390. In that case, the Court held that as private
respondent Singian was not informed of the cause or causes of his
dismissal and was not investigated nor given a chance to air his side, his
dismissal was without due process. However, the Court also ruled that his
dismissal was for cause as he was given to drunkenness, violent temper,
insubordination and habitual absenteeism. The Court found that these
charges were not seriously controverted.
14
Skippers United Pacific, Inc. v NLRC, supra note 9, citing Skippers
Pacific, Inc. v. Mira, 440 Phil 906, 919 (2002) and Tingson v. NLRC,
G.R. No. 84702, 18 May 1990, 185 SCRA 498, 502, citing National
Service Corporation v. NLRC, No. L-69870, 29 November 1988, 168
SCRA 122.
15
Bondoc v. NLRC, 342 Phil 250, 258 (1997).
16
Per position paper for respondent, rollo, p. 35; reply to complainant's
position paper, id., p. 75; and respondent's rejoinder, id., p. 88. However,
in their notice and memorandum of appeal to the NLRC, id., p. 127,
respondents, probably sensing the fallacy of their argument, contended
that, "[c]omplainant was first notified to improve his performance.
Thereafter he was given a notice of termination. The first notice gave him
an opportunity not only to improve his performance[,] but more
importantly[,] to defend himself." This argument was reiterated in their
petition for certiorari filed in the CA, id., p. 168.
17
Zagala v. Mikado Philippines Corporation, G.R. No. 160863, 27
September 2006, 503 SCRA 581, 589; Coca-Cola Bottlers, Phils., Inc. v.
Kapisanan ng Malayang Manggagawa sa Coca-Cola-FFW, G.R. No.
148205, 28 February 2005, 452 SCRA 480, 500; Asuncion v. NLRC, et
al., 414 Phil 329, 336 (2001) and Maneja v. NLRC, 353 Phil 45, 66
(1998).
18
225 Phil 127, 135 (1986). This case enumerated the limitations for the
termination of a probationary employee's employment, to wit:

1. It must be exercised in accordance with the specific

requirements of the contract;

2. If a particular time is prescribed, the termination must be within

such time and if formal notice is required, then that form must be
used;

3. The employer's dissatisfaction must be real and in good faith,

not feigned so as to circumvent the contract or the law;
 4. There must be no unlawful discrimination in the dismissal.
19
G.R. No. 48494, 5 February 1990, 181 SCRA 702, 714.
20
312 Phil 1137, 1144 (1995).
21
Skippers United Pacific, Inc. v. NLRC, supra note 9, citing Ravago v.
ESSO Eastern Marine, Ltd., G.R. No. 158324, 14 March 2005, 453
SCRA 381, 402.
22
Pentagon International Shipping, Inc. v. Adelantar, G.R. No. 157373,
27 July 2004, 435 SCRA 342, 348, citing Millares v. NLRC, 434 Phil 524,
539 (2002).
23
Civil Code, Art. 1306.
24
Supra.

FIRST DIVISION

POSEIDON FISHING/TERRY G.R. No. 168052

DE JESUS,

Petitioners,

Present:

PANGANIBAN, C.J.

Chairperson,
- versus - YNARES-SANTIAGO,

AUSTRIA-MARTINEZ,

CALLEJO, SR.,* and

CHICO-NAZARIO, JJ.

NATIONAL LABOR RELATIONS

COMMISSION AND JIMMY S.
ESTOQUIA, Promulgated:

Respondents.

February 20, 2006

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Article 280 of the Labor Code, in its truest sense, distinguishes

between regular and casual employees to protect the interests of labor. Its
language evidently manifests the intent to safeguard the tenurial interest of
the worker who may be denied the rights and benefits due a regular
employee by virtue of lopsided agreements with the economically powerful
employer who can maneuver to keep an employee on a casual status for as
long as convenient.

This petition assails the Decision of the Court of Appeals dated 14

March 2005 in CA-G.R. SP No. 81140 entitled, “Poseidon Fishing/Terry De
Jesus v. National Labor Relations Commission and Jimmy S. Estoquia”
which affirmed that of the National Labor Relations Commission (NLRC).
The NLRC had affirmed with modification the Decision dated 5 December
2000 of Labor Arbiter Melquiades Sol D. Del Rosario in NLRC-NCR Case
No. 00-07-03625-00, declaring private respondent to have been illegally
dismissed and entitled to backwages and separation pay.

As thoroughly told by the Court of Appeals and the Labor Arbiter, the
particulars are beyond dispute:

Petitioner Poseidon Fishing is a fishing company engaged in the deep-

sea fishing industry. Its various vessels catch fish in the outlying islands of
the Philippines, which are traded and sold at the Navotas Fish Port. One of
its boat crew was private respondent Jimmy S. Estoquia. Petitioner Terry de
Jesus is the manager of petitioner company.

Private respondent was employed by Poseidon Fishing in January

1988 as Chief Mate. After five years, he was promoted to Boat Captain. In
1999, petitioners, without reason, demoted respondent from Boat Captain to
Radio Operator of petitioner Poseidon. As a Radio Operator, he monitored
the daily activities in their office and recorded in the duty logbook the names
of the callers and time of their calls.

On 3 July 2000, private respondent failed to record a 7:25 a.m. call in

one of the logbooks. However, he was able to record the same in the other
logbook. Consequently, when he reviewed the two logbooks, he noticed that
he was not able to record the said call in one of the logbooks so he
immediately recorded the 7:25 a.m. call after the 7:30 a.m. entry.

Around 9:00 o’clock in the morning of 4 July 2000, petitioner Terry de

Jesus detected the error in the entry in the logbook. Subsequently, she asked
private respondent to prepare an incident report to explain the reason for the
said oversight.

At around 2:00 o’clock in the afternoon of that same day, petitioner

Poseidon’s secretary, namely Nenita Laderas, summoned private respondent
to get his separation pay amounting to Fifty-Five Thousand Pesos
(P55,000.00). However, he refused to accept the amount as he believed that
he did nothing illegal to warrant his immediate discharge from work.
 Rising to the occasion, private respondent filed a complaint for illegal
dismissal on 11 July 2000 with the Labor Arbiter, alleging nonpayment of
wages with prayer for back wages, damages, attorney’s fees, and other
monetary benefits.

In private respondent’s position paper, he averred that petitioner

Poseidon employed him as a Chief Mate sometime in January 1988. He
claimed that he was promoted to the position of Boat Captain five years
after. However, in 1999, he was demoted from Boat Captain to Radio
Operator without any reason and shortly, he was terminated without just
cause and without due process of law.

Conversely, petitioners Poseidon and Terry de Jesus strongly asserted

that private respondent was a contractual or a casual employee whose
services could be terminated at the end of the contract even without a just or
authorized cause in view of Article 280 of the Labor Code, which provides:

Art. 280. Regular and Casual Employment. – The provisions of written

agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
 An employment shall be deemed to be casual if it is not covered by
the preceding paragraph: Provided, That any employee who has rendered
at least one year of service, whether such service is continuous or broken,
shall be considered 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 further posited that when the private respondent was

engaged, it was made clear to him that he was being employed only on a
“por viaje” or per trip basis and that his employment would be terminated at
the end of the trip for which he was being hired. As such, the private
respondent could not be entitled to separation pay and other monetary
claims.

On 5 December 2000, following the termination of the hearing of the

case, the Labor Arbiter decided in favor of private respondent. The Labor
Arbiter held that even if the private respondent was a casual employee, he
became a regular employee after a period of one year and, thereafter, had
attained tenurial security which could only be lost due to a legal cause after
observing due process. The dispositive portion of the Decision reads:

CONFORMABLY WITH THE FOREGOING, judgment is hereby

rendered finding complainant to have been illegally dismissed and so must
immediately be reinstated to his former position as radio operator and paid
by respondent[s] in solidum his backwages which as of December 3, 2000
 had already accumulated in the sum of P35,880.00 plus his unpaid one (1)
week salary in the sum of P1,794.00.

Respondents are further ordered to pay attorney’s fees in a sum

equivalent to 10% of the awarded claims.

Consequently, the petitioners filed their Memorandum of Appeal with the NLRC
for the reversal of the aforesaid decision. On 24 September 2002, the NLRC affirmed the
decision of the Labor Arbiter with the modification, inter alia, that: (a) the private
respondent would be paid his separation pay equivalent to one-half of his monthly pay for
every year of service that he has rendered in lieu of reinstatement; and (b) an amount
equivalent to six months salary should be deducted from his full backwages because it
was his negligence in the performance of his work that brought about his termination. It
held:

WHEREFORE, the decision is modified as follows:

1. The amount equivalent to six (6) months salary is to be deducted

from the total award of backwages;
2. The respondent is ordered to pay complainant separation pay
equivalent to one-half (1/2) month pay for every year of service
counted from 1998; x x x
3. The respondent is ordered to pay complainant’s unpaid wages in
the amount of P1,794.00; and
4. Respondent is ordered to pay attorney’s fees in a sum equivalent
to ten percent (10%) of the awarded claims.

Petitioners moved for the reconsideration of the NLRC decision, but

were denied in a Resolution dated 29 August 2003.
 Petitioners filed a Petition for Certiorari with the Court of Appeals,
imputing grave abuse of discretion, but the Court of Appeals found none.
The following is the fallo of the decision:

WHEREFORE, the foregoing premises considered, the instant

petition is hereby DENIED.

In a last attempt at vindication, petitioners filed the present petition for

review with the following assignment of errors:

I.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT

THE RESPONDENT WAS A REGULAR EMPLOYEE WHEN IN
TRUTH HE WAS A CONTRACTUAL/PROJECT/SEASONAL
EMPLOYEE.

II.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING

THAT THE RESPONDENT WAS ILLEGALLY DISMISSED FROM
EMPLOYMENT.

III.

THE HONORABLE COURT OF APPEALS ERRED IN NOT

CONSIDERING THE RESPONDENT A SEASONAL EMPLOYEE AND
APPLYING THE RULING IN RJL MARTINEZ FISHING
CORPORATION vs. NLRC THAT “THE ACTIVITY OF FISHING IS A
CONTINUOUS PROCESS AND COULD HARDLY BE CONSIDERED
AS SEASONAL IN NATURE.”

IV.
 THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
THAT THE RESPONDENT IS ENTITLED TO BACKWAGES,
SEPARATION PAY, ATTORNEY’S FEES AND OTHER MONETARY
BENEFITS.

V.

THE HONORABLE COURT OF APPEALS ERRED IN NOT

RESOLVING THE PRAYER FOR THE ISSUANCE OF PRELIMINARY
INJUNCTION AND/OR TEMPORARY RESTRAINING ORDER.

The fundamental issue entails the determination of the nature of the

contractual relationship between petitioners and private respondent, i.e., was
private respondent a regular employee at the time his employment was
terminated on 04 July 2000?

Asserting their right to terminate the contract with private respondent

per the “Kasunduan” with him, petitioners pointed to the provision thereof
stating that he was being employed only on a ‘’por viaje’’ basis and that his
employment would be terminated at the end of the trip for which he was
being hired, to wit:

NA, kami ay sumasang-ayon na MAGLINGKOD at GUMAWA ng mga

gawaing magmula sa pag-alis ng lantsa sa pondohan sa Navotas patungo
sa palakayahan; pabalik sa pondohan ng lantsa sa Navotas hanggang sa
paghango ng mga kargang isda.

Petitioners lament that fixed-term employment contracts are recognized as valid under
the law notwithstanding the provision of Article 280 of the Labor Code. Petitioners
theorize that the Civil Code has always recognized the validity of contracts with a fixed
and definite period, and imposes no restraints on the freedom of the parties to fix the
duration of the contract, whatever its object, be it species, goods or services, except the
general admonition against stipulations contrary to law, morals, good customs, public
order and public policy. Quoting Brent School Inc. v. Zamora, petitioners are hamstrung
on their reasoning that under the Civil Code, fixed-term employment contracts are not
limited, as they are under the present Labor Code, to those that by their nature are
seasonal or for specific projects with pre-determined dates of completion as they also
include those to which the parties by free choice have assigned a specific date of
termination. Hence, persons may enter into such contracts as long as they are capacitated
to act, petitioners bemoan.

We are far from persuaded by petitioners’ ratiocination.

Petitioners’ construal of Brent School, Inc. v. Zamora, has certainly

gone astray. The subject of scrutiny in the Brent case was the employment
contract inked between the school and one engaged as its Athletic Director.
The contract fixed a specific term of five years from the date of execution of
the agreement. This Court upheld the validity of the contract between therein
petitioner and private respondent, fixing the latter’s period of employment.
This Court laid down the following criteria for judging the validity of such
fixed-term contracts, to wit:

Accordingly, and since the entire purpose behind the development

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

Brent cited some familiar examples of employment contracts which

may neither be for seasonal work nor for specific projects, but to which a
fixed term is an essential and natural appurtenance, i.e., overseas
employment contracts, 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. Thus, in Brent, the acid test in
considering fixed-term contracts as valid is: if from the circumstances it is
apparent that periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be disregarded for being
contrary to public policy.

On the same tack as Brent, the Court in Pakistan International

Airlines Corporation v. Ople, ruled in this wise:

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 evade.

Consistent with the pronouncements in these two earlier cases, the

Court, in Cielo v. National Labor Relations Commission, did not hesitate to
nullify 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 the case under consideration, the agreement has such an objective -

to frustrate the security of tenure of private respondent- and fittingly, must
be nullified. In this case, petitioners’ intent to evade the application of
Article 280 of the Labor Code is unmistakable. In a span of 12 years, private
respondent worked for petitioner company first as a Chief Mate, then Boat
Captain, and later as Radio Operator. His job was directly related to the
deep-sea fishing business of petitioner Poseidon. His work was, therefore,
necessary and important to the business of his employer. Such being the
scenario involved, private respondent is considered a regular employee of
petitioner under Article 280 of the Labor Code, the law in point, which
provides:

Art. 280. Regular and Casual Employment. – The provisions of

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

An employment shall be deemed to be casual if it is not covered by

the preceding paragraph: Provided, That any employee who has rendered
at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such
actually exists. (Emphasis supplied.)

Moreover, unlike in the Brent case where the period of the contract
was fixed and clearly stated, note that in the case at bar, the terms of
employment of private respondent as provided in the Kasunduan was not
only vague, it also failed to provide an actual or specific date or period
for the contract. As adroitly observed by the Labor Arbiter:

There is nothing in the contract that says complainant, who

happened to be the captain of said vessel, is a casual, seasonal or a project
worker. The date July 1 to 31, 1998 under the heading “Pagdating” had
been placed there merely to indicate the possible date of arrival of the
vessel and is not an indication of the status of employment of the crew of
the vessel.

Actually, the exception under Article 280 of the Labor Code in

which the respondents have taken refuge to justify its position does not
apply in the instant case. The proviso, “Except where the employment has
been fixed for a specific project or undertaking the completion or
determination 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.” (Article
280 Labor Code), is inapplicable because the very contract adduced by
respondents is unclear and uncertain. The kasunduan does not specify the
duration that complainant had been hired x x x. (Emphasis supplied.)
 Furthermore, as petitioners themselves admitted in their petition
before this Court, private respondent was repeatedly hired as part of the
boat’s crew and he acted in various capacities onboard the vessel. In
Integrated Contractor and Plumbing Works, Inc. v. National Labor
Relations Commission, we held that the test to determine whether
employment is regular or not is the reasonable connection between the
particular activity performed by the employee in relation to the usual
business or trade of the employer. And, 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.

In Bustamante v. National Labor Relations Commission, the Court

expounded on what are regular employees under Article 280 of the Labor
Code, viz:

It is undisputed that petitioners were illegally dismissed from

employment. Article 280 of the Labor Code, states:
ART. 280. Regular and Casual Employment. - The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual
business or trade of the employer, except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration
of the season.
An employment shall be deemed to be casual if it is not covered by
the preceding paragraph: Provided, that, any employee who has rendered
 at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such
activity exists.
This provision draws a line between regular and casual
employment, a distinction however often abused by employers. The
provision enumerates two (2) kinds of employees, the regular employees
and the casual employees. The regular employees consist of the
following:
1) those engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer; and
2) those who have rendered at least one year of service whether
such service is continuous or broken.

Ostensibly, in the case at bar, at different times, private respondent

occupied the position of Chief Mate, Boat Captain, and Radio Operator. In
petitioners’ interpretation, however, this act of hiring and re-hiring actually
highlight private respondent’s contractual status saying that for every
engagement, a fresh contract was entered into by the parties at the outset as
the conditions of employment changed when the private respondent filled in
a different position. But to this Court, the act of hiring and re-hiring in
various capacities is a mere gambit employed by petitioner to thwart the
tenurial protection of private respondent. Such pattern of re-hiring and the
recurring need for his services are testament to the necessity and
indispensability of such services to petitioners’ business or trade.

Petitioners would brush off private respondent’s length of service by

stating that he had worked for the company merely for several years and that
in those times, his services were not exclusive to petitioners. On the other
hand, to prove his claim that he had continuously worked for petitioners
from 1988 to 2000, private respondent submitted a copy of his payroll from
30 May 1988 to October 1988 and a copy of his SSS Employees
Contributions as of the year 2000. These documents were submitted by
private respondent in order to benchmark his claim of 12 years of service.
Petitioners, however, failed to submit the pertinent employee files, payrolls,
records, remittances and other similar documents which would show that
private respondent’s work was not continuous and for less than 12 years.
Inasmuch as these documents are not in private respondent’s possession but
in the custody and absolute control of petitioners, their failure to refute
private respondent’s evidence or even categorically deny private
respondent’s allegations lead us to no other conclusion than that private
respondent was hired in 1988 and had been continuously in its employ since
then. Indeed, petitioners’ failure to submit the necessary documents, which
as employers are in their possession, gives rise to the presumption that their
presentation is prejudicial to its cause.

To recapitulate, it was after 12 long years of having private respondent

under its wings when petitioners, possibly sensing a brewing brush with the
law as far as private respondent’s employment is concerned, finally found a
loophole to kick private respondent out when the latter failed to properly
record a 7:25 a.m. call. Capitalizing on this faux pas, petitioner summarily
dismissed private respondent. On this note, we disagree with the finding of
the NLRC that private respondent was negligent on account of his failure to
properly record a call in the log book. A review of the records would
ineluctably show that there is no basis to deduct six months’ worth of salary
from the total separation pay that private respondent is entitled to. We note
further that the NLRC’s finding clashes with that of the Labor Arbiter which
found no such negligence and that such inadvertence on the part of private
respondent, at best, constitutes simple negligence punishable only with
admonition or suspension for a day or two.

As the records bear out, private respondent himself seasonably

realized his oversight and in no time recorded the 7:25 a.m. call after the
7:30 a.m. call. Gross negligence under Article 282 of the Labor Code, as
amended, connotes want of care in the performance of one’s duties, while
habitual neglect implies repeated failure to perform one’s duties for a period
of time, depending upon the circumstances. Here, it is not disputed that
private respondent corrected straight away the recording of the call and
petitioners failed to prove the damage or injury that such inadvertence
caused the company. We find, as the Labor Arbiter had found, that there is
no sufficient evidence on record to prove private respondent’s negligence,
gross or simple for that matter, in the performance of his duties to warrant a
reduction of six months salary from private respondent’s separation pay.
Moreover, respondent missed to properly record, not two or three calls, but
just a single call. It was also a first infraction on the part of private
respondent, not to mention that the gaffe, if at all, proved to be innocuous.
Thus, we find such slip to be within tolerable range. After all, is it not a rule
that in carrying out and interpreting the provisions of the Labor Code and its
implementing regulations, the workingman's welfare should be primordial?

Petitioners next assert that deep-sea fishing is a seasonal industry

because catching of fish could only be undertaken for a limited duration or
seasonal within a given year. Thus, according to petitioners, private
respondent was a seasonal or project employee.

We are not won over.

As correctly pointed out by the Court of Appeals, the “activity of

catching fish is a continuous process and could hardly be considered as
seasonal in nature.” In Philex Mining Corp. v. National Labor Relations
Commission, we defined project employees as 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. The principal test for determining whether particular employees
are “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 this
case, petitioners have not shown that private respondent was informed that
he will be assigned to a “specific project or undertaking.” As earlier noted,
neither has it been established that he was informed of the duration and
scope of such project or undertaking at the time of their engagement.

More to the point, in Maraguinot, Jr. v. National Labor Relations

Commission, we ruled 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.

In fine, inasmuch as private respondent’s functions as described above

are no doubt “usually necessary or desirable in the usual business or trade”
of petitioner fishing company and he was hired continuously for 12 years for
the same nature of tasks, we are constrained to say that he belongs to the ilk
of regular employee. Being one, private respondent’s dismissal without
valid cause was illegal. And, where illegal dismissal is proven, the worker is
entitled to back wages and other similar benefits without deductions or
conditions.

Indeed, it behooves this Court to be ever vigilant in checking the

unscrupulous efforts of some of our entrepreneurs, primarily aimed at
maximizing their return on investments at the expense of the lowly
workingman.

WHEREFORE, the present petition is hereby DENIED. The

Decision of the Court of Appeals dated 14 March 2005 in CA-G.R. SP No.
81140 is hereby AFFIRMED WITH MODIFICATION by deleting the
reduction of an amount equivalent to six months of pay from private
respondent’s separation pay. The case is remanded to the Labor Arbiter for
further proceedings solely for the purpose of determining the monetary
liabilities of petitioners in accordance with the decision. The Labor Arbiter is
ORDERED to submit his compliance thereon within thirty (30) days from
notice of this decision, with copies furnished to the parties. Costs against
petitioners.

SO ORDERED.

MINITA V. CHICO-NAZARIO

Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice

Chairperson
CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-
MARTINEZ

Associate Justice Associate Justice

On Leave

ROMEO J. CALLEJO, SR.

Associate Justice

C E R T I FI CAT I O N

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby

certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.

ARTEMIO V. PANGANIBAN
Chief Justice
* On leave.

Bustamante v. National Labor Relations Commission, 325 Phil. 415, 422 (1996),
citing Baguio Country Club Corporation v. National Labor Relations
Commission, G.R. No. 71662, 28 February 1992, 206 SCRA 643, 649.

Penned by Associate Justice Jose C. Reyes, Jr. with Associate Justices Delilah
Vidallon-Magtolis and Perlita J. Tria Tirona, concurring. Rollo, pp. 70-81.

Id., p. 71.

Id.

Id., pp. 140-141.

Id., p. 141.

Id.

Id.

Id., p. 146.

Id., pp. 174-175.

Id., p. 81.

Id., p. 16.

Id., p. 19.

G.R. No. 48494, 05 February 1990, 181 SCRA 702, 714.

Id., p. 716.
Id., p. 714.

G.R. No. 61594, 28 September 1990, 190 SCRA 90, 102.

G.R. No. 78693, 28 January 1991, 193 SCRA 410, 415.

Rollo, p. 143.

G.R. No. 152427, 09 August 2005, 466 SCRA 265, 273.

Id.

Supra note 1.

Id., p. 421.

Integrated Contractor and Plumbing Works, Inc. v. National Labor Relations

Commission, supra note 20, p. 273.

Rollo, 24.

Id., p. 132.

Id., p. 133.

Mayon Hotel & Restaurant v. Rolando Adana, G.R. No. 157634, 16 May 2005,
458 SCRA 609, 644.

Article 282 of the Labor Code enumerates the just causes for termination by the
employer: (a) serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or the latter’s representative in connection with the
employee’s work; (b) gross and habitual neglect by the employee of his duties; (c)
fraud or willful breach by the employee of the trust reposed in him by his
employer or his duly authorized representative; (d) commission of a crime or
offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representative; and (e) other causes
analogous to the foregoing. See Agabon v. National Labor Relations Commission,
G.R. No. 158693, 17 November 2004, 442 SCRA 573, 605.

Chua v. National Labor Relations Commission, G.R. No. 146780, 11 March 2005,
453 SCRA 244, 254.

Rollo, p. 144.

Salinas, Jr. v. National Labor Relations Commission, 377 Phil. 55, 65-66 (1999).
 Rollo, p. 78, citing RJL Martinez Fishing Corporation v. National Labor
Relations Commission, 212 Phil. 417, 424 (1984).

371 Phil. 48, 57 (1999).

348 Phil. 580, 606 (1998).

Caurdanetaan Piece Workers Union v. Laguesma, 350 Phil. 35, 73 (1998). Article
279 of the Labor Code states:

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.

Aurora Land Project Corp. v. National Labor Relations Commission, 334 Phil.
44, 48 (1997).