G.R. No.

148492 May 9, 2003

BUENAVENTURA C. MAGSALIN & COCA-COLA BOTTLERS PHILS., INC., petitioners,

vs.
NATIONAL ORGANIZATION OF WORKING MEN VITUG, J.:

Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondent workers as "sales
route helpers" for a limited period of five months. After five months, respondent workers were employed
by petitioner company on a day-to-day basis. According to petitioner company, respondent workers were
hired to substitute for regular sales route helpers whenever the latter would be unavailable or when there
would be an unexpected shortage of manpower in any of its work places or an unusually high volume of
work. The practice was for the workers to wait every morning outside the gates of the sales office of
petitioner company. If thus hired, the workers would then be paid their wages at the end of the day.

Ultimately, respondent workers asked petitioner company to extend to them regular appointments.
Petitioner company refused. On 07 November 1997, twenty-three (23) of the "temporary" workers (herein
respondents) filed with the National Labor Relations Commission (NLRC) a complaint for the
regularization of their employment with petitioner company. The complaint was amended a number of
times to include other complainants that ultimately totaled fifty-eight (58) workers. Claiming that
petitioner company meanwhile terminated their services, respondent workers filed a notice of strike and a
complaint for illegal dismissal and unfair labor practice with the NLRC.

On 01 April 1998, the parties agreed to submit the controversy, including the issue raised in the complaint
for regularization of employment, for voluntary arbitration. On 18 May 1998, the voluntary arbitrator
rendered a decision dismissing the complaint on the thesis that respondents (then complainants) were
not regular employees of petitioner company.

Respondent workers filed with the Court of Appeals a petition for review under Rule 43 of the Rules of
Civil Procedure assailing the decision of the voluntary arbitrator, therein contending that -

"1. The Voluntary Arbitrator committed errors in finding that petitioners voluntarily and knowingly agreed
to be employed on a day-to-day basis; and

"2. The Voluntary Arbitrator committed errors in finding that petitioners' dismissal was valid."1

In its decision of 11 August 2000, the Court of Appeals reversed and set aside the ruling of the voluntary
arbitrator, it concluded -

"WHEREFORE, the assailed decision of the Voluntary Arbitrator is hereby REVERSED and SET ASIDE and
anew one is entered:

"1. Declaring petitioners as regular employees of Coca-Cola Bottlers Phils., Inc. and their dismissal from
employment as illegal;
"2. Ordering respondent Coca-Cola Bottlers Phils., Inc. to reinstate petitioners to their former positions
with full backwages, inclusive of allowances that petitioners had been receiving during their employment
and 13th month pay, computed from the date of their termination up to the time of their actual
reinstatement (Paramount Vinyl Product Corp. vs. NLRC, 190 SCRA 526)."2

Petitioner company's motion for reconsideration was denied in a resolution, dated 21 May 2001, of the
appellate court.

The focal issues revolve around the matter of whether or not the nature of work of respondents in the
company is of such nature as to be deemed necessary and desirable in the usual business or trade of
petitioner that could qualify them to be regular employees.

The basic law on the case is Article 280 of the Labor Code. Its pertinent provisions read:

"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."

Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinks in the country.
Respondent workers have long been in the service of petitioner company. Respondent workers, when
hired, would go with route salesmen on board delivery trucks and undertake the laborious task of loading
and unloading softdrink products of petitioner company to its various delivery points.

Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to
ensure a "regular" worker's security of tenure, however, can hardly be doubted. In determining whether an
employment should be considered regular or non-regular, the applicable test is the reasonable
connection between the particular activity performed by the employee in relation to the usual business or
trade of the employer. The standard, supplied by the law itself, is whether the work undertaken is
necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by
looking into the nature of the services rendered and its relation to the general scheme under which the
business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is
divorced from the normal activities required in carrying on the particular business or trade. But, although
the work to be performed is only for a specific project or seasonal, where a person thus engaged has been
performing the job for at least one year, even if the performance is not continuous or is merely
intermittent, the law deems the repeated and continuing need for its performance as being sufficient to
indicate the necessity or desirability of that activity to the business or trade of the employer. The
employment of such person is also then deemed to be regular with respect to such activity and while such
activity exists.3

The argument of petitioner that its usual business or trade is softdrink manufacturing and that the work
assigned to respondent workers as sales route helpers so involves merely "postproduction activities," one
which is not indispensable in the manufacture of its products, scarcely can be persuasive. If, as so argued
by petitioner company, only those whose work are directly involved in the production of softdrinks may
be held performing functions necessary and desirable in its usual business or trade, there would have then
been no need for it to even maintain regular truck sales route helpers. The nature of the work performed
must be viewed from a perspective of the business or trade in its entirety4 and not on a confined scope.

The repeated rehiring of respondent workers and the continuing need for their services clearly attest to
the necessity or desirability of their services in the regular conduct of the business or trade of petitioner
company. The Court of Appeals has found each of respondents to have worked for at least one year with
petitioner company. While this Court, in Brent School, Inc. vs. Zamora,5 has upheld the legality of a fixed-
term employment, it has done so, however, with a stern admonition that where from the circumstances it
is apparent that the period has been imposed to preclude the acquisition of tenurial security by the
employee, then it should be struck down as being contrary to law, morals, good customs, public order
and public policy. The pernicious practice of having employees, workers and laborers, engaged for a fixed
period of few months, short of the normal six-month probationary period of employment, and, thereafter,
to be hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be
countenanced. The fact that respondent workers have agreed to be employed on such basis and to
forego the protection given to them on their security of tenure, demonstrate nothing more than the
serious problem of impoverishment of so many of our people and the resulting unevenness between
labor and capital. A contract of employment is impressed with public interest. The provisions of applicable
statutes are deemed written into the contract, and "the parties are not at liberty to insulate themselves
and their relationships from the impact of labor laws and regulations by simply contracting with each
other."6

With respect to the "Release, Waiver and Quitclaim" executed by thirty-six (36) of the original
complainants, namely, Rommel Abad, Armando Amor, Bobby Austero, Felix Avenido, Amado Badasan,
Edmundo Bayos, Eduardo Bella, Jr., Mariano Cañete, Carmelo Cea, Ernie Chavez, Randy Dechaves,
Frederick De Guzman, Renato De Ocampo, Ademar Estuita, Leonilo Galapin, Raymund Gaudicos, Retchel
Hautea, Larry Javier, Nelson Logrinio, Alberto Magtibay, Frederick Magallano, Rogelio Malinis, Rodolfo
Melgar, Silverio Mindajao, Leonardo Mondina, Ruben Navales, Rey Pangilinan, Christopher Peralta, Jimmy
Reyes, Herminio Roflo, Michael Rubia, Noel Rubia, Roberto Tumomba, Oliver Villaflor, and Joselito
Villanueva, this Court finds the execution of the same to be in order. During the pendency of the appeal
with the Court of Appeals, these thirty-six (36) complainants individually executed voluntarily a release,
waiver and quitclaim and received from petitioner company the amount of fifteen thousand (P15,000.00)
pesos each. The amount accords with the disposition of the case by the voluntary arbitrator thusly:

"WHEREFORE, above premises considered, the herein complaint is hereby DISMISSED for lack of merit.

"However, we cannot completely negate the fact that complainants did and do actually render services to
the Company. It is with this in mind and considering the difficulty the complainants may face in looking
for another job in case they are no longer re-engaged that we direct the company to pay complainants
Fifteen Thousand Pesos each (P15,000.00) as financial assistance. It is however understood that the
financial assistance previously extended by the Company to some of the complainants shall be deducted
from the financial assistance herein awarded."7

The receipt of the amount awarded by the voluntary arbitrator, as well as the execution of a release,
waiver and quitclaim, is, in effect, an acceptance of said decision. There is nothing on record which could
indicate that the execution thereof by thirty-six (36) of the respondent workers has been attended by
fraud or deceit. While quitclaims executed by employees are commonly frowned upon as being contrary
to public policy and are ineffective to bar claims for the full measure of their legal rights, there are,
however, legitimate waivers that represent a voluntary and reasonable settlement of laborers' claims
which should be so respected by the Court as the law between the parties.8 Where the person making the
waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim
is credible and reasonable, the transaction must be recognized as being a valid and binding undertaking.
"Dire necessity" is not an acceptable ground for annulling the release, when it is not shown that the
employee has been forced to execute it.9

WHEREFORE, the questioned decision of the Court of Appeals, in CA-G.R. SP No. 47872 is hereby
AFFIRMED with MODIFICATION in that the "Release, Waiver and Quitclaim" executed by the thirty-six (36)
individual respondents are hereby declared VALID and LEGAL.

SO ORDERED.
G.R. No. 109902 August 2, 1994

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

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

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

Employee Date Nature of Separated

Employed Employment

1. Alan Barinque 5-14-82 Engineer 1 8-31-91

2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92
3. Edgar Bontuyan 11-03-82 Chairman to present
4. Osias Dandasan 9-21-82 Utilityman 1991
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92
6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91
7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
9. Russell Gacus 1-30-85 Engineer 1 6-30-92
10. Jose Garguena 3-02-81 Warehouseman to present
11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992
13. Romeo Sarona 2-26-83 Machine Operator 8-31-912

On 5 July 1990, petitioners filed separate complaints for unfair labor practice, regularization and monetary
benefits with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.

The complaints were consolidated and after hearing, the Labor Arbiter in a Decision dated 7 June 1991,
declared petitioners "regular project employees who shall continue their employment as such for as long
as such [project] activity exists," but entitled to the salary of a regular employee pursuant to the provisions
in the collective bargaining agreement. It also ordered payment of salary differentials. 3

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

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

Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed to show
any grave abuse of discretion or any act without or in excess of jurisdiction on the part of the NLRC in
rendering its questioned resolutions of 8 January 1993 and 15 February 1993.

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

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

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

Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are "necessary, desirable
and work-related to private respondent's main business, steel-making"; and (ii) they have rendered service
for six (6) or more years to private respondent NSC. 4

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

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

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

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

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

Which ever type of project employment is found in a particular case, a common basic requisite is that the
designation of named employees as "project employees" and their assignment to a specific project, are
effected and implemented in good faith, and not merely as a means of evading otherwise applicable
requirements of labor laws.

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

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

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

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

xxx xxx xxx

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

Petitioners next claim that their service to NSC of more than six (6) years should qualify them as regular
employees. We believe this claim is without legal basis. The simple fact that the employment of
petitioners as project employees had gone beyond one (1) year, does not detract from, or legally dissolve,
their status as project employees. 10 The second paragraph of Article 280 of the Labor Code, quoted
above, providing that an employee who has served for at least one (1) year, shall be considered a regular
employee, relates to casual employees, not to project employees.

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

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

SO ORDERED.
G.R. No. 170181 June 26, 2008
HANJIN HEAVY INDUSTRIES vs. FELICITO IBAÑEZ
CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision,1
dated 28 July 2005, rendered by the Court of Appeals, reversing the Decision,2 promulgated by the
National Labor Relations Commission (NLRC) on 7 May 2004. The Court of Appeals, in its assailed
Decision, declared that respondents are regular employees who were illegally dismissed by petitioner
Hanjin Heavy Industries and & Construction Company, Limited (HANJIN).

Petitioner HANJIN is a foreign company duly registered with the Securities and Exchange Commission to
engage in the construction business in the Philippines. Petitioners Hak Kon Kim and Jhunie Adajar were
employed as Project Director and Supervisor, respectively, by HANJIN.

On 11 April 2002, respondents Felicito Ibañez, Aligwas Carolino, Elmer Gacula, Enrique Dagotdot, Ruel
Calda, and four other co-workers filed a complaint before the NLRC, docketed as NLRC Case No. RAB-IV-
04-15515-02-RI, for illegal dismissal with prayer for reinstatement and full backwages against petitioners.
In their Position Paper dated 29 July 2002, respondents alleged that HANJIN hired them for various
positions on different dates, hereunder specified:

Position

Date of Employment

Felicito Ibañez – Tireman 7 March 2000

Elmer Gacula Crane - Operator 1992

Enrique Dagotdot –Welder 1995

Aligwas Carolino - Welder September 1994

Ruel Calda- Warehouseman 26 January 19963

Respondents stated that their tasks were usual and necessary or desirable in the usual business or trade of
HANJIN. Respondents additionally averred that they were employed as members of a work pool from
which HANJIN draws the workers to be dispatched to its various construction projects; with the exception
of Ruel Calda, who as a warehouseman was required to work in HANJIN's main office.4 Among the various
construction projects to which they were supposedly assigned, respondents named the North Harbor
project in 1992-1994; Manila International Port in 1994-1996; Batangas Port in 1996-1998; the Batangas
Pier, and La Mesa Dam.5

On 15 April 2002, Hanjin dismissed respondents from employment. Respondents claimed that at the time
of their dismissal, HANJIN had several construction projects that were still in progress, such as Metro Rail
Transit (MRT) II and MRT III, and continued to hire employees to fill the positions vacated by the
respondents.6

Petitioners denied the respondents' allegations. They maintained that respondents were hired as project
employees for the construction of the LRT/MRT Line 2 Package 2 and 3 Project. HANJIN and respondents
purportedly executed contracts of employment, in which it was clearly stipulated that the respondents
were to be hired as project employees for a period of only three months, but that the contracts may be
renewed, to wit:

Article II

TERM OF AGREEMENT

This Agreement takes effect xxx for the duration of three (3) months and shall be considered automatically
renewed in the absence of any Notice of Termination by the EMPLOYER to the PROJECT EMPLOYEE. This
AGREEMENT automatically terminates at the completion of the project or any particular phase thereof,
depending upon the progress of the project.7

However, petitioners failed to furnish the Labor Arbiter a copy of said contracts of employment.

Petitioners asserted that respondents were duly informed of HANJIN's policies, rules and regulations, as
well as the terms of their contracts. Copies of the employees' rules and regulations were posted on the
bulletin boards of all HANJIN campsite offices.8

Petitioners further emphasized that prior to 15 April 2002, Hak Kon Kim, HANJIN's Project Director,
notified respondents of the company's intention to reduce its manpower due to the completion of the
LRT/MRT Line 2 Package 2 and 3 Project. Respondents were among the project employees who were
thereafter laid off, as shown in the Establishment Termination Report filed by HANJIN before the
Department of Labor and Employment (DOLE) Regional Office (IV) in Cainta, Rizal on 11 April 2002.9

Finally, petitioners insist that in accordance with the usual practice of the construction industry, a
completion bonus was paid to the respondents.10 To support this claim, they offered as evidence payroll
records for the period 4 April 2002 to 20 April 2002, with the words "completion bonus" written at the
lower left corner of each page.11

Petitioners attached copies of the Quitclaims,12 executed by the respondents, which uniformly stated that
the latter received all wages and benefits that were due them and released HANJIN and its representatives
from any claims in connection with their employment. These Quitclaims also contained Clearance
Certificates which confirmed that the employees concerned were cleared of all accountabilities at the
close of the working hours on 15 April 2002.

In their Reply13 dated 27 August 2002, respondents vehemently refuted having signed any written
contract stating that they were project employees.
The Labor Arbiter found merit in the respondents' complaint and declared that they were regular
employees who had been dismissed without just and valid causes and without due process. It ruled that
HANJIN's allegation that respondents were project employees was negated by its failure to present proof
thereof. It also noted that a termination report should be presented after the completion of every project
or a phase thereof and not just the completion of one of these projects. The Labor Arbiter further
construed the number of years that respondents rendered their services for HANJIN as an indication that
respondents were regular, not project, employees.14 The Labor Arbiter ordered in its Decision, dated 30
April 2003, that:

WHEREFORE, premises considered, judgment is hereby rendered as follows;

1) Declaring respondent HANJIN HEAVY INDUSTRIES & CONSTRUCTION CO. LTD. guilty of illegal
dismissal

>2) Ordering respondent to reinstate all the complainants to positions previously occupied by them with
full backwages from the time compensation was withheld from them up to date of actual reinstatement in
the following amount (as of date of this decision):

1. Felicito Ibañez P 88,020.83

2. Elmer A. Gacula 88,020.83

3. Rizalino De Vera 88,020.83

4. Enrique Dagotdot 88,020.83

5. Carolino Aligwas 88,020.83

6. Ruel Calda 88,020.83

7. Roldan Lanojan 88,020.83

8. Pascual Caranguian 88,020.83

9. Carmelito Dalumangcad 88,020.83

Total P792, 187.47

3) In lieu of reinstatement, respondent is ordered to pay complainants their separation pay in the
following sum:

Felicito Ibañez P 19,500.00

Elmer A. Gacula 71,500.00

Rizaliano De Vera 19,500.00

Enrique Dagotdot 52,000.00

Carolino Aligwas 58,500.00

Ruel Calda 45,500.00

Roldan Lanojan 19,500.00

Pascual Caranguian 26,000.00

Carmelito Dalumangcad 78,000.00

Total P390,000.00

4) Ordering respondent to pay each complainant P50,000.00 for moral damages and P30,000.00 as
exemplary damages, or the total sum of P450,000.00 and P270,000.00, respectively; and

5) Ordering respondent to pay complainants litigation expenses in the sum of P30,000.00

All other claims are DISMISSED for lack of merit.15

Petitioners filed an appeal before the NLRC. In their Notice of Appeal/Memorandum Appeal16 dated 5
July 2003, petitioners discarded their earlier claim that respondents signed employment contracts,
unequivocally informing them of their status as project employees. Nonetheless, they still contended that
the absence of respondents' contracts of employment does not vest the latter with regular status.

The NLRC reversed the Labor Arbiter's Decision dated 30 April 2003, and pronounced that the
respondents were project employees who were legally terminated from employment.17 The NLRC gave
probative value to the Termination Report submitted by HANJIN to the DOLE, receipts signed by
respondents for their completion bonus upon phase completion, and the Quitclaims executed by the
respondents in favor of HANJIN. The NLRC also observed that the records were devoid of any proof to
support respondents' allegation that they were employed before 1997, the time when construction work
on the MRT started. Lastly, it overruled the Labor Arbiter's award of moral and exemplary damages.18 The
dispositive part of the Decision dated 7 May 2004 of the NLCR states that:

WHEREFORE, in view of the foregoing, the decision subject of appeal is hereby REVERSED and SET ASIDE
and a new one is entered DISMISSING complainants' complaint for lack of merit.19

On appeal, the Court of Appeals reversed the NLRC Decision, dated 7 May 2004. The appellate court
looked with disfavor at the change in HANJIN's initial position before the Labor Arbiter-from its initial
argument that respondents executed employment contracts; to its modified argument during its appeal
before the NLRC-that respondents could still be categorized as project workers despite the absence of
contracts of employment. Additionally, it adjudged the Termination Report as inconclusive proof that
respondents were project employees. Emphasizing that the employer had the burden of proving the
legality of the dismissal, the appellate court ruled that respondents were regular employees and upheld
the Labor Arbiter's finding that they were illegally dismissed. The Court of Appeals, however, adopted the
NLRC's deletion of the award of damages.20 The decretal portion of the Decision of the Court of Appeals
reads:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the challenged decision and resolution of the NLRC must
be, as they hereby are, REVERSED and SET ASIDE. The decision of the Labor Arbiter is hereby REINSTATED
relative to the award to petitioners of full backwages, separation pay in lieu of reinstatement, and
litigation expenses, but not with respect to the awards for moral damages or for exemplary damages,
both of which are hereby DELETED. Without costs in this instance.21

Hence, the present Petition, in which the following issues are raised:

WHETHER OR NOT THE FINDINGS OF THE HONORABLE COURT OF APPEALS ARE MERE CONCLUSIONS
WITHOUT DELVING INTO THE RECORDS OF THE CASE AND EXAMINE (sic) FOR ITSELF THE QUESTIONED
FINDINGS OF THE LABOR ARBITER AND THE NATIONAL LABOR RELATIONS COMMISSION CONTRARY TO
THE RULING IN THE CASE OF AGABON VS. NLRC, ET. AL. 442 SCRA 573.

II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS MANIFESTLY OVERLOOKED CERTAIN

RELEVANT FACTS WHICH, IF PROPERLY CONSIDERED, WOULD RESULT IN A DIFFERENT CONCLUSION.

III

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING THE PERTINENT
PROVISIONS OF POLICY INSTRUCTIONS NO. 20, AS AMENDED BY DEPARTMENT ORDER NO. 19 SERIES
OF 1993 IN RELATION TO ARTICLE 280 OF THE LABOR CODE IN CONSIDERING WHETHER OR NOT
RESPONDENTS ARE PROJECT EMPLOYEES.

IV

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS WERE ILLEGALLY
DISMISSED.22

The Petition is without merit.

As a general rule, the factual findings of the Court of Appeals are binding upon the Supreme Court. One
exception to this rule is when the factual findings of the former are contrary to those of the trial court or
the lower administrative body, as the case may be. The main question that needs to be settled-whether
respondents were regular or project employees-is factual in nature. Nevertheless, this Court is obliged to
resolve it due to the incongruent findings of the NLRC and those of the Labor Arbiter and the Court of
Appeals. 23

Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee" thus:

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

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

From the foregoing provision, the principal test for determining whether particular employees are
properly characterized as "project employees" as distinguished from "regular employees" is whether or
not the project employees were assigned to carry out a "specific project or undertaking," the duration and
scope of which were specified at the time the employees were engaged for that project.24

In a number of cases, 25 the Court has held that the length of service or the re-hiring of construction
workers on a project-to-project basis does not confer upon them regular employment status, since their
re-hiring is only a natural consequence of the fact that experienced construction workers are preferred.
Employees who are hired for carrying out a separate job, distinct from the other undertakings of the
company, the scope and duration of which has been determined and made known to the employees at
the time of the employment, are properly treated as project employees and their services may be lawfully
terminated upon the completion of a project.26 Should the terms of their employment fail to comply with
this standard, they cannot be considered project employees.

In Abesco Construction and Development Corporation v. Ramirez,27 which also involved a construction
company and its workers, this Court considered it crucial that the employees were informed of their status
as project employees:

The principal test for determining whether employees are "project employees" or "regular employees" is
whether they are assigned to carry out a specific project or undertaking, the duration and scope of which
are specified at the time they are engaged for that project. Such duration, as well as the particular
work/service to be performed, is defined in an employment agreement and is made clear to the
employees at the time of hiring.

In this case, petitioners did not have that kind of agreement with respondents. Neither did they inform
respondents of the nature of the latters' work at the time of hiring. Hence, for failure of petitioners to
substantiate their claim that respondents were project employees, we are constrained to declare them as
regular employees.

In Caramol v. National Labor Relations Commission,28 and later reiterated in Salinas, Jr. v. National Labor
Relations Commission,29 the Court markedly stressed the importance of the employees' knowing consent
to being engaged as project employees when it clarified that "there is no question that stipulation on
employment contract providing for a fixed period of employment such as `project-to-project' contract is
valid provided the period was agreed upon knowingly and voluntarily by the parties, without any force,
duress or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent x x x."

During the proceedings before the Labor Arbiter, the petitioners' failure to produce respondents'
contracts of employment was already noted, especially after they alleged in their pleadings the existence
of such contracts stipulating that respondents' employment would only be for the duration of three
months, automatically renewed in the absence of notice, and terminated at the completion of the project.
Respondents denied having executed such contracts with HANJIN. In their appeal before the NLRC until
the present, petitioners now claim that due to a lapse in management procedure, no such employment
contracts were executed; nonetheless, the absence of a written contract does not remove respondents
from the ambit of being project employees.30

While the absence of a written contract does not automatically confer regular status, it has been
construed by this Court as a red flag in cases involving the question of whether the workers concerned are
regular or project employees. In Grandspan Development Corporation v. Bernardo31 and Audion Electric
Co., Inc. v. National Labor Relations Commission,32 this Court took note of the fact that the employer was
unable to present employment contracts signed by the workers, which stated the duration of the project.
In another case, Raycor v. Aircontrol Systems, Inc. v. National Labor Relations Commission,33 this Court
refused to give any weight to the employment contracts offered by the employers as evidence, which
contained the signature of the president and general manager, but not the signatures of the employees.
In cases where this Court ruled that construction workers repeatedly rehired retained their status as
project employees, the employers were able to produce employment contracts clearly stipulating that the
workers' employment was coterminous with the project to support their claims that the employees were
notified of the scope and duration of the project.34

Hence, even though the absence of a written contract does not by itself grant regular status to
respondents, such a contract is evidence that respondents were informed of the duration and scope of
their work and their status as project employees. In this case, where no other evidence was offered, the
absence of an employment contract puts into serious question whether the employees were properly
informed at the onset of their employment status as project employees. It is doctrinally entrenched that in
illegal dismissal cases, the employer has the burden of proving with clear, accurate, consistent and
convincing evidence that a dismissal was valid.35 Absent any other proof that the project employees were
informed of their status as such, it will be presumed that they are regular employees in accordance with
Clause 3.3(a) of Department Order No. 19, Series of 1993, which states that:

a) Project employees whose aggregate period of continuous employment in a construction company is at

least one year shall be considered regular employees, in the absence of a "day certain" agreed upon by
the parties for the termination of their relationship. Project employees who have become regular shall be
entitled to separation pay.

A "day" as used herein, is understood to be that which must necessarily come, although it may not be
known exactly when. This means that where the final completion of a project or phase thereof is in fact
determinable and the expected completion is made known to the employee, such project employee may
not be considered regular, notwithstanding the one-year duration of employment in the project or phase
thereof or the one-year duration of two or more employments in the same project or phase of the project.
(Emphasis provided.)

Petitioners call attention to the fact that they complied with two of the indicators of project employment,
as prescribed under Section 2.2(e) and (f) of Department Order No. 19, Series of 1993, entitled Guidelines
Governing the Employment of Workers in the Construction Industry, issued by the DOLE:

2.2 Indicators of project employment. - Either one or more of the following circumstances, among others,
may be considered as indicators that an employee is a project employee.

(a) The duration of the specific/identified undertaking for which the worker is engaged is reasonably
determinable.

(b) Such duration, as well as the specific work/service to be performed, is defined in an employment
agreement and is made clear to the employee at the time of hiring.

(c) The work/service performed by the employee is in connection with the particular project/undertaking
for which he is engaged.

(d) The employee, while not employed and awaiting engagement, is free to offer his services to any other
employer.

(e) The termination of his employment in the particular project/undertaking is reported to the Department
of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days
following the date of his separation from work, using the prescribed form on employees'
terminations/dismissals/suspensions.

(f) An undertaking in the employment contract by the employer to pay completion bonus to the project
employee as practiced by most construction companies. (Emphasis provided.)

Petitioners argue that the Termination Report filed before the DOLE Regional Office (IV) in Cainta, Rizal on
11 April 2002 signifies that respondents' services were engaged merely for the LRT/MRT Line 2 Package 2
and 3 Project.

Given the particular facts established in this case, petitioners' argument fails to persuade this Court.
Petitioners were not able to offer evidence to refute or controvert the respondents' claim that they were
assigned to various construction projects, particularly the North Harbor Project in 1992-1994; Manila
International Port in 1994-1996; Batangas Port in 1996-1998; the Batangas Pier; and La Mesa Dam.36 Had
respondents' allegations been false, petitioners could simply present as evidence documents and records
in their custody to disprove the same, i.e., payroll for such projects or termination reports, which do not
bear respondents' names. Petitioners, instead, chose to remain vague as to the circumstances surrounding
the hiring of the respondents. This Court finds it unusual that petitioners cannot even categorically state
the exact year when HANJIN employed respondents.

It also bears to note that petitioners did not present other Termination Reports apart from that filed on 11
April 2002. The failure of an employer to file a Termination Report with the DOLE every time a project or a
phase thereof is completed indicates that respondents were not project employees.37 Employers cannot
mislead their employees, whose work is necessary and desirable in the former's line of business, by
treating them as though they are part of a work pool from which workers could be continually drawn and
then assigned to various projects and thereafter denied regular status at any time by the expedient act of
filing a Termination Report. This would constitute a practice in which an employee is unjustly precluded
from acquiring security of tenure, contrary to public policy, morals, good customs and public order.38

In this case, only the last and final termination of petitioners was reported to the DOLE. If respondents
were actually project employees, petitioners should have filed as many Termination Reports as there were
construction projects actually finished and for which respondents were employed. Thus, a lone
Termination Report filed by petitioners only upon the termination of the respondents' final project, and
after their previous continuous employment for other projects, is not only unconvincing, but even
suspicious.

Petitioners insist that the payment to the respondents of a completion bonus indicates that respondents
were project employees. To support their claim, petitioners presented payroll records for the period 4
April 2002 to 20 April 2002, with the words "completion bonus" written at the lower left corner of each
page.39 The amount paid to each employee was equivalent to his fifteen-day salary. Respondents,
however, deny receiving any such amount.

Assuming that petitioners actually paid respondents a completion bonus, petitioners failed to present
evidence showing that they undertook to pay respondents such a bonus upon the completion of the
project, as provided under Section 2.2(f) of Department Order No. 19, Series of 1993.40 Petitioners did not
even allege how the "completion bonus" was to be computed or the conditions that must be fulfilled
before it was to be given. A completion bonus, if paid as a mere afterthought, cannot be used to
determine whether or not the employment was regular or merely for a project. Otherwise, an employer
may defeat the workers' security of tenure by paying them a completion bonus at any time it is inclined to
unjustly dismiss them.

Department Order No. 19, Series of 1993, provides that in the absence of an undertaking that the
completion bonus will be paid to the employee, as in this case, the employee may be considered a non-
project employee, to wit:

3.4 Completion of the project. Project employees who are separated from work as a result of the
completion of the project or any phase thereof in which they are employed are entitled to the pro-rata
completion bonus if there is an undertaking by for the grant of such bonus. An undertaking by the
employer to pay a completion bonus shall be an indicator that an employee is a project employee. Where
there is no such undertaking, the employee may be considered a non-project employee. The pro-rata
completion bonus may be based on the industry practice which is at least the employee's one-half (1/2)
month salary for every 12 months of service and may be put into effect for any project bid (in case of bid
projects) or tender submitted (in case of negotiated projects) thirty (30) days from the date of issuances of
these Guidelines. (Emphasis supplied.)

Furthermore, after examining the payroll documents submitted by petitioners, this Court finds that the
payments termed as "completion bonus" are not the completion bonus paid in connection with the
termination of the project. First of all, the period from 4 April 2002 to 20 April 2002, as stated in the
payrolls, bears no relevance to a completion bonus. A completion bonus is paid in connection with the
completion of the project, and is not based on a fifteen-day period. Secondly, the amount paid to each
employee as his completion bonus was uniformly equivalent to his fifteen-day wages, without
consideration of the number of years of service rendered. Section 3.4 of Department Order No. 19, Series
of 1993, provides that based on industry practice, the completion bonus is at least the employee's one-
half month salary for every twelve months of service.

Finally, the Quitclaims which the respondents signed cannot bar them from demanding what is legally due
them as regular employees. As a rule, quitclaims and waivers or releases are looked upon with disfavor
and frowned upon as contrary to public policy. They are thus ineffective to bar claims for the full measure
of a worker's legal rights, particularly when the following conditions are applicable: 1) where there is clear
proof that the waiver was wangled from an unsuspecting or gullible person, or (2) where the terms of
settlement are unconscionable on their face.41 To determine whether the Quitclaims signed by
respondents are valid, one important factor that must be taken into account is the consideration accepted
by respondents; the amount must constitute a reasonable settlement equivalent to the full measure of
their legal rights.42 In this case, the Quitclaims signed by the respondents do not appear to have been
made for valuable consideration. Respondents, who are regular employees, are entitled to backwages and
separation pay and, therefore, the Quitclaims which they signed cannot prevent them from seeking claims
to which they are entitled.43

Due to petitioners' failure to adduce any evidence showing that petitioners were project employees who
had been informed of the duration and scope of their employment, they were unable to discharge the
burden of proof required to establish that respondents' dismissal was legal and valid. Furthermore, it is a
well-settled doctrine that if doubts exist between the evidence presented by the employer and that by the
employee, the scales of justice must be tilted in favor of the latter.44 For these reasons, respondents are
to be considered regular employees of HANJIN.

Finally, in the instant case, records failed to show that HANJIN afforded respondents, as regular
employees, due process prior to their dismissal, through the twin requirements of notice and hearing.
Respondents were not served notices informing them of the particular acts for which their dismissal was
sought. Nor were they required to give their side regarding the charges made against them. Certainly, the
respondents' dismissal was not carried out in accordance with law and was, therefore, illegal.45

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. This Court AFFIRMS the assailed Decision of
the Court of Appeals in CA-G.R. SP No. 87474, promulgated on 28 July 2005, declaring that the
respondents are regular employees who have been illegally dismissed by Hanjin Heavy Industries &
Construction Company, Limited, and are, therefore, entitled to full backwages, separation pay, and
litigation expenses. Costs against the petitioners.

SO ORDERED.
G.R. No. 192514 April 18, 2012
D.M. CONSUNJI, INC. and/or DAVID M. CONSUNJI, Petitioners,
vs.
ESTELITO L. JAMIN, Respondent.
BRION, J.:

We resolve the present appeal1 from the decision2 dated February 26, 2010 and the resolution3 dated
June 3, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 100099.

The Antecedents

On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a construction company, hired respondent
Estelito L. Jamin as a laborer. Sometime in 1975, Jamin became a helper carpenter. Since his initial hiring,
Jamin’s employment contract had been renewed a number of times.4 On March 20, 1999, his work at
DMCI was terminated due to the completion of the SM Manila project. This termination marked the end
of his employment with DMCI as he was not rehired again.

On April 5, 1999, Jamin filed a complaint5 for illegal dismissal, with several money claims (including
attorney’s fees), against DMCI and its President/General Manager, David M. Consunji. Jamin alleged that
DMCI terminated his employment without a just and authorized cause at a time when he was already 55
years old and had no independent source of livelihood. He claimed that he rendered service to DMCI
continuously for almost 31 years. In addition to the schedule of projects (where he was assigned)
submitted by DMCI to the labor arbiter,6 he alleged that he worked for three other DMCI projects: Twin
Towers, Ritz Towers, from July 29, 1980 to June 12, 1982; New Istana Project, B.S.B. Brunei, from June 23,
1982 to February 16, 1984; and New Istana Project, B.S.B. Brunei, from January 24, 1986 to May 25, 1986.

DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from the start of his
engagement in 1968 until the completion of its SM Manila project on March 20, 1999 where Jamin last
worked. With the completion of the project, it terminated Jamin’s employment. It alleged that it submitted
a report to the Department of Labor and Employment (DOLE) everytime it terminated Jamin’s services.

The Compulsory Arbitration Rulings

In a decision dated May 27, 2002,7 Labor Arbiter Francisco A. Robles dismissed the complaint for lack of
merit. He sustained DMCI’s position that Jamin was a project employee whose services had been
terminated due to the completion of the project where he was assigned. The labor arbiter added that
everytime DMCI rehired Jamin, it entered into a contract of employment with him. Moreover, upon
completion of the phase of the project for which Jamin was hired or upon completion of the project itself,
the company served a notice of termination to him and a termination report to the DOLE Regional Office.
The labor arbiter also noted that Jamin had to file an application if he wanted to be re-hired.

On appeal by Jamin, the National Labor Relations Commission (NLRC), in its decision of April 18, 2007,8
dismissed the appeal and affirmed the labor arbiter’s finding that Jamin was a project employee. Jamin
moved for reconsideration, but the NLRC denied the motion in a resolution dated May 30, 2007.9 Jamin
sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court.

The CA Decision

On February 26, 2010, the CA Special Fourth Division rendered the disputed decision10 reversing the
compulsory arbitration rulings. It held that Jamin was a regular employee. It based its conclusion on: (1)
Jamin’s repeated and successive rehiring in DMCI’s various projects; and (2) the nature of his work in the
projects — he was performing activities necessary or desirable in DMCI’s construction business. Invoking
the Court’s ruling in an earlier case,11 the CA declared that the pattern of Jamin’s rehiring and the
recurring need for his services are sufficient evidence of the necessity and indispensability of such services
to DMCI’s business or trade, a key indicator of regular employment. It opined that although Jamin started
as a project employee, the circumstances of his employment made it regular or, at the very least, has
ripened into a regular employment.

The CA considered the project employment contracts Jamin entered into with DMCI for almost 31 years
not definitive of his actual status in the company. It stressed that the existence of such contracts is not
always conclusive of a worker’s employment status as this Court explained in Liganza v. RBL Shipyard
Corporation, et al.12 It found added support from Integrated Contractor and Plumbing Works, Inc. v.
NLRC,13 where the Court said that while there were several employment contracts between the worker
and the employer, in all of them, the worker performed tasks which were usually necessary or desirable in
the usual business or trade of the employer and, a review of the worker’s assignments showed that he
belonged to a work pool, making his employment regular.

Contrary to DMCI’s submission and the labor arbiter’s findings, the CA noted that DMCI failed to submit a
report to the DOLE Regional Office everytime Jamin’s employment was terminated, as required by DOLE
Policy Instructions No. 20. The CA opined that DMCI’s failure to submit the reports to the DOLE is an
indication that Jamin was not a project employee. It further noted that DOLE Department Order No. 19,
Series of 1993, which superseded DOLE Policy Instructions No. 20, provides that the termination report is
one of the indicators of project employment.14

Having found Jamin to be a regular employee, the CA declared his dismissal illegal as it was without a
valid cause and without due process. It found that DMCI failed to provide Jamin the required notice
before he was dismissed. Accordingly, the CA ordered Jamin’s immediate reinstatement with backwages,
and without loss of seniority rights and other benefits.

DMCI moved for reconsideration, but the CA denied the motion in its resolution of June 3, 2010.15 DMCI
is now before the Court through a petition for review on certiorari under Rule 45 of the Rules of Court.16

The Petition

DMCI seeks a reversal of the CA rulings on the ground that the appellate court committed a grave error in
annulling the decisions of the labor arbiter and the NLRC. It presents the following arguments:
1. The CA misapplied the phrase "usually necessary or desirable in the usual business or trade of the
employer" when it considered Jamin a regular employee. The definition of a regular employee under
Article 280 of the Labor Code does not apply to project employment or "employment which has been
fixed for a specific project," as interpreted by the Supreme Court in Fernandez v. National Labor Relations
Commission17 and D.M. Consunji, Inc. v. NLRC.18 It maintains the same project employment
methodology in its business operations and it cannot understand why a different ruling or treatment
would be handed down in the present case.

2. There is no work pool in DMCI’s roster of project employees. The CA erred in insinuating that Jamin
belonged to a work pool when it cited Integrated Contractor and Plumbing Works, Inc. ruling.19 At any
rate, Jamin presented no evidence to prove his membership in any work pool at DMCI.

3. The CA misinterpreted the rules requiring the submission of termination of employment reports to the
DOLE. While the report is an indicator of project employment, as noted by the CA, it is only one of several
indicators under the rules.20 In any event, the CA penalized DMCI for a few lapses in its submission of
reports to the DOLE with a "very rigid application of the rule despite the almost unanimous proofs
surrounding the circumstances of private respondent being a project employee as shown by petitioner’s
documentary evidence."21

4. The CA erred in holding that Jamin was dismissed without due process for its failure to serve him notice
prior to the termination of his employment. As Jamin was not dismissed for cause, there was no need to
furnish him a written notice of the grounds for the dismissal and neither is there a need for a hearing.
When there is no more job for Jamin because of the completion of the project, DMCI, under the law, has
the right to terminate his employment without incurring any liability. Pursuant to the rules implementing
the Labor Code,22 if the termination is brought about by the completion of the contract or phase thereof,
no prior notice is required.

Finally, DMCI objects to the CA’s reversal of the findings of the labor arbiter and the NLRC in the absence
of a showing that the labor authorities committed a grave abuse of discretion or that evidence had been
disregarded or that their rulings had been arrived at arbitrarily.

The Case for Jamin

In his Comment (to the Petition),23 Jamin prays that the petition be denied for having been filed out of
time and for lack of merit.

He claims, in support of his plea for the petition’s outright dismissal, that DMCI received a copy of the CA
decision (dated February 26, 2010) on March 4, 2010, as stated by DMCI itself in its motion for
reconsideration of the decision.24 Since DMCI filed the motion with the CA on March 22, 2010, it is
obvious, Jamin stresses, that the motion was filed three days beyond the 15-day reglementary period, the
last day of which fell on March 19, 2010. He maintains that for this reason, the CA’s February 26, 2010
decision had become final and executory, as he argued before the CA in his Comment and Opposition (to
DMCI’s Motion for Reconsideration).25
On the merits of the case, Jamin submits that the CA committed no error in nullifying the rulings of the
labor arbiter and the NLRC. He contends that DMCI misread this Court’s rulings in Fernandez v. National
Labor Relations Commission, et al.26 and D.M. Consunji, Inc. v. NLRC,27 cited to support its position that
Jamin was a project employee.

Jamin argues that in Fernandez, the Court explained that the proviso in the second paragraph of Article
280 of the Labor Code relates only to casual employees who shall be considered regular employees if they
have rendered at least one year of service, whether such service is continuous or broken. He further
argues that in Fernandez, the Court held that inasmuch as the documentary evidence clearly showed gaps
of a month or months between the hiring of Ricardo Fernandez in the numerous projects where he was
assigned, it was the Court’s conclusion that Fernandez had not continuously worked for the company but
only intermittently as he was hired solely for specific projects.28 Also, in Fernandez, the Court affirmed its
rulings in earlier cases that "the failure of the employer to report to the [nearest] employment office the
termination of workers everytime a project is completed proves that the employees are not project
employees."29

Jamin further explains that in the D.M. Consunji, Inc. case, the company deliberately omitted portions of
the Court’s ruling stating that the complainants were not claiming that they were regular employees;
rather, they were questioning the termination of their employment before the completion of the project
at the Cebu Super Block, without just cause and due process.30

In the matter of termination reports to the DOLE, Jamin disputes DMCI’s submission that it committed
only few lapses in the reportorial requirement. He maintains that even the NLRC noted that there were no
termination reports with the DOLE Regional Office after every completion of a phase of work, although
the NLRC considered that the report is required only for statistical purposes. He, therefore, contends that
the CA committed no error in holding that DMCI’s failure to submit reports to the DOLE was an indication
that he was not a project employee.

Finally, Jamin argues that as a regular employee of DMCI for almost 31 years, the termination of his
employment was without just cause and due process.

The Court’s Ruling

The procedural issue

Was DMCI’s appeal filed out of time, as Jamin claims, and should have been dismissed outright? The
records support Jamin’s submission on the issue.

DMCI received its copy of the February 26, 2010 CA decision on March 4, 2010 (a Thursday), as indicated
in its motion for reconsideration of the decision itself,31 not on March 5, 2010 (a Friday), as stated in the
present petition.32 The deadline for the filing of the motion for reconsideration was on March 19, 2010
(15 days from receipt of copy of the decision), but it was filed only on March 22, 2010 or three days late.
Clearly, the motion for reconsideration was filed out of time, thereby rendering the CA decision final and
executory.
Necessarily, DMCI’s petition for review on certiorari is also late as it had only fifteen (15) days from notice
of the CA decision to file the petition or the denial of its motion for reconsideration filed in due time.33
The reckoning date is March 4, 2010, since DMCI’s motion for reconsideration was not filed in due time.
We see no point in exercising liberality and disregarding the late filing as we did in Orozco v. Fifth Division
of the Court of Appeals,34 where we ruled that "[t]echnicality should not be allowed to stand in the way
of equitably and completely resolving the rights and obligations of the parties." The petition lacks merit
for its failure to show that the CA committed any reversible error or grave abuse of discretion when it
reversed the findings of the labor arbiter and the NLRC.

As earlier mentioned, Jamin worked for DMCI for almost 31 years, initially as a laborer and, for the most
part, as a carpenter. Through all those years, DMCI treated him as a project employee, so that he never
obtained tenure. On the surface and at first glance, DMCI appears to be correct. Jamin entered into a
contract of employment (actually an appointment paper to which he signified his conformity) with DMCI
either as a field worker, a temporary worker, a casual employee, or a project employee everytime DMCI
needed his services and a termination of employment paper was served on him upon completion of every
project or phase of the project where he worked.35 DMCI would then submit termination of employment
reports to the DOLE, containing the names of a number of employees including Jamin.36 The NLRC and
the CA would later on say, however, that DMCI failed to submit termination reports to the DOLE.

The CA pierced the cover of Jamin’s project employment contract and declared him a regular employee
who had been dismissed without cause and without notice. To reiterate, the CA’s findings were based on:
(1) Jamin’s repeated and successive engagements in DMCI’s construction projects, and (2) Jamin’s
performance of activities necessary or desirable in DMCI’s usual trade or business.

We agree with the CA. In Liganza v. RBL Shipyard Corporation,37 the Court held that "[a]ssuming, without
granting[,] that [the] petitioner was initially hired for specific projects or undertakings, the repeated re-
hiring and continuing need for his services for over eight (8) years have undeniably made him a regular
employee." We find the Liganza ruling squarely applicable to this case, considering that for almost 31
years, DMCI had repeatedly, continuously and successively engaged Jamin’s services since he was hired
on December 17, 1968 or for a total of 38 times — 35 as shown by the schedule of projects submitted by
DMCI to the labor arbiter38 and three more projects or engagements added by Jamin, which he claimed
DMCI intentionally did not include in its schedule so as to make it appear that there were wide gaps in his
engagements. One of the three projects was local, the Ritz Towers,39 from July 29, 1980 to June 12, 1982,
while the other two were overseas — the New Istana Project in Brunei, Darussalam, from June 23, 1982 to
February 16, 1984;40 and again, the New Istana Project, from January 24, 1986 to May 25, 1986.41

We reviewed Jamin’s employment contracts as the CA did and we noted that while the contracts indeed
show that Jamin had been engaged as a project employee, there was an almost unbroken string of
Jamin’s rehiring from December 17, 1968 up to the termination of his employment on March 20, 1999.
While the history of Jamin’s employment (schedule of projects)42 relied upon by DMCI shows a gap of
almost four years in his employment for the period between July 28, 1980 (the supposed completion date
of the Midtown Plaza project) and June 13, 1984 (the start of the IRRI Dorm IV project), the gap was
caused by the company’s omission of the three projects above mentioned.
For not disclosing that there had been other projects where DMCI engaged his services, Jamin accuses the
company of suppressing vital evidence that supports his contention that he rendered service in the
company’s construction projects continuously and repeatedly for more than three decades. The non-
disclosure might not have constituted suppression of evidence — it could just have been overlooked by
the company — but the oversight is unfair to Jamin as the non-inclusion of the three projects gives the
impression that there were substantial gaps not only of several months but years in his employment with
DMCI.

Thus, as Jamin explains, the Ritz Tower Project (July 29, 1980 to June 12, 1982) and the New Istana Project
(June 23, 1982 to February 16, 1984) would explain the gap between the Midtown Plaza project
(September 3, 1979 to July 28, 1980) and the IRRI Dorm IV project (June 13, 1984 to March 12, 1985) and
the other New Istana Project (January 24, 1986 to May 25, 1986) would explain the gap between P. 516
Hanger (September 13, 1985 to January 23, 1986) and P. 516 Maint (May 26, 1986 to November 18, 1987).

To reiterate, Jamin’s employment history with DMCI stands out for his continuous, repeated and
successive rehiring in the company’s construction projects. In all the 38 projects where DMCI engaged
Jamin’s services, the tasks he performed as a carpenter were indisputably necessary and desirable in
DMCI’s construction business. He might not have been a member of a work pool as DMCI insisted that it
does not maintain a work pool, but his continuous rehiring and the nature of his work unmistakably made
him a regular employee. In Maraguinot, Jr. v. NLRC,43 the Court held that once a project or work pool
employee has been: (1) continuously, as opposed to intermittently, rehired 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.

Further, as we stressed in Liganza,44 "[r]espondent capitalizes on our ruling in D.M. Consunji, Inc. v. NLRC
which reiterates the rule that the length of service of a project employee is not the controlling test of
employment tenure but whether or not ‘the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement
of the employee.’"

"Surely, length of time is not the controlling test for project employment. Nevertheless, it is vital in
determining if the employee was hired for a specific undertaking or tasked to perform functions vital,
necessary and indispensable to the usual business or trade of the employer. Here, [private] respondent
had been a project employee several times over. His employment ceased to be coterminous with specific
projects when he was repeatedly re-hired due to the demands of petitioner’s business."45 Without doubt,
Jamin’s case fits squarely into the employment situation just quoted.

The termination reports

With our ruling that Jamin had been a regular employee, the issue of whether DMCI submitted
termination of employment reports, pursuant to Policy Instructions No. 20 (Undated46 ), as superseded by
DOLE Department Order No. 19 (series of 1993), has become academic. DOLE Policy Instructions No. 20
provides in part:
Project employees are not entitled to termination pay if they are terminated as a result of the completion
of the project or any phase thereof in which they are employed, regardless of the number of projects in
which they have been employed by a particular construction company. Moreover, the company is not
required to obtain a clearance from the Secretary of Labor in connection with such termination. What is
required of the company is a report to the nearest Public Employment Office for statistical purposes.47

To set the records straight, DMCI indeed submitted reports to the DOLE but as pointed out by Jamin, the
submissions started only in 1992.48 DMCI explained that it submitted the earlier reports (1982), but it lost
and never recovered the reports. It reconstituted the lost reports and submitted them to the DOLE in
October 1992; thus, the dates appearing in the reports.49

Is David M. Consunji, DMCI’s

President/General Manager, liable
for Jamin’s dismissal?

While there is no question that the company is liable for Jamin’s dismissal, we note that the CA made no
pronouncement on whether DMCI’s President/General Manager, a co-petitioner with the company, is also
liable.50 Neither had the parties brought the matter up to the CA nor with this Court. As there is no
express finding of Mr. Consunji’s involvement in Jamin’s dismissal, we deem it proper to absolve him of
liability in this case.

As a final point, it is well to reiterate a cautionary statement we made in Maraguinot,51 thus:

At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty
to re-hire a project employee even after completion of the project for which he was hired. The import of
this decision is not to impose a positive and sweeping obligation upon the employer to re-hire project
employees. What this decision merely accomplishes is a judicial recognition of the employment status of a
project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by
the employer of project or work pool employees who perform tasks necessary or desirable to the
employer’s usual business or trade.

In sum, we deny the present appeal for having been filed late and for lack of any reversible error.1âwphi1
We see no point in extending any liberality by disregarding the late filing as the petition lacks merit.

WHEREFORE, premises considered, the petition is hereby DENIED for late filing and for lack of merit. The
decision dated February 26, 2010 and the resolution dated June 3, 2010 of the Court of Appeals are
AFFIRMED. Petitioner David M. Consunji is absolved of liability in this case.

SO ORDERED.
G.R. No. 61594 September 28, 1990

PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner,

vs
HON. BLAS F. OPLE, in his capacity as Minister of Labor; HON. VICENTE LEOGARDO, JR., in his
capacity as Deputy Minister; ETHELYNNE B. FARRALES and MARIA MOONYEEN MAMASIG,
respondents.
FELICIANO, J.:

On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a foreign corporation
licensed to do business in the Philippines, executed in Manila two (2) separate contracts of employment,
one with private respondent Ethelynne B. Farrales and the other with private respondent Ma. M.C.
Mamasig. 1 The contracts, which became effective on 9 January 1979, provided in pertinent portion as
follows:

5. DURATION OF EMPLOYMENT AND PENALTY

This agreement is for a period of three (3) years, but can be extended by the mutual consent of the
parties.

xxx xxx xxx

6. TERMINATION

xxx xxx xxx

Notwithstanding anything to contrary as herein provided, PIA reserves the right to terminate this
agreement at any time by giving the EMPLOYEE notice in writing in advance one month before the
intended termination or in lieu thereof, by paying the EMPLOYEE wages equivalent to one month's salary.

xxx xxx xxx

10. APPLICABLE LAW:

This agreement shall be construed and governed under and by the laws of Pakistan, and only the Courts
of Karachi, Pakistan shall have the jurisdiction to consider any matter arising out of or under this
agreement.

Respondents then commenced training in Pakistan. After their training period, they began discharging
their job functions as flight attendants, with base station in Manila and flying assignments to different
parts of the Middle East and Europe.

On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of the contracts of
employment, PIA through Mr. Oscar Benares, counsel for and official of the local branch of PIA, sent
separate letters both dated 1 August 1980 to private respondents Farrales and Mamasig advising both
that their services as flight stewardesses would be terminated "effective 1 September 1980, conformably
to clause 6 (b) of the employment agreement [they had) executed with [PIA]."2

On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a complaint, docketed
as NCR-STF-95151-80, for illegal dismissal and non-payment of company benefits and bonuses, against
PIA with the then Ministry of Labor and Employment ("MOLE"). After several unfruitful attempts at
conciliation, the MOLE hearing officer Atty. Jose M. Pascual ordered the parties to submit their position
papers and evidence supporting their respective positions. The PIA submitted its position paper, 3 but no
evidence, and there claimed that both private respondents were habitual absentees; that both were in the
habit of bringing in from abroad sizeable quantities of "personal effects"; and that PIA personnel at the
Manila International Airport had been discreetly warned by customs officials to advise private respondents
to discontinue that practice. PIA further claimed that the services of both private respondents were
terminated pursuant to the provisions of the employment contract.

In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered the reinstatement of
private respondents with full backwages or, in the alternative, the payment to them of the amounts
equivalent to their salaries for the remainder of the fixed three-year period of their employment contracts;
the payment to private respondent Mamasig of an amount equivalent to the value of a round trip ticket
Manila-USA Manila; and payment of a bonus to each of the private respondents equivalent to their one-
month salary. 4 The Order stated that private respondents had attained the status of regular employees
after they had rendered more than a year of continued service; that the stipulation limiting the period of
the employment contract to three (3) years was null and void as violative of the provisions of the Labor
Code and its implementing rules and regulations on regular and casual employment; and that the
dismissal, having been carried out without the requisite clearance from the MOLE, was illegal and entitled
private respondents to reinstatement with full backwages.

On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy Minister, MOLE,
adopted the findings of fact and conclusions of the Regional Director and affirmed the latter's award save
for the portion thereof giving PIA the option, in lieu of reinstatement, "to pay each of the complainants
[private respondents] their salaries corresponding to the unexpired portion of the contract[s] [of
employment] . . .". 5

In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional Director and the
Order of the Deputy Minister as having been rendered without jurisdiction; for having been rendered
without support in the evidence of record since, allegedly, no hearing was conducted by the hearing
officer, Atty. Jose M. Pascual; and for having been issued in disregard and in violation of petitioner's rights
under the employment contracts with private respondents.

1. Petitioner's first contention is that the Regional Director, MOLE, had no jurisdiction over the subject
matter of the complaint initiated by private respondents for illegal dismissal, jurisdiction over the same
being lodged in the Arbitration Branch of the National Labor Relations Commission ("NLRC") It appears to
us beyond dispute, however, that both at the time the complaint was initiated in September 1980 and at
the time the Orders assailed were rendered on January 1981 (by Regional Director Francisco L. Estrella)
and August 1982 (by Deputy Minister Vicente Leogardo, Jr.), the Regional Director had jurisdiction over
termination cases.
Art. 278 of the Labor Code, as it then existed, forbade the termination of the services of employees with at
least one (1) year of service without prior clearance from the Department of Labor and Employment:

Art. 278. Miscellaneous Provisions — . . .

(b) With or without a collective agreement, no employer may shut down his establishment or dismiss or
terminate the employment of employees with at least one year of service during the last two (2) years,
whether such service is continuous or broken, without prior written authority issued in accordance with
such rules and regulations as the Secretary may promulgate . . . (emphasis supplied)

Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code, made clear that in case
of a termination without the necessary clearance, the Regional Director was authorized to order the
reinstatement of the employee concerned and the payment of backwages; necessarily, therefore, the
Regional Director must have been given jurisdiction over such termination cases:

Sec. 2. Shutdown or dismissal without clearance. — Any shutdown or dismissal without prior clearance
shall be conclusively presumed to be termination of employment without a just cause. The Regional
Director shall, in such case order the immediate reinstatement of the employee and the payment of his
wages from the time of the shutdown or dismissal until the time of reinstatement. (emphasis supplied)

Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April 1976, was similarly very explicit
about the jurisdiction of the Regional Director over termination of employment cases:

Under PD 850, termination cases — with or without CBA — are now placed under the original jurisdiction
of the Regional Director. Preventive suspension cases, now made cognizable for the first time, are also
placed under the Regional Director. Before PD 850, termination cases where there was a CBA were under
the jurisdiction of the grievance machinery and voluntary arbitration, while termination cases where there
was no CBA were under the jurisdiction of the Conciliation Section.

In more details, the major innovations introduced by PD 850 and its implementing rules and regulations
with respect to termination and preventive suspension cases are:

1. The Regional Director is now required to rule on every application for clearance, whether there is
opposition or not, within ten days from receipt thereof.

xxx xxx xxx

(Emphasis supplied)

2. The second contention of petitioner PIA is that, even if the Regional Director had jurisdiction, still his
order was null and void because it had been issued in violation of petitioner's right to procedural due
process .6 This claim, however, cannot be given serious consideration. Petitioner was ordered by the
Regional Director to submit not only its position paper but also such evidence in its favor as it might have.
Petitioner opted to rely solely upon its position paper; we must assume it had no evidence to sustain its
assertions. Thus, even if no formal or oral hearing was conducted, petitioner had ample opportunity to
explain its side. Moreover, petitioner PIA was able to appeal his case to the Ministry of Labor and
Employment. 7

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

3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract of employment with
private respondents Farrales and Mamasig, arguing that its relationship with them was governed by the
provisions of its contract rather than by the general provisions of the Labor Code. 9

Paragraph 5 of that contract set a term of three (3) years for that relationship, extendible by agreement
between the parties; while paragraph 6 provided that, notwithstanding any other provision in the
Contract, PIA had the right to terminate the employment agreement at any time by giving one-month's
notice to the employee or, in lieu of such notice, one-months salary.

A contract freely entered into should, of course, be respected, as PIA argues, since a contract is the law
between the parties. 10 The principle of party autonomy in contracts is not, however, an absolute
principle. The rule in Article 1306, of our Civil Code is that the contracting parties may establish such
stipulations as they may deem convenient, "provided they are not contrary to law, morals, good customs,
public order or public policy." Thus, counter-balancing the principle of autonomy of contracting parties is
the equally general rule that provisions of applicable law, especially provisions relating to matters affected
with public policy, are deemed written into the contract. 11 Put a little differently, the governing principle
is that parties may not contract away applicable provisions of law especially peremptory provisions
dealing with matters heavily impressed with public interest. The law relating to labor and employment is
clearly such an area and parties are not at liberty to insulate themselves and their relationships from the
impact of labor laws and regulations by simply contracting with each other. It is thus necessary to
appraise the contractual provisions invoked by petitioner PIA in terms of their consistency with applicable
Philippine law and regulations.

As noted earlier, both the Labor Arbiter and the Deputy Minister, MOLE, in effect held that paragraph 5 of
that employment contract was inconsistent with Articles 280 and 281 of the Labor Code as they existed at
the time the contract of employment was entered into, and hence refused to give effect to said paragraph
5. These Articles read as follows:
Art. 280. Security of Tenure. — In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to his
backwages computed from the time his compensation was withheld from him up to the time his
reinstatement.

Art. 281. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for
a specific project or undertaking the completion or termination of which has been determined at the time
of the engagement of the employee or where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season.

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

In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., 12 the Court had occasion to examine in detail
the question of whether employment for a fixed term has been outlawed under the above quoted
provisions of the Labor Code. After an extensive examination of the history and development of Articles
280 and 281, the Court reached the conclusion that a contract providing for employment with a fixed
period was not necessarily unlawful:

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

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

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

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

Examining the provisions of paragraphs 5 and 6 of the employment agreement between petitioner PIA
and private respondents, we consider that those provisions must be read together and when so read, the
fixed period of three (3) years specified in paragraph 5 will be seen to have been effectively neutralized by
the provisions of paragraph 6 of that agreement. Paragraph 6 in effect took back from the employee the
fixed three (3)-year period ostensibly granted by paragraph 5 by rendering such period in effect a
facultative one at the option of the employer PIA. For petitioner PIA claims to be authorized to shorten
that term, at any time and for any cause satisfactory to itself, to a one-month period, or even less by
simply paying the employee a month's salary. Because the net effect of paragraphs 5 and 6 of the
agreement here involved is to render the employment of private respondents Farrales and Mamasig
basically employment at the pleasure of petitioner PIA, the Court considers that paragraphs 5 and 6 were
intended to prevent any security of tenure from accruing in favor of private respondents even during the
limited period of three (3) years,13 and thus to escape completely the thrust of Articles 280 and 281 of the
Labor Code.

Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly,
the law of Pakistan as the applicable law of the agreement and, secondly, lays the venue for settlement of
any dispute arising out of or in connection with the agreement "only [in] courts of Karachi Pakistan". The
first clause of paragraph 10 cannot be invoked to prevent the application of Philippine labor laws and
regulations to the subject matter of this case, i.e., the employer-employee relationship between petitioner
PIA and private respondents. We have already pointed out that the relationship is much affected with
public interest and that the otherwise applicable Philippine laws and regulations cannot be rendered
illusory by the parties agreeing upon some other law to govern their relationship. Neither may petitioner
invoke the second clause of paragraph 10, specifying the Karachi courts as the sole venue for the
settlement of dispute; between the contracting parties. Even a cursory scrutiny of the relevant
circumstances of this case will show the multiple and substantive contacts between Philippine law and
Philippine courts, on the one hand, and the relationship between the parties, upon the other: the contract
was not only executed in the Philippines, it was also performed here, at least partially; private respondents
are Philippine citizens and respondents, while petitioner, although a foreign corporation, is licensed to do
business (and actually doing business) and hence resident in the Philippines; lastly, private respondents
were based in the Philippines in between their assigned flights to the Middle East and Europe. All the
above contacts point to the Philippine courts and administrative agencies as a proper forum for the
resolution of contractual disputes between the parties. Under these circumstances, paragraph 10 of the
employment agreement cannot be given effect so as to oust Philippine agencies and courts of the
jurisdiction vested upon them by Philippine law. Finally, and in any event, the petitioner PIA did not
undertake to plead and prove the contents of Pakistan law on the matter; it must therefore be presumed
that the applicable provisions of the law of Pakistan are the same as the applicable provisions of
Philippine law.14

We conclude that private respondents Farrales and Mamasig were illegally dismissed and that public
respondent Deputy Minister, MOLE, had not committed any grave abuse of discretion nor any act without
or in excess of jurisdiction in ordering their reinstatement with backwages. Private respondents are
entitled to three (3) years backwages without qualification or deduction. Should their reinstatement to
their former or other substantially equivalent positions not be feasible in view of the length of time which
has gone by since their services were unlawfully terminated, petitioner should be required to pay
separation pay to private respondents amounting to one (1) month's salary for every year of service
rendered by them, including the three (3) years service putatively rendered.

ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for lack of merit, and the Order dated 12
August 1982 of public respondent is hereby AFFIRMED, except that (1) private respondents are entitled to
three (3) years backwages, without deduction or qualification; and (2) should reinstatement of private
respondents to their former positions or to substantially equivalent positions not be feasible, then
petitioner shall, in lieu thereof, pay to private respondents separation pay amounting to one (1)-month's
salary for every year of service actually rendered by them and for the three (3) years putative service by
private respondents. The Temporary Restraining Order issued on 13 September 1982 is hereby LIFTED.
Costs against petitioner.

SO ORDERED.
[G.R. No. 122653. December 12, 1997]
PURE FOODS CORPORATON, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION, RODOLFO
CORDOVA, VIOLETA CRUSIS, ET AL.,* respondents.
DAVIDE, JR., J.:

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

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

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

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

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

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

On 28 October 1994, the NLRC affirmed the Labor Arbiter's decision. 3 However, on private respondents
motion for reconsideration, the NLRC rendered another decision on 30 January 1995 4 vacating and
setting aside its decision of 28 October 1994 and holding that the private respondents and their co-
complainants were regular employees. It declared that the contract of employment for five months was a
clandestine scheme employed by [the petitioner] to stifle [private respondents] right to security of tenure
and should therefore be struck down and disregarded for being contrary to law, public policy, and morals.
Hence, their dismissal on account of the expiration of their respective contracts was illegal.
Accordingly, the NLRC ordered the petitioner to reinstate the private respondents to their former position
without loss of seniority rights and other privileges, with full back wages; and in case their reinstatement
would no longer be feasible, the petitioner should pay them separation pay equivalent to one-month pay
or one-half-month pay for every year of service, whichever is higher, with back wages and 10% of the
monetary award as attorneys fees.

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

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

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

In its Comment, the Office of the Solicitor General (OSG) advances the argument that the private
respondents were regular employees, since they performed activities necessary and desirable in the
business or trade of the petitioner. The period of employment stipulated in the contracts of employment
was null and void for being contrary to law and public policy, as its purpose was to circumvent the law on
security of tenure. The expiration of the contract did not, therefore, justify the termination of their
employment.

The OSG further maintains that the ruling of the then Secretary of Labor and Employment in LAP-NOWM
v. Pure Foods Corporation is not binding on this Court; neither is that ruling controlling, as the said case
involved certification election and not the issue of the nature of private respondents employment. It also
considers private respondents quitclaim as ineffective to bar the enforcement for the full measure of their
legal rights.

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

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

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

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

Thus, the two kinds of regular employees are (1) those who are engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who
have rendered at least one year of service, whether continuous or broken, with respect to the activity in
which they are employed.6cräläwvirtualibräry

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

Contrary to petitioner's submission, the private respondents could not be regarded as having been hired
for a specific project or undertaking. The term specific project or undertaking under Article 280 of the
Labor Code contemplates an activity which is not commonly or habitually performed or such type of work
which is not done on a daily basis but only for a specific duration of time or until completion; the services
employed are then necessary and desirable in the employers usual business only for the period of time it
takes to complete the project.7cräläwvirtualibräry

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

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

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

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

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

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

[I]t could not be supposed that private respondents and all other so-called casual workers of [the
petitioner] KNOWINGLY and VOLUNTARILY agreed to the 5-month employment contract. Cannery
workers are never on equal terms with their employers. Almost always, they agree to any terms of an
employment contract just to get employed considering that it is difficult to find work given their ordinary
qualifications. Their freedom to contract is empty and hollow because theirs is the freedom to starve if
they refuse to work as casual or contractual workers. Indeed, to the unemployed, security of tenure has no
value. It could not then be said that petitioner and private respondents "dealt with each other on more or
less equal terms with no moral dominance whatever being exercised by the former over the latter.
10chanroblesvirtuallawlibrary

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

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

This scheme of the petitioner was apparently designed to prevent the private respondents and the other
casual employees from attaining the status of a regular employee. It was a clear circumvention of the
employees right to security of tenure and to other benefits like minimum wage, cost-of-living allowance,
sick leave, holiday pay, and 13th month pay. 11 Indeed, the petitioner succeeded in evading the
application of labor laws. Also, it saved itself from the trouble or burden of establishing a just cause for
terminating employees by the simple expedient of refusing to renew the employment contracts.
The five-month period specified in private respondents employment contracts having been imposed
precisely to circumvent the constitutional guarantee on security of tenure should, therefore, be struck
down or disregarded as contrary to public policy or morals. 12 To uphold the contractual arrangement
between the petitioner and the private respondents would, in effect, permit the former to avoid hiring
permanent or regular employees by simply hiring them on a temporary or casual basis, thereby violating
the employees security of tenure in their jobs.13cräläwvirtualibräry

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

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

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

However, since reinstatement is no longer possible because the petitioner's tuna cannery plant had,
admittedly, been closed in November 1994,18 the proper award is separation pay equivalent to one
month pay or one-half month pay for every year of service, whichever is higher, to be computed from the
commencement of their employment up to the closure of the tuna cannery plant. The amount of back
wages must be computed from the time the private respondents were dismissed until the time
petitioner's cannery plant ceased operation.19cräläwvirtualibräry

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

SO ORDERED.
G.R. No. 181974 February 1, 2012
LYNVIL FISHING ENTERPRISES, INC. and/or ROSENDO S. DE BORJA, Petitioners,
vs.
ANDRES G. ARIOLA, JESSIE D. ALCOVENDAS, JIMMY B. CALINAO AND LEOPOLDO G. SEBULLEN,
Respondents.
PEREZ, J.:

Before the Court is a Petition for Review on Certiorari1 of the Decision2 of the Fourteenth Division of the
Court of Appeals in CA-G.R. SP No. 95094 dated 10 September 2007, granting the Writ of Certiorari
prayed for under Rule 65 of the 1997 Revised Rules of Civil Procedure by herein respondents Andres G.
Ariola, Jessie D. Alcovendas, Jimmy B. Calinao and Leopoldo Sebullen thereby reversing the Resolution of
the National Labor Relations Commission (NLRC). The dispositive portion of the assailed decision reads:

WHEREFORE, premises considered, the Decision dated March 31, 2004 rendered by the National Labor
Relations Commission is hereby REVERSED and SET ASIDE. In lieu thereof, the Decision of the Labor
Arbiter is hereby REINSTATED, except as to the award of attorney’s fees, which is ordered DELETED.3

The version of the petitioners follows:

1. Lynvil Fishing Enterprises, Inc. (Lynvil) is a company engaged in deep-sea fishing, operating along the
shores of Palawan and other outlying islands of the Philippines.4 It is operated and managed by Rosendo
S. de Borja.

2. On 1 August 1998, Lynvil received a report from Romanito Clarido, one of its employees, that on 31 July
1998, he witnessed that while on board the company vessel Analyn VIII, Lynvil employees, namely: Andres
G. Ariola (Ariola), the captain; Jessie D. Alcovendas (Alcovendas), Chief Mate; Jimmy B. Calinao (Calinao),
Chief Engineer; Ismael G. Nubla (Nubla), cook; Elorde Bañez (Bañez), oiler; and Leopoldo D. Sebullen
(Sebullen), bodegero, conspired with one another and stole eight (8) tubs of "pampano" and "tangigue"
fish and delivered them to another vessel, to the prejudice of Lynvil.5

3. The said employees were engaged on a per trip basis or "por viaje" which terminates at the end of each
trip. Ariola, Alcovendas and Calinao were managerial field personnel while the rest of the crew were field
personnel.6

4. By reason of the report and after initial investigation, Lynvil’s General Manager Rosendo S. De Borja (De
Borja) summoned respondents to explain within five (5) days why they should not be dismissed from
service. However, except for Alcovendas and Bañez,7 the respondents refused to sign the receipt of the
notice.

5. Failing to explain as required, respondents’ employment was terminated.

6. Lynvil, through De Borja, filed a criminal complaint against the dismissed employees for violation of P.D.
532, or the Anti-Piracy and Anti-Highway Robbery Law of 1974 before the Office of the City Prosecutor of
Malabon City.8
7. On 12 November 1998, First Assistant City Prosecutor Rosauro Silverio found probable cause for the
indictment of the dismissed employees for the crime of qualified theft9 under the Revised Penal Code.

On the other hand, the story of the defense is:

1. The private respondents were crew members of Lynvil’s vessel named Analyn VIII.10

2. On 31 July 1998, they arrived at the Navotas Fishport on board Analyn VIII loaded with 1,241 bañeras of
different kinds of fishes. These bañeras were delivered to a consignee named SAS and Royale.11

The following day, the private respondents reported back to Lynvil office to inquire about their new job
assignment but were told to wait for further advice. They were not allowed to board any vessel.12

3. On 5 August 1998, only Alcovendas and Bañez received a memorandum from De Borja ordering them
to explain the incident that happened on 31 July 1998. Upon being informed about this, Ariola, Calinao,
Nubla and Sebullen went to the Lynvil office. However, they were told that their employments were
already terminated.13

Aggrieved, the employees filed with the Arbitration Branch of the National Labor Relations Commission-
National Capital Region on 25 August 1998 a complaint for illegal dismissal with claims for backwages,
salary differential reinstatement, service incentive leave, holiday pay and its premium and 13th month pay
from 1996 to1998. They also claimed for moral, exemplary damages and attorney’s fees for their dismissal
with bad faith.14

They added that the unwarranted accusation of theft stemmed from their oral demand of increase of
salaries three months earlier and their request that they should not be required to sign a blank payroll
and vouchers.15

On 5 June 2002, Labor Arbiter Ramon Valentin C. Reyes found merit in complainants’ charge of illegal
dismissal.16 The dispositive portion reads:

WHEREFORE, premises considered, judgment is hereby rendered finding that complainants were illegally
dismissed, ordering respondents to jointly and severally pay complainants (a) separation pay at one half
month pay for every year of service; (b) backwages; (c) salary differential; (d) 13th month pay; and (e)
attorney’s fees, as follows:

"1) Andres Ariola

Backwages P234,000.00
(P6,500.00 x 36 = P234,000.00)
Separation Pay – P74,650.00
13th Month Pay – P6,500.00
P325,250.00
"2) Jessie Alcovendas
Backwages P195,328.00
(P5,148.00 x 36 = P195,328.00)
Separation Pay – P44,304.00
13th Month Pay – 5,538.00
Salary Differential – 1,547.52
P246,717.52
"3) Jimmy Calinao
Backwages P234,000.00
(P6,500.00 x 36 = P234,000.00)
Separation Pay – 55,250.00
13th Month Pay – P6,500.00
P295,700.00
"4) Leopoldo Sebullen
Backwages P154,440.00
(P4, 290.00 x 36 = P154,440.00)
Separation Pay – P44,073.00
13th Month Pay – 2,473.12
Salary Differential – 4,472.00
P208,455.12
"5) Ismael Nubla
Backwages P199,640.12
Separation Pay – P58,149.00
13th Month Pay – 2,473.12
Salary Differential – P5,538.00
P265, 28.12
TOTAL P 1, 341, 650.76
All other claims are dismissed for lack of merit."17

The Labor Arbiter found that there was no evidence showing that the private respondents received the 41
bañeras of "pampano" as alleged by De Borja in his reply-affidavit; and that no proof was presented that
the 8 bañeras of pampano [and tangigue] were missing at the place of destination.18

The Labor Arbiter disregarded the Resolution of Assistant City Prosecutor Rosauro Silverio on the theft
case. He reasoned out that the Labor Office is governed by different rules for the determination of the
validity of the dismissal of employees.19

The Labor Arbiter also ruled that the contractual provision that the employment terminates upon the end
of each trip does not make the respondents’ dismissal legal. He pointed out that respondents and Lynvil
did not negotiate on equal terms because of the moral dominance of the employer.20

The Labor Arbiter found that the procedural due process was not complied with and that the mere notice
given to the private respondents fell short of the requirement of "ample opportunity" to present the
employees’ side.21

On appeal before the National Labor Relations Commission, petitioners asserted that private respondents
were only contractual employees; that they were not illegally dismissed but were accorded procedural due
process and that De Borja did not commit bad faith in dismissing the employees so as to warrant his joint
liability with Lynvil.22

On 31 March 2004, the NLRC reversed and set aside the Decision of the Labor Arbiter. The dispositive
portion reads:

WHEREFORE, judgment is hereby rendered REVERSING AND SETTING ASIDE the Decision of the Labor
Arbiter a quo and a new one entered DISMISSING the present complaints for utter lack of merit;

However as above discussed, an administrative fine of PhP5,000.00 for each complainant, Andres Ariola,
Jessie Alcovendas, Jimmy Canilao, Leopoldo Sebullen and Ismael Nobla or a total of PhP25,000.00 is
hereby awarded.23

The private respondents except Elorde Bañez filed a Petition for Certiorari24 before the Court of Appeals
alleging grave abuse of discretion on the part of NLRC.

The Court of Appeals found merit in the petition and reinstated the Decision of the Labor Arbiter except
as to the award of attorney’s fees. The appellate court held that the allegation of theft did not warrant the
dismissal of the employees since there was no evidence to prove the actual quantities of the missing kinds
of fish loaded to Analyn VIII.25 It also reversed the finding of the NLRC that the dismissed employees
were merely contractual employees and added that they were regular ones performing activities which are
usually necessary or desirable in the business and trade of Lynvil. Finally, it ruled that the two-notice rule
provided by law and jurisprudence is mandatory and non-compliance therewith rendered the dismissal of
the employees illegal.

The following are the assignment of errors presented before this Court by Lynvil:

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THE ESTABLISHED DOCTRINE
LAID DOWN IN NASIPIT LUMBER COMPANY V. NLRC HOLDING THAT THE FILING OF A CRIMINAL CASE
BEFORE THE PROSECUTOR’S OFFICE CONSTITUTES SUFFICIENT BASIS FOR A VALID TERMINATION OF
EMPLOYMENT ON THE GROUNDS OF SERIOUS MISCONDUCT AND/OR LOSS OF TRUST AND
CONFIDENCE.

II

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE TERMINATION OF RESPONDENTS’
EMPLOYMENT WAS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.

III

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THAT THE RESPONDENTS’
EMPLOYMENT, IN ANY EVENT, WERE CONTRACTUAL IN NATURE BEING ON A PER VOYAGE BASIS. THUS,
THEIR RESPECTIVE EMPLOYMENT TERMINATED AFTER THE END OF EACH VOYAGE
IV

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE RESPONDENTS WERE NOT
ACCORDED PROCEDURAL DUE PROCESS.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE RESPONDENTS ARE ENTITLED TO
THE PAYMENT OF THEIR MONEY CLAIMS.

VI

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THAT PETITIONER ROSENDO S.
DE BORJA IS NOT JOINTLY AND SEVERALLY LIABLE FOR THE JUDGMENT WHEN THERE WAS NO FINDING
OF BAD FAITH.26

The Court’s Ruling

The Supreme Court is not a trier of facts. Under Rule 45,27 parties may raise only questions of law. We are
not duty-bound to analyze again and weigh the evidence introduced in and considered by the tribunals
below. Generally when supported by substantial evidence, the findings of fact of the CA are conclusive
and binding on the parties and are not reviewable by this Court, unless the case falls under any of the
following recognized exceptions:

(1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures;

(2) When the inference made is manifestly mistaken, absurd or impossible;

(3) Where there is a grave abuse of discretion;

(4) When the judgment is based on a misapprehension of facts;

(5) When the findings of fact are conflicting;

(6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee;

(7) When the findings are contrary to those of the trial court;

(8) When the findings of fact are conclusions without citation of specific evidence on which they are
based;

(9) When the facts set forth in the petition as well as in the petitioners' main and reply briefs are not
disputed by the respondents; and
(10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence
and contradicted by the evidence on record. (Emphasis supplied)28

The contrariety of the findings of the Labor Arbiter and the NLRC prevents reliance on the principle of
special administrative expertise and provides the reason for judicial review, at first instance by the
appellate court, and on final study through the present petition.

In the first assignment of error, Lynvil contends that the filing of a criminal case before the Office of the
Prosecutor is sufficient basis for a valid termination of employment based on serious misconduct and/or
loss of trust and confidence relying on Nasipit Lumber Company v. NLRC.29

Nasipit is about a security guard who was charged with qualified theft which charge was dismissed by the
Office of the Prosecutor. However, despite the dismissal of the complaint, he was still terminated from his
employment on the ground of loss of confidence. We ruled that proof beyond reasonable doubt of an
employee's misconduct is not required when loss of confidence is the ground for dismissal. It is sufficient
if the employer has "some basis" to lose confidence or that the employer has reasonable ground to
believe or to entertain the moral conviction that the employee concerned is responsible for the
misconduct and that the nature of his participation therein rendered him absolutely unworthy of the trust
and confidence demanded by his position.30 It added that the dropping of the qualified theft charges
against the respondent is not binding upon a labor tribunal.31

In Nicolas v. National Labor Relations Commission,32 we held that a criminal conviction is not necessary
to find just cause for employment termination. Otherwise stated, an employee’s acquittal in a criminal
case, especially one that is grounded on the existence of reasonable doubt, will not preclude a
determination in a labor case that he is guilty of acts inimical to the employer’s interests.33 In the reverse,
the finding of probable cause is not followed by automatic adoption of such finding by the labor
tribunals.

In other words, whichever way the public prosecutor disposes of a complaint, the finding does not bind
the labor tribunal.

Thus, Lynvil cannot argue that since the Office of the Prosecutor found probable cause for theft the Labor
Arbiter must follow the finding as a valid reason for the termination of respondents’ employment. The
proof required for purposes that differ from one and the other are likewise different.

Nonetheless, even without reliance on the prosecutor’s finding, we find that there was valid cause for
respondents’ dismissal.

In illegal dismissal cases, the employer bears the burden of proving that the termination was for a valid or
authorized cause.34

Just cause is required for a valid dismissal. The Labor Code35 provides that an employer may terminate an
employment based on fraud or willful breach of the trust reposed on the employee. Such breach is
considered willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must also be based
on substantial evidence and not on the employer’s whims or caprices or suspicions otherwise, the
employee would eternally remain at the mercy of the employer. Loss of confidence must not be
indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was
arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-
related and shows that the employee concerned is unfit to continue working for the employer. In addition,
loss of confidence as a just cause for termination of employment is premised on the fact that the
employee concerned holds a position of responsibility, trust and confidence or that the employee
concerned is entrusted with confidence with respect to delicate matters, such as the handling or care and
protection of the property and assets of the employer. The betrayal of this trust is the essence of the
offense for which an employee is penalized.36

Breach of trust is present in this case.

We agree with the ruling of the Labor Arbiter and Court of Appeals that the quantity of tubs expected to
be received was the same as that which was loaded. However, what is material is the kind of fish loaded
and then unloaded. Sameness is likewise needed.

We cannot close our eyes to the positive and clear narration of facts of the three witnesses to the
commission of qualified theft. Jonathan Distajo, a crew member of the Analyn VIII, stated in his letter
addressed to De Borja37 dated 8 August 1998, that while the vessel was traversing San Nicolas, Cavite, he
saw a small boat approach them. When the boat was next to their vessel, Alcovendas went inside the
stockroom while Sebullen pushed an estimated four tubs of fish away from it. Ariola, on the other hand,
served as the lookout and negotiator of the transaction. Finally, Bañez and Calinao helped in putting the
tubs in the small boat. He further added that he received ₱800.00 as his share for the transaction.
Romanito Clarido, who was also on board the vessel, corroborated the narration of Distajo on all accounts
in his 25 August 1998 affidavit.38 He added that Alcovendas told him to keep silent about what happened
on that day. Sealing tight the credibility of the narration of theft is the affidavit39 executed by Elorde
Bañez dated 3 May 1999. Bañez was one of the dismissed employees who actively participated in the
taking of the tubs. He clarified in the affidavit that the four tubs taken out of the stockroom in fact
contained fish taken from the eight tubs. He further stated that Ariola told everyone in the vessel not to
say anything and instead file a labor case against the management. Clearly, we cannot fault Lynvil and De
Borja when it dismissed the employees.

The second to the fifth assignment of errors interconnect.

The nature of employment is defined in the Labor Code, thus:

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

Lynvil contends that it cannot be guilty of illegal dismissal because the private respondents were
employed under a fixed-term contract which expired at the end of the voyage. The pertinent provisions of
the contract are:

xxxx

1. NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-ayon sa patakarang "por

viaje" na magmumula sa pagalis sa Navotas papunta sa pangisdaan at pagbabalik sa pondohan ng lantsa
sa Navotas, Metro Manila;

xxxx

1. NA ako ay nakipagkasundo na babayaran ang aking paglilingkod sa paraang "por viaje" sa halagang
P__________ isang biyahe ng kabuuang araw xxxx.40

Lynvil insists on the applicability of the case of Brent School,41 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.

Contrarily, the private respondents contend that they became regular employees by reason of their
continuous hiring and performance of tasks necessary and desirable in the usual trade and business of
Lynvil.

Jurisprudence,42 laid two conditions for the validity of a fixed-contract agreement between the employer
and employee:
First, 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

Second, it satisfactorily appears that the employer and the employee dealt with each other on more or
less equal terms with no moral dominance exercised by the former or the latter.43

Textually, the provision that: "NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-
ayon sa patakarang "por viaje" na magmumula sa pagalis sa Navotas papunta sa pangisdaan at
pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila" is for a fixed period of employment. In the
context, however, of the facts that: (1) the respondents were doing tasks necessarily to Lynvil’s fishing
business with positions ranging from captain of the vessel to bodegero; (2) after the end of a trip, they will
again be hired for another trip with new contracts; and (3) this arrangement continued for more than ten
years, the clear intention is to go around the security of tenure of the respondents as regular employees.
And respondents are so by the express provisions of the second paragraph of Article 280, thus:

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

The same set of circumstances indicate clearly enough that it was the need for a continued source of
income that forced the employees’ acceptance of the "por viaje" provision.

Having found that respondents are regular employees who may be, however, dismissed for cause as we
have so found in this case, there is a need to look into the procedural requirement of due process in
Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code. It is required that the employer
furnish the employee with two written notices: (1) a written notice served on the employee specifying the
ground or grounds for termination, and giving to said employee reasonable opportunity within which to
explain his side; and (2) a written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination.

From the records, there was only one written notice which required respondents to explain within five (5)
days why they should not be dismissed from the service. Alcovendas was the only one who signed the
receipt of the notice. The others, as claimed by Lynvil, refused to sign. The other employees argue that no
notice was given to them. Despite the inconsistencies, what is clear is that no final written notice or
notices of termination were sent to the employees.

The twin requirements of notice and hearing constitute the elements of [due] process in cases of
employee's dismissal. The requirement of notice is intended to inform the employee concerned of the
employer's intent to dismiss and the reason for the proposed dismissal. Upon the other hand, the
requirement of hearing affords the employee an opportunity to answer his employer's charges against
him and accordingly, to defend himself therefrom before dismissal is effected.44 Obviously, the second
written notice, as indispensable as the first, is intended to ensure the observance of due process.
Applying the rule to the facts at hand, we grant a monetary award of ₱50,000.00 as nominal damages,
this, pursuant to the fresh ruling of this Court in Culili v. Eastern Communication Philippines, Inc.45 Due to
the failure of Lynvil to follow the procedural requirement of two-notice rule, nominal damages are due to
respondents despite their dismissal for just cause.

Given the fact that their dismissal was for just cause, we cannot grant backwages and separation pay to
respondents. However, following the findings of the Labor Arbiter who with the expertise presided over
the proceedings below, which findings were affirmed by the Court of Appeals, we grant the 13th month
pay and salary differential of the dismissed employees.

Whether De Borja is jointly and severally liable with Lynvil

As to the last issue, this Court has ruled that in labor cases, the corporate directors and officers are
solidarily liable with the corporation for the termination of employment of employees done with malice or
in bad faith.46 Indeed, moral damages are recoverable when the dismissal of an employee is attended by
bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good
morals, good customs or public policy.

It has also been discussed in MAM Realty Development Corporation v. NLRC47 that:

x x x A corporation being a juridical entity, may act only through its directors, officers and employees.
Obligations incurred by them, acting as such corporate agents, are not theirs but the direct
accountabilities of the corporation they represent. True, solidary liabilities may at times be incurred but
only when exceptional circumstances warrant such as, generally, in the following cases:

1. When directors and trustees or, in appropriate cases, the officers of a corporation:

xxx

(b) act in bad faith or with gross negligence in directing the corporate affairs;

x x x 48

The term "bad faith" contemplates a "state of mind affirmatively operating with furtive design or with
some motive of self-interest or will or for ulterior purpose."49 1âwphi1

We agree with the ruling of both the NLRC and the Court of Appeals when they pronounced that there
was no evidence on record that indicates commission of bad faith on the part of De Borja. He is the
general manager of Lynvil, the one tasked with the supervision by the employees and the operation of the
business. However, there is no proof that he imposed on the respondents the "por viaje" provision for
purpose of effecting their summary dismissal.

WHEREFORE, the petition is partially GRANTED. The 10 September 2007 Decision of the Court of Appeals
in CA-G.R. SP No. 95094 reversing the Resolution dated 31 March 2004 of the National Labor Relations
Commission is hereby MODIFIED. The Court hereby rules that the employees were dismissed for just
cause by Lynvil Fishing Enterprises, Inc. and Rosendo S. De Borja, hence, the reversal of the award for
backwages and separation pay. However, we affirm the award for 13th month pay, salary differential and
grant an additional ₱50,000.00 in favor of the employees representing nominal damages for petitioners’
non-compliance with statutory due process. No cost.

SO ORDERED.
HERRY J. PRICE, STEPHANIE G. DOMINGO AND LOLITA ARBILERA, Petitioners,
Vs.
INNODATA PHILS. INC.,/ INNODATA CORPORATION, LEO RABANG AND JANE NAVARETTE,
Respondents.
G.R. No. 178505
CHICO-NAZARIO, J.:

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

The factual antecedents of the case are as follows:

Respondent Innodata Philippines, Inc./Innodata Corporation (INNODATA) was a domestic corporation

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

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

CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD

xxxx

WITNESSETH: That

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

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

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

TERM/DURATION

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

TERMINATION

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

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

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

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

6.5 Either of the parties may terminate this Contract by reason of the breach or violation of the terms and
conditions hereof by giving at least Fifteen (15) days written notice. Termination with cause under this
paragraph shall be effective without need of judicial action or approval.4

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

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

RE: End of Contract

Date: February 16, 2000

Please be informed that your employment ceases effective at the end of the close of business hours on
February 16, 2000.5

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

On 22 May 2000, petitioners filed a Complaint6 for illegal dismissal and damages against respondents.
Petitioners claimed that they should be considered regular employees since their positions as formatters
were necessary and desirable to the usual business of INNODATA as an encoding, conversion and data
processing company. Petitioners also averred that the decisions in Villanueva v. National Labor Relations
Commission7 and Servidad v. National Labor Relations Commission,8 in which the Court already
purportedly ruled "that the nature of employment at Innodata Phils., Inc. is regular,"9 constituted stare
decisis to the present case. Petitioners finally argued that they could not be considered project employees
considering that their employment was not coterminous with any project or undertaking, the termination
of which was predetermined.

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

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

FOREGOING PREMISES CONSIDERED, judgment is hereby rendered declaring complainants’ dismissal

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

A. Backwages

1. Cherry J. Price

2/17/2000 – 10/17/2000 at 223.50/day

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

2. Stephanie Domingo 46,488.00

(same computation)
3. Lolita Arbilera 46,488.00

(same computation)

Total Backwages P139,464.00

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

Total Award P153,410.40

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

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

The dispositive portion of the NLRC Decision thus reads:

WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and SET ASIDE and a
new one entered DISMISSING the instant complaint for lack of merit.15

The NLRC denied petitioners’ Motion for Reconsideration in a Resolution dated 28 June 2002.16

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

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

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

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

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

The Court of Appeals adjudged:

WHEREFORE, the instant petition is hereby DENIED and the Resolution dated December 14, 2001 of the
National Labor Relations Commission declaring petitioners were not illegally dismissed is AFFIRMED.17

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

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

I.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND GRAVE ABUSE OF
DISCRETION WHEN IT DID NOT APPLY THE SUPREME COURT RULING IN THE CASE OF NATIVIDAD &
QUEJADA THAT THE NATURE OF EMPLOYMENT OF RESPONDENTS IS REGULAR NOT FIXED, AND AS SO
RULED IN AT LEAST TWO OTHER CASES AGAINST INNODATA PHILS. INC.

II.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN RULING THAT THE
STIPULATION OF CONTRACT IS GOVERNING AND NOT THE NATURE OF EMPLOYMENT AS DEFINED BY
LAW.

III.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO

LACK OF JURISDICTION WHEN IT DID NOT CONSIDER THE EVIDENCE ON RECORD SHOWING THAT
THERE IS CLEAR CIRCUMVENTION OF THE LAW ON SECURITY OF TENURE THROUGH CONTRACT
MANIPULATION.18
The issue of whether petitioners were illegally dismissed by respondents is ultimately dependent on the
question of whether petitioners were hired by INNODATA under valid fixed-term employment contracts.

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

The employment status of a person is defined and prescribed by law and not by what the parties say it
should be.19 Equally important to consider is that a contract of employment is impressed with public
interest such that labor contracts must yield to the common good.20 Thus, provisions of applicable
statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves and
their relationships from the impact of labor laws and regulations by simply contracting with each other.21

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

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

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

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

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

Under Article 280 of the Labor Code, the applicable test to determine whether an employment should be
considered regular or non-regular is the reasonable connection between the particular activity performed
by the employee in relation to the usual business or trade of the employer.22

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

However, it is also true that while certain forms of employment require the performance of usual or
desirable functions and exceed one year, these do not necessarily result in regular employment under
Article 280 of the Labor Code.23 Under the Civil Code, fixed-term employment contracts are not limited,
as they are under the present Labor Code, to those by nature seasonal or for specific projects with
predetermined dates of completion; they also include those to which the parties by free choice have
assigned a specific date of termination.24

The decisive determinant in term employment is the day certain agreed upon by the parties for the
commencement and termination of their employment relationship, a day certain being understood to be
that which must necessarily come, although it may not be known when. Seasonal employment and
employment for a particular project are instances of employment in which a period, where not expressly
set down, is necessarily implied.25

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

The Court disagrees.

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

Some familiar examples may be cited of employment contracts which may be neither for seasonal work
nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas
employment contracts, for one, to which, whatever the nature of the engagement, the concept of regular
employment with all that it implies does not appear ever to have been applied, Article 280 of the Labor
Code notwithstanding; also appointments to the positions of dean, assistant dean, college secretary,
principal, and other administrative offices in educational institutions, which are by practice or tradition
rotated among the faculty members, and where fixed terms are a necessity without which no reasonable
rotation would be possible. Similarly, despite the provisions of Article 280, Policy Instructions No. 8 of the
Minister of Labor implicitly recognize that certain company officials may be elected for what would
amount to fixed periods, at the expiration of which they would have to stand down, in providing that
these officials, "x x may lose their jobs as president, executive vice-president or vice president, etc.
because the stockholders or the board of directors for one reason or another did not reelect them."26

As a matter of fact, the Court, in its oft-quoted decision in Brent, also issued a stern admonition that
where, from the circumstances, it is apparent that the period was imposed to preclude the acquisition of
tenurial security by the employee, then it should be struck down as being contrary to law, morals, good
customs, public order and public policy.27
After considering petitioners’ contracts in their entirety, as well as the circumstances surrounding
petitioners’ employment at INNODATA, the Court is convinced that the terms fixed therein were meant
only to circumvent petitioners’ right to security of tenure and are, therefore, invalid.

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

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

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

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

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

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

Even assuming that petitioners’ length of employment is material, given respondents’ muddled assertions,
this Court adheres to its pronouncement in Villanueva v. National Labor Relations Commission,28 to the
effect that where a contract of employment, being a contract of adhesion, is ambiguous, any ambiguity
therein should be construed strictly against the party who prepared it. The Court is, thus, compelled to
conclude that petitioners’ contracts of employment became effective on 16 February 1999, and that they
were already working continuously for INNODATA for a year.
Further attempting to exonerate itself from any liability for illegal dismissal, INNODATA contends that
petitioners were project employees whose employment ceased at the end of a specific project or
undertaking. This contention is specious and devoid of merit.

In Philex Mining Corp. v. National Labor Relations Commission,29 the Court defined "project employees"
as those workers hired (1) for a specific project or undertaking, and wherein (2) the completion or
termination of such project has been determined at the time of the engagement of the employee.

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

In Magcalas v. National Labor Relations Commission,30 the Court struck down a similar claim by the
employer therein that the dismissed employees were fixed-term and project employees. The Court here
reiterates the rule that all doubts, uncertainties, ambiguities and insufficiencies should be resolved in favor
of labor. It is a well-entrenched doctrine that in illegal dismissal cases, the employer has the burden of
proof. This burden was not discharged in the present case.

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

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

xxxx

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

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

Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of
security of tenure and free them from the bondage of uncertainty of tenure woven by some employers
into their contracts of employment. This was exactly the purpose of the legislators in drafting Article 280
of the Labor Code – to prevent the circumvention by unscrupulous employers of the employee’s right to
be secure in his tenure by indiscriminately and completely ruling out all written and oral agreements
inconsistent with the concept of regular employment.

In all, respondents’ insistence that it can legally dismiss petitioners on the ground that their term of
employment has expired is untenable. To reiterate, petitioners, being regular employees of INNODATA,
are entitled to security of tenure. In the words of Article 279 of the Labor Code:

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

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

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

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

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

Finally, unless they have exceeded their authority, corporate officers are, as a general rule, not personally
liable for their official acts, because a corporation, by legal fiction, has a personality separate and distinct
from its officers, stockholders and members. Although as an exception, corporate directors and officers
are solidarily held liable with the corporation, where terminations of employment are done with malice or
in bad faith,33 in the absence of evidence that they acted with malice or bad faith herein, the Court
exempts the individual respondents, Leo Rabang and Jane Navarette, from any personal liability for the
illegal dismissal of petitioners.
WHEREFORE, the Petition for Review on Certiorari is GRANTED. The Decision dated 25 September 2006
and Resolution dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No. 72795are hereby REVERSED
and SET ASIDE. RespondentInnodata Philippines, Inc./Innodata Corporation is ORDERED to pay petitioners
Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera: (a) separation pay, in lieu of reinstatement,
equivalent to one month pay for every year of service, to be computed from the commencement of their
employment up to the date respondent Innodata Philippines, Inc./Innodata Corporation ceased
operations; (b) full backwages, computed from the time petitioners’ compensation was withheld from
them up to the time respondent Innodata Philippines, Inc./Innodata Corporation ceased operations; and
(3) 10% of the total monetary award as attorney’s fees. Costs against respondent Innodata Philippines,
Inc./Innodata Corporation.

SO ORDERED.
[G.R. NO. 149329 : July 12, 2004
ROSITA PANGILINAN, YOLANDA LAYOLA, v. GENERAL MILLING CORPORATION, Respondent.
CALLEJO, SR., J.:

Before this Court is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals in CA-G.R.
SP No. 51678 and its Resolution denying the motion for reconsideration thereon.

The Antecedents

The respondent General Milling Corporation is a domestic corporation engaged in the production and
sale of livestock and poultry.2 It is, likewise, the distributor of dressed chicken to various restaurants and
establishments nationwide.3 As such, it employs hundreds of employees, some on a regular basis and
others on a casual basis, as "emergency workers."

The petitioners4 were employed by the respondent on different dates as emergency workers at its poultry
plant in Cainta, Rizal, under separate "temporary/casual contracts of employment" for a period of five
months.5 Most of them worked as chicken dressers, while the others served as packers or helpers.6 Upon
the expiration of their respective contracts, their services were terminated. They later filed separate
complaints for illegal dismissal and non-payment of holiday pay, 13th month pay, night-shift differential
and service incentive leave pay against the respondent before the Arbitration Branch of the National
Labor Relations Commission, docketed as NLRC Case No. RAB-IV-9-4519-92-RI; NLRC Case No. RAB-IV-9-
4520-92-RI; NLRC Case No. RAB-IV-9-4521-92-RI; NLRC Case No. RAB-IV-9-4541-92-RI; NLRC Case No.
RAB-IV-10-4552-92-RI; NLRC Case No. RAB-IV-10-4595-92-RI and NLRC Case No. RAB-IV-11-4599-92-RI.
7

The petitioners alleged that their work as chicken dressers was necessary and desirable in the usual
business of the respondent, and added that although they worked from 10:00 p.m. to 6:00 a.m., they were
not paid night-shift differential.8 They stressed that based on the nature of their work, they were regular
employees of the respondent; hence, could not be dismissed from their employment unless for just cause
and after due notice. In support thereof, the petitioners cited the decision of the Honorable Labor Arbiter
Perlita B. Velasco in NLRC Case No. NCR-6-2168-86, entitled Estelita Jayme, et al. v. General Milling
Corporation; and NLRC Case No. NCR-9-3726-86, entitled Marilou Carino, et al. v. General Milling
Corporation.9 They asserted that the respondent GMC terminated their contract of employment without
just cause and due notice. They further argued that the respondent could not rely on the nomenclature of
their employment as "temporary or casual."

On August 18, 1997, Labor Arbiter (LA) Voltaire A. Balitaan rendered a decision in favor of the petitioners
declaring that they were regular employees. Finding that the termination of their employment was not
based on any of the just causes provided for in the Labor Code, the LA declared that they were allegedly
illegally dismissed. The decretal portion of the decision reads:

WHEREFORE, judgment is hereby rendered in these cases, as follows:

1. Declaring respondent corporation guilty of illegally dismissing complainants, except Rosalina Basan and
Filomena Lanting whose complaints are hereby dismissed on ground of prescription, and as a
consequence therefor ordering the said respondent corporation to reinstate them to their former
positions without loss of seniority rights and other privileges and with full backwages from the time they
were illegally dismissed in the aggregate amount of P15,328,594.04;

2. Ordering respondent corporation to pay the said complainants their 13th month pay, holiday pay and
service incentive leave pay in the aggregate amount of P1,979,148.23;

3. Ordering respondent corporation to pay said complainants the amount of P1,730,744.22 by way of
attorney's fees, representing ten (10%) percentum of the total judgment awards.

The case against individual respondent Medardo Quiambao is hereby dismissed.10

A copy of the decision was sent by registered mail to the respondent on October 23, 1997 under
Registered Mail No. 004567 addressed to Atty. Emmanuel O. Pacsi, counsel for GMC, 6th Floor, Corinthian
Plaza Bldg., 121 Paseo de Roxas, Makati City.11 However, Beth Cacal, a clerk of the respondent GMC
received the said decision on October 28, 1997.12 Contending that a copy thereof was received only on
November 3, 1997, the respondent filed an appeal on November 12, 1997, before the National Labor
Relations Commission (NLRC), docketed as NLRC NCR CA No. 014462-98. The petitioners filed a Motion
to Dismiss Respondents' Notice of Appeal/Appeal Memorandum on the ground that the appeal was filed
five days late, considering that the August 18, 1997 Decision was received by the respondent through its
employee, Beth Cacal, on October 28, 1997.13

The respondent opposed the motion, contending that Cacal was a mere clerk, and was not a member of
the staff of its Legal Department. It further contended that the Legal Department was located at the sixth
(6th) floor of Corinthian Plaza and had its own staff, including the legal secretary who served as the Legal
Department's receiving clerk.14 Invoking Section 10, Rule 13 of the Rules of Court, in relation to Section 2
thereof, the respondent alleged that Cacal's receipt of the mail and/or decision was not equivalent to
receipt by its counsel. In support thereof, the respondent cited the cases of Adamson University v.
Adamson University Faculty and Employees Association,15 and PLDT v. NLRC.16

On May 25, 1998, the NLRC rendered a decision reversing that of the Labor Arbiter, the dispositive portion
of which is herein quoted:

WHEREFORE, except for its award of "13th month pay, holiday pay and service incentive leave pay in the
aggregate amount of P1,979,148.23" which is hereby affirmed, the appealed decision is set aside for being
contrary to settled jurisprudence.17

The NLRC ruled that the respondent GMC filed its appeal within the reglementary period. Citing the case
of Cañete v. NLRC18 which, in turn, cited Adamson v. Adamson19 and United Placement International v.
NLRC,20 the NLRC held that service by registered mail is completed only "upon actual receipt thereof by
the addressee." Since the addressee of the mail is the respondent's counsel and the person who received
it was a non-member of the Legal Staff, the decision cannot be said to have been validly served on the
respondent's counsel on October 28, 1997.
The NLRC also held that the petitioners, who were temporary or contractual employees of the respondent,
were legally terminated upon the expiration of their respective contracts. Citing the case of Brent School,
Inc. v. Zamora,21 the NLRC explained that while the petitioners' work was necessary and desirable in the
usual business of GMC, they cannot be considered as regular employees since they agreed to a fixed
term.

The petitioners' motion for reconsideration of the decision having been denied by the NLRC on October
12, 1998,22 they filed a petition for certiorari before the Court of Appeals and assigned the following
errors:

THE RESPONDENT COMMISSION SERIOUSLY ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK AND/OR IN EXCESS OF ITS JURISDICTION IN ENTERTAINING AND GIVING DUE
COURSE TO RESPONDENT COMPANY'S APPEAL WHICH WAS UNDENIABLY FILED OUT OF TIME AND
CONSEQUENTLY SETTING ASIDE THE FINAL DECISION OF THE LABOR ARBITER.

II

THE RESPONDENT COMMISSION SERIOUSLY ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION IN
HOLDING THAT PETITIONERS' DISMISSAL WAS LEGAL ON THE GROUND OF EXPIRATION OF
EMPLOYMENT CONTRACT WHICH IS NOT A STATUTORY CAUSE UNDER THE LABOR CODE.

III

THE RESPONDENT COMMISSION [S]ERIOUSLY ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION
IN NOT FINDING THAT PETITIONERS, AS REGULAR EMPLOYEES, CANNOT BE DISMISSED WITHOUT JUST
CAUSE AND THE REQUIRED DUE PROCESS.23

On September 29, 2000, the CA rendered a decision affirming with modification the decision of the NLRC,
the decretal portion of which reads:

WHEREFORE, the appealed decision of the NLRC is hereby AFFIRMED, with the MODIFICATION that the
award of 13th month pay, holiday pay, and service incentive leave pay shall cover only the year or years
when petitioners were actually employed with herein respondent General Milling Corporation.24

The CA ruled that no grave abuse of discretion could be imputed to the NLRC, considering that the ten-
day period to appeal began to run only from the date the decision of the LA was validly served on the
respondent's counsel. The appellate court also ruled that even assuming arguendo that the respondent
GMC's appeal was filed late, in view of the substantial amount involved, giving due course to the appeal
did not amount to grave abuse of discretion.

On the merits of the petition, the CA ruled that where the duties of the employee consist of activities
usually necessary or desirable in the usual business of the employer, it does not necessarily follow that the
parties are forbidden from agreeing on a period of time for the performance of such activities, and cited
the case of St. Theresa's School of Novaliches Foundation v. NLRC.25 The CA affirmed the entitlement of
the petitioners to a proportionate thirteenth (13th) month pay for the particular year/s the petitioners
were employed. As to the awards of holiday pay and service incentive leave pay, the CA ruled that they
should be limited to the year/s of actual service.26

The petitioners filed a motion for reconsideration of the said decision, which was denied on July 24,
2001.27

The Present Petition

The petitioners filed the instant petition, ascribing the following errors to the appellate court:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED AND ACTED WITHOUT JURISDICTION WHEN IT
MODIFIED THE LABOR ARBITER'S JUDGMENT THAT HAS BECOME FINAL AND EXECUTORY FOR FAILURE
OF THE RESPONDENT TO APPEAL WITHIN THE REGLEMENTARY PERIOD.

II

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE DECISION OF THE LABOR
ARBITER WAS DEEMED SERVED NOT ON THE DATE WHEN THE DECISION WAS DELIVERED BY THE
POSTMASTER TO THE OFFICE OF THE RESPONDENT'S LAWYER, BUT ON THE DATE WHEN THE RECEIVING
CLERK GAVE THE DECISION TO THE LAWYER.

III

THE RESPONDENT'S PRACTICE OF HIRING CHICKEN DRESSERS ON A 5-MONTH CONTRACT AND

REPLACING THEM WITH ANOTHER SET OF 5-MONTH CONTRACT WORKERS, OBVIOUSLY TO PREVENT
THEM FROM ATTAINING REGULAR STATUS, IS VIOLATIVE OF THE CONSTITUTION AND ARTICLES 279
AND 280 OF THE LABOR CODE.28

The issues for resolution are (a) whether or not the respondent's appeal from the Labor Arbiter's decision
was filed within the reglementary period therefor; and, (b) whether or not the petitioners were regular
employees of the respondent GMC when their employment was terminated.

In Petitions for Review on Certiorari of the decision of the CA, only errors of law are generally reviewed.29
Normally, the Supreme Court is not a trier of facts.30 In the absence of any showing that the NLRC
committed grave abuse of discretion, or otherwise acted without or in excess of jurisdiction, the Court is
bound by its findings.31 Such findings are not infallible, however, particularly when there is a showing that
they were arrived at arbitrarily or in disregard of the evidence on record. In such case, they may be re-
examined by the Court.
Hence, when the factual findings of the NLRC are contrary to those of the Labor Arbiter, the evidentiary
facts may be reviewed by the appellate court.32 Considering that the NLRC's findings clash with those of
the Labor Arbiter's, this Court is compelled to go over the records of the case as well as the submissions
of the parties.33

The Ruling of the Court

The petition is bereft of merit.

Anent the first issue, we agree with the CA that the NLRC did not act with grave abuse of discretion when
it gave due course to the appeal of the respondent. Decisions of the Labor Arbiter are final and executory,
unless appealed to the Commission, within ten (10) calendar days from receipt thereof.34 Copies of
decisions or final awards are served on both parties and their counsel by registered mail,35 and such
service by registered mail is completed upon actual receipt by the addressee or five (5) days from receipt
of the first notice of the postmaster, whichever is earlier.36

The records show that the August 18, 1997 Decision of the Labor Arbiter was served via registered mail,
addressed to the respondent GMC's counsel, Atty. Emmanuel O. Pacsi, at the sixth (6th) Floor, Corinthian
Plaza Bldg., 121 Paseo de Roxas, Makati City.37 It was received by Beth Cacal, a clerk of the respondent,
on October 28, 1997. The petitioners insist that Cacal is a person with authority to receive legal and
judicial correspondence for the respondent's Legal Department. They point out that such authority to
receive mail for and in behalf of the respondent's Legal Department is bolstered by the certification from
the Makati Post Office that she received the copy of their motion to dismiss the appeal, addressed to the
said department.

The respondent GMC counters that the service of the LA's decision to a person not connected to its Legal
Department is not a valid service, and that it is only when a copy of such decision is actually given to such
department that a valid service of the decision is deemed to have been made. Stressing that factual issues
are not proper in a petition for certiorari under Rule 45, the respondent no longer discussed Cacal's
authority to receive legal and judicial communications for the respondent.

A review of the records reveal that Cacal was a clerk at the respondent's office and was assigned at the
sixth floor of the Corinthian Plaza Bldg. She was not assigned at the respondent's Legal Department,
which has its own office staff, including a secretary who serves as the department's receiving clerk.38 The
Court has ruled that a service of a copy of a decision on a person who is neither a clerk nor one in charge
of the attorney's office is invalid.39 Thus, there was no grave abuse of discretion on the part of the NLRC
in giving due course to the respondent's appeal.

On the second issue, we agree that the petitioners were employees with a fixed period, and, as such, were
not regular employees.

Article 280 of the Labor Code comprehends three kinds of employees: (a) regular employees or those
whose work is necessary or desirable to the usual business of the employer; (b) project employees or
those whose employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the employment is for the duration of the
season; and, (c) casual employees or those who are neither regular nor project employees.40
A regular employee is one who is engaged to perform activities which are necessary and desirable in the
usual business or trade of the employer as against those which are undertaken for a specific project or are
seasonal.41 There are two separate instances whereby it can be determined that an employment is
regular: (1) if the particular activity performed by the employee is necessary or desirable in the usual
business or trade of the employer; and, (2) if the employee has been performing the job for at least a
year.42

In the case of St. Theresa's School of Novaliches Foundation v. NLRC,43 we held that Article 280 of the
Labor Code does not proscribe or prohibit an employment contract with a fixed period. We furthered that
it does not necessarily follow that where the duties of the employee consist of activities usually necessary
or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of
time for the performance of such activities. There is thus nothing essentially contradictory between a
definite period of employment and the nature of the employee's duties.

Indeed, in the leading case of Brent School Inc. v. Zamora,44 we laid down the guideline before a contract
of employment may be held as valid, to wit:

' [S]tipulations in employment contracts providing for term employment or fixed period employment are
valid when the period were agreed upon knowingly and voluntarily by the parties without 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.45

An examination of the contracts entered into by the petitioners showed that their employment was
limited to a fixed period, usually five or six months, and did not go beyond such period.

TEMPORARY/CASUAL CONTRACT OF EMPLOYMENT

KNOW ALL MEN BY THESE PRESENTS:

That the GENERAL MILLING CORPORATION, hereby temporarily hires ________________ as Emergency
worker for a period beginning from ____________ to _____________, inclusive, at the rate of _____________ per
day, payable every 15th [day] and end of each month.

________________ hereby binds and obligates himself/herself to perform his/her assigned work diligently
and to the best of his/her ability, and promise to obey all lawful orders of his/ her superior and/or
representatives made in connection with the work for which he/she is employed.

IT IS CLEARLY STIPULATED THAT THE CONDITION OF THIS EMPLOYMENT SHALL BE AS FOLLOWS:

1. This employment contract shall be on a DAY-TO-DAY BASIS and shall not extend beyond the period
specified above;
2. The employee aforementioned may be laid off or separated from the Firm, EVEN BEFORE THE EXPIRY
DATE OF THIS CONTRACT, if his/her services are no longer needed, or if such services are found to be
unsatisfactory, or if she/he has violated any of the established rules and regulations of the Company;

3. In any case, the period of employment shall not go beyond the duration of the work or purpose for
which the aforementioned employee has been engaged;

4. That the employee hereby agrees to work in any work shift schedule that may be assigned to him by
the Firm during the period of this contract; andcralawlibrary

This Temporary/Casual Employment contract, unless sooner terminated for any of the causes above-cited,
shall then automatically cease on its expiry date, without the necessity of any prior notice to the employee
concerned.46

The records reveal that the stipulations in the employment contracts were knowingly and voluntarily
agreed to by the petitioners without force, duress or improper pressure, or any circumstances that vitiated
their consent. Similarly, nothing therein shows that these contracts were used as a subterfuge by the
respondent GMC to evade the provisions of Articles 279 and 280 of the Labor Code.

The petitioners were hired as "emergency workers" and assigned as chicken dressers, packers and helpers
at the Cainta Processing Plant. The respondent GMC is a domestic corporation engaged in the production
and sale of livestock and poultry, and is a distributor of dressed chicken. While the petitioners'
employment as chicken dressers is necessary and desirable in the usual business of the respondent, they
were employed on a mere temporary basis, since their employment was limited to a fixed period. As such,
they cannot be said to be regular employees, but are merely "contractual employees." Consequently,
there was no illegal dismissal when the petitioners' services were terminated by reason of the expiration
of their contracts.47 Lack of notice of termination is of no consequence, because when the contract
specifies the period of its duration, it terminates on the expiration of such period. A contract for
employment for a definite period terminates by its own term at the end of such period.48

In sum, we rule that the appeal was filed within the ten (10)-day reglementary period. Although the
petitioners who mainly worked as chicken dressers performed work necessary and desirable in the usual
business of the respondent, they were not regular employees therein. Consequently, the termination of
their employment upon the expiry of their respective contracts was valid.

IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED DUE COURSE. The Decision of the Court
of Appeals in CA-G.R. SP No. 51678 is AFFIRMED. No costs.

SO ORDERED.
FIRST DIVISION
[ G.R. No. 193857, November 28, 2012 ]
MA. MERCEDES L. BARBA, PETITIONER, VS. LICEO DE CAGAYAN UNIVERSITY, RESPONDENT.
VILLARAMA, JR., J.:

Before the Court is a petition for review on certiorari assailing the March 29, 2010 Amended Decision[1]
and September 14, 2010 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 02508-MIN. The CA
had reconsidered its earlier Decision[3] dated October 22, 2009 and set aside the September 25, 2007 and
June 30, 2008 Resolutions[4] of the National Labor Relations Commission (NLRC) as well as the September
29, 2006 Decision[5] of the Labor Arbiter. The CA held that the Labor Arbiter and NLRC had no jurisdiction
over the illegal dismissal case filed by petitioner against respondent because petitioner's position as Dean
of the College of Physical Therapy of respondent is a corporate office.

The facts follow.

Petitioner Dr. Ma. Mercedes L. Barba was the Dean of the College of Physical Therapy of respondent Liceo
de Cagayan University, Inc., a private educational institution with school campus located at Carmen,
Cagayan de Oro City.

Petitioner started working for respondent on July 8, 1993 as medical officer/school physician for a period
of one school year or until March 31, 1994. In July 1994, she was chosen by respondent to be the recipient
of a scholarship grant to pursue a three-year residency training in Rehabilitation Medicine at the Veterans
Memorial Medical Center (VMMC). The Scholarship Contract[6] provides:

5. That the SCHOLAR after the duration of her study and training shall serve the SCHOOL in whatever
position the SCHOOL desires related to the SCHOLAR's studies for a period of not less than ten (10) years;

After completing her residency training with VMMC in June 1997, petitioner returned to continue working
for respondent. She was appointed as Acting Dean of the College of Physical Therapy and at the same
time designated as Doctor-In-Charge of the Rehabilitation Clinic of the Rodolfo N. Pelaez Hall, City
Memorial Hospital.

On June 19, 2002, petitioner's appointment as Doctor-In-Charge of the Rehabilitation Clinic was renewed
and she was appointed as Dean of the College of Physical Therapy by respondent's President, Dr. Jose Ma.
R. Golez. The appointment letter[7] reads:

xxxx

Dear Dr. Barba:

You are hereby re-appointed Dean of the College of Physical Therapy and Doctor-In-Charge of the
Rehabilitation Clinic at Rodolfo N. Pelaez Hall, City Memorial Hospital and other rehabilitation clinics
under the management of Liceo de Cagayan University for a period of three years effective July 1, 2002
unless sooner revoked for valid cause or causes.
Your position is one of trust and confidence and the appointment is subject to the pertinent provisions of
the University Administrative Personnel and Faculty Manuals, and Labor Code.

xxxx

Petitioner accepted her appointment and assumed the position of Dean of the College of Physical
Therapy. In the school year 2003 to 2004, the College of Physical Therapy suffered a dramatic decline in
the number of enrollees from a total of 1,121 students in the school year 1995 to 1996 to only 29 students
in the first semester of school year 2003 to 2004. This worsened in the next year or in school year 2004 to
2005 where a total of only 20 students enrolled.[8]

Due to the low number of enrollees, respondent decided to freeze the operation of the College of
Physical Therapy indefinitely. Respondent's President Dr. Rafaelita Pelaez-Golez wrote petitioner a letter[9]
dated March 16, 2005 informing her that her services as dean of the said college will end at the close of
the school year. Thereafter, the College of Physical Therapy ceased operations on March 31, 2005, and
petitioner went on leave without pay starting on April 9, 2005. Subsequently, respondent's Executive Vice
President, Dr. Mariano M. Lerin, through Dr. Glory S. Magdale, respondent's Vice President for Academic
Affairs, sent petitioner a letter[10] dated April 27, 2005 instructing petitioner to return to work on June 1,
2005 and report to Ma. Chona Palomares, the Acting Dean of the College of Nursing, to receive her
teaching load and assignment as a full-time faculty member in that department for the school year 2005-
2006.

In reply, petitioner informed Dr. Lerin that she had not committed to teach in the College of Nursing and
that as far as she can recall, her employment is not dependent on any teaching load. She then requested
for the processing of her separation benefits in view of the closure of the College of Physical Therapy.[11]
She did not report to Palomares on June 1, 2005.

On June 8, 2005, petitioner followed up her request for separation pay and other benefits but Dr. Lerin
insisted that she report to Palomares; otherwise, sanctions will be imposed on her. Thus, petitioner
through counsel wrote Dr. Golez directly, asking for her separation pay and other benefits.

On June 21, 2005, Dr. Magdale wrote petitioner a letter[12] directing her to report for work and to teach
her assigned subjects on or before June 23, 2005. Otherwise, she will be dismissed from employment on
the ground of abandonment. Petitioner, through counsel, replied that teaching in the College of Nursing
is in no way related to her scholarship and training in the field of rehabilitation medicine. Petitioner added
that coercing her to become a faculty member from her position as College Dean is a great demotion
which amounts to constructive dismissal.[13]

Dr. Magdale sent another letter[14] to petitioner on June 24, 2005 ordering her to report for work as she
was still bound by the Scholarship Contract to serve respondent for two more years. But petitioner did
not do so. Hence, on June 28, 2005, Dr. Magdale sent petitioner a notice terminating her services on the
ground of abandonment.

Meanwhile, on June 22, 2005, prior to the termination of her services, petitioner filed a complaint before
the Labor Arbiter for illegal dismissal, payment of separation pay and retirement benefits against
respondent, Dr. Magdale and Dr. Golez. She alleged that her transfer to the College of Nursing as a faculty
member is a demotion amounting to constructive dismissal.

Respondent claimed that petitioner was not terminated and that it was only petitioner's appointment as
College Dean in the College of Physical Therapy that expired as a necessary consequence of the eventual
closure of the said college. Respondent further averred that petitioner's transfer as full-time professor in
the College of Nursing does not amount to constructive dismissal since the transfer was without loss of
seniority rights and without diminution of pay. Also, respondent added that pursuant to the Scholarship
Contract, petitioner was still duty bound to serve respondent until 2007 in whatever position related to
her studies the school desires.

Labor Arbiter's Ruling

In a Decision[15] dated September 29, 2006, the Labor Arbiter found that respondent did not
constructively dismiss petitioner; therefore, she was not entitled to separation pay. The Labor Arbiter held
that petitioner's assignment as full-time professor in the College of Nursing was not a demotion
tantamount to constructive dismissal. The dispositive portion of the Labor Arbiter's decision reads:

WHEREFORE, in view of the foregoing, judgment is hereby rendered dismissing the complaint for illegal
dismissal for utter lack of merit, but ordering the respondent Liceo de Cagayan University to reinstate
complainant to an equivalent position without loss of seniority rights, but without back wages.

However, if reinstatement is no longer feasible or if there is no equivalent position to which complainant

may be reinstated, respondent may opt to pay complainant her separation pay equivalent to one-half
(1/2) month pay for every year of service or in the sum of P195,000.00, subject to deduction for advances
or accountabilities which complainant may have had.

Other claims are ordered dismissed for lack of merit.

SO ORDERED.[16]

NLRC's Ruling

Petitioner appealed the above decision to the NLRC. On September 25, 2007, the NLRC issued a
Resolution[17] reversing the Labor Arbiter's decision and holding that petitioner was constructively
dismissed. The NLRC held that petitioner was demoted when she was assigned as a professor in the
College of Nursing because there are functions and obligations and certain allowances and benefits given
to a College Dean but not to an ordinary professor. The NLRC ruled:

WHEREFORE, in view of the foregoing, the assailed decision is hereby MODIFIED in that complainant is
hereby considered as constructively dismissed and thus entitled to backwages and separation pay of one
(1) month salary for every year of service, plus attorney's fees, which shall be computed at the execution
stage before the Arbitration Branch of origin.

SO ORDERED.[18]
The NLRC denied respondent's motion for reconsideration in a Resolution[19] dated June 30, 2008.

Ruling of the Court of Appeals

Respondent went to the CA on a petition for certiorari alleging that the NLRC committed grave abuse of
discretion when it declared that petitioner's transfer to the College of Nursing as full-time professor but
without diminution of salaries and without loss of seniority rights amounted to constructive dismissal
because there was a demotion involved in the transfer and because petitioner was compelled to accept
her new assignment.

Respondent also filed a Supplemental Petition[20] raising for the first time the issue of lack of jurisdiction
of the Labor Arbiter and the NLRC over the case. Respondent claimed that a College Dean is a corporate
officer under its by-laws and petitioner was a corporate officer of respondent since her appointment was
approved by the board of directors. Respondent posited that petitioner was a corporate officer since her
office was created by the by-laws and her appointment, compensation, duties and functions were
approved by the board of directors. Thus, respondent maintained that the jurisdiction over the case is
with the regular courts and not with the labor tribunals.

In its original Decision[21] dated October 22, 2009, the CA reversed and set aside the NLRC resolutions
and reinstated the decision of the Labor Arbiter. The CA did not find merit in respondent's assertion in its
Supplemental Petition that the position of petitioner as College Dean was a corporate office. Instead, the
appellate court held that petitioner was respondent's employee, explaining thus:

Corporate officers in the context of PD 902-A are those officers of a corporation who are given that
character either by the Corporation Code or by the corporation's By-Laws. Under Section 25 of the
Corporation Code, the "corporate officers" are the president, secretary, treasurer and such other officers
as may be provided for in the By-Laws.

True, the By-Laws of LDCU provides that there shall be a College Director. This means a College Director is
a corporate officer. However, contrary to the allegation of petitioner, the position of Dean does not
appear to be the same as that of a College Director.

Aside from the obvious disparity in name, the By-Laws of LDCU provides for only one College Director.
But as shown by LDCU itself, numerous persons have been appointed as Deans. They could not be the
College Director contemplated by the By-Laws inasmuch as the By-Laws authorize only the appointment
of one not many. If it is indeed the intention of LDCU to give its many Deans the rank of College Director,
then it exceeded the authority given to it by its By-Laws because only one College Director is authorized
to be appointed. It must amend its By-Laws. Prior to such an amendment, the office of College Dean is
not a corporate office.

Another telling sign that a College Director is not the same as a Dean is the manner of appointment. A
College Director is directly appointed by the Board of Directors. However, a College Dean is appointed by
the President upon the recommendation of the Vice President for Academic Affairs and the Executive Vice
President and approval of the Board of Directors. There is a clear distinction on the manner of
appointment indicating that the offices are not one and the same.

xxxx

This shows that it was not the intention of LDCU to make Dr. Barba a corporate officer as it was stated in
her letter of appointment that the same shall be subject to the provisions of the Labor Code. Otherwise,
the appointment letter should have stated that her appointment is governed by the Corporation Code.
Thus, We find the arguments in the Supplemental Petition on the matter of lack of jurisdiction of the
Labor Arbiter and the NLRC to be without merit. Dr. Barba, being a College Dean, was not a corporate
officer.[22] (Emphasis not ours)

The CA further found that no constructive dismissal occurred nor has petitioner abandoned her work.
According to the CA, a transfer amounts to constructive dismissal when the transfer is unreasonable,
unlikely, inconvenient, impossible, or prejudicial to the employee or it involves a demotion in rank or a
diminution of salary and other benefits. In the case of petitioner, the CA held that she was never demoted
and her transfer, being a consequence of the closure of the College of Physical Therapy, was valid.

The CA also noted that petitioner's appointment as Dean of the College of Physical Therapy was for a
term of three years. Hence, when her appointment as College Dean was no longer renewed on June 1,
2005 or after her three-year term had expired, it cannot be said that there was a demotion or that she was
dismissed. Her term as Dean had expired and she can no longer claim to be entitled to the benefits
emanating from such office.

On the issue of alleged lack of jurisdiction, the CA observed that respondent never raised the issue of
jurisdiction before the Labor Arbiter and the NLRC and respondent even actively participated in the
proceedings below. Hence, respondent is estopped from questioning the jurisdiction of the labor
tribunals.

Unsatisfied, both petitioner and respondent sought reconsideration of the CA decision. Petitioner prayed
for the reversal of the ruling that there was no constructive dismissal. Respondent meanwhile maintained
that the labor tribunals have no jurisdiction over the case, petitioner being a corporate officer.

On March 29, 2010, the CA issued the assailed Amended Decision[23] setting aside its earlier ruling. This
time the CA held that the position of a College Dean is a corporate office and therefore the labor tribunals
had no jurisdiction over the complaint for constructive dismissal. The CA noted that petitioner's
appointment as Dean of the College of Physical Therapy was approved by the respondent's board of
directors thereby concluding that the position of a College Dean is a corporate office. Also, the CA held
that the College Director mentioned in respondent's by-laws is the same as a College Dean and no one
has ever been appointed as College Director. The CA added that in the Administrative Manual the words
"college" and "department" were used in the same context in the section on the Duties and
Responsibilities of the College Dean, and that there could not have been any other "head of department"
being alluded to in the by-laws but the college dean.
The dispositive portion of the Amended Decision reads:

WHEREFORE, in view of the foregoing, We reconsider Our Decision on October [22], 2009, and declare
that the position of College Dean is a corporate office of Petitioner [Liceo de Cagayan University], thereby
divesting the Labor Arbiter and the National Labor Relations Commission of jurisdiction over the instant
case. Hence, the Resolutions of the Public Respondent dated September 25, 2007 and June 30, 2008 as
well as that of the Regional Labor Arbiter dated 29 September 2006 are VACATED and SET ASIDE as they
were rendered by tribunals that had no jurisdiction over the case.

SO ORDERED.[24]

Petitioner filed a motion for reconsideration from the above decision, but her motion was denied by the
CA in its Resolution[25] dated September 14, 2010. Hence, petitioner filed the present petition.

Petitioner argues that the CA erred in ruling that she was a corporate officer and asserts that the CA's
previous finding that she was respondent's employee is more in accord with law and jurisprudence.
Petitioner adds that the appellate court erred when it ruled that the labor tribunals had no jurisdiction
over her complaint for illegal dismissal against respondent. She faults the CA for allowing respondent to
raise the issue of jurisdiction in a Supplemental Petition after respondent has actively participated in the
proceedings before the labor tribunals. Petitioner also asserts that the CA erred in denying her motion for
reconsideration from its Amended Decision on the ground that it is a second motion for reconsideration
which is a prohibited pleading. Lastly, petitioner claims that respondent violated the rule against forum
shopping when it failed to inform the CA of the pendency of the complaint for breach of contract which it
filed against petitioner before the Regional Trial Court of Misamis Oriental, Branch 23.

Respondent, for its part, counters that the petition was filed out of time and petitioner's motion for
reconsideration from the Amended Decision was a prohibited pleading since petitioner has already filed a
motion for reconsideration from the original decision of the CA. It is respondent's posture that an
Amended Decision is not really a new decision but the appellate court's own modification of its prior
decision. More importantly, respondent points out that the arguments raised by petitioner do not justify a
reversal of the Amended Decision of the appellate court. Respondent insists on the correctness of the
Amended Decision and quotes the assailed decision in its entirety.

Issue

The decisive issue in the present petition is whether petitioner was an employee or a corporate officer of
respondent university. Resolution of this issue resolves the question of whether the appellate court was
correct in ruling that the Labor Arbiter and the NLRC had no jurisdiction over petitioner's complaint for
constructive dismissal against respondent.

Our Ruling

We grant the petition.

Prefatorily, we first discuss the procedural matter raised by respondent that the present petition is filed
out of time. Respondent claims that petitioner's motion for reconsideration from the Amended Decision is
a second motion for reconsideration which is a prohibited pleading. Respondent's assertion, however, is
misplaced for it should be noted that the CA's Amended Decision totally reversed and set aside its
previous ruling. Section 2, Rule 52 of the 1997 Rules of Civil Procedure, as amended, provides that no
second motion for reconsideration of a judgment or final resolution by the same party shall be
entertained. This contemplates a situation where a second motion for reconsideration is filed by the same
party assailing the same judgment or final resolution. Here, the motion for reconsideration of petitioner
was filed after the appellate court rendered an Amended Decision totally reversing and setting aside its
previous ruling. Hence, petitioner is not precluded from filing another motion for reconsideration from the
Amended Decision which held that the labor tribunals lacked jurisdiction over petitioner's complaint for
constructive dismissal. The period to file an appeal should be reckoned not from the denial of her motion
for reconsideration of the original decision, but from the date of petitioner's receipt of the notice of denial
of her motion for reconsideration from the Amended Decision. And as petitioner received notice of the
denial of her motion for reconsideration from the Amended Decision on September 23, 2010 and filed her
petition on November 8, 2010, or within the extension period granted by the Court to file the petition, her
petition was filed on time.

Now on the main issue.

As a general rule, only questions of law may be allowed in a petition for review on certiorari.[26]
Considering, however, that the CA reversed its earlier decision and made a complete turnaround from its
previous ruling, and consequently set aside both the findings of the Labor Arbiter and the NLRC for
allegedly having been issued without jurisdiction, it is necessary for the Court to reexamine the records
and resolve the conflicting rulings.

After a careful review and examination of the records, we find that the CA's previous ruling that petitioner
was respondent's employee and not a corporate officer is supported by the totality of the evidence and
more in accord with law and prevailing jurisprudence.

Corporate officers are elected or appointed by the directors or stockholders, and are those who are given
that character either by the Corporation Code or by the corporation's by-laws.[27] Section 25[28] of the
Corporation Code enumerates corporate officers as the president, the secretary, the treasurer and such
other officers as may be provided for in the by-laws. In Matling Industrial and Commercial Corporation v.
Coros,[29] the phrase "such other officers as may be provided for in the by-laws" has been clarified, thus:

Conformably with Section 25, a position must be expressly mentioned in the By-Laws in order to be
considered as a corporate office. Thus, the creation of an office pursuant to or under a By-Law enabling
provision is not enough to make a position a corporate office. Guerrea v. Lezama, the first ruling on the
matter, held that the only officers of a corporation were those given that character either by the
Corporation Code or by the By-Laws; the rest of the corporate officers could be considered only as
employees of subordinate officials. Thus, it was held in Easycall Communications Phils., Inc. v. King:

An "office" is created by the charter of the corporation and the officer is elected by the directors or
stockholders. On the other hand, an employee occupies no office and generally is employed not by the
action of the directors or stockholders but by the managing officer of the corporation who also
determines the compensation to be paid to such employee. (Emphasis supplied)

In declaring petitioner a corporate officer, the CA considered respondent's by-laws and gave weight to
the certifications of respondent's secretary attesting to the resolutions of the board of directors
appointing the various academic deans for the School Years 1991-2002 and 2002-2005, including
petitioner. However, an assiduous perusal of these documents does not convince us that petitioner
occupies a corporate office position in respondent university.

The relevant portions of respondent's by-laws[30] are hereby quoted as follows:

Article III
The Board of Directors

Sec. 3. The Board of Directors shall appoint a College Director, define his powers and duties, and
determine his compensation; approve or disapprove recommendations for appointment or dismissal of
teachers and employees submitted to it by the College Director; and exercise other powers and perform
such duties as may be required of it hereafter for the proper functioning of the school.

xxxx

Article IV
Officers

Sec. 1. The officers of the corporation shall consist of a President, a Vice President, and a Secretary-
Treasurer, who shall be chosen from the directors and by the directors themselves. They shall be elected
annually at the first meeting of the directors immediately after their election, and shall hold office for one
(1) year and until their successors are elected and qualified.

xxxx

Article V
Other Appointive Officials

Sec. 1. The Liceo de Cagayan shall have a College Director and such heads of departments as may exist in
the said college whose appointments, compensations, powers and duties shall be determined by the
Board of Directors.[31] (Emphasis supplied)

On the other hand, the pertinent portions of the two board resolutions appointing the various academic
deans in the university including petitioner, read as follows:

xxxx

RESOLVE, as it is hereby resolved, that pursuant to Section 3[,] Article III and Section 1[,] Article V of the
Corporation's By-laws, the various academic deans for the school years 1999-2002 of the University, as
recommended by the President of the Corporation, are hereby appointed, whose names are enumerated
hereunder and their respective colleges and their honoraria are indicated opposite their names, all of
them having a three (3) year term, to wit:

Name and College Honorarium

Ma. Mercedes Vivares 2,660.00

Physical Therapy

xxxx

RESOLVE, as it is hereby resolved, that pursuant to Section 3[,] Article III and Section 1[,] Article V of the
Corporation's By-laws, the various academic deans for the school years 2002-2005 of the University, as
recommended by the President of the Corporation, are hereby appointed, whose names are enumerated
hereunder and their respective colleges and their honoraria are indicated opposite their names, all of
them having a three (3) year term, to wit:

Name and College Honorarium

Ma. Mercedes Vivares 2,450.00

Physical Therapy

x x x x[32]

In respondent's by-laws, there are four officers specifically mentioned, namely, a president, a vice
president, a secretary and a treasurer. In addition, it is provided that there shall be other appointive
officials, a College Director and heads of departments whose appointments, compensations, powers and
duties shall be determined by the board of directors. It is worthy to note that a College Dean is not
among the corporate officers mentioned in respondent's by-laws. Petitioner, being an academic dean,
also held an administrative post in the university but not a corporate office as contemplated by law.
Petitioner was not directly elected nor appointed by the board of directors to any corporate office but her
appointment was merely approved by the board together with the other academic deans of respondent
university in accordance with the procedure prescribed in respondent's Administrative Manual.[33] The act
of the board of directors in approving the appointment of petitioner as Dean of the College of Therapy
did not make her a corporate officer of the corporation.

Moreover, the CA, in its amended decision erroneously equated the position of a College Director to that
of a College Dean thereby concluding that petitioner is an officer of respondent.

It bears stressing that the appointive officials mentioned in Article V of respondent's by-laws are not
corporate officers under the contemplation of the law. Though the board of directors may create
appointive positions other than the positions of corporate officers, the persons occupying such positions
cannot be deemed as corporate officers as contemplated by Section 25 of the Corporation Code. On this
point, the SEC Opinion dated November 25, 1993 quoted in the case of Matling Industrial and
Commercial Corporation v. Coros,[34] is instructive:

Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever are the corporate
officers enumerated in the by-laws are the exclusive Officers of the corporation and the Board has no
power to create other Offices without amending first the corporate By-laws. However, the Board may
create appointive positions other than the positions of corporate Officers, but the persons occupying such
positions are not considered as corporate officers within the meaning of Section 25 of the Corporation
Code and are not empowered to exercise the functions of the corporate Officers, except those functions
lawfully delegated to them. Their functions and duties are to be determined by the Board of
Directors/Trustees.

But even assuming that a College Director may be considered a corporate officer of respondent, a review
of the records as well as the other documents submitted by the parties fails to persuade that petitioner
was the "College Director" mentioned in the by-laws of respondent. Nowhere in petitioner's appointment
letter was it stated that petitioner was designated as the College Director or that petitioner was to assume
the functions and duties of a College Director. Neither can it be inferred in respondent's by-laws that a
dean of a college is the same as a College Director of respondent. Respondent's lone surviving
incorporating director Yolanda Rollo even admitted that no College Director has ever been appointed by
respondent. In her affidavit, Yolanda also explained the reason for the creation of the position of a
College Director, to wit:

4. At the time we signed the By-Laws of the Corporation, we, as directors, did envision to form only a
college of law as that was the main thrust of our president, the late Atty. Rodolfo N. Pelaez. The original
plan then was to have a "College Director" as the head of the college of law and below him within the
college were heads of departments. The appointments, remuneration, duties and functions of the "College
Director" and the heads of departments were to be approved by the Board of Directors. x x x[35]

Notably, the CA has sufficiently explained why petitioner could not be considered a College Director in its
previous decision. The appellate court explained:

True, the By-Laws of [Liceo de Cagayan University] provides that there shall be a College Director. This
means a College Director is a corporate officer. However, contrary to the allegation of petitioner, the
position of Dean does not appear to be the same as that of a College Director.

Aside from the obvious disparity in name, the By-Laws of [Liceo de Cagayan University] provides for only
one College Director. But as shown by [Liceo de Cagayan University] itself, numerous persons have been
appointed as Deans. They could not be the College Director contemplated by the By-Laws inasmuch as
the By-Laws authorize only the appointment of one not many. If it is indeed the intention of [Liceo de
Cagayan University] to give its many Deans the rank of College Director, then it exceeded the authority
given to it by its By-Laws because only one College Director is authorized to be appointed. It must amend
its By-Laws. Prior to such amendment, the office of [the] College Dean is not a corporate office.

Another telling sign that a College Director is not the same as a Dean is the manner of appointment. A
College Director is directly appointed by the Board of Directors. However, a College Dean is appointed by
the President upon the recommendation of the Vice President for Academic Affairs and the Executive Vice
President and approval of the Board of Directors. There is a clear distinction on the manner of
appointment indicating that the offices are not one and the same.[36] (Additional emphasis supplied)

Undoubtedly, petitioner is not a College Director and she is not a corporate officer but an employee of
respondent. Applying the four-fold test concerning (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; (4) the employer's power to control the employee with
respect to the means and methods by which the work is to be accomplished, it is clear that there exists an
employer-employee relationship between petitioner and respondent. Records show that petitioner was
appointed to her position as Dean by Dr. Golez, the university president and was paid a salary of P32,500
plus transportation allowance. It was evident that respondent had the power of control over petitioner as
one of its deans. It was also the university president who informed petitioner that her services as Dean of
the College of Physical Therapy was terminated effective March 31, 2005 and she was subsequently
directed to report to the Acting Dean of the College of Nursing for assignment of teaching load.

Thus, petitioner, being an employee of respondent, her complaint for illegal/constructive dismissal against
respondent was properly within the jurisdiction of the Labor Arbiter and the NLRC. Article 217 of the
Labor Code provides:

ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this
Code, the Arbiters shall have original and exclusive jurisdiction to hear and decide xxx the following cases
involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving wage, rates
of pay, hours of work and other terms and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of
strikes and lockouts; and

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other
claims arising from employer-employee relations, including those of persons in domestic or household
service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

xxxx
Moreover, we agree with the CA's earlier pronouncement that since respondent actively participated in
the proceedings before the Labor Arbiter and the NLRC, it is already estopped from belatedly raising the
issue of lack of jurisdiction. In this case, respondent filed position papers and other supporting documents
to bolster its defense before the labor tribunals but in all these pleadings, the issue of lack of jurisdiction
was never raised. It was only in its Supplemental Petition filed before the CA that respondent first brought
the issue of lack of jurisdiction. We have consistently held that while jurisdiction may be assailed at any
stage, a party's active participation in the proceedings will estop such party from assailing its jurisdiction.
It is an undesirable practice of a party participating in the proceedings and submitting his case for
decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction, when
adverse.[37]

Under Section 6, Rule 10 of the 1997 Rules of Civil Procedure, as amended, governing supplemental
pleadings, the court "may" admit supplemental pleadings, such as the supplemental petition filed by
respondent before the appellate court, but the admission of these pleadings remains in the sound
discretion of the court. Nevertheless, we have already found no credence in respondent's claim that
petitioner is a corporate officer, consequently, the alleged lack of jurisdiction asserted by respondent in
the supplemental petition is bereft of merit.

On the issue of constructive dismissal, we agree with the Labor Arbiter and the appellate court's earlier
ruling that petitioner was not constructively dismissed. Petitioner's letter of appointment specifically
appointed her as Dean of the College of Physical Therapy and Doctor-in-Charge of the Rehabilitation
Clinic "for a period of three years effective July 1, 2002 unless sooner revoked for valid cause or causes."
Evidently, petitioner's appointment as College Dean was for a fixed term, subject to reappointment and
revocation or termination for a valid cause. When respondent decided to close its College of Physical
Therapy due to drastic decrease in enrollees, petitioner's appointment as its College Dean was validly
revoked and her subsequent assignment to teach in the College of Nursing was justified as it is still
related to her scholarship studies in Physical Therapy.

As we observed in Brent School, Inc. v. Zamora,[38] also cited by the CA, it is common practice in
educational institutions to have fixed-term contracts in administrative positions, thus:

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

In constructive dismissal cases, the employer has the burden of proving that its conduct and action or the
transfer of an employee are for valid and legitimate grounds such as genuine business necessity.[39]
Particularly, for a transfer not to be considered a constructive dismissal, the employer must be able to
show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee. In this case,
petitioner's transfer was not unreasonable, inconvenient or prejudicial to her. On the contrary, the
assignment of a teaching load in the College of Nursing was undertaken by respondent to accommodate
petitioner following the closure of the College of Physical Therapy. Respondent further considered the
fact that petitioner still has two years to serve the university under the Scholarship Contract.

Petitioner's subsequent transfer to another department or college is not tantamount to demotion as it

was a valid transfer. There is therefore no constructive dismissal to speak of. That petitioner ceased to
enjoy the compensation, privileges and benefits as College Dean was but a logical consequence of the
valid revocation or termination of such fixed-term position. Indeed, it would be absurd and unjust for
respondent to maintain a deanship position in a college or department that has ceased to exist. Under the
circumstances, giving petitioner a teaching load in another College/Department that is related to Physical
Therapy -- thus enabling her to serve and complete her remaining two years under the Scholarship
Contract -- is a valid exercise of management prerogative on the part of respondent.

Lastly, as to whether respondent was guilty of forum shopping when it failed to inform the appellate court
of the pendency of Civil Case No. 2009-320, a complaint for breach of contract filed by respondent
against petitioner, we rule in the negative. Forum shopping exists when the elements of litis pendentia are
present or where a final judgment in one case will amount to res judicata in another. Litis pendentia
requires the concurrence of the following requisites: (1) identity of parties, or at least such parties as those
representing the same interests in both actions; (2) identity of rights asserted and reliefs prayed for, the
reliefs being founded on the same facts; and (3) identity with respect to the two preceding particulars in
the two cases, such that any judgment that may be rendered in the pending case, regardless of which
party is successful, would amount to res judicata in the other case.[40]

While there is identity of parties in the two cases, the causes of action and the reliefs sought are different.
The issue raised in the present case is whether there was constructive dismissal committed by respondent.
On the other hand, the issue in the civil case pending before the RTC is whether petitioner was guilty of
breach of contract. Hence, respondent is not guilty of forum shopping.
WHEREFORE, the petition for review on certiorari is GRANTED. The Amended Decision dated March 29,
2010 and Resolution dated September 14, 2010 of the Court of Appeals in CA-G.R. SP No. 02508-MIN are
hereby SET ASIDE. The earlier Decision dated October 22, 2009 of the Court of Appeals in said case is
REINSTATED and UPHELD.
No pronouncement as to costs.
SO ORDERED.
G. R. No. 149440 - January 28, 2003

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE SEGURA, petitioners,
vs. NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE, respondents.

PANGANIBAN, J.:

Although the employers have shown that respondents performed work that was seasonal in nature,
they failed to prove that the latter worked only for the duration of one particular season. In fact,
petitioners do not deny that these workers have served them for several years already. Hence, they are
regular not seasonal employees.

The Case

Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the
February 20, 2001 Decision of the Court of Appeals 1 (CA) in CA-GR SP No. 51033. The dispositive part of
the Decision reads:

"WHEREFORE, premises considered, the instant special civil action for certiorari is hereby DENIED." 2

On the other hand, the National Labor Relations Commission (NLRC) Decision, 3 upheld by the CA,
disposed in this wise:

"WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED
and a new one entered declaring complainants to have been illegally dismissed. Respondents are hereby
ORDERED to reinstate complainants except Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy
Silva to their previous position and to pay full backwages from September 1991 until reinstated.
Respondents being guilty of unfair labor practice are further ordered to pay complainant union the sum
of P10,000.00 as moral damages and P5,000.00 as exemplary damages." 4

The Facts

The facts are summarized in the NLRC Decision as follows:

"Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused to work
and/or were choosy in the kind of jobs they wanted to perform, the records is replete with
complainants' persistence and dogged determination in going back to work.

"Indeed, it would appear that respondents did not look with favor workers' having organized themselves
into a union. Thus, when complainant union was certified as the collective bargaining representative in
the certification elections, respondents under the pretext that the result was on appeal, refused to sit
down with the union for the purpose of entering into a collective bargaining agreement. Moreover, the
workers including complainants herein were not given work for more than one month. In protest,
complainants staged a strike which was however settled upon the signing of a Memorandum of
Agreement which stipulated among others that:

'a) The parties will initially meet for CBA negotiations on the 11th day of January 1991 and will endeavor
to conclude the same within thirty (30) days.

'b) The management will give priority to the women workers who are members of the union in case
work relative . . . or amount[ing] to gahit and [dipol] arises.

'c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week.

'd) The management will provide fifteen (15) wagons for the workers and that existing workforce prior
to the actual strike will be given priority. However, in case the said workforce would not be enough, the
management can hire additional workers to supplement them.

'e) The management will not anymore allow the scabs, numbering about eighteen (18) workers[,] to
work in the hacienda; and

'f) The union will immediately lift the picket upon signing of this agreement.'

"However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its
commitment to sit down and bargain collectively. Instead, respondent employed all means including the
use of private armed guards to prevent the organizers from entering the premises.
"Moreover, starting September 1991, respondents did not any more give work assignments to the
complainants forcing the union to stage a strike on January 2, 1992. But due to the conciliation efforts
by the DOLE, another Memorandum of Agreement was signed by the complainants and respondents
which provides:

'Whereas the union staged a strike against management on January 2, 1992 grounded on the dismissal
of the union officials and members;

'Whereas parties to the present dispute agree to settle the case amicably once and for all;

'Now therefore, in the interest of both labor and management, parties herein agree as follows:

'1. That the list of the names of affected union members hereto attached and made part of this
agreement shall be referred to the Hacienda payroll of 1990 and determine whether or not this
concerned Union members are hacienda workers;

'2. That in addition to the payroll of 1990 as reference, herein parties will use as guide the subjects of a
Memorandum of Agreement entered into by and between the parties last January 4, 1990;

'3. That herein parties can use other employment references in support of their respective claims
whether or not any or all of the listed 36 union members are employees or hacienda workers or not as
the case may be;

'4. That in case conflict or disagreement arises in the determination of the status of the particular
hacienda workers subject of this agreement herein parties further agree to submit the same to
voluntary arbitration;

'5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby created to be composed
of three representatives each and is given five working days starting Jan. 23, 1992 to resolve the status
of the subject 36 hacienda workers. (Union representatives: Bernardo Torres, Martin Alas-as, Ariston
Arulea Jr.)"

"Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed as
follows:
'The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko based on who
received their 13th month pay. The following are deemed not considered employees:

1. Luisa Rombo

2. Ramona Rombo

3. Bobong Abrega

4. Boboy Silva

'The name Orencio Rombo shall be verified in the 1990 payroll.

'The following employees shall be reinstated immediately upon availability of work:

1. Jose Dagle

7. Alejandro Tejares

2. Rico Dagle

8. Gaudioso Rombo

3. Ricardo Dagle

9. Martin Alas-as Jr.

4. Jesus Silva
10. Cresensio Abrega

5. Fernando Silva

11. Ariston Eruela Sr.

6. Ernesto Tejares

12. Ariston Eruela Jr.'

"When respondents again reneged on its commitment; complainants filed the present complaint.

"But for all their persistence, the risk they had to undergo in conducting a strike in the face of
overwhelming odds, complainants in an ironic twist of fate now find themselves being accused of
'refusing to work and being choosy in the kind of work they have to perform'." 5 (Citations omitted)

Ruling of the Court of Appeals

The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be
merely on leave during the off-season and were therefore still employed by petitioners. Moreover, the
workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be
tantamount to illegal dismissal.

The appellate court found neither "rhyme nor reason in petitioner's argument that it was the workers
themselves who refused to or were choosy in their work." As found by the NLRC, the record of this case
is "replete with complainants' persistence and dogged determination in going back to work." 6

The CA likewise concurred with the NLRC's finding that petitioners were guilty of unfair labor practice.

Hence this Petition. 7

Issues

Petitioners raise the following issues for the Court's consideration:

"A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal
workers, were regular employees, contrary to the clear provisions of Article 280 of the Labor Code,
which categorically state that seasonal employees are not covered by the definition of regular
employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual
employees who have served for at least one year.

"B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, . . . and relying instead
on rulings which are not directly applicable to the case at bench, viz, Philippine Tobacco, Bacolod-
Murcia, and Gaco, . . .

"C Whether or not the Court of Appeals committed grave abuse of discretion in upholding the NLRC's
conclusion that private respondents were illegally dismissed, that petitioner[s were] guilty of unfair
labor practice, and that the union be awarded moral and exemplary damages." 8

Consistent with the discussion in petitioners' Memorandum, we shall take up Items A and B as the first
issue and Item C as the second.

The Court's Ruling

The Petition has no merit.

First Issue:

Regular Employment

At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for
review on certiorari of CA decisions. 9 Questions of fact are not entertained. 10 The Court is not a trier
of facts and, in labor cases, this doctrine applies with greater force. 11 Factual questions are for labor
tribunals to resolve. 12 In the present case, these have already been threshed out by the NLRC. Its
findings were affirmed by the appellate court.

Contrary to petitioners' contention, the CA did not err when it held that respondents were regular
employees.

Article 280 of the Labor Code, as amended, 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 exist." (Italics supplied)

For respondents to be excluded from those classified as regular employees, it is not enough that they
perform work or services that are seasonal in nature. They must have also been employed only for the
duration of one season. The evidence proves the existence of the first, but not of the second, condition.
The fact that respondents with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and
Boboy Silva repeatedly worked as sugarcane workers for petitioners for several years is not denied by
the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the
general rule of regular employment is applicable.

In Abasolo v. National Labor Relations Commission, 13 the Court issued this clarification:

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

xxx - xxx - xxx

". . . [T]he fact that [respondents] do not work continuously for one whole year but only for the duration
of the . . . season does not detract from considering them in regular employment since in a litany of
cases this Court has already settled that seasonal workers who are called to work from time to time and
are temporarily laid off during off-season are not separated from service in said period, but merely
considered on leave until re-employed." 14

The CA did not err when it ruled that Mercado v. NLRC 15 was not applicable to the case at bar. In the
earlier case, the workers were required to perform phases of agricultural work for a definite period of
time, after which their services would be available to any other farm owner. They were not hired
regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase
thereof. On the other hand, herein respondents, having performed the same tasks for petitioners every
season for several years, are considered the latter's regular employees for their respective tasks.
Petitioners' eventual refusal to use their services even if they were ready, able and willing to perform
their usual duties whenever these were available and hiring of other workers to perform the tasks
originally assigned to respondents amounted to illegal dismissal of the latter.

The Court finds no reason to disturb the CA's dismissal of what petitioners claim was their valid exercise
of a management prerogative. The sudden changes in work assignments reeked of bad faith. These
changes were implemented immediately after respondents had organized themselves into a union and
started demanding collective bargaining. Those who were union members were effectively deprived of
their jobs. Petitioners' move actually amounted to unjustified dismissal of respondents, in violation of
the Labor Code.

"Where there is no showing of clear, valid and legal cause for the termination of employment, the law
considers the matter a case of illegal dismissal and the burden is on the employer to prove that the
termination was for a valid and authorized cause." 16 In the case at bar, petitioners failed to prove any
such cause for the dismissal of respondents who, as discussed above, are regular employees.
Second Issue:

Unfair Labor Practice

The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows:

"Indeed, from respondents' refusal to bargain, to their acts of economic inducements resulting in the
promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to
come in, and the dismissal of union officials and members, one cannot but conclude that respondents
did not want a union in their haciendaa clear interference in the right of the workers to self-
organization." 17

We uphold the CA's affirmation of the above findings. Indeed, factual findings of labor officials, who are
deemed to have acquired expertise in matters within their respective jurisdictions, are generally
accorded not only respect but even finality. Their findings are binding on the Supreme Court. 18 Verily,
their conclusions are accorded great weight upon appeal, especially when supported by substantial
evidence. 19 Consequently, the Court is not duty-bound to delve into the accuracy of their factual
findings, in the absence of a clear showing that these were arbitrary and bereft of any rational basis." 20

The finding of unfair labor practice done in bad faith carries with it the sanction of moral and exemplary
damages." 21

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against
petitioners.

SO ORDERED.
G.R. No. 79869 September 5, 1991

FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO MERCADO, JR., ANTONIO MERCADO, JOSE
CABRAL, LUCIA MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA MERCADO, JULIANA
CABRAL, GUADALUPE PAGUIO, BRIGIDA ALCANTARA, EMERLITA MERCADO, ROMEO GUEVARA, ROMEO
MERCADO and LEON SANTILLAN, petitioners,

vs.

NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD DIVISION; LABOR ARBITER LUCIANO
AQUINO, RAB-III; AURORA L. CRUZ; SPOUSES FRANCISCO DE BORJA and LETICIA DE BORJA; and STO.
NIÑO REALTY, INCORPORATED, respondents.

Servillano S. Santillan for petitioners.

Luis R. Mauricio for private respondents.

PADILLA, J.:

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

This petition originated from a complaint for illegal dismissal, underpayment of wages, non-payment of
overtime pay, holiday pay, service incentive leave benefits, emergency cost of living allowances and
13th month pay, filed by above-named petitioners against private respondents Aurora L. Cruz, Francisco
Borja, Leticia C. Borja and Sto. Niño Realty Incorporated, with Regional Arbitration Branch No. III,
National Labor Relations Commission in San Fernando, Pampanga.1

Petitioners alleged in their complaint that they were agricultural workers utilized by private respondents
in all the agricultural phases of work on the 7 1/2 hectares of ace land and 10 hectares of sugar land
owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan worked in the farm of private
respondents since 1949, Fortunato Mercado, Jr. and Antonio Mercado since 1972 and the rest of the
petitioners since 1960 up to April 1979, when they were all allegedly dismissed from their employment;
and that, during the period of their employment, petitioners received the following daily wages:
From 1962-1963 — P1.50

1963-1965 — P2.00

1965-1967 — P3.00

1967-1970 — P4.00

1970-1973 — P5.00

1973-1975 — P5.00

1975-1978 — P6.00

1978-1979 — P7.00

Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said petitioners
were her regular employees and instead averred that she engaged their services, through Spouses
Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is, persons who take charge in
supplying the number of workers needed by owners of various farms, but only to do a particular phase
of agricultural work necessary in rice production and/or sugar cane production, after which they would
be free to render services to other farm owners who need their services.2

The other private respondents denied having any relationship whatsoever with the petitioners and state
that they were merely registered owners of the land in question included as corespondents in this
case.3

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

Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents and held that
petitioners were not regular and permanent workers of the private respondents, for the nature of the
terms and conditions of their hiring reveal that they were required to perform phases of agricultural
work for a definite period of time after which their services would be available to any other farm
owner.4 Respondent Labor Arbiter deemed petitioners' contention of working twelve (12) hours a day
the whole year round in the farm, an exaggeration, for the reason that the planting of lice and sugar
cane does not entail a whole year as reported in the findings of the Chief of the NLRC Special Task
Force.5 Even the sworn statement of one of the petitioners, Fortunato Mercado, Jr., the son of spouses
Fortunato Mercado, Sr. and Rosa Mercado, indubitably show that said petitioners were hired only as
casuals, on an "on and off" basis, thus, it was within the prerogative of private respondent Aurora Cruz
either to take in the petitioners to do further work or not after any single phase of agricultural work had
been completed by them.6

Respondent Labor Arbiter was also of the opinion that the real cause which triggered the filing of the
complaint by the petitioners who are related to one another, either by consanguinity or affinity, was the
filing of a criminal complaint for theft against Reynaldo Mercado, son of spouses Fortunate Mercado, Sr.
and Rosa Mercado, for they even asked the help of Jesus David, Zone Chairman of the locality to talk to
private respondent, Aurora Cruz regarding said criminal case.7 In his affidavit, Jesus David stated under
oath that petitioners were never regularly employed by private respondent Aurora Cruz but were, on-
and-off hired to work and render services when needed, thus adding further support to the conclusion
that petitioners were not regular and permanent employees of private respondent Aurora Cruz.8

Respondent Labor Arbiter further held that only money claims from years 1976-1977, 1977-1978 and
1978-1979 may be properly considered since all the other money claims have prescribed for having
accrued beyond the three (3) year period prescribed by law.9 On grounds of equity, however,
respondent Labor Arbiter awarded petitioners financial assistance by private respondent Aurora Cruz, in
the amount of Ten Thousand Pesos (P10,000.00) to be equitably divided among an the petitioners
except petitioner Fortunato Mercado, Jr. who had manifested his disinterest in the further prosecution
of his complaint against private respondent.10

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

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

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

SO ORDERED.11

Petitioners filed a motion for reconsideration of the Decision of the Third Division of the NLRC dated 8
August 1984; however, the NLRC denied tills motion in a resolution dated 17 August 1987.12
In the present Petition for certiorari, petitioners seek the reversal of the above-mentioned rulings.
Petitioners contend that respondent Labor Arbiter and respondent NLRC erred when both ruled that
petitioners are not regular and permanent employees of private respondents based on the terms and
conditions of their hiring, for said findings are contrary to the provisions of Article 280 of the Labor
Code.13 They submit that petitioners' employment, even assuming said employment were seasonal,
continued for so many years such that, by express provision of Article 280 of the Labor Code as
amended, petitioners have become regular and permanent employees.14

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

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

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

This new concept should be strictly enforced to give meaning to the constitutional guarantee of
employment tenure.16

Tested under the laws invoked, petitioners submit that it would be unjust, if not unlawful, to consider
them as casual workers since they have been doing all phases of agricultural work for so many years,
activities which are undeniably necessary, desirable and indispensable in the rice and sugar cane
production business of the private respondents.17

In the Comment filed by private respondents, they submit that the decision of the Labor Arbiter, as
aimed by respondent NLRC, that petitioners were only hired as casuals, is based on solid evidence
presented by the parties and also by the Chief of the Special Task Force of the NLRC Regional Office and,
therefore, in accordance with the rule on findings of fact of administrative agencies, the decision should
be given great weight.18 Furthermore, they contend that the arguments used by petitioners in
questioning the decision of the Labor Arbiter were based on matters which were not offered as
evidence in the case heard before the regional office of the then Ministry of Labor but rather in the case
before the Social Security Commission, also between the same parties.19

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

The provisions of written agreements to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in the usual business or trade of
the employer, except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the employment is
for the duration of the season.21 (emphasis supplied)

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

The petition is not impressed with merit.

The invariable rule set by the Court in reviewing administrative decisions of the Executive Branch of the
Government is that the findings of fact made therein are respected, so long as they are supported by
substantial evidence, even if not overwhelming or preponderant;22 that it is not for the reviewing court
to weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its
own judgment for that of the administrative agency on the sufficiency of the evidence;23 that the
administrative decision in matters within the executive's jurisdiction can only be set aside upon proof of
gross abuse of discretion, fraud, or error of law.24

The questioned decision of the Labor Arbiter reads:

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

In fact, the sworn statement of one of the petitioners Fortunato Mercado, Jr., the son of spouses
Fortunato Mercado, Sr. and Rosa Mercado, indubitably shows that said petitioners were only hired as
casuals, on-and-off basis. With this kind of relationship between the petitioners and the respondent
Aurora Cruz, we feel that there is no basis in law upon which the claims of the petitioners should be
sustained, more specially their complaint for illegal dismissal. It is within the prerogative of respondent
Aurora Cruz either to take in the petitioners to do further work or not after any single phase of
agricultural work has been completed by them. We are of the opinion that the real cause which
triggered the filing of this complaint by the petitioners who are related to one another, either by
consanguinity or affinity was due to the filing of a criminal complaint by the respondent Aurora Cruz
against Reynaldo Mercado, son of spouses Fortunato Mercado, Sr. and Rosa Mercado. In April 1979,
according to Jesus David, Zone Chairman of the locality where the petitioners and respondent reside,
petitioner Fortunato Mercado, Sr. asked for help regarding the case of his son, Reynaldo, to talk with
respondent Aurora Cruz and the said Zone Chairman also stated under oath that the petitioners were
never regularly employed by respondent Aurora Cruz but were on-and-off hired to work to render
services when needed.25

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

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

Article 280 of the Labor Code reads in full:

Article 280. Regular and Casual Employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed
for a specific project or undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one year of service whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such actually exists.

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

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

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

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

The general rule is that the office of a proviso is to qualify or modify only the phrase immediately
preceding it or restrain or limit the generality of the clause that it immediately follows.27 Thus, it has
been held that a proviso is to be construed with reference to the immediately preceding part of the
provision to which it is attached, and not to the statute itself or to other sections thereof.28 The only
exception to this rule is where the clear legislative intent is to restrain or qualify not only the phrase
immediately preceding it (the proviso) but also earlier provisions of the statute or even the statute itself
as a whole.29

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

Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees,
their employment legally ends upon completion of the project or the season. The termination of their
employment cannot and should not constitute an illegal dismissal.30

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

SO ORDERED.
G.R. No. 193493 June 13, 2013

JAIME N. GAPAYAO, Petitioner,

vs.

ROSARIO FULO, SOCIAL SECURITY SYSTEM and SOCIAL SECURITY COMMISSION, Respondents.

DECISION

SERENO, CJ.:

This is a Rule 45 Petition1 assailing the Decision2 and Resolution3 of the Court of Appeals (CA) in CA-G.R.
SP. No. 101688, affirming the Resolution4 of the Social Security Commission (SSC). The SSC held
petitioner Jaime N. Gapayao liable to pay the unpaid social security contributions due to the deceased
Jaime Fulo, and the Social Security System (SSS) to pay private respondent Rosario L. Fulo, the widow of
the deceased, the appropriate death benefits pursuant to the Social Security Law.

The antecedent facts are as follows:

On 4 November 1997, Jaime Fulo (deceased) died of "acute renal failure secondary to 1st degree burn
70% secondary electrocution"5 while doing repairs at the residence and business establishment of
petitioner located at San Julian, Irosin, Sorsogon.

Allegedly moved by his Christian faith, petitioner extended some financial assistance to private
respondent. On 16 November 1997, the latter executed an Affidavit of Desistance6 stating that she was
not holding them liable for the death of her late husband, Jaime Fulo, and was thereby waiving her right
and desisting from filing any criminal or civil action against petitioner.

On 14 January 1998, both parties executed a Compromise Agreement,7 the relevant portion of which is
quoted below:

We, the undersigned unto this Honorable Regional Office/District Office/Provincial Agency Office
respectfully state:
1. The undersigned employer, hereby agrees to pay the sum of FORTY THOUSAND PESOS (₱40,000.00)
to the surviving spouse of JAIME POLO, an employee who died of an accident, as a complete and full
payment for all claims due the victim.

2. On the other hand, the undersigned surviving spouse of the victim having received the said amount
do [sic] hereby release and discharge the employer from any and all claims that maybe due the victim in
connection with the victim’s employment thereat.

Thereafter, private respondent filed a claim for social security benefits with the Social Security System
(SSS)–Sorosogon Branch.8 However, upon verification and evaluation, it was discovered that the
deceased was not a registered member of the SSS.9

Upon the insistence of private respondent that her late husband had been employed by petitioner from
January 1983 up to his untimely death on 4 November 1997, the SSS conducted a field investigation to
clarify his status of employment. In its field investigation report,10 it enumerated its findings as follows:

In connection with the complaint filed by Mrs. Rosario Fulo, hereunder are the findings per interview
with Mr. Leonor Delgra, Santiago Bolanos and Amado Gacelo:

1. That Mr. Jaime Fulo was an employee of Jaime Gapayao as farm laborer from 1983 to 1997.

2. Mr. Leonor Delgra and Santiago Bolanos are co-employees of Jaime Fulo.

3. Mr. Jaime Fulo receives compensation on a daily basis ranging from ₱5.00 to ₱60.00 from 1983 to
1997.

Per interview from Mrs. Estela Gapayao, please be informed that:

1. Jaime Fulo is an employee of Mr. & Mrs. Jaime Gapayao on an extra basis.

2. Sometimes Jaime Fulo is allowed to work in the farm as abaca harvester and earn 1/3 share of its
harvest as his income.
3. Mr. & Mrs. Gapayao hired the services of Jaime Fulo not only in the farm as well as in doing house
repairs whenever it is available. Mr. Fulo receives his remuneration usually in the afternoon after doing
his job.

4. Mr. & Mrs. Gapayao hires 50-100 persons when necessary to work in their farm as laborer and Jaime
Fulo is one of them. Jaime Fulo receives more or less ₱50.00 a day. (Emphases in the original)

Consequently, the SSS demanded that petitioner remit the social security contributions of the deceased.
When petitioner denied that the deceased was his employee, the SSS required private respondent to
present documentary and testimonial evidence to refute petitioner’s allegations.11

Instead of presenting evidence, private respondent filed a Petition12 before the SSC on 17 February
2003. In her Petition, she sought social security coverage and payment of contributions in order to avail
herself of the benefits accruing from the death of her husband.

On 6 May 2003, petitioner filed an Answer13 disclaiming any liability on the premise that the deceased
was not the former’s employee, but was rather an independent contractor whose tasks were not subject
to petitioner’s control and supervision.14 Assuming arguendo that the deceased was petitioner’s
employee, he was still not entitled to be paid his SSS premiums for the intervening period when he was
not at work, as he was an "intermittent worker who was only summoned every now and then as the
need arose."15 Hence, petitioner insisted that he was under no obligation to report the former’s demise
to the SSS for social security coverage.

Subsequently, on 30 June 2003, the SSS filed a Petition-in-Intervention16 before the SSC, outlining the
factual circumstances of the case and praying that judgment be rendered based on the evidence
adduced by the parties.

On 14 March 2007, the SSC rendered a Resolution,17 the dispositive portion of which provides:

WHEREFORE, PREMISES CONSIDERED, this Commission finds, and so holds, that Jaime Fulo, the late
husband of petitioner, was employed by respondent Jaime N. Gapayao from January 1983 to November
4, 1997, working for nine (9) months a year receiving the minimum wage then prevailing.

Accordingly, the respondent is hereby ordered to pay ₱45,315.95 representing the unpaid SS
contributions due on behalf of deceased Jaime Fulo, the amount of ₱217,710.33 as 3% per month
penalty for late remittance thereof, computed as of March 30, 2006, without prejudice to the collection
of additional penalty accruing thereafter, and the sum of ₱230,542.20 (SSS) and ₱166,000.00 (EC) as
damages for the failure of the respondent to report the deceased Jaime Fulo for SS coverage prior to his
death pursuant to Section 24(a) of the SS Law, as amended.

The SSS is hereby directed to pay petitioner Rosario Fulo the appropriate death benefit, pursuant to
Section 13 of the SS Law, as amended, as well as its prevailing rules and regulations, and to inform this
Commission of its compliance herewith.

SO ORDERED.

On 18 May 2007, petitioner filed a Motion for Reconsideration,18 which was denied in an Order19
dated 16 August 2007.

Aggrieved, petitioner appealed to the CA on 19 December 2007.20 On 17 March 2010, the CA rendered
a Decision21 in favor of private respondent, as follows:

In fine, public respondent SSC had sufficient basis in concluding that private respondent’s husband was
an employee of petitioner and should, therefore, be entitled to compulsory coverage under the Social
Security Law.

Having ruled in favor of the existence of employer-employee relationship between petitioner and the
late Jaime Fulo, it is no longer necessary to dwell on the other issues raised.

Resultantly, for his failure to report Jaime Fulo for compulsory social security coverage, petitioner should
bear the consequences thereof. Under the law, an employer who fails to report his employee for social
security coverage is liable to [1] pay the benefits of those who die, become disabled, get sick or reach
retirement age; [2] pay all unpaid contributions plus a penalty of three percent per month; and [3] be
held liable for a criminal offense punishable by fine and/or imprisonment. But an employee is still
entitled to social security benefits even is (sic) his employer fails or refuses to remit his contribution to
the SSS.

WHEREFORE, premises considered, the Resolution appealed from is AFFIRMED in toto.

SO ORDERED.

In holding thus, the CA gave credence to the findings of the SSC. The appellate court held that it "does
not follow that a person who does not observe normal hours of work cannot be deemed an
employee."22 For one, it is not essential for the employer to actually supervise the performance of
duties of the employee; it is sufficient that the former has a right to wield the power. In this case,
petitioner exercised his control through an overseer in the person of Amado Gacelo, the tenant on
petitioner’s land.23 Most important, petitioner entered into a Compromise Agreement with private
respondent and expressly admitted therein that he was the employer of the deceased.24 The CA
interpreted this admission as a declaration against interest, pursuant to Section 26, Rule 130 of the
Rules of Court.25

Hence, this petition.

Public respondents SSS26 and SSC27 filed their Comments on 31 January 2011 and 28 February 2011,
respectively, while private respondent filed her Comment on 14 March 2011.28 On 6 March 2012,
petitioner filed a "Consolidated Reply to the Comments of the Public Respondents SSS and SSC and
Private Respondent Rosario Fulo."29

ISSUE

The sole issue presented before us is whether or not there exists between the deceased Jaime Fulo and
petitioner an employer-employee relationship that would merit an award of benefits in favor of private
respondent under social security laws.

THE COURT’S RULING

In asserting the existence of an employer-employee relationship, private respondent alleges that her
late husband had been in the employ of petitioner for 14 years, from 1983 to 1997.30 During that
period, he was made to work as a laborer in the agricultural landholdings, a harvester in the abaca
plantation, and a repairman/utility worker in several business establishments owned by petitioner.31 To
private respondent, the "considerable length of time during which [the deceased] was given diverse
tasks by petitioner was a clear indication of the necessity and indispensability of her late husband’s
services to petitioner’s business."32 This view is bolstered by the admission of petitioner himself in the
Compromise Agreement that he was the deceased’s employer.33
Private respondent’s position is similarly espoused by the SSC, which contends that its findings are duly
supported by evidence on record.34 It insists that pakyaw workers are considered employees, as long as
the employer exercises control over them. In this case, the exercise of control by the employer was
delegated to the caretaker of his farm, Amado Gacelo. The SSC further asserts that the deceased
rendered services essential for the petitioner’s harvest. While these services were not rendered
continuously (in the sense that they were not rendered every day throughout the year), still, the
deceased had never stopped working for petitioner from year to year until the day the former died.35 In
fact, the deceased was required to work in the other business ventures of petitioner, such as the latter’s
bakery and grocery store.36 The Compromise Agreement entered into by petitioner with private
respondent should not be a bar to an employee demanding what is legally due the latter.37

The SSS, while clarifying that it is "neither adversarial nor favoring any of the private parties x x x as it is
only tasked to carry out the purposes of the Social Security Law,"38 agrees with both private respondent
and SSC. It stresses that factual findings of the lower courts, when affirmed by the appellate court, are
generally conclusive and binding upon the Court.39

Petitioner, on the other hand, insists that the deceased was not his employee. Supposedly, the latter,
during the performance of his function, was not under petitioner’s control. Control is not necessarily
present even if the worker works inside the premises of the person who has engaged his services.40
Granting without admitting that petitioner gave rules or guidelines to the deceased in the process of the
latter’s performing his work, the situation cannot be interpreted as control, because it was only
intended to promote mutually desired results.41

Alternatively, petitioner insists that the deceased was hired by Adolfo Gamba, the contractor whom he
had hired to construct their building;42 and by Amado Gacelo, the tenant whom petitioner instructed to
manage the latter’s farm.43 For this reason, petitioner believes that a tenant is not beholden to the
landlord and is not under the latter’s control and supervision. So if a worker is hired to work on the land
of a tenant – such as petitioner – the former cannot be the worker of the landlord, but of the
tenant’s.44

Anent the Compromise Agreement, petitioner clarifies that it was executed to buy peace, because
"respondent kept on pestering them by asking for money."45 Petitioner allegedly received threats that if
the matter was not settled, private respondent would refer the matter to the New Peoples’ Army.46
Allegedly, the Compromise Agreement was "extortion camouflaged as an agreement."47 Likewise,
petitioner maintains that he shouldered the hospitalization and burial expenses of the deceased to
express his "compassion and sympathy to a distressed person and his family," and not to admit
liability.48
Lastly, petitioner alleges that the deceased is a freelance worker. Since he was engaged on a pakyaw
basis and worked for a short period of time, in the nature of a farm worker every season, he was not
precluded from working with other persons and in fact worked for them. Under Article 280 of the Labor
Code,49 seasonal employees are not covered by the definitions of regular and casual employees.50
Petitioner cites Mercado, Sr. v. NLRC,51 in which the Court held that seasonal workers do not become
regular employees by the mere fact that they have rendered at least one year of service, whether
continuous or broken.52

We see no cogent reason to reverse the CA.

Findings of fact of the SSC are given weight and credence.

At the outset, it is settled that the Court is not a trier of facts and will not weigh evidence all over again.
Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally accorded not only respect but
finality when affirmed by the CA.53 For as long as these findings are supported by substantial evidence,
they must be upheld.54

II

Farm workers may be considered regular seasonal employees.

Article 280 of the Labor Code states:

Article 280. Regular and Casual Employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed
for a specific project or undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one year of service whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such actually exists.

Jurisprudence has identified the three types of employees mentioned in the provision: (1) regular
employees or those who have been engaged to perform activities that are usually necessary or desirable
in the usual business or trade of the employer; (2) project employees or those whose employment has
been fixed for a specific project or undertaking, the completion or termination of which has been
determined at the time of their engagement, or those whose work or service is seasonal in nature and is
performed for the duration of the season; and (3) casual employees or those who are neither regular
nor project employees.55

Farm workers generally fall under the definition of seasonal employees. We have consistently held that
seasonal employees may be considered as regular employees.56 Regular seasonal employees are those
called to work from time to time. The nature of their relationship with the employer is such that during
the off season, they are temporarily laid off; but reemployed during the summer season or when their
services may be needed.57 They are in regular employment because of the nature of their job,and not
because of the length of time they have worked.58

The rule, however, is not absolute. In Hacienda Fatima v. National Federation of Sugarcane Workers-
Food & General Trade,59 the Court held that seasonal workers who have worked for one season only
may not be considered regular employees. Similarly, in Mercado, Sr. v. NLRC,60 it was held that when
seasonal employees are free to contract their services with other farm owners, then the former are not
regular employees.

For regular employees to be considered as such, the primary standard used is the reasonable connection
between the particular activity they perform and the usual trade or business of the employer.61 This
test has been explained thoroughly in De Leon v. NLRC,62 viz:

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

A reading of the records reveals that the deceased was indeed a farm worker who was in the regular
employ of petitioner. From year to year, starting January 1983 up until his death, the deceased had been
working on petitioner’s land by harvesting abaca and coconut, processing copra, and clearing weeds. His
employment was continuous in the sense that it was done for more than one harvesting season.
Moreover, no amount of reasoning could detract from the fact that these tasks were necessary or
desirable in the usual business of petitioner.

The other tasks allegedly done by the deceased outside his usual farm work only bolster the existence of
an employer-employee relationship. As found by the SSC, the deceased was a construction worker in the
building and a helper in the bakery, grocery, hardware, and piggery – all owned by petitioner.63 This
fact only proves that even during the off season, the deceased was still in the employ of petitioner.

The most telling indicia of this relationship is the Compromise Agreement executed by petitioner and
private respondent. It is a valid agreement as long as the consideration is reasonable and the employee
signed the waiver voluntarily, with a full understanding of what he or she was entering into.64 All that is
required for the compromise to be deemed voluntarily entered into is personal and specific individual
consent.65 Once executed by the workers or employees and their employers to settle their differences,
and done in good faith, a Compromise Agreement is deemed valid and binding among the parties.66

Petitioner entered into the agreement with full knowledge that he was described as the employer of the
deceased.67 This knowledge cannot simply be denied by a statement that petitioner was merely forced
or threatened into such an agreement.1âwphi1 His belated attempt to circumvent the agreement
should not be given any consideration or weight by this Court.

III

Pakyaw workers are regular employees,

provided they are subject to the control of petitioner.

Pakyaw workers are considered employees for as long as their employers exercise control over them. In
Legend Hotel Manila v. Realuyo,68 the Court held that "the power of the employer to control the work
of the employee is considered the most significant determinant of the existence of an employer-
employee relationship. This is the so-called control test and is premised on whether the person for
whom the services are performed reserves the right to control both the end achieved and the manner
and means used to achieve that end." It should be remembered that the control test merely calls for the
existence of the right to control, and not necessarily the exercise thereof.69 It is not essential that the
employer actually supervises the performance of duties by the employee. It is enough that the former
has a right to wield the power.70

In this case, we agree with the CA that petitioner wielded control over the deceased in the discharge of
his functions. Being the owner of the farm on which the latter worked, petitioner – on his own or
through his overseer – necessarily had the right to review the quality of work produced by his laborers.
It matters not whether the deceased conducted his work inside petitioner’s farm or not because
petitioner retained the right to control him in his work, and in fact exercised it through his farm manager
Amado Gacelo. The latter himself testified that petitioner had hired the deceased as one of the pakyaw
workers whose salaries were derived from the gross proceeds of the harvest.71

We do not give credence to the allegation that the deceased was an independent contractor hired by a
certain Adolfo Gamba, the contractor whom petitioner himself had hired to build a building. The
allegation was based on the self-serving testimony of Joyce Gapay Demate,72 the daughter of
petitioner. The latter has not offered any other proof apart from her testimony to prove the contention.

The right of an employee to be covered by the Social Security Act is premised on the existence of an
employer-employee relationship.73 That having been established, the Court hereby rules in h1vor of
private respondent.

WHEREFORE, the Petition for Review on Certiorari is hereby DENIED. The assailed Decision and
resolution of the Court of Appeals in CA-G.R. SP. No. 101688 dated 17 March 2010 and 13 August 2010,
respectively, are hereby AFFIRMED.

SO ORDERED.
[G.R.No. 159343 : September 28, 2007]

PEDY CASERES and ANDITO PAEL, Petitioners, v. UNIVERSAL ROBINA SUGAR MILLING CORPORATION
(URSUMCO) and/or RESIDENT MANAGER RENE CABATE, Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Universal Robina Sugar Milling Corporation (respondent) is a corporation engaged in the cane sugar
milling business. Pedy Caseres (petitioner Caseres) started working for respondent in 1989, while Andito
Pael (petitioner Pael) in 1993. At the start of their respective employments, they were made to sign a
Contract of Employment for Specific Project or Undertaking. Petitioners' contracts were renewed from
time to time, until May 1999 when they were informed that their contracts will not be renewed
anymore.

Petitioners filed a complaint for illegal dismissal, regularization, incentive leave pay, 13th month pay,
damages and attorney's fees.

In a Decision1 dated August 24, 1999, the Labor Arbiter (LA) dismissed the complaint "for not being
substantiated with clear and convincing evidence."

The National Labor Relations Commission (NLRC) affirmed the LA's dismissal,2 and the Court of Appeals
(CA)3 dismissed the petition filed before it.4

Hence, herein Petition for Review on Certiorari under Rule 45 of the Rules of Court with the issues set
forth as follows:

I. WHETHER OR NOT THE PETITIONERS ARE SEASONAL/PROJECT/TERM EMPLOYEES NOT REGULAR

EMPLOYEES OF RESPONDENTS;

II. WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY DISMISSED AND ARE ENTITLED TO BACKWAGES
AND OTHER MONETARY BENEFITS PRAYED FOR IN THE COMPLAINT.5
The petition is without merit.

The rule is clear that a Petition for Review on Certiorari under Rule 45 of the Rules of Court should raise
only questions of law, subject to certain exceptions.6 Whether or not respondents were project
employees or regular employees is a question of fact.7

The LA, the NLRC and the CA are one in ruling that petitioners were not illegally dismissed as they were
not regular, but contractual or project employees. Consequently, the finding of the LA, the NLRC, and
the CA that petitioners were project employees binds this Court.8

The Court finds no cogent reason to depart from their ruling.

Article 280 of the Labor Code provides:

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

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

The foregoing provision provides for three kinds of employees: (a) regular employees or those who have
been "engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer"; (b) project employees or those "whose employment has been fixed for a specific
project or undertaking, the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be performed is seasonal in nature and
the employment is for the duration of the season"; and (c) casual employees or those who are neither
regular nor project employees.9
The principal test for determining whether an employee is a project employee or a regular employee is
whether 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.10 A project
employee is one whose employment has been fixed for a specific project or undertaking, the completion
or termination of which has been determined at the time of the engagement of the employee or where
the work or service to be performed is seasonal in nature and the employment is for the duration of the
season.11 A true project employee should be assigned to a project which begins and ends at determined
or determinable times, and be informed thereof at the time of hiring.12

Petitioners contend that respondent's repeated hiring of their services qualifies them to the status of
regular employees. On this score, the LA ruled:

This is further buttress[ed] by the fact that the relationship between complainants and the respondent
URSUMCO, would clearly reveal that the very nature of the terms and conditions of their hiring would
show that complainants were required to perform phases of special projects which are not related to
the main operation of the respondent for a definite period, after which their services are available to
any farm owner.13

The NLRC, agreeing with the LA, further ruled that:

In the case at bar, We note that complainants never bothered to deny that they voluntarily, knowingly
and willfully executed the contracts of employment. Neither was there any showing that respondents
exercised moral dominance on the complainants, x x x it is clear that the contracts of employment are
valid and binding on the complainants.

The execution of these contracts in the case at bar is necessitated by the peculiar nature of the work in
the sugar industry which has an off milling season. The very nature of the terms and conditions of
complainants' hiring reveals that they were required to perform phases of special projects for a definite
period after, their services are available to other farm owners. This is so because the planting of sugar
does not entail a whole year operation, and utility works are comparatively small during the off-milling
season. x x x14

Finally, the CA noted:

Petitioner Pedy Caseres first applied with private respondent URSUMCO on January 9, 1989 as a worker
assisting the crane operator at the transloading station. Upon application, Caseres was interviewed and
made to understand that his employment would be co-terminus with the phase of work to which he
would be then assigned, that is until February 5, 1989 and thereafter he would be free to seek
employment elsewhere. Caseres agreed and signed the contract of employment for specific project or
undertaking. After an absence of more than five (5) months, Caseres re-applied with respondent as a
seasonal project worker assisting in the general underchassis reconditioning to transport units on July
17, 1989. Like his first assignment, Caseres was made to understand that his services would be co-
terminus with the work to which he would be then assigned that is from July 17, 1989 to July 20, 1989
and that thereafter he is free to seek employment elsewhere to which Caseres agreed and readily signed
the contract of employment for specific project or undertaking issued to him. Thereafter Caseres
voluntarily signed several other employment contracts for various undertakings with a determinable
period. As in the first contract, Caseres' services were co-terminus with the work to which he was
assigned, and that thereafter, he was free to seek employment with other sugar millers or elsewhere.

The nature and terms and conditions of employment of petitioner Andito Pael were the same as that of
his co-petitioner Caseres.

xxx

It must be noted that there were intervals in petitioners' respective employment contracts, and that
their work depended on the availability of such contracts or projects. Consequently, the employment of
URSUMCO's work force was not permanent but co-terminous with the projects to which the employees
were assigned and from whose payrolls they were paid (Palomares v. NLRC, 277 SCRA 439).

Petitioners' repeated and successive re-employment on the basis of a contract of employment for more
than one year cannot and does not make them regular employees. Length of service is not the
controlling determinant of the employment tenure of a project employee (Rada v. NLRC, 205 SCRA 69). x
x x15

It should be stressed that contracts for project employment are valid under the law. In Villa v. National
Labor Relations Commission,16 the Court stated that:

x x x by entering into such contract, an employee is deemed to understand that his employment is
coterminous with the project. He may not expect to be employed continuously beyond the completion
of the project. It is of judicial notice that project employees engaged for manual services or those for
special skills like those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is
not a valid reason for bestowing special treatment on them or for invalidating a contract of
employment. Project employment contracts are not lopsided agreements in favor of only one party
thereto. The employer's interest is equally important as that of the employee's for theirs is the interest
that propels economic activity. While it may be true that it is the employer who drafts project
employment contracts with its business interest as overriding consideration, such contracts do not, of
necessity, prejudice the employee. Neither is the employee left helpless by a prejudicial employment
contract. After all, under the law, the interest of the worker is paramount.17 ςηαñrοblεš νιrâ€
υαl lαω lιbrαrÿ

The fact that petitioners were constantly re-hired does not ipso facto establish that they became regular
employees. Their respective contracts with respondent show that there were intervals in their
employment. In petitioner Caseres's case, while his employment lasted from August 1989 to May 1999,
the duration of his employment ranged from one day to several months at a time, and such successive
employments were not continuous. With regard to petitioner Pael, his employment never lasted for
more than a month at a time. These support the conclusion that they were indeed project employees,
and since their work depended on the availability of such contracts or projects, necessarily the
employment of respondent's work force was not permanent but co-terminous with the projects to
which they were assigned and from whose payrolls they were paid. As ruled in Palomares v. National
Labor Relations Commission,18 it would be extremely burdensome for their employer to retain them as
permanent employees and pay them wages even if there were no projects to work on.

Moreover, even if petitioners were repeatedly and successively re-hired, still it did not qualify them as
regular employees, as length of service is not the controlling determinant of the employment tenure of
a project employee,19 but whether the employment has been fixed for a specific project or undertaking,
its completion has been determined at the time of the engagement of the employee.20 Further, the
proviso in Article 280, stating that an employee who has rendered service for at least one (1) year shall
be considered a regular employee, pertains to casual employees and not to project employees.21

Accordingly, petitioners cannot complain of illegal dismissal inasmuch as the completion of the contract
or phase thereof for which they have been engaged automatically terminates their employment.

WHEREFORE, the petition is DENIED.

SO ORDERED
G.R. No. 114733 January 2, 1997

AURORA LAND PROJECTS CORP. Doing business under the name "AURORA PLAZA" and TERESITA T.
QUAZON, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION and HONORIO DAGUI,
Respondents.

HERMOSISIMA, JR., J.:

The question as to whether an employer-employee relationship exists in a certain situation continues to

bedevil the courts. Some businessmen try to avoid the bringing about of an employer-employee
relationship in their enterprises because that judicial relation spawns obligations connected with
workmen's compensation, social security, medicare, minimum wage, termination pay, and unionism. 1
In light of this observation, 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.

This petition for certiorari seeks the reversal of the Resolution 2 of public respondent National Labor
Relations Commission dated March 16, 1994 affirming with modification the decision of the Labor
Arbiter, dated May 25, 1992, finding petitioners liable to pay private respondent the total amount of
P195,624.00 as separation pay and attorney's fees.

The relevant antecedents:

Private respondent Honorio Dagui was hired by Doña Aurora Suntay Tanjangco in 1953 to take charge of
the maintenance and repair of the Tanjangco apartments and residential buildings. He was to perform
carpentry, plumbing, electrical and masonry work. Upon the death of Doña Aurora Tanjangco in 1982,
her daughter, petitioner Teresita Tanjangco Quazon, took over the administration of all the Tanjangco
properties. On June 8, 1991, private respondent Dagui received the shock of his life when Mrs. Quazon
suddenly told him: "Wala ka nang trabaho mula ngayon," 3 on the alleged ground that his work was
unsatisfactory. On August 29, 1991, private respondent, who was then already sixty-two (62) years old,
filed a complaint for illegal dismissal with the Labor Arbiter.

On May 25, 1992, Labor Arbiter Ricardo C. Nora rendered judgment, the decretal portion of which
reads:
IN VIEW OF ALL THE FOREGOING, respondents Aurora Plaza and/or Teresita Tanjangco Quazon are
hereby ordered to pay the complainant the total amount of ONE HUNDRED NINETY FIVE THOUSAND SIX
HUNDRED TWENTY FOUR PESOS (P195,624.00) representing complainant's separation pay and the ten
(10%) percent attorney's fees within ten (10) days from receipt of this Decision.

All other issues are dismissed for lack of merit. 4

Aggrieved, petitioners Aurora Land Projects Corporation and Teresita T. Quazon appealed to the
National Labor Relations Commission. The Commission affirmed, with modification, the Labor Arbiter's
decision in a Resolution promulgated on March 16, 1994, in the following manner:

WHEREFORE, in view of the above considerations, let the appealed decision be as it is hereby AFFIRMED
with (the) MODIFICATION that complainant must be paid separation pay in the amount of P88,920.00
instead of P177,840.00. The award of attorney's fees is hereby deleted. 5

As a last recourse, petitioners filed the instant petition based on grounds not otherwise succinctly and
distinctly ascribed, viz:

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF

JURISDICTION IN AFFIRMING THE LABOR ARBITER'S DECISION SOLELY ON THE BASIS OF ITS STATEMENT
THAT "WE FAIL TO FIND ANY REASON OR JUSTIFICATION TO DISAGREE WITH THE LABOR ARBITER IN HIS
FINDING THAT HONORIO DAGUI WAS DISMISSED BY THE RESPONDENT" (p. 7, RESOLUTION), DESPITE -
AND WITHOUT EVEN BOTHERING TO CONSIDER - THE GROUNDS STATED IN PETITIONERS' APPEAL
MEMORANDUM WHICH ARE PLAINLY MERITORIOUS.

II

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF

JURISDICTION IN FINDING THAT COMPLAINANT WAS EMPLOYED BY THE RESPONDENTS MORE SO
"FROM 1953 TO 1991" (p. 3, RESOLUTION).

III
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN AWARDING SEPARATION PAY IN FAVOR OF PRIVATE RESPONDENT MORE SO FOR THE
EQUIVALENT OF 38 YEARS OF ALLEGED SERVICE.

IV

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF

JURISDICTION IN HOLDING BOTH PETITIONERS LIABLE FOR SEPARATION PAY. 6

It is our impression that the crux of this petition rests on two elemental issues: (1) Whether or not
private respondent Honorio Dagui was an employee of petitioners; and (2) If he were, whether or not he
was illegally dismissed.

Petitioners insist that private respondent had never been their employee. Since the establishment of
Aurora Plaza, Dagui served therein only as a job contractor. Dagui had control and supervision of
whoever he would take to perform a contracted job. On occasion, Dagui was hired only as a "tubero" or
plumber as the need arises in order to unclog sewerage pipes. Every time his services were needed, he
was paid accordingly. It was understood that his job was limited to the specific undertaking of
unclogging the pipes. In effect, petitioners would like us to believe that private respondent Dagui was an
independent contractor, particularly a job contractor, and not an employee of Aurora Plaza.

We are not persuaded.

Section 8, Rule VIII, Book III of the Implementing Rules and Regulations of the Labor Code provides in
part:

There is job contracting permissible under the Code if the following conditions are met:

xxx xxx xxx

(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries,
work premises, and other materials which are necessary in the conduct of his business.
Honorio Dagui earns a measly sum of P180.00 a day (latest salary). 7 Ostensibly, and by no stretch of the
imagination can Dagui qualify as a job contractor. No proof was adduced by the petitioners to show that
Dagui was merely a job contractor, and it is absurd to expect that private respondent, with such humble
resources, would have substantial capital or investment in the form of tools, equipment, and
machineries, with which to conduct the business of supplying Aurora Plaza with manpower and services
for the exclusive purpose of maintaining the apartment houses owned by the petitioners herein.

The bare allegation of petitioners, without more, that private respondent Dagui is a job contractor has
been disbelieved by the Labor Arbiter and the public respondent NLRC. Dagui, by the findings of both
tribunals, was an employee of the petitioners. We are not inclined to set aside these findings. The issue
whether or not an employer-employee relationship exists in a given case is essentially a question of fact.
8 As a rule, repetitious though it has become to state, this Court does not review supposed errors in the
decision of the NLRC which raise factual issues, because factual findings of agencies exercising quasi-
judicial functions [like public respondent NLRC] are accorded not only respect but even finality, aside
from the consideration that this Court is essentially not a trier of facts. 9

However, we deem it wise to discuss this issue full-length if only to bolster the conclusions reached by
the labor tribunals, to which we fully concur.

Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute,
four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the
employee's conduct. 10 It is the so-called "control test," and that is, whether the employer controls or
has reserved the right to control the employee not only as to the result of the work to be done but also
as to the means and methods by which the same is to be accomplished, 11 which constitute the most
important index of the existence of the employer-employee relationship. Stated otherwise, an
employer-employee relationship exists where the person for whom the services are performed reserves
the right to control not only the end to be achieved but also the means to be used in reaching such end.
12

All these elements are present in the case at bar. Private respondent was hired in 1953 by Doña Aurora
Suntay Tanjangco (mother of Teresita Tanjangco-Quazon), who was then the one in charge of the
administration of the Tanjangco's various apartments and other properties. He was employed as a stay-
in worker performing carpentry, plumbing, electrical and necessary work (sic) needed in the repairs of
Tanjangco's properties. 13 Upon the demise of Doña Aurora in 1982, petitioner Teresita Tanjangco-
Quazon took over the administration of these properties and continued to employ the private
respondent, until his unceremonious dismissal on June 8, 1991. 14
Dagui was not compensated in terms of profits for his labor or services like an independent contractor.
Rather, he was paid on a daily wage basis at the rate of P180.00. 15 Employees are those who are
compensated for their labor or services by wages rather than by profits. 16 Clearly, Dagui fits under this
classification.

Doña Aurora and later her daughter petitioner Teresita Quazon evidently had the power of dismissal for
cause over the private respondent. 17

Finally, the records unmistakably show that the most important requisite of control is likewise extant in
this case. It should be borne in mind that the power of control refers merely to the existence of the
power and not to the actual exercise thereof. It is not essential for the employer to actually supervise
the performance of duties of the employee; it is enough that the former has a right to wield the power.
18 The establishment of petitioners is engaged in the leasing of residential and apartment buildings.
Naturally, private respondent's work therein as a maintenance man had to be performed within the
premises of herein petitioners. In fact, petitioners do not dispute the fact that Dagui reports for work
from 7:00 o'clock in the morning until 4:00 o'clock in the afternoon. It is not far-fetched to expect,
therefore, that Dagui had to observe the instructions and specifications given by then Doña Aurora and
later by Mrs. Teresita Quazon as to how his work had to be performed. Parenthetically, since the job of a
maintenance crew is necessarily done within company premises, it can be inferred that both Doña
Aurora and Mrs. Quazon could easily exercise control on private respondent whenever they please.

The employment relationship established, the next question would have to be: What kind of an
employee is the private respondent - regular, casual or probationary?

We find private respondent to be a regular employee, for Article 280 of the Labor Code provides:

Regular and Casual employment. - The provisions of written agreement to the contrary notwithstanding
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the 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.
As can be gleaned from this provision, there are two kinds of regular employees, namely: (1) those who
are engaged to perform activities which are usually necessary or desirable in the usual business or trade
of the employer; and (2) those who have rendered at least one year of service, whether continuous or
broken, with respect to the activity in which they are employed. 19

Whichever standard is applied, private respondent qualifies as a regular employee. As aptly ruled by the
Labor Arbiter:

. . . As owner of many residential and apartment buildings in Metro Manila, the necessity of maintaining
and employing a permanent stay-in worker to perform carpentry, plumbing, electrical and necessary
work needed in the repairs of Tanjangco's properties is readily apparent and is in fact needed. So much
so that upon the demise of Doña Aurora Tanjangco, respondent's daughter Teresita Tanjangco-Quazon
apparently took over the administration of the properties and continued to employ complainant until
his outright dismissal on June 8, 1991. . . . 20

The jobs assigned to private respondent as maintenance man, carpenter, plumber, electrician and
mason were directly related to the business of petitioners as lessors of residential and apartment
buildings. Moreover, such a continuing need for his services by herein petitioners is sufficient evidence
of the necessity and indispensability of his services to petitioners' business or trade.

Private respondent Dagui should likewise be considered a regular employee by the mere fact that he
rendered service for the Tanjangcos for more than one year, that is, beginning 1953 until 1982, under
Doña Aurora; and then from 1982 up to June 8, 1991 under the petitioners, for a total of twenty-nine
(29) and nine (9) years respectively. Owing to private respondent's length of service, he became a
regular employee, by operation of law, one year after he was employed in 1953 and subsequently in
1982. In Baguio Country Club Corp., v. NLRC, 21 we decided that it is more in consonance with the intent
and spirit of the law to rule that the status of regular employment attaches to the casual employee on
the day immediately after the end of his first year of service. To rule otherwise is to impose a burden on
the employee which is not sanctioned by law. Thus, the law does not provide the qualification that the
employee must first be issued a regular appointment or must first be formally declared as such before
he can acquire a regular status.

Petitioners argue, however, that even assuming arguendo that private respondent can be considered an
employee, he cannot be classified as a regular employee. He was merely a project employee whose
services were hired only with respect to a specific job and only while the same exists, 22 thus falling
under the exception of Article 280, paragraph 1 of the Labor Code. Hence, it is claimed that he is not
entitled to the benefits prayed for and subsequently awarded by the Labor Arbiter as modified by public
respondent NLRC.

The circumstances of this case in light of settled case law do not, at all, support this averment.
Consonant with a string of cases beginning with Ochoco v. NLRC, 23 followed by Philippine National
Construction Corporation v. NLRC, 24 Magante v. NLRC, 25 and Capitol Industrial Construction
Corporation v. NLRC, 26 if truly, private respondent was employed as a "project employee," petitioners
should have submitted a report of termination to the nearest public employment office everytime his
employment is terminated due to completion of each project, as required by Policy Instruction No. 20,
which provides:

Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the number of
project in which they have been employed by a particular construction company. Moreover, the
company is not required to obtain a clearance from the Secretary of Labor in connection with such
termination. What is required of the company is a report to the nearest Public Employment Office for
statistical purposes.

Throughout the duration of private respondent's employment as maintenance man, there should have
been filed as many reports of termination as there were projects actually finished, if it were true that
private respondent was only a project worker. Failure of the petitioners to comply with this simple, but
nonetheless compulsory, requirement is proof that Dagui is not a project employee. 27

Coming now to the second issue as to whether or not private respondent Dagui was illegally dismissed,
we rule in the affirmative.

Jurisprudence abound as to the rule that the twin requirements of due process, substantive and
procedural, must be complied with, before a valid dismissal exists. 28 Without which the dismissal
becomes void. 29

The twin requirements of notice and hearing constitute the essential elements of due process. This
simply means that the employer shall afford the worker ample opportunity to be beard and to defend
himself with the assistance of his representative, if he so desires. 30 As held in the case of Pepsi Cola
Bottling Co. v. NLRC: 31

The law requires that the employer must furnish the worker sought to be dismissed with two written
notices before termination of employee can be legally effected: (1) notice which apprises the employee
of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which
informs the employee of the employer's decision to dismiss him (Section 13, BP 130; Sections, 2-6, Rule
XIV, Book V Rules and Regulations Implementing the Labor Code as amended), Failure to comply with
the requirements taints the dismissal with illegality. This procedure is mandatory; in the absence of
which, any judgment reached by management is void and inexistent. (Tingson, Jr. v. NLRC, 185 SCRA 498
[1990]; National Service Corporation v. NLRC, 168 SCRA 122 [1988]; Ruffy v. NLRC, 182 SCRA 365 [1990].

These mandatory requirements were undeniably absent in the case at bar. Petitioner Quazon dismissed
private respondent on June 8, 1991, without giving him any written notice informing the worker herein
of the cause for his termination. Neither was there any hearing conducted in order to give Dagui the
opportunity to be heard and defend himself. He was simply told: "Wala ka nang trabaho mula ngayon,"
allegedly because of poor workmanship on a previous job. 32 The undignified manner by which private
respondent's services were terminated smacks of absolute denial of the employee's right to due process
and betrays petitioner Quazon's utter lack of respect for labor. Such an attitude indeed deserves
condemnation.

The Court, however, is bewildered why only an award for separation pay in lieu of reinstatement was
made by both the Labor Arbiter and the NLRC. No backwages were awarded. It must be remembered
that backwages and reinstatement are two reliefs that should be given to an illegally dismissed
employee. They are separate and distinct from each other. In the event that reinstatement is no longer
possible, as in this case, 33 separation pay is awarded to the employee. The award of separation pay is
in lieu of reinstatement and not of backwages. In other words, an illegally dismissed employee is entitled
to (1) either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and (2)
backwages. 34 Payment of backwages is specifically designed to restore an employee's income that was
lost because of his unjust dismissal. 35 On the other hand, payment of separation pay is intended to
provide the employee money during the period in which he will be looking for another employment. 36

Considering, however, that the termination of private respondent Dagui was made on June 8, 1991 or
after the effectivity of the amendatory provision of Republic Act No. 6715 on March 21, 1989, private
respondent's backwages should be computed on the basis of said law.

It is true that private respondent did not appeal the award of the Labor Arbiter awarding separation pay
sans backwages. While as a general rule, a party who has not appealed is not entitled to affirmative
relief other than the ones granted in the decision of the court below, 37 law and jurisprudence authorize
a tribunal to consider errors, although unassigned, if they involve (1) errors affecting the lower court's
jurisdiction over the subject matter, (2) plain errors not specified, and (3) clerical errors. 38 In this case,
the failure of the Labor Arbiter and the public respondent NLRC to award backwages to the private
respondent, who is legally entitled thereto having been illegally dismissed, amounts to a "plain error"
which we may rectify in this petition, although private respondent Dagui did not bring any appeal
regarding the matter, in the interest of substantial justice. The Supreme Court is clothed with ample
authority to review matters, even if they are not assigned as errors on appeal, if it finds that their
consideration is necessary in arriving at a just decision of the case. 39 Rules of procedure are mere tools
designed to facilitate the attainment of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always be avoided. 40
Thus, substantive rights like the award of backwages resulting from illegal dismissal must not be
prejudiced by a rigid and technical application of the rules. 41

Petitioner Quazon argues that, granting the petitioner corporation should be held liable for the claims of
private respondent, she cannot be made jointly and severally liable with the corporation,
notwithstanding the fact that she is the highest ranking officer of the company, since Aurora Plaza has a
separate juridical personality.

We disagree.

In the cases of Maglutac v. National Labor Relations Commission, 42 Chua v. National Labor Relations
Commission, 43 and A.C. Ransom Labor Union-CCLU v. National Labor Relations Commission 44 we were
consistent in holding that the highest and most ranking officer of the corporation, which in this case is
petitioner Teresita Quazon as manager of Aurora Land Projects Corporation, can be held jointly and
severally liable with the corporation for the payment of the unpaid money claims of its employees who
were illegally dismissed. In this case, not only was Teresita Quazon the most ranking officer of Aurora
Plaza at the time of the termination of the private respondent, but worse, she had a direct hand in the
private respondent's illegal dismissal. A corporate officer is not personally liable for the money claims of
discharged corporate employees unless he acted with evident malice and bad faith in terminating their
employment. 45 Here, the failure of petitioner Quazon to observe the mandatory requirements of due
process in terminating the services of Dagui evinced malice and bad faith on her part, thus making her
liable.

Finally, we must address one last point. Petitioners aver that, assuming that private respondent can be
considered an employee of Aurora Plaza, petitioners cannot be held liable for separation pay for the
duration of his employment with Doña Aurora Tanjangco from 1953 up to 1982. If petitioners should be
held liable as employers, their liability for separation pay should only be counted from the time Dagui
was rehired by the petitioners in 1982 as a maintenance man.

We agree.

Petitioners' liability for separation pay ought to be reckoned from 1982 when petitioner Teresita
Quazon, as manager of Aurora Plaza, continued to employ private respondent. From 1953 up to the
death of Doña Aurora sometime in 1982, private respondent's claim for separation pay should have
been filed in the testate or intestate proceedings of Doña Aurora. This is because the demand for
separation pay covered by the years 1953-1982 is actually a money claim against the estate of Doña
Aurora, which claim did not survive the death of the old woman. Thus, it must be filed against her estate
in accordance with Section 5, Rule 86 of the Revised Rules of Court, to wit:

Sec. 5. Claims which must be filed under tire notice. If not filed, barred; exceptions. - All claims for
money against the decedent, arising from contract, express or implied, whether the same be due, not
due, or contingent, all claims for funeral expenses for the last sickness of the decedent, and judgment
for money against the decedent, must be filed within the time limited in the notice; otherwise they are
barred forever, except that they may be set forth as counterclaims in any action that the executor or
administrator may bring against the claimants. . . .

WHEREFORE, the instant petition is partly GRANTED and the Resolution of the public respondent
National Labor Relations Commission dated March 16, 1994 is hereby MODIFIED in that the award of
separation pay against the petitioners shall be reckoned from the date private respondent was re-
employed by the petitioners in 1982, until June 8, 1991. In addition to separation pay, full backwages
are likewise awarded to private respondent, inclusive of allowances, and other benefits or their
monetary equivalent pursuant to Article 279 46 of the Labor Code, as amended by Section 34 of
Republic Act No. 6715, computed from the time he was dismissed on June 8, 1991 up to the finality of
this decision, without deducting therefrom the earnings derived by private respondent elsewhere during
the period of his illegal dismissal, pursuant to our ruling in Osmalik Bustamante, et al. v. National Labor
Relations Commission. 47

No costs.

SO ORDERED.
G.R. NO. 186169 - August 1, 2012]

MYLENE CARVAJAL, Petitioner, v. LUZON DEVELOPMENT BANK AND/OR OSCAR Z. RAMIREZ,

Respondents.

DECISION

PEREZ, J.:

In this Petition for Review on Certiorari, petitioner Mylene Carvajal assails the Decision1 of the Court of
Appeals, Second Division, dated 20 August 2008 which dismissed her complaint for illegal dismissal. The
Court or Appeals reversed and set aside the Resolution2 of the National Labor Relations Commission
(NLRC) affirming with modification the Labor Arbiter s Decision3 finding petitioner s dismissal as illegal
and ordering reinstatement or payment of backwages and attorney s fees.ςηαñrοblεš νιr†υαl
lαω lιbrαrÿ

The facts are as follows:

chanrobles virtual law library

Petitioner Mylene Carvajal was employed as a trainee-teller by respondent Luzon Development Bank
(Bank) on 28 October 2003 under a six-month probationary employment contract, with a monthly salary
of P5,175.00. Respondent Oscar Ramirez is the President and Chief Executive Officer of the Bank.

On 10 December 2003, the Bank sent petitioner a Memorandum4 directing her to explain in writing why
she should not be subjected to disciplinary action for "chronic tardiness" on November 3, 5, 6, 14, 18,
20, 21 and 28 2003 or for a total of eight (8) times. Petitioner apologized in writing and explained that
she was in the process of making adjustments regarding her work and house chores.5 She was thus
reprimanded in writing and reminded of her status as a probationary employee.6 Still, on 6 January
2004, a second Memorandum was sent to petitioner directing her to explain why she should not be
suspended for "chronic tardiness" on 13 occasions or on December 2, 3, 4, 5, 8, 10, 11, 12, 15, 16, 18,
22, and 23 2003. On 7 January 2004, petitioner submitted her written explanation and manifested her
acceptance of the consequences of her actions.7 On 12 January 2004, petitioner was informed, through
a Memorandum,8 of her suspension for three (3) working days without pay effective 21 January 2004.
Finally, in a Memorandum dated 22 January 2004, petitioner s suspension was lifted but in the same
breath, her employment was terminated effective 23 January 2004.9ςrνll
Hence, petitioner s filing of the Complaint for illegal dismissal before the Labor Arbiter. Petitioner
alleged, in her position paper, that the following were the reasons for her termination: 1) she is not an
effective frontliner; 2) she has mistakenly cleared a check; 3) tardiness; 4) absenteeism; and 5)
shortage.10ςrνll

In their position paper, respondents averred that petitioner was terminated as a probationary employee
on three grounds, namely: 1) chronic tardiness; 2) unauthorized absence; and 3) failure to perform
satisfactorily as a probationary employee. Respondents explained that petitioner was a chronic violator
of the bank s rules and regulations on tardiness and absenteeism. Aside from her numerous tardiness,
petitioner was absent without leave for 2 days. She also cleared a check which later turned out to be a
bounced check. Finally, petitioner garnered only a rating of 2.17, with 4 being the highest and 1 the
lowest, in her performance evaluation.

On 9 June 2005, the Labor Arbiter ruled that petitioner was illegally dismissed. Respondents were held
solidarily liable for payment of money claims. The dispositive portion of the Decision
reads:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

WHEREFORE, premises considered, judgment is rendered declaring that complainant as probationary

employee was illegally dismissed. Respondents are ordered to immediately reinstate complainant to her
former position, without loss of any seniority rights and other monetary benefits. However, if
reinstatement is no longer feasible due to strained relationship between the parties, respondents are
further ordered to pay complainant, jointly and severally the amount of P20,070.38, representing full
backwages of complainant from the time of her illegal dismissal up to the end of her probationary
contract of employment with respondent bank. Plus, 10% of the monetary award as attorney s
fee.11ςrνll

chanrobles virtual law library

The Labor Arbiter found that petitioner was dismissed without due process because "she was not
afforded the notice in writing informing her of what respondent (the Bank) would like to bring out to her
for the latter to answer in writing." The Labor Arbiter also did not consider "unsatisfactory performance"
as a valid ground to shorten the six-month contract of petitioner with the Bank.12ςrνll

The decision of the Labor Arbiter was partially appealed to the NLRC by petitioner. Petitioner contended
that she should be considered a regular employee and that the computation by the Labor Arbiter of
backwages up to the end of her probationary contract is without basis. In its Comment, respondent
argued against the illegality of petitioner s dismissal and their joint and solidary liability to pay
complainant s monetary claims. On 31 May 2006, the NLRC affirmed with modification the Labor Arbiter
s Decision and ordered for petitioner s reinstatement, to wit:ςηαñrοblεš νιr†υαl lαω
lιbrαrÿ

WHEREFORE, premises considered, the assailed decision is hereby affirmed with MODIFICATION
ordering the respondents to reinstate the complainant to her former position, without loss of any
seniority rights and other monetary benefits and to pay her full backwages from the date of her
dismissal to the date of her reinstatement, actual or in payroll.

All other aspects of the assailed decision stands.13ςrνll

chanrobles virtual law library

Respondents filed a motion for reconsideration but the NLRC denied the same in a Resolution14 dated
20 July 2006.

In a Petition for Certiorari filed by respondents, the Court of Appeals rendered the 20 August 2008
Decision reversing the NLRC ruling, thus:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

IN VIEW OF ALL THE FOREGOING, the instant petition is GRANTED. The assailed NLRC Resolution in NLRC
CA No. 046866-05 dated May 31, 2006 which affirmed with modification the Decision of the Labor
Arbiter in NLRC Case No. RAB IV-2-18910-04-L dated June 9, 2005 is hereby REVERSED and SET ASIDE. All
monetary liabilities decreed in the Labor Arbiter s Decision against petitioners are hereby SET ASIDE. The
Complaint for illegal dismissal, money claims and damages is ORDERED DISMISSED.15ςrνll

chanrobles virtual law library

The Court of Appeals found that petitioner is not entitled to backwages because she was rightfully
dismissed for failure to meet the employment standards.

The motion for reconsideration filed by petitioner was likewise dismissed.

Petitioner elevated the case to this Court via Petition for Review on Certiorari, raising the following
errors allegedly committed by the Court of Appeals:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
THE HON. COURT OF APPEALS COMMITTED ERRORS IN LAW IN DECIDING THE ISSUE ON PETITIONER S
VALIDITY OF DISMISSAL DESPITE SUCH ISSUE HAD LONG BECOME FINAL AND EXECUTORY FOR FAILURE
OF PRIVATE RESPONDENT LUZON DEVELOPMENT BANK TO APPEAL THE DECISION OF THE LABOR
ARBITER FINDING PETITIONER S DISMISSAL ILLEGAL.

THE HON. COURT OF APPEALS COMMITTED ERROR IN LAW IN DECIDING ISSUES WHICH WERE NOT
RAISED BEFORE THE NLRC ON APPEAL.16ςrνll

chanrobles virtual law library

Petitioner harps on the finality of the Labor Arbiter s ruling on illegal dismissal and questions the
judgment of the Court of Appeals in discussing and upholding the validity of her dismissal.

Indeed, respondents did not assail the ruling of the Labor Arbiter. It was in fact petitioner who partially
appealed the Labor Arbiter s computation of backwages. Provided with the opportunity, respondents
assailed the Labor Arbiter s Decision in their Comment to the Partial

Appeal. Upon affirmance of the Labor Arbiter s Decision by the NLRC, respondent filed a petition for
certiorari with the Court of Appeals insisting on the validity of the dismissal.

Petitioner seeks to limit the issues to her employment status and backwages, her basis being that the
illegality of her dismissal has already been finally determined by the Labor Arbiter.

We disagree. As We noted, the facts show that the illegality of petitioner s dismissal was an issue that
was squarely before the NLRC. When the NLRC decision was reversed by the Court of Appeals, from
which the issue was elevated to us, we had a situation where "the findings of facts are conflicting." Thus,
we find applicable the rule that while generally, only questions of law can be raised in a Petition for
Review on Certiorari under Rule 45 of the Rules of Court, the rule admits of certain exceptions, namely:
(1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the
inference made is manifestly mistaken, absurd, or impossible; (3) when there is a grave abuse of
discretion; (4) when the judgment is based on misappreciation of facts; (5) when the findings of fact are
conflicting; (6) when in making its findings, the same are contrary to the admissions of both appellant
and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in
the petition as well as in the petitioner s main and reply briefs are not disputed by the respondent; and
(10) when the findings of fact are premised on the supposed absence of evidence and contradicted by
the evidence on record.17ςrνll
The petition comes within the purview of exception (5) and by analogy, exception (7). Hence, the Court
resolves to scour the records of this case.

Truly, it is axiomatic that an appeal, once accepted by this Court, throws the entire case open to review,
and that this Court has the authority to review matters not specifically raised or assigned as error by the
parties, if their consideration is necessary in arriving at a just resolution of the case.18ςrνll

Petitioner premised her appeal on Article 279 of the Labor Code which provides:ςηαñrοblεš νιrâ€
υαl lαω lιbrαrÿ

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 other monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.

chanrobles virtual law library

Petitioner maintained that she became a regular employee by virtue of Book VI, Rule 1, Section 6(d) of
the Implementing Rules of the Labor Code which states:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

(d) In all cases of probationary employment, the employer shall make known to the employee the
standards under which he will qualify as a regular employee at the time of his engagement. Where no
standards are made known to the employee at that time, he shall be deemed a regular employee.

chanrobles virtual law library

It is beyond dispute that petitioner was hired as a probationary employee. Whether her employment
status ripened into a regular one is the point of contention.

Under the very provision cited by petitioner, we cannot, by any hermeneutics, see petitioner s
employment status as regular. At the time of her engagement and as mandated by law, petitioner was
informed in writing of the standards necessary to qualify her as a regular employee. Her appointment
letter19 reads:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
Dear Ms. Carvajal:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

We are pleased to confirm your appointment as follows:

chanrobles virtual law library

Position : Trainee- Teller

Assignment : Main Branch

Status : Probationary (6 months)

Effectivity : October 28, 2003

Remuneration : P5,175.00 (262)

Possible extension of this contract will depend on the job requirements of the Bank and your overall
performance. Performance review will be conducted before possible renewal can take effect.

The Bank reserves the right to immediately terminate this contract in the event of a below satisfactory
performance, serious disregard of company rules and policies and other reasons critical to its interests.

Kindly sign below if the above conditions are acceptable. We look forward to a performance
commensurate to your presented capabilities.

Very truly yours,

[sgd]

Oscar S. Ramirez

Vice President

CONFORME:ςrαlαω

[sgd]

Mylene T. Carvajal [Emphasis Supplied]

chanrobles virtual law library

Petitioner knew, at the time of her engagement, that she must comply with the standards set forth by
respondent and perform satisfactorily in order to attain regular status. She was apprised of her
functions and duties as a trainee-teller. Respondent released to petitioner its evaluation20 of her
performance. Petitioner was found wanting. Even the NLRC upheld petitioner s probationary status,
thus:ςrαlαω

During the time that the complainant was dismissed by respondents, she was holding the position of a
trainee-teller on probationary status. Thus, with the Labor Arbiter s finding of illegal dismissal, which the
respondent left unchallenged, the complainant is entitled to be reinstated to resume the functions of a
trainee-teller, no more no less. Reinstatement is not synonymous with regularization. The determination
of whether the complainant can qualify to become one of respondent bank s regular employees is still
within the well recognized management s prerogative.21 [Emphasis Supplied]

A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of
probationary employment, aside from just or authorized causes of termination, an additional ground is
provided under Article 281 of the Labor Code, i.e., the probationary employee may also be terminated
for failure to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of the engagement. Thus, the services of an employee who has
been engaged on probationary basis may be terminated for any of the following: (1) a just or (2) an
authorized cause and (3) when he fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer.22ςrνll

It is evident that the primary cause of respondent s dismissal from her probationary employment was
her "chronic tardiness." At the very start of her employment, petitioner already exhibited poor working
habits. Even during her first month on the job, she already incurred eight (8) tardiness. In a
Memorandum dated 11 December 2003, petitioner was warned that her tardiness might affect her
opportunity to become a permanent or regular employee. And petitioner did not provide a satisfactory
explanation for the cause of her tardiness.

Punctuality is a reasonable standard imposed on every employee, whether in government or private

sector. As a matter of fact, habitual tardiness is a serious offense that may very well constitute gross or
habitual neglect of duty, a just cause to dismiss a regular employee. Assuming that petitioner was not
apprised of the standards concomitant to her job, it is but common sense that she must abide by the
work hours imposed by the bank. As we have aptly stated in Aberdeen Court, Inc. v. Agustin, Jr.,23 the
rule on reasonable standards made known to the employee prior to engagement should not be used to
exculpate a probationary employee who acts in a manner contrary to basic knowledge and common
sense, in regard to which there is no need to spell out a policy or standard to be met.
Respondent also cited other infractions such as unauthorized leaves of absence, mistake in clearing of a
check, and underperformance. All of these infractions were not refuted by petitioner. The Labor Arbiter
failed to discuss the veracity of these grounds. It focused on unsatisfactory performance and concluded
that such is not a sufficient ground to terminate the probationary employment. The Labor Arbiter relied
on its own misappreciation of facts for a finding that, resultingly, is contradicted by the evidence on
record.

More importantly, satisfactory performance is and should be one of the basic standards for
regularization. Naturally, before an employer hires an employee, the former can require the employee,
upon his engagement, to undergo a trial period during which the employer determines his fitness to
qualify for regular employment based on reasonable standards made known to him at the time of
engagement. This is the concept of probationary employment which is intended to afford the employer
an opportunity to observe the fitness of a probationary employee while at work, and to ascertain
whether he will become an efficient and productive employee. While the employer observes the fitness,
propriety and efficiency of a probationer to ascertain whether he is qualified for permanent
employment, the probationer, on the other hand, seeks to prove to the satisfaction of the employer that
he has the qualifications to meet the reasonable standards for permanent employment.24ςrνll

Moreover, in the letter of appointment, respondents reserved the right to "immediately terminate this
contract in the event of a below satisfactory performance, serious disregard of company rules and
policies and other reasons critical to its interests."

In finding for illegal dismissal, the Labor Arbiter held that the dismissal was without due process. We
hold otherwise. As elucidated by this Court in Philippine Daily Inquirer, Inc. v. Magtibay,
Jr.:25ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Unlike under the first ground for the valid termination of probationary employment which is for just
cause, the second ground failure to qualify in accordance with the standards prescribed by employer
does not require notice and hearing. Due process of law for this second ground consists of making the
reasonable standards expected of the employee during his probationary period known to him at the
time of his probationary employment. By the very nature of a probationary employment, the employee
knows from the very start that he will be under close observation and his performance of his assigned
duties and functions would be under continuous scrutiny by his superiors. It is in apprising him of the
standards against which his performance shall be continuously assessed where due process regarding
the second ground lies, and not in notice and hearing as in the case of the first ground.26ςrνll

chanrobles virtual law library

As we have underscored, respondent complied with the basic requirements of due process as defined in
Magtibay, Jr. Petitioner had more than sufficient knowledge of the standards her job entails.
Respondent had not been remiss in reminding petitioner, through memoranda, of the standards that
should be observed in aspiring for regularization.

Petitioner was even notified in two (2) memoranda regarding the bank s displeasure over her chronic
tardiness. Every memorandum directed petitioner to explain in writing why she should not be subjected
to disciplinary action. Each time, petitioner acknowledged her fault and assured the bank that she
would, in her daily schedules, make adjustments to make amends. This certainly is compliance with due
process. Taken together with her low performance rating and other infractions, petitioner was called by
the head of Human Resources who discussed with her the reasons for the discontinuance of her
probationary appointment before she was formally served the termination letter on that very same day.
There was, in this case, full accordance to petitioner of the opportunity to be heard.

In sum, petitioner was validly dismissed from probationary employment before the expiration of her 6-
montb probationary employment contract. If the termination is for cause, it may be done anytime
during the probation; the employer docs not have to wait until the probation period is over.27ςrνll

With a valid reason for petitioner's dismissal coupled with the proper observance of due process, the
claim for back wages must necessarily fail.

In view of the foregoing, we find no reason to disturb the findings and conclusions of the Court of
Appeals.

WHEREFORE, the petition is DENIED.

SO ORDERED.
G.R. No. 192571 July 23, 2013

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA T.

YABUTMISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR, Petitioners,

vs.

PEARLIE ANN F. ALCARAZ, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated December 10,2009 and
Resolution3 dated June 9, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 101045 which
pronounced that the National Labor Relations Commission (NLRC) did not gravely abuse its discretion
when it ruled that respondent Pearlie Ann F. Alcaraz (Alcaraz) was illegally dismissed from her
employment.

The Facts

On June 27, 2004, petitioner Abbott Laboratories, Philippines (Abbott) caused the publication in a major
broadsheet newspaper of its need for a Medical and Regulatory Affairs Manager (Regulatory Affairs
Manager) who would: (a) be responsible for drug safety surveillance operations, staffing, and budget;
(b) lead the development and implementation of standard operating procedures/policies for drug safety
surveillance and vigilance; and (c) act as the primary interface with internal and external customers
regarding safety operations and queries.4 Alcaraz - who was then a Regulatory Affairs and Information
Manager at Aventis Pasteur Philippines, Incorporated (another pharmaceutical company like Abbott) –
showed interest and submitted her application on October 4, 2004.5

On December 7, 2004, Abbott formally offered Alcaraz the abovementioned position which was an item
under the company’s Hospira Affiliate Local Surveillance Unit (ALSU) department.6 In Abbott’s offer
sheet.7 it was stated that Alcaraz was to be employed on a probationary basis.8 Later that day, she
accepted the said offer and received an electronic mail (e-mail) from Abbott’s Recruitment Officer,
petitioner Teresita C. Bernardo (Bernardo), confirming the same. Attached to Bernardo’s e-mail were
Abbott’s organizational chart and a job description of Alcaraz’s work.9
On February 12, 2005, Alcaraz signed an employment contract which stated, inter alia, that she was to
be placed on probation for a period of six (6) months beginning February 15, 2005 to August 14, 2005.
The said contract was also signed by Abbott’s General Manager, petitioner Edwin Feist (Feist):10

PROBATIONARY EMPLOYMENT

Dear Pearl,

After having successfully passed the pre-employment requirements, you are hereby appointed as
follows:

Position Title : Regulatory Affairs Manager

Department : Hospira

The terms of your employment are:

Nature of Employment : Probationary

Effectivity : February 15, 2005 to August 14, 2005

Basic Salary : ₱110,000.00/ month

It is understood that you agree to abide by all existing policies, rules and regulations of the company, as
well as those, which may be hereinafter promulgated.

Unless renewed, probationary appointment expires on the date indicated subject to earlier termination
by the Company for any justifiable reason.

If you agree to the terms and conditions of your employment, please signify your conformity below and
return a copy to HRD.
Welcome to Abbott!

Very truly yours,

Sgd.

EDWIN D. FEIST

General Manager

CONFORME:

Sgd.

PEARLIE ANN FERRER-ALCARAZ

During Alcaraz’s pre-employment orientation, petitioner Allan G. Almazar (Almazar), Hospira’s Country
Transition Manager, briefed her on her duties and responsibilities as Regulatory Affairs Manager, stating
that: (a) she will handle the staff of Hospira ALSU and will directly report to Almazar on matters
regarding Hopira’s local operations, operational budget, and performance evaluation of the Hospira
ALSU Staff who are on probationary status; (b) she must implement Abbott’s Code of Good Corporate
Conduct (Code of Conduct), office policies on human resources and finance, and ensure that Abbott will
hire people who are fit in the organizational discipline; (c) petitioner Kelly Walsh (Walsh), Manager of
the Literature Drug Surveillance Drug Safety of Hospira, will be her immediate supervisor; (d) she should
always coordinate with Abbott’s human resource officers in the management and discipline of the staff;
(e) Hospira ALSU will spin off from Abbott in early 2006 and will be officially incorporated and known as
Hospira, Philippines. In the interim, Hospira ALSU operations will still be under Abbott’s management,
excluding the technical aspects of the operations which is under the control and supervision of Walsh;
and (f) the processing of information and/or raw material data subject of Hospira ALSU operations will
be strictly confined and controlled under the computer system and network being maintained and
operated from the United States. For this purpose, all those involved in Hospira ALSU are required to
use two identification cards: one, to identify them as Abbott’s employees and another, to identify them
as Hospira employees.11

On March 3, 2005, petitioner Maria Olivia T. Yabut-Misa (Misa), Abbott’s Human Resources (HR)
Director, sent Alcaraz an e-mail which contained an explanation of the procedure for evaluating the
performance of probationary employees and further indicated that Abbott had only one evaluation
system for all of its employees. Alcaraz was also given copies of Abbott’s Code of Conduct and
Probationary Performance Standards and Evaluation (PPSE) and Performance Excellence Orientation
Modules (Performance Modules) which she had to apply in line with her task of evaluating the Hospira
ALSU staff.12

Abbott’s PPSE procedure mandates that the job performance of a probationary employee should be
formally reviewed and discussed with the employee at least twice: first on the third month and second
on the fifth month from the date of employment. The necessary Performance Improvement Plan should
also be made during the third-month review in case of a gap between the employee’s performance and
the standards set. These performance standards should be discussed in detail with the employee within
the first two (2) weeks on the job. It was equally required that a signed copy of the PPSE form must be
submitted to Abbott’s Human Resources Department (HRD) and shall serve as documentation of the
employee’s performance during his/her probationary period. This shall form the basis for
recommending the confirmation or termination of the probationary employment.13

During the course of her employment, Alcaraz noticed that some of the staff had disciplinary problems.
Thus, she would reprimand them for their unprofessional behavior such as non-observance of the dress
code, moonlighting, and disrespect of Abbott officers. However, Alcaraz’s method of management was
considered by Walsh to be "too strict."14 Alcaraz approached Misa to discuss these concerns and was
told to "lie low" and let Walsh handle the matter. Misa even assured her that Abbott’s HRD would
support her in all her management decisions.15

On April 12, 2005, Alcaraz received an e-mail from Misa requesting immediate action on the staff’s
performance evaluation as their probationary periods were about to end. This Alcaraz eventually
submitted.16

On April 20, 2005, Alcaraz had a meeting with petitioner Cecille Terrible (Terrible), Abbott’s former HR
Director, to discuss certain issues regarding staff performance standards. In the course thereof, Alcaraz
accidentally saw a printed copy of an e-mail sent by Walsh to some staff members which essentially
contained queries regarding the former’s job performance. Alcaraz asked if Walsh’s action was the
normal process of evaluation. Terrible said that it was not.17

On May 16, 2005, Alcaraz was called to a meeting with Walsh and Terrible where she was informed that
she failed to meet the regularization standards for the position of Regulatory Affairs Manager.18
Thereafter, Walsh and Terrible requested Alcaraz to tender her resignation, else they be forced to
terminate her services. She was also told that, regardless of her choice, she should no longer report for
work and was asked to surrender her office identification cards. She requested to be given one week to
decide on the same, but to no avail.19
On May 17, 2005, Alcaraz told her administrative assistant, Claude Gonzales (Gonzales), that she would
be on leave for that day. However, Gonzales told her that Walsh and Terrible already announced to the
whole Hospira ALSU staff that Alcaraz already resigned due to health reasons.20

On May 23, 2005, Walsh, Almazar, and Bernardo personally handed to Alcaraz a letter stating that her
services had been terminated effective May 19, 2005.21 The letter detailed the reasons for Alcaraz’s
termination – particularly, that Alcaraz: (a) did not manage her time effectively; (b) failed to gain the
trust of her staff and to build an effective rapport with them; (c) failed to train her staff effectively; and
(d) was not able to obtain the knowledge and ability to make sound judgments on case processing and
article review which were necessary for the proper performance of her duties.22 On May 27, 2005,
Alcaraz received another copy of the said termination letter via registered mail.23

Alcaraz felt that she was unjustly terminated from her employment and thus, filed a complaint for illegal
dismissal and damages against Abbott and its officers, namely, Misa, Bernardo, Almazar, Walsh, Terrible,
and Feist.24 She claimed that she should have already been considered as a regular and not a
probationary employee given Abbott’s failure to inform her of the reasonable standards for her
regularization upon her engagement as required under Article 29525 of the Labor Code. In this relation,
she contended that while her employment contract stated that she was to be engaged on a
probationary status, the same did not indicate the standards on which her regularization would be
based.26 She further averred that the individual petitioners maliciously connived to illegally dismiss her
when: (a) they threatened her with termination; (b) she was ordered not to enter company premises
even if she was still an employee thereof; and (c) they publicly announced that she already resigned in
order to humiliate her.27

On the contrary, petitioners maintained that Alcaraz was validly terminated from her probationary
employment given her failure to satisfy the prescribed standards for her regularization which were
made known to her at the time of her engagement.28

The LA Ruling

In a Decision dated March 30, 2006,29 the LA dismissed Alcaraz’s complaint for lack of merit.

The LA rejected Alcaraz’s argument that she was not informed of the reasonable standards to qualify as
a regular employee considering her admissions that she was briefed by Almazar on her work during her
pre-employment orientation meeting30 and that she received copies of Abbott’s Code of Conduct and
Performance Modules which were used for evaluating all types of Abbott employees.31 As Alcaraz was
unable to meet the standards set by Abbott as per her performance evaluation, the LA ruled that the
termination of her probationary employment was justified.32 Lastly, the LA found that there was no
evidence to conclude that Abbott’s officers and employees acted in bad faith in terminating Alcaraz’s
employment.33

Displeased with the LA’s ruling, Alcaraz filed an appeal with the National Labor Relations Commission
(NLRC).

The NLRC Ruling

On September 15, 2006, the NLRC rendered a Decision,34 annulling and setting aside the LA’s ruling, the
dispositive portion of which reads:

WHEREFORE, the Decision of the Labor Arbiter dated 31 March 2006 [sic] is hereby reversed, annulled
and set aside and judgment is hereby rendered:

1. Finding respondents Abbot [sic] and individual respondents to have committed illegal dismissal;

2. Respondents are ordered to immediately reinstate complainant to her former position without loss of
seniority rights immediately upon receipt hereof;

3. To jointly and severally pay complainant backwages computed from 16 May 2005 until finality of this
decision. As of the date hereof the backwages is computed at

a. Backwages for 15 months - PhP 1,650,000.00

b. 13th month pay - 110,000.00

TOTAL PhP 1,760,000.00

4. Respondents are ordered to pay complainant moral damages of ₱50,000.00 and exemplary damages
of ₱50,000.00.

5. Respondents are also ordered to pay attorney’s fees of 10% of the total award.
6. All other claims are dismissed for lack of merit.

SO ORDERED.35

The NLRC reversed the findings of the LA and ruled that there was no evidence showing that Alcaraz had
been apprised of her probationary status and the requirements which she should have complied with in
order to be a regular employee.36 It held that Alcaraz’s receipt of her job description and Abbott’s Code
of Conduct and Performance Modules was not equivalent to her being actually informed of the
performance standards upon which she should have been evaluated on.37 It further observed that
Abbott did not comply with its own standard operating procedure in evaluating probationary
employees.38 The NLRC was also not convinced that Alcaraz was terminated for a valid cause given that
petitioners’ allegation of Alcaraz’s "poor performance" remained unsubstantiated.39

Petitioners filed a motion for reconsideration which was denied by the NLRC in a Resolution dated July
31, 2007.40

Aggrieved, petitioners filed with the CA a Petition for Certiorari with Prayer for Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction, docketed as CA G.R. SP No. 101045 (First CA
Petition), alleging grave abuse of discretion on the part of NLRC when it ruled that Alcaraz was illegally
dismissed.41

Pending resolution of the First CA Petition, Alcaraz moved for the execution of the NLRC’s Decision
before the LA, which petitioners strongly opposed. The LA denied the said motion in an Order dated July
8, 2008 which was, however, eventually reversed on appeal by the NLRC.42 Due to the foregoing,
petitioners filed another Petition for Certiorari with the CA, docketed as CA G.R. SP No. 111318 (Second
CA Petition), assailing the propriety of the execution of the NLRC decision.43

The CA Ruling

With regard to the First CA Petition, the CA, in a Decision44 dated December 10, 2009, affirmed the
ruling of the NLRC and held that the latter did not commit any grave abuse of discretion in finding that
Alcaraz was illegally dismissed.

It observed that Alcaraz was not apprised at the start of her employment of the reasonable standards
under which she could qualify as a regular employee.45 This was based on its examination of the
employment contract which showed that the same did not contain any standard of performance or any
stipulation that Alcaraz shall undergo a performance evaluation before she could qualify as a regular
employee.46 It also found that Abbott was unable to prove that there was any reasonable ground to
terminate Alcaraz’s employment.47 Abbott moved for the reconsideration of the aforementioned ruling
which was, however, denied by the CA in a Resolution48 dated June 9, 2010.

The CA likewise denied the Second CA Petition in a Resolution dated May 18, 2010 (May 18, 2010
Resolution) and ruled that the NLRC was correct in upholding the execution of the NLRC Decision.49
Thus, petitioners filed a motion for reconsideration.

While the petitioners’ motion for reconsideration of the CA’s May 18, 2010 Resolution was pending,
Alcaraz again moved for the issuance of a writ of execution before the LA. On June 7, 2010, petitioners
received the LA’s order granting Alcaraz’s motion for execution which they in turn appealed to the NLRC
– through a Memorandum of Appeal dated June 16, 2010 (June 16, 2010 Memorandum of Appeal ) – on
the ground that the implementation of the LA’s order would render its motion for reconsideration moot
and academic.50

Meanwhile, petitioners’ motion for reconsideration of the CA’s May 18, 2010 Resolution in the Second
CA Petition was denied via a Resolution dated October 4, 2010.51 This attained finality on January 10,
2011 for petitioners’ failure to timely appeal the same.52 Hence, as it stands, only the issues in the First
CA petition are left to be resolved.

Incidentally, in her Comment dated November 15, 2010, Alcaraz also alleges that petitioners were guilty
of forum shopping when they filed the Second CA Petition pending the resolution of their motion for
reconsideration of the CA’s December 10, 2009 Decision i.e., the decision in the First CA Petition.53 She
also contends that petitioners have not complied with the certification requirement under Section 5,
Rule 7 of the Rules of Court when they failed to disclose in the instant petition the filing of the June 16,
2010 Memorandum of Appeal filed before the NLRC.54

The Issues Before the Court

The following issues have been raised for the Court’s resolution: (a) whether or not petitioners are guilty
of forum shopping and have violated the certification requirement under Section 5, Rule 7 of the Rules
of Court; (b) whether or not Alcaraz was sufficiently informed of the reasonable standards to qualify her
as a regular employee; (c) whether or not Alcaraz was validly terminated from her employment; and (d)
whether or not the individual petitioners herein are liable.
The Court’s Ruling

A. Forum Shopping and

Violation of Section 5, Rule 7

of the Rules of Court.

At the outset, it is noteworthy to mention that the prohibition against forum shopping is different from
a violation of the certification requirement under Section 5, Rule 7 of the Rules of Court. In Sps. Ong v.
CA,55 the Court explained that:

x x x The distinction between the prohibition against forum shopping and the certification requirement
should by now be too elementary to be misunderstood. To reiterate, compliance with the certification
against forum shopping is separate from and independent of the avoidance of the act of forum shopping
itself. There is a difference in the treatment between failure to comply with the certification
requirement and violation of the prohibition against forum shopping not only in terms of imposable
sanctions but also in the manner of enforcing them. The former constitutes sufficient cause for the
dismissal without prejudice to the filing of the complaint or initiatory pleading upon motion and after
hearing, while the latter is a ground for summary dismissal thereof and for direct contempt. x x x. 56

As to the first, forum shopping takes place when a litigant files multiple suits involving the same parties,
either simultaneously or successively, to secure a favorable judgment. It exists where the elements of
litis pendentia are present, namely: (a) identity of parties, or at least such parties who represent the
same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being
founded on the same facts; and (c) the identity with respect to the two preceding particulars in the two
(2) cases is such that any judgment that may be rendered in the pending case, regardless of which party
is successful, would amount to res judicata in the other case.57

In this case, records show that, except for the element of identity of parties, the elements of forum
shopping do not exist. Evidently, the First CA Petition was instituted to question the ruling of the NLRC
that Alcaraz was illegally dismissed. On the other hand, the Second CA Petition pertains to the propriety
of the enforcement of the judgment award pending the resolution of the First CA Petition and the
finality of the decision in the labor dispute between Alcaraz and the petitioners. Based on the foregoing,
a judgment in the Second CA Petition will not constitute res judicata insofar as the First CA Petition is
concerned. Thus, considering that the two petitions clearly cover different subject matters and causes of
action, there exists no forum shopping.
As to the second, Alcaraz further imputes that the petitioners violated the certification requirement
under Section 5, Rule 7 of the Rules of Court58 by not disclosing the fact that it filed the June 16, 2010
Memorandum of Appeal before the NLRC in the instant petition.

In this regard, Section 5(b), Rule 7 of the Rules of Court requires that a plaintiff who files a case should
provide a complete statement of the present status of any pending case if the latter involves the same
issues as the one that was filed. If there is no such similar pending case, Section 5(a) of the same rule
provides that the plaintiff is obliged to declare under oath that to the best of his knowledge, no such
other action or claim is pending.

Records show that the issues raised in the instant petition and those in the June 16, 2010 Memorandum
of Appeal filed with the NLRC likewise cover different subject matters and causes of action. In this case,
the validity of Alcaraz’s dismissal is at issue whereas in the said Memorandum of Appeal, the propriety
of the issuance of a writ of execution was in question.

Thus, given the dissimilar issues, petitioners did not have to disclose in the present petition the filing of
their June 16, 2010 Memorandum of Appeal with the NLRC. In any event, considering that the issue on
the propriety of the issuance of a writ of execution had been resolved in the Second CA Petition – which
in fact had already attained finality – the matter of disclosing the June 16, 2010 Memorandum of Appeal
is now moot and academic.

Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive
issues.

B. Probationary employment;

grounds for termination.

A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of
probationary employment, aside from just or authorized causes of termination, an additional ground is
provided under Article 295 of the Labor Code, i.e., the probationary employee may also be terminated
for failure to qualify as a regular employee in accordance with the reasonable standards made known by
the employer to the employee at the time of the engagement.59 Thus, the services of an employee who
has been engaged on probationary basis may be terminated for any of the following: (a) a just or (b) an
authorized cause; and (c) when he fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer.60
Corollary thereto, Section 6(d), Rule I, Book VI of the Implementing Rules of the Labor Code provides
that if the employer fails to inform the probationary employee of the reasonable standards upon which
the regularization would be based on at the time of the engagement, then the said employee shall be
deemed a regular employee, viz.:

(d) In all cases of probationary employment, the employer shall make known to the employee the
standards under which he will qualify as a regular employee at the time of his engagement. Where no
standards are made known to the employee at that time, he shall be deemed a regular employee.

In other words, the employer is made to comply with two (2) requirements when dealing with a
probationary employee: first, the employer must communicate the regularization standards to the
probationary employee; and second, the employer must make such communication at the time of the
probationary employee’s engagement. If the employer fails to comply with either, the employee is
deemed as a regular and not a probationary employee.

Keeping with these rules, an employer is deemed to have made known the standards that would qualify
a probationary employee to be a regular employee when it has exerted reasonable efforts to apprise the
employee of what he is expected to do or accomplish during the trial period of probation. This goes
without saying that the employee is sufficiently made aware of his probationary status as well as the
length of time of the probation.

The exception to the foregoing is when the job is self-descriptive in nature, for instance, in the case of
maids, cooks, drivers, or messengers.61 Also, in Aberdeen Court, Inc. v. Agustin,62 it has been held that
the rule on notifying a probationary employee of the standards of regularization should not be used to
exculpate an employee who acts in a manner contrary to basic knowledge and common sense in regard
to which there is no need to spell out a policy or standard to be met. In the same light, an employee’s
failure to perform the duties and responsibilities which have been clearly made known to him
constitutes a justifiable basis for a probationary employee’s non-regularization.

In this case, petitioners contend that Alcaraz was terminated because she failed to qualify as a regular
employee according to Abbott’s standards which were made known to her at the time of her
engagement. Contrarily, Alcaraz claims that Abbott never apprised her of these standards and thus,
maintains that she is a regular and not a mere probationary employee.

The Court finds petitioners’ assertions to be well-taken.

A punctilious examination of the records reveals that Abbott had indeed complied with the above-stated
requirements. This conclusion is largely impelled by the fact that Abbott clearly conveyed to Alcaraz her
duties and responsibilities as Regulatory Affairs Manager prior to, during the time of her engagement,
and the incipient stages of her employment. On this score, the Court finds it apt to detail not only the
incidents which point out to the efforts made by Abbott but also those circumstances which would show
that Alcaraz was well-apprised of her employer’s expectations that would, in turn, determine her
regularization:

(a) On June 27, 2004, Abbott caused the publication in a major broadsheet newspaper of its need for a
Regulatory Affairs Manager, indicating therein the job description for as well as the duties and
responsibilities attendant to the aforesaid position; this prompted Alcaraz to submit her application to
Abbott on October 4, 2004;

(b) In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz was to be employed on a
probationary status;

(c) On February 12, 2005, Alcaraz signed an employment contract which specifically stated, inter alia,
that she was to be placed on probation for a period of six (6) months beginning February 15, 2005 to
August 14, 2005;

(d) On the day Alcaraz accepted Abbott’s employment offer, Bernardo sent her copies of Abbott’s
organizational structure and her job description through e-mail;

(e) Alcaraz was made to undergo a pre-employment orientation where Almazar informed her that she
had to implement Abbott’s Code of Conduct and office policies on human resources and finance and
that she would be reporting directly to Walsh;

(f) Alcaraz was also required to undergo a training program as part of her orientation;

(g) Alcaraz received copies of Abbott’s Code of Conduct and Performance Modules from Misa who
explained to her the procedure for evaluating the performance of probationary employees; she was
further notified that Abbott had only one evaluation system for all of its employees; and

(h) Moreover, Alcaraz had previously worked for another pharmaceutical company and had admitted to
have an "extensive training and background" to acquire the necessary skills for her job.63
Considering the totality of the above-stated circumstances, it cannot, therefore, be doubted that Alcaraz
was well-aware that her regularization would depend on her ability and capacity to fulfill the
requirements of her position as Regulatory Affairs Manager and that her failure to perform such would
give Abbott a valid cause to terminate her probationary employment.

Verily, basic knowledge and common sense dictate that the adequate performance of one’s duties is, by
and of itself, an inherent and implied standard for a probationary employee to be regularized; such is a
regularization standard which need not be literally spelled out or mapped into technical indicators in
every case. In this regard, it must be observed that the assessment of adequate duty performance is in
the nature of a management prerogative which when reasonably exercised – as Abbott did in this case –
should be respected. This is especially true of a managerial employee like Alcaraz who was tasked with
the vital responsibility of handling the personnel and important matters of her department.

In fine, the Court rules that Alcaraz’s status as a probationary employee and her consequent dismissal
must stand. Consequently, in holding that Alcaraz was illegally dismissed due to her status as a regular
and not a probationary employee, the Court finds that the NLRC committed a grave abuse of discretion.

To elucidate, records show that the NLRC based its decision on the premise that Alcaraz’s receipt of her
job description and Abbott’s Code of Conduct and Performance Modules was not equivalent to being
actually informed of the performance standards upon which she should have been evaluated on.64 It,
however, overlooked the legal implication of the other attendant circumstances as detailed herein
which should have warranted a contrary finding that Alcaraz was indeed a probationary and not a
regular employee – more particularly the fact that she was well-aware of her duties and responsibilities
and that her failure to adequately perform the same would lead to her non-regularization and
eventually, her termination.

Accordingly, by affirming the NLRC’s pronouncement which is tainted with grave abuse of discretion, the
CA committed a reversible error which, perforce, necessitates the reversal of its decision.

C. Probationary employment;

termination procedure.

A different procedure is applied when terminating a probationary employee; the usual two-notice rule
does not govern.65 Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code states that "if
the termination is brought about by the x x x failure of an employee to meet the standards of the
employer in case of probationary employment, it shall be sufficient that a written notice is served the
employee, within a reasonable time from the effective date of termination."

As the records show, Alcaraz's dismissal was effected through a letter dated May 19, 2005 which she
received on May 23, 2005 and again on May 27, 2005. Stated therein were the reasons for her
termination, i.e., that after proper evaluation, Abbott determined that she failed to meet the reasonable
standards for her regularization considering her lack of time and people management and decision-
making skills, which are necessary in the performance of her functions as Regulatory Affairs Manager.66
Undeniably, this written notice sufficiently meets the criteria set forth above, thereby legitimizing the
cause and manner of Alcaraz’s dismissal as a probationary employee under the parameters set by the
Labor Code.67

D. Employer’s violation of

company policy and

procedure.

Nonetheless, despite the existence of a sufficient ground to terminate Alcaraz’s employment and
Abbott’s compliance with the Labor Code termination procedure, it is readily apparent that Abbott
breached its contractual obligation to Alcaraz when it failed to abide by its own procedure in evaluating
the performance of a probationary employee.

Veritably, a company policy partakes of the nature of an implied contract between the employer and
employee. In Parts Depot, Inc. v. Beiswenger,68 it has been held that:

Employer statements of policy . . . can give rise to contractual rights in employees without evidence that
the parties mutually agreed that the policy statements would create contractual rights in the employee,
and, hence, although the statement of policy is signed by neither party, can be unilaterally amended by
the employer without notice to the employee, and contains no reference to a specific employee, his job
description or compensation, and although no reference was made to the policy statement in pre-
employment interviews and the employee does not learn of its existence until after his hiring. Toussaint,
292 N.W .2d at 892. The principle is akin to estoppel. Once an employer establishes an express
personnel policy and the employee continues to work while the policy remains in effect, the policy is
deemed an implied contract for so long as it remains in effect. If the employer unilaterally changes the
policy, the terms of the implied contract are also thereby changed.1âwphi1 (Emphasis and underscoring
supplied.)
Hence, given such nature, company personnel policies create an obligation on the part of both the
employee and the employer to abide by the same.

Records show that Abbott’s PPSE procedure mandates, inter alia, that the job performance of a
probationary employee should be formally reviewed and discussed with the employee at least twice:
first on the third month and second on the fifth month from the date of employment. Abbott is also
required to come up with a Performance Improvement Plan during the third month review to bridge the
gap between the employee’s performance and the standards set, if any.69 In addition, a signed copy of
the PPSE form should be submitted to Abbott’s HRD as the same would serve as basis for recommending
the confirmation or termination of the probationary employment.70

In this case, it is apparent that Abbott failed to follow the above-stated procedure in evaluating Alcaraz.
For one, there lies a hiatus of evidence that a signed copy of Alcaraz’s PPSE form was submitted to the
HRD. It was not even shown that a PPSE form was completed to formally assess her performance.
Neither was the performance evaluation discussed with her during the third and fifth months of her
employment. Nor did Abbott come up with the necessary Performance Improvement Plan to properly
gauge Alcaraz’s performance with the set company standards.

While it is Abbott’s management prerogative to promulgate its own company rules and even
subsequently amend them, this right equally demands that when it does create its own policies and
thereafter notify its employee of the same, it accords upon itself the obligation to faithfully implement
them. Indeed, a contrary interpretation would entail a disharmonious relationship in the work place for
the laborer should never be mired by the uncertainty of flimsy rules in which the latter’s labor rights and
duties would, to some extent, depend.

In this light, while there lies due cause to terminate Alcaraz’s probationary employment for her failure to
meet the standards required for her regularization, and while it must be further pointed out that Abbott
had satisfied its statutory duty to serve a written notice of termination, the fact that it violated its own
company procedure renders the termination of Alcaraz’s employment procedurally infirm, warranting
the payment of nominal damages. A further exposition is apropos.

Case law has settled that an employer who terminates an employee for a valid cause but does so
through invalid procedure is liable to pay the latter nominal damages.

In Agabon v. NLRC (Agabon),71 the Court pronounced that where the dismissal is for a just cause, the
lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However,
the employer should indemnify the employee for the violation of his statutory rights.72 Thus, in Agabon,
the employer was ordered to pay the employee nominal damages in the amount of ₱30,000.00.73
Proceeding from the same ratio, the Court modified Agabon in the case of Jaka Food Processing
Corporation v. Pacot (Jaka)74 where it created a distinction between procedurally defective dismissals
due to a just cause, on one hand, and those due to an authorized cause, on the other.

It was explained that if the dismissal is based on a just cause under Article 282 of the Labor Code (now
Article 296) but the employer failed to comply with the notice requirement, the sanction to be imposed
upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable
to the employee; if the dismissal is based on an authorized cause under Article 283 (now Article 297) but
the employer failed to comply with the notice requirement, the sanction should be stiffer because the
dismissal process was initiated by the employer’s exercise of his management prerogative.75 Hence, in
Jaka, where the employee was dismissed for an authorized cause of retrenchment76 – as
contradistinguished from the employee in Agabon who was dismissed for a just cause of neglect of
duty77 – the Court ordered the employer to pay the employee nominal damages at the higher amount
of ₱50,000.00.

Evidently, the sanctions imposed in both Agabon and Jaka proceed from the necessity to deter
employers from future violations of the statutory due process rights of employees.78 In similar regard,
the Court deems it proper to apply the same principle to the case at bar for the reason that an
employer’s contractual breach of its own company procedure – albeit not statutory in source – has the
parallel effect of violating the laborer’s rights. Suffice it to state, the contract is the law between the
parties and thus, breaches of the same impel recompense to vindicate a right that has been violated.
Consequently, while the Court is wont to uphold the dismissal of Alcaraz because a valid cause exists,
the payment of nominal damages on account of Abbott’s contractual breach is warranted in accordance
with Article 2221 of the Civil Code.79

Anent the proper amount of damages to be awarded, the Court observes that Alcaraz’s dismissal
proceeded from her failure to comply with the standards required for her regularization. As such, it is
undeniable that the dismissal process was, in effect, initiated by an act imputable to the employee, akin
to dismissals due to just causes under Article 296 of the Labor Code. Therefore, the Court deems it
appropriate to fix the amount of nominal damages at the amount of ₱30,000.00, consistent with its
rulings in both Agabon and Jaka.

E. Liability of individual

petitioners as corporate

officers.
It is hornbook principle that personal liability of corporate directors, trustees or officers attaches only
when: (a) they assent to a patently unlawful act of the corporation, or when they are guilty of bad faith
or gross negligence in directing its affairs, or when there is a conflict of interest resulting in damages to
the corporation, its stockholders or other persons; (b) they consent to the issuance of watered down
stocks or when, having knowledge of such issuance, do not forthwith file with the corporate secretary
their written objection; (c) they agree to hold themselves personally and solidarily liable with the
corporation; or (d) they are made by specific provision of law personally answerable for their corporate
action.80

In this case, Alcaraz alleges that the individual petitioners acted in bad faith with regard to the supposed
crude manner by which her probationary employment was terminated and thus, should be held liable
together with Abbott. In the same vein, she further attributes the loss of some of her remaining
belongings to them.81

Alcaraz’s contention fails to persuade.

A judicious perusal of the records show that other than her unfounded assertions on the matter, there is
no evidence to support the fact that the individual petitioners herein, in their capacity as Abbott’s
officers and employees, acted in bad faith or were motivated by ill will in terminating

Alcaraz’s services. The fact that Alcaraz was made to resign and not allowed to enter the workplace does
not necessarily indicate bad faith on Abbott’s part since a sufficient ground existed for the latter to
actually proceed with her termination. On the alleged loss of her personal belongings, records are bereft
of any showing that the same could be attributed to Abbott or any of its officers. It is a well-settled rule
that bad faith cannot be presumed and he who alleges bad faith has the onus of proving it. All told, since
Alcaraz failed to prove any malicious act on the part of Abbott or any of its officers, the Court finds the
award of moral or exemplary damages unwarranted.

WHEREFORE, the petition is GRANTED. The Decision dated December 10, 2009 and Resolution dated
June 9, 2010 of the Court of Appeals in CA-G.R. SP No. 101045 are hereby REVERSED and SET ASIDE.
Accordingly, the Decision dated March 30, 2006 of the Labor Arbiter is REINSTATED with the
MODIFICATION that petitioner Abbott Laboratories, Philippines be ORDERED to pay respondent Pearlie
Ann F. Alcaraz nominal damages in the amount of ₱30,000.00 on account of its breach of its own
company procedure.

SO ORDERED.
G.R. No. 185829 April 25, 2012

ARMANDO ALILING, Petitioner,

vs.

JOSE B. FELICIANO, MANUEL F. SAN MATEO III, JOSEPH R. LARIOSA, and WIDE WIDE WORLD EXPRESS
CORPORATION, Respondents.

DECISION

VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 45 assails and seeks to set aside the July 3, 2008
Decision1 and December 15, 2008 Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No. 101309,
entitled Armando Aliling v. National Labor Relations Commission, Wide Wide World Express
Corporation, Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa. The assailed issuances
modified the Resolutions dated May 31, 20073 and August 31, 20074 rendered by the National Labor
Relations Commission (NLRC) in NLRC NCR Case No. 00-10-11166-2004, affirming the Decision dated
April 25, 20065 of the Labor Arbiter.

The Facts

Via a letter dated June 2, 2004,6 respondent Wide Wide World Express Corporation (WWWEC) offered
to employ petitioner Armando Aliling (Aliling) as "Account Executive (Seafreight Sales)," with the
following compensation package: a monthly salary of PhP 13,000, transportation allowance of PhP
3,000, clothing allowance of PhP 800, cost of living allowance of PhP 500, each payable on a per month
basis and a 14th month pay depending on the profitability and availability of financial resources of the
company. The offer came with a six (6)-month probation period condition with this express caveat:
"Performance during [sic] probationary period shall be made as basis for confirmation to Regular or
Permanent Status."

On June 11, 2004, Aliling and WWWEC inked an Employment Contract7 under the following terms,
among others:
Conversion to regular status shall be determined on the basis of work performance; and

Employment services may, at any time, be terminated for just cause or in accordance with the standards
defined at the time of engagement.8

Training then started. However, instead of a Seafreight Sale assignment, WWWEC asked Aliling to
handle Ground Express (GX), a new company product launched on June 18, 2004 involving domestic
cargo forwarding service for Luzon. Marketing this product and finding daily contracts for it formed the
core of Aliling’s new assignment.

Barely a month after, Manuel F. San Mateo III (San Mateo), WWWEC Sales and Marketing Director,
emailed Aliling9 to express dissatisfaction with the latter’s performance, thus:

Armand,

My expectations is [sic] that GX Shuttles should be 80% full by the 3rd week (August 5) after launch (July
15). Pls. make that happen. It has been more than a month since you came in. I am expecting sales to be
pumping in by now. Thanks.

Nonong

Thereafter, in a letter of September 25, 2004,10 Joseph R. Lariosa (Lariosa), Human Resources Manager
of WWWEC, asked Aliling to report to the Human Resources Department to explain his absence taken
without leave from September 20, 2004.

Aliling responded two days later. He denied being absent on the days in question, attaching to his reply-
letter11 a copy of his timesheet12 which showed that he worked from September 20 to 24, 2004.
Aliling’s explanation came with a query regarding the withholding of his salary corresponding to
September 11 to 25, 2004.

In a separate letter dated September 27, 2004,13 Aliling wrote San Mateo stating: "Pursuant to your
instruction on September 20, 2004, I hereby tender my resignation effective October 15, 2004." While
WWWEC took no action on his tender, Aliling nonetheless demanded reinstatement and a written
apology, claiming in a subsequent letter dated October 1, 200414 to management that San Mateo had
forced him to resign.
Lariosa’s response-letter of October 1, 2004,15 informed Aliling that his case was still in the process of
being evaluated. On October 6, 2004,16 Lariosa again wrote, this time to advise Aliling of the
termination of his services effective as of that date owing to his "non-satisfactory performance" during
his probationary period. Records show that Aliling, for the period indicated, was paid his outstanding
salary which consisted of:

PhP 4,988.18 (salary for the September 25, 2004 payroll)

1,987.28 (salary for 4 days in October 2004)

------------------

PhP 6,975.46 Total

Earlier, however, or on October 4, 2004, Aliling filed a Complaint17 for illegal dismissal due to forced
resignation, nonpayment of salaries as well as damages with the NLRC against WWWEC. Appended to
the complaint was Aliling’s Affidavit dated November 12, 2004,18 in which he stated: "5. At the time of
my engagement, respondents did not make known to me the standards under which I will qualify as a
regular employee."

Refuting Aliling’s basic posture, WWWEC stated in its Position Paper dated November 22, 200419 that,
in addition to the letter-offer and employment contract adverted to, WWWEC and Aliling have signed a
letter of appointment20 on June 11, 2004 containing the following terms of engagement:

Additionally, upon the effectivity of your probation, you and your immediate superior are required to
jointly define your objectives compared with the job requirements of the position. Based on the pre-
agreed objectives, your performance shall be reviewed on the 3rd month to assess your competence
and work attitude. The 5th month Performance Appraisal shall be the basis in elevating or confirming
your employment status from Probationary to Regular.

Failure to meet the job requirements during the probation stage means that your services may be
terminated without prior notice and without recourse to separation pay.

WWWEC also attached to its Position Paper a memo dated September 20, 200421 in which San Mateo
asked Aliling to explain why he should not be terminated for failure to meet the expected job
performance, considering that the load factor for the GX Shuttles for the period July to September was
only 0.18% as opposed to the allegedly agreed upon load of 80% targeted for August 5, 2004. According
to WWWEC, Aliling, instead of explaining himself, simply submitted a resignation letter.
In a Reply-Affidavit dated December 13, 2004,22 Aliling denied having received a copy of San Mateo’s
September 20, 2004 letter.

Issues having been joined, the Labor Arbiter issued on April 25, 200623 a Decision declaring Aliling’s
termination as unjustified. In its pertinent parts, the decision reads:

The grounds upon which complainant’s dismissal was based did not conform not only the standard but
also the compliance required under Article 281 of the Labor Code, Necessarily, complainant’s
termination is not justified for failure to comply with the mandate the law requires. Respondents should
be ordered to pay salaries corresponding to the unexpired portion of the contract of employment and
all other benefits amounting to a total of THIRTY FIVE THOUSAND EIGHT HUNDRED ELEVEN PESOS
(P35,811.00) covering the period from October 6 to December 7, 2004, computed as follows:

Unexpired Portion of the Contract:

Basic Salary P13,000.00

Transportation 3,000.00

Clothing Allowance 800.00

ECOLA 500.00

-----------------

P17,300.00

10/06/04 – 12/07/04

P17,300.00 x 2.7 mos. = P35,811.00

Complainant’s 13th month pay proportionately for 2004 was not shown to have been paid to
complainant, respondent be made liable to him therefore computed at SIX THOUSAND FIVE HUNDRED
THIRTY TWO PESOS AND 50/100 (P6,532.50).

For engaging the services of counsel to protect his interest, complainant is likewise entitled to a 10%
attorney’s fees of the judgment amount. Such other claims for lack of basis sufficient to support for their
grant are unwarranted.
WHEREFORE, judgment is hereby rendered ordering respondent company to pay complainant Armando
Aliling the sum of THIRTY FIVE THOUSAND EIGHT HUNDRED ELEVEN PESOS (P35,811.00) representing
his salaries and other benefits as discussed above.

Respondent company is likewise ordered to pay said complainant the amount of TEN THOUSAND SEVEN
HUNDRED SIXTY SIX PESOS AND 85/100 ONLY (10.766.85) representing his proportionate 13th month
pay for 2004 plus 10% of the total judgment as and by way of attorney’s fees.

Other claims are hereby denied for lack of merit. (Emphasis supplied.)

The labor arbiter gave credence to Aliling’s allegation about not receiving and, therefore, not bound by,
San Mateo’s purported September 20, 2004 memo. The memo, to reiterate, supposedly apprised Aliling
of the sales quota he was, but failed, to meet. Pushing the point, the labor arbiter explained that Aliling
cannot be validly terminated for non-compliance with the quota threshold absent a prior advisory of the
reasonable standards upon which his performance would be evaluated.

Both parties appealed the above decision to the NLRC, which affirmed the Decision in toto in its
Resolution dated May 31, 2007. The separate motions for reconsideration were also denied by the NLRC
in its Resolution dated August 31, 2007.

Therefrom, Aliling went on certiorari to the CA, which eventually rendered the assailed Decision, the
dispositive portion of which reads:

WHEREFORE, the petition is PARTLY GRANTED. The assailed Resolutions of respondent (Third Division)
National Labor Relations Commission are AFFIRMED, with the following MODIFICATION/CLARIFICATION:
Respondents Wide Wide World Express Corp. and its officers, Jose B. Feliciano, Manuel F. San Mateo III
and Joseph R. Lariosa, are jointly and severally liable to pay petitioner Armando Aliling: (A) the sum of
Forty Two Thousand Three Hundred Thirty Three & 50/100 (P42,333.50) as the total money judgment,
(B) the sum of Four Thousand Two Hundred Thirty Three & 35/100 (P4,233.35) as attorney’s fees, and
(C) the additional sum equivalent to one-half (1/2) month of petitioner’s salary as separation pay.

SO ORDERED.24 (Emphasis supplied.)

The CA anchored its assailed action on the strength of the following premises: (a) respondents failed to
prove that Aliling’s dismal performance constituted gross and habitual neglect necessary to justify his
dismissal; (b) not having been informed at the time of his engagement of the reasonable standards
under which he will qualify as a regular employee, Aliling was deemed to have been hired from day one
as a regular employee; and (c) the strained relationship existing between the parties argues against the
propriety of reinstatement.

Aliling’s motion for reconsideration was rejected by the CA through the assailed Resolution dated
December 15, 2008.

Hence, the instant petition.

The Issues

Aliling raises the following issues for consideration:

A. The failure of the Court of Appeals to order reinstatement (despite its finding that petitioner was
illegally dismissed from employment) is contrary to law and applicable jurisprudence.

B. The failure of the Court of Appeals to award backwages (even if it did not order reinstatement) is
contrary to law and applicable jurisprudence.

C. The failure of the Court of Appeals to award moral and exemplary damages (despite its finding that
petitioner was dismissed to prevent the acquisition of his regular status) is contrary to law and
applicable jurisprudence.25

In their Comment,26 respondents reiterated their position that WWWEC hired petitioner on a
probationary basis and fired him before he became a regular employee.

The Court’s Ruling

The petition is partly meritorious.

Petitioner is a regular employee

On a procedural matter, petitioner Aliling argues that WWWEC, not having appealed from the judgment
of CA which declared Aliling as a regular employee from the time he signed the employment contract, is
now precluded from questioning the appellate court’s determination as to the nature of his
employment.

Petitioner errs. The Court has, when a case is on appeal, the authority to review matters not specifically
raised or assigned as error if their consideration is necessary in reaching a just conclusion of the case.
We said as much in Sociedad Europea de Financiacion, SA v. Court of Appeals,27 "It is axiomatic that an
appeal, once accepted by this Court, throws the entire case open to review, and that this Court has the
authority to review matters not specifically raised or assigned as error by the parties, if their
consideration is necessary in arriving at a just resolution of the case."

The issue of whether or not petitioner was, during the period material, a probationary or regular
employee is of pivotal import. Its resolution is doubtless necessary at arriving at a fair and just
disposition of the controversy.

The Labor Arbiter cryptically held in his decision dated April 25, 2006 that:

Be that as it may, there appears no showing that indeed the said September 20, 2004 Memorandum
addressed to complainant was received by him. Moreover, complainant’s tasked where he was assigned
was a new developed service. In this regard, it is noted:

"Due process dictates that an employee be apprised beforehand of the conditions of his employment
and of the terms of advancement therein. Precisely, implicit in Article 281 of the Labor Code is the
requirement that reasonable standards be previously made known by the employer to the employee at
the time of his engagement (Ibid, citing Sameer Overseas Placement Agency, Inc. vs. NLRC, G.R. No.
132564, October 20, 1999).28

From our review, it appears that the labor arbiter, and later the NLRC, considered Aliling a probationary
employee despite finding that he was not informed of the reasonable standards by which his
probationary employment was to be judged.

The CA, on the other hand, citing Cielo v. National Labor Relations Commission,29 ruled that petitioner
was a regular employee from the outset inasmuch as he was not informed of the standards by which his
probationary employment would be measured. The CA wrote:
Petitioner was regularized from the time of the execution of the employment contract on June 11, 2004,
although respondent company had arbitrarily shortened his tenure. As pointed out, respondent
company did not make known the reasonable standards under which he will qualify as a regular
employee at the time of his engagement. Hence, he was deemed to have been hired from day one as a
regular employee.30 (Emphasis supplied.)

WWWEC, however, excepts on the argument that it put Aliling on notice that he would be evaluated on
the 3rd and 5th months of his probationary employment. To WWWEC, its efforts translate to sufficient
compliance with the requirement that a probationary worker be apprised of the reasonable standards
for his regularization. WWWEC invokes the ensuing holding in Alcira v. National Labor Relations
Commission31 to support its case:

Conversely, an employer is deemed to substantially comply with the rule on notification of standards if
he apprises the employee that he will be subjected to a performance evaluation on a particular date
after his hiring. We agree with the labor arbiter when he ruled that:

In the instant case, petitioner cannot successfully say that he was never informed by private respondent
of the standards that he must satisfy in order to be converted into regular status. This rans (sic) counter
to the agreement between the parties that after five months of service the petitioner’s performance
would be evaluated. It is only but natural that the evaluation should be made vis-à-vis the performance
standards for the job.1âwphi1 Private respondent Trifona Mamaradlo speaks of such standard in her
affidavit referring to the fact that petitioner did not perform well in his assigned work and his attitude
was below par compared to the company’s standard required of him. (Emphasis supplied.)

WWWEC’s contention is untenable.

Alcira is cast under a different factual setting. There, the labor arbiter, the NLRC, the CA, and even finally
this Court were one in their findings that the employee concerned knew, having been duly informed
during his engagement, of the standards for becoming a regular employee. This is in stark contrast to
the instant case where the element of being informed of the regularizing standards does not obtain. As
such, Alcira cannot be made to apply to the instant case.

To note, the June 2, 2004 letter-offer itself states that the regularization standards or the performance
norms to be used are still to be agreed upon by Aliling and his supervisor. WWWEC has failed to prove
that an agreement as regards thereto has been reached. Clearly then, there were actually no
performance standards to speak of. And lest it be overlooked, Aliling was assigned to GX trucking sales,
an activity entirely different to the Seafreight Sales he was originally hired and trained for. Thus, at the
time of his engagement, the standards relative to his assignment with GX sales could not have plausibly
been communicated to him as he was under Seafreight Sales. Even for this reason alone, the conclusion
reached in Alcira is of little relevant to the instant case.

Based on the facts established in this case in light of extant jurisprudence, the CA’s holding as to the kind
of employment petitioner enjoyed is correct. So was the NLRC ruling, affirmatory of that of the labor
arbiter. In the final analysis, one common thread runs through the holding of the labor arbiter, the NLRC
and the CA, i.e., petitioner Aliling, albeit hired from management’s standpoint as a probationary
employee, was deemed a regular employee by force of the following self-explanatory provisions:

Article 281 of the Labor Code

ART. 281. Probationary employment. - Probationary employment shall not exceed six (6) months from
the date the employee started working, unless it is covered by an apprenticeship agreement stipulating
a longer period. The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be considered a regular employee.
(Emphasis supplied.)

Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code

Sec. 6. Probationary employment. – There is probationary employment where the employee, upon his
engagement, is made to undergo a trial period where the employee determines his fitness to qualify for
regular employment, based on reasonable standards made known to him at the time of engagement.

Probationary employment shall be governed by the following rules:

xxxx

(d) In all cases of probationary employment, the employer shall make known to the employee the
standards under which he will qualify as a regular employee at the time of his engagement. Where no
standards are made known to the employee at that time, he shall be deemed a regular employee.
(Emphasis supplied.)
To repeat, the labor arbiter, NLRC and the CA are agreed, on the basis of documentary evidence
adduced, that respondent WWWEC did not inform petitioner Aliling of the reasonable standards by
which his probation would be measured against at the time of his engagement. The Court is loathed to
interfere with this factual determination. As We have held:

Settled is the rule that the findings of the Labor Arbiter, when affirmed by the NLRC and the Court of
Appeals, are binding on the Supreme Court, unless patently erroneous. It is not the function of the
Supreme Court to analyze or weigh all over again the evidence already considered in the proceedings
below. The jurisdiction of this Court in a petition for review on certiorari is limited to reviewing only
errors of law, not of fact, unless the factual findings being assailed are not supported by evidence on
record or the impugned judgment is based on a misapprehension of facts.32

The more recent Peñafrancia Tours and Travel Transport, Inc., v. Sarmiento33 has reaffirmed the above
ruling, to wit:

Finally, the CA affirmed the ruling of the NLRC and adopted as its own the latter's factual findings. Long-
established is the doctrine that findings of fact of quasi-judicial bodies x x x are accorded respect, even
finality, if supported by substantial evidence. When passed upon and upheld by the CA, they are binding
and conclusive upon this Court and will not normally be disturbed. Though this doctrine is not without
exceptions, the Court finds that none are applicable to the present case.

WWWEC also cannot validly argue that "the factual findings being assailed are not supported by
evidence on record or the impugned judgment is based on a misapprehension of facts." Its very own
letter-offer of employment argues against its above posture. Excerpts of the letter-offer:

Additionally, upon the effectivity of your probation, you and your immediate superior are required to
jointly define your objectives compared with the job requirements of the position. Based on the pre-
agreed objectives, your performance shall be reviewed on the 3rd month to assess your competence
and work attitude. The 5th month Performance Appraisal shall be the basis in elevating or confirming
your employment status from Probationary to Regular.

Failure to meet the job requirements during the probation stage means that your services may be
terminated without prior notice and without recourse to separation pay. (Emphasis supplied.)
Respondents further allege that San Mateo’s email dated July 16, 2004 shows that the standards for his
regularization were made known to petitioner Aliling at the time of his engagement. To recall, in that
email message, San Mateo reminded Aliling of the sales quota he ought to meet as a condition for his
continued employment, i.e., that the GX trucks should already be 80% full by August 5, 2004. Contrary
to respondents’ contention, San Mateo’s email cannot support their allegation on Aliling being informed
of the standards for his continued employment, such as the sales quota, at the time of his engagement.
As it were, the email message was sent to Aliling more than a month after he signed his employment
contract with WWWEC. The aforequoted Section 6 of the Implementing Rules of Book VI, Rule VIII-A of
the Code specifically requires the employer to inform the probationary employee of such reasonable
standards at the time of his engagement, not at any time later; else, the latter shall be considered a
regular employee. Thus, pursuant to the explicit provision of Article 281 of the Labor Code, Section 6(d)
of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled jurisprudence, petitioner
Aliling is deemed a regular employee as of June 11, 2004, the date of his employment contract.

Petitioner was illegally dismissed

To justify fully the dismissal of an employee, the employer must, as a rule, prove that the dismissal was
for a just cause and that the employee was afforded due process prior to dismissal. As a complementary
principle, the employer has the onus of proving with clear, accurate, consistent, and convincing
evidence the validity of the dismissal.34

WWWEC had failed to discharge its twin burden in the instant case.

First off, the attendant circumstances in the instant case aptly show that the issue of petitioner’s alleged
failure to achieve his quota, as a ground for terminating employment, strikes the Court as a mere
afterthought on the part of WWWEC. Consider: Lariosa’s letter of September 25, 2004 already betrayed
management’s intention to dismiss the petitioner for alleged unauthorized absences. Aliling was in fact
made to explain and he did so satisfactorily. But, lo and behold, WWWEC nonetheless proceeded with
its plan to dismiss the petitioner for non-satisfactory performance, although the corresponding
termination letter dated October 6, 2004 did not even specifically state Aliling’s "non-satisfactory
performance," or that Aliling’s termination was by reason of his failure to achieve his set quota.

What WWWEC considered as the evidence purportedly showing it gave Aliling the chance to explain his
inability to reach his quota was a purported September 20, 2004 memo of San Mateo addressed to the
latter. However, Aliling denies having received such letter and WWWEC has failed to refute his
contention of non-receipt. In net effect, WWWEC was at a loss to explain the exact just reason for
dismissing Aliling.
At any event, assuming for argument that the petitioner indeed failed to achieve his sales quota, his
termination from employment on that ground would still be unjustified.

Article 282 of the Labor Code considers any of the following acts or omission on the part of the
employee as just cause or ground for terminating employment:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his 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 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 representatives; and

(e) Other causes analogous to the foregoing. (Emphasis supplied)

In Lim v. National Labor Relations Commission,35 the Court considered inefficiency as an analogous just
cause for termination of employment under Article 282 of the Labor Code:

We cannot but agree with PEPSI that "gross inefficiency" falls within the purview of "other causes
analogous to the foregoing," this constitutes, therefore, just cause to terminate an employee under
Article 282 of the Labor Code. One is analogous to another if it is susceptible of comparison with the
latter either in general or in some specific detail; or has a close relationship with the latter. "Gross
inefficiency" is closely related to "gross neglect," for both involve specific acts of omission on the part of
the employee resulting in damage to the employer or to his business. In Buiser vs. Leogardo, this Court
ruled that failure to observed prescribed standards to inefficiency may constitute just cause for
dismissal. (Emphasis supplied.)

It did so anew in Leonardo v. National Labor Relations Commission36 on the following rationale:
An employer is entitled to impose productivity standards for its workers, and in fact, non-compliance
may be visited with a penalty even more severe than demotion. Thus,

[t]he practice of a company in laying off workers because they failed to make the work quota has been
recognized in this jurisdiction. (Philippine American Embroideries vs. Embroidery and Garment Workers,
26 SCRA 634, 639). In the case at bar, the petitioners' failure to meet the sales quota assigned to each of
them constitute a just cause of their dismissal, regardless of the permanent or probationary status of
their employment. Failure to observe prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood
to mean failure to attain work goals or work quotas, either by failing to complete the same within the
allotted reasonable period, or by producing unsatisfactory results. This management prerogative of
requiring standards may be availed of so long as they are exercised in good faith for the advancement of
the employer's interest. (Emphasis supplied.)

In fine, an employee’s failure to meet sales or work quotas falls under the concept of gross inefficiency,
which in turn is analogous to gross neglect of duty that is a just cause for dismissal under Article 282 of
the Code. However, in order for the quota imposed to be considered a valid productivity standard and
thereby validate a dismissal, management’s prerogative of fixing the quota must be exercised in good
faith for the advancement of its interest. The duty to prove good faith, however, rests with WWWEC as
part of its burden to show that the dismissal was for a just cause. WWWEC must show that such quota
was imposed in good faith. This WWWEC failed to do, perceptibly because it could not. The fact of the
matter is that the alleged imposition of the quota was a desperate attempt to lend a semblance of
validity to Aliling’s illegal dismissal. It must be stressed that even WWWEC’s sales manager, Eve Amador
(Amador), in an internal e-mail to San Mateo, hedged on whether petitioner performed below or above
expectation:

Could not quantify level of performance as he as was tasked to handle a new product (GX). Revenue
report is not yet administered by IT on a month-to-month basis. Moreover, this in a way is an
experimental activity. Practically you have a close monitoring with Armand with regards to his
performance. Your assessment of him would be more accurate.

Being an experimental activity and having been launched for the first time, the sales of GX services could
not be reasonably quantified. This would explain why Amador implied in her email that other bases
besides sales figures will be used to determine Aliling’s performance. And yet, despite such a neutral
observation, Aliling was still dismissed for his dismal sales of GX services. In any event, WWWEC failed to
demonstrate the reasonableness and the bona fides on the quota imposition.

Employees must be reminded that while probationary employees do not enjoy permanent status, they
enjoy the constitutional protection of security of tenure. They can only be terminated for cause or when
they otherwise fail to meet the reasonable standards made known to them by the employer at the time
of their engagement.37 Respondent WWWEC miserably failed to prove the termination of petitioner
was for a just cause nor was there substantial evidence to demonstrate the standards were made known
to the latter at the time of his engagement. Hence, petitioner’s right to security of tenure was breached.

Aliling’s right to procedural due process was violated

As earlier stated, to effect a legal dismissal, the employer must show not only a valid ground therefor,
but also that procedural due process has properly been observed. When the Labor Code speaks of
procedural due process, the reference is usually to the two (2)-written notice rule envisaged in Section 2
(III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, which provides:

Section 2. Standard of due process: requirements of notice. — In all cases of termination of

employment, the following standards of due process shall be substantially observed.

I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the
employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him; and

(c) A written notice [of] termination served on the employee indicating that upon due consideration of
all the circumstance, grounds have been established to justify his termination.

In case of termination, the foregoing notices shall be served on the employee’s last known address.

MGG Marine Services, Inc. v. NLRC38 tersely described the mechanics of what may be considered a two-
part due process requirement which includes the two-notice rule, "x x x one, of the intention to dismiss,
indicating therein his acts or omissions complained against, and two, notice of the decision to dismiss;
and an opportunity to answer and rebut the charges against him, in between such notices."
King of Kings Transport, Inc. v. Mamac39 expounded on this procedural requirement in this manner:

(1) The first written notice to be served on the employees should contain the specific causes or grounds
for termination against them, and a directive that the employees are given the opportunity to submit
their written explanation within a reasonable period. "Reasonable opportunity" under the Omnibus
Rules means every kind of assistance that management must accord to the employees to enable them
to prepare adequately for their defense. This should be construed as a period of at least five calendar
days from receipt of the notice xxxx Moreover, in order to enable the employees to intelligently prepare
their explanation and defenses, the notice should contain a detailed narration of the facts and
circumstances that will serve as basis for the charge against the employees. A general description of the
charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are
violated and/or which among the grounds under Art. 288 [of the Labor Code] is being charged against
the employees

(2) After serving the first notice, the employees should schedule and conduct a hearing or conference
wherein the employees will be given the opportunity to (1) explain and clarify their defenses to the
charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence
presented against them by the management. During the hearing or conference, the employees are given
the chance to defend themselves personally, with the assistance of a representative or counsel of their
choice x x x.

(3) After determining that termination is justified, the employer shall serve the employees a written
notice of termination indicating that: (1) all the circumstances involving the charge against the
employees have been considered; and (2) grounds have been established to justify the severance of
their employment. (Emphasis in the original.)

Here, the first and second notice requirements have not been properly observed, thus tainting
petitioner’s dismissal with illegality.

The adverted memo dated September 20, 2004 of WWWEC supposedly informing Aliling of the
likelihood of his termination and directing him to account for his failure to meet the expected job
performance would have had constituted the "charge sheet," sufficient to answer for the first notice
requirement, but for the fact that there is no proof such letter had been sent to and received by him. In
fact, in his December 13, 2004 Complainant’s Reply Affidavit, Aliling goes on to tag such
letter/memorandum as fabrication. WWWEC did not adduce proof to show that a copy of the letter was
duly served upon Aliling. Clearly enough, WWWEC did not comply with the first notice requirement.
Neither was there compliance with the imperatives of a hearing or conference. The Court need not
dwell at length on this particular breach of the due procedural requirement. Suffice it to point out that
the record is devoid of any showing of a hearing or conference having been conducted. On the contrary,
in its October 1, 2004 letter to Aliling, or barely five (5) days after it served the notice of termination,
WWWEC acknowledged that it was still evaluating his case. And the written notice of termination itself
did not indicate all the circumstances involving the charge to justify severance of employment.

Aliling is entitled to backwages

and separation pay in lieu of reinstatement

As may be noted, the CA found Aliling’s dismissal as having been illegally effected, but nonetheless
concluded that his employment ceased at the end of the probationary period. Thus, the appellate court
merely affirmed the monetary award made by the NLRC, which consisted of the payment of that
amount corresponding to the unserved portion of the contract of employment.

The case disposition on the award is erroneous.

As earlier explained, Aliling cannot be rightfully considered as a mere probationary employee.

Accordingly, the probationary period set in the contract of employment dated June 11, 2004 was of no
moment. In net effect, as of that date June 11, 2004, Aliling became part of the WWWEC organization as
a regular employee of the company without a fixed term of employment. Thus, he is entitled to
backwages reckoned from the time he was illegally dismissed on October 6, 2004, with a PhP 17,300.00
monthly salary, until the finality of this Decision. This disposition hews with the Court’s ensuing holding
in Javellana v. Belen:40

Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715 instructs:

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. (Emphasis supplied)

Clearly, the law intends the award of backwages and similar benefits to accumulate past the date of the
Labor Arbiter’s decision until the dismissed employee is actually reinstated. But if, as in this case,
reinstatement is no longer possible, this Court has consistently ruled that backwages shall be computed
from the time of illegal dismissal until the date the decision becomes final. (Emphasis supplied.)

Additionally, Aliling is entitled to separation pay in lieu of reinstatement on the ground of strained
relationship.

In Golden Ace Builders v. Talde,41 the Court ruled:

The basis for the payment of backwages is different from that for the award of separation pay.1âwphi1
Separation pay is granted where reinstatement is no longer advisable because of strained relations
between the employee and the employer. Backwages represent compensation that should have been
earned but were not collected because of the unjust dismissal. The basis for computing backwages is
usually the length of the employee's service while that for separation pay is the actual period when the
employee was unlawfully prevented from working.

As to how both awards should be computed, Macasero v. Southern Industrial Gases Philippines
instructs:

[T]he award of separation pay is inconsistent with a finding that there was no illegal dismissal, for under
Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed without
just cause and without due process is entitled to backwages and reinstatement or payment of
separation pay in lieu thereof:

Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two
reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the employer, separation pay is granted. In
effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was withheld up to
the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service should be awarded as an alternative. The
payment of separation pay is in addition to payment of backwages. x x x
Velasco v. National Labor Relations Commission emphasizes:

The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no
longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may
likewise be awarded if the employee decides not to be reinstated. (emphasis in the original; italics
supplied)

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable
alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such
payment liberates the employee from what could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ
a worker it could no longer trust.

Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence —

substantial evidence to show that the relationship between the employer and the employee is indeed
strained as a necessary consequence of the judicial controversy.

In the present case, the Labor Arbiter found that actual animosity existed between petitioner Azul and
respondent as a result of the filing of the illegal dismissal case. Such finding, especially when affirmed by
the appellate court as in the case at bar, is binding upon the Court, consistent with the prevailing rules
that this Court will not try facts anew and that findings of facts of quasi-judicial bodies are accorded
great respect, even finality. (Emphasis supplied.)

As the CA correctly observed, "To reinstate petitioner [Aliling] would only create an atmosphere of
antagonism and distrust, more so that he had only a short stint with respondent company."42 The Court
need not belabor the fact that the patent animosity that had developed between employer and
employee generated what may be considered as the arbitrary dismissal of the petitioner.

Following the pronouncements of this Court Sagales v. Rustan’s Commercial Corporation,43 the
computation of separation pay in lieu of reinstatement includes the period for which backwages were
awarded:

Thus, in lieu of reinstatement, it is but proper to award petitioner separation pay computed at one-
month salary for every year of service, a fraction of at least six (6) months considered as one whole year.
In the computation of separation pay, the period where backwages are awarded must be included.
(Emphasis supplied.)
Thus, Aliling is entitled to both backwages and separation pay (in lieu of reinstatement) in the amount of
one (1) month’s salary for every year of service, that is, from June 11, 2004 (date of employment
contract) until the finality of this decision with a fraction of a year of at least six (6) months to be
considered as one (1) whole year. As determined by the labor arbiter, the basis for the computation of
backwages and separation pay will be Aliling’s monthly salary at PhP 17,300.

Finally, Aliling is entitled to an award of PhP 30,000 as nominal damages in consonance with prevailing
jurisprudence44 for violation of due process.

Petitioner is not entitled to moral and exemplary damages

In Nazareno v. City of Dumaguete,45 the Court expounded on the requisite elements for a litigant’s
entitlement to moral damages, thus:

Moral damages are awarded if the following elements exist in the case: (1) an injury clearly sustained by
the claimant; (2) a culpable act or omission factually established; (3) a wrongful act or omission by the
defendant as the proximate cause of the injury sustained by the claimant; and (4) the award of damages
predicated on any of the cases stated Article 2219 of the Civil Code. In addition, the person claiming
moral damages must prove the existence of bad faith by clear and convincing evidence for the law
always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish,
and serious anxiety as the result of the actuations of the other party. Invariably such action must be
shown to have been willfully done in bad faith or with ill motive. Bad faith, under the law, does not
simply connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong, a breach of a known duty through some motive or interest or ill will that
partakes of the nature of fraud. (Emphasis supplied.)

In alleging that WWWEC acted in bad faith, Aliling has the burden of proof to present evidence in
support of his claim, as ruled in Culili v. Eastern Telecommunications Philippines, Inc.:46

According to jurisprudence, "basic is the principle that good faith is presumed and he who alleges bad
faith has the duty to prove the same." By imputing bad faith to the actuations of ETPI, Culili has the
burden of proof to present substantial evidence to support the allegation of unfair labor practice. Culili
failed to discharge this burden and his bare allegations deserve no credit.
This was reiterated in United Claimants Association of NEA (UNICAN) v. National Electrification
Administration (NEA),47 in this wise:

It must be noted that the burden of proving bad faith rests on the one alleging it. As the Court ruled in
Culili v. Eastern Telecommunications, Inc., "According to jurisprudence, ‘basic is the principle that good
faith is presumed and he who alleges bad faith has the duty to prove the same.’" Moreover, in Spouses
Palada v. Solidbank Corporation, the Court stated, "Allegations of bad faith and fraud must be proved by
clear and convincing evidence."

Similarly, Aliling has failed to overcome such burden to prove bad faith on the part of WWWEC. Aliling
has not presented any clear and convincing evidence to show bad faith. The fact that he was illegally
dismissed is insufficient to prove bad faith. Thus, the CA correctly ruled that "[t]here was no sufficient
showing of bad faith or abuse of management prerogatives in the personal action taken against
petitioner."48 In Lambert Pawnbrokers and Jewelry Corporation v. Binamira,49 the Court ruled:

A dismissal may be contrary to law but by itself alone, it does not establish bad faith to entitle the
dismissed employee to moral damages. The award of moral and exemplary damages cannot be justified
solely upon the premise that the employer dismissed his employee without authorized cause and due
process.

The officers of WWWEC cannot be held

jointly and severally liable with the company

The CA held the president of WWWEC, Jose B. Feliciano, San Mateo and Lariosa jointly and severally
liable for the monetary awards of Aliling on the ground that the officers are considered "employers"
acting in the interest of the corporation. The CA cited NYK International Knitwear Corporation
Philippines (NYK) v. National Labor Relations Commission50 in support of its argument. Notably, NYK in
turn cited A.C. Ransom Labor Union-CCLU v. NLRC.51

Such ruling has been reversed by the Court in Alba v. Yupangco,52 where the Court ruled:

By Order of September 5, 2007, the Labor Arbiter denied respondent’s motion to quash the 3rd alias
writ. Brushing aside respondent’s contention that his liability is merely joint, the Labor Arbiter ruled:
Such issue regarding the personal liability of the officers of a corporation for the payment of wages and
money claims to its employees, as in the instant case, has long been resolved by the Supreme Court in a
long list of cases [A.C. Ransom Labor Union-CLU vs. NLRC (142 SCRA 269) and reiterated in the cases of
Chua vs. NLRC (182 SCRA 353), Gudez vs. NLRC (183 SCRA 644)]. In the aforementioned cases, the
Supreme Court has expressly held that the irresponsible officer of the corporation (e.g. President) is
liable for the corporation’s obligations to its workers. Thus, respondent Yupangco, being the president
of the respondent YL Land and Ultra Motors Corp., is properly jointly and severally liable with the
defendant corporations for the labor claims of Complainants Alba and De Guzman. x x x

xxxx

As reflected above, the Labor Arbiter held that respondent’s liability is solidary.

There is solidary liability when the obligation expressly so states, when the law so provides, or when the
nature of the obligation so requires. MAM Realty Development Corporation v. NLRC, on solidary liability
of corporate officers in labor disputes, enlightens:

x x x A corporation being a juridical entity, may act only through its directors, officers and employees.
Obligations incurred by them, acting as such corporate agents are not theirs but the direct
accountabilities of the corporation they represent. True solidary liabilities may at times be incurred but
only when exceptional circumstances warrant such as, generally, in the following cases:

1. When directors and trustees or, in appropriate cases, the officers of a corporation:

(a) vote for or assent to patently unlawful acts of the corporation;

(b) act in bad faith or with gross negligence in directing the corporate affairs;

xxxx

In labor cases, for instance, the Court has held corporate directors and officers solidarily liable with the
corporation for the termination of employment of employees done with malice or in bad faith.
A review of the facts of the case does not reveal ample and satisfactory proof that respondent officers
of WWEC acted in bad faith or with malice in effecting the termination of petitioner Aliling. Even
assuming arguendo that the actions of WWWEC are ill-conceived and erroneous, respondent officers
cannot be held jointly and solidarily with it. Hence, the ruling on the joint and solidary liability of
individual respondents must be recalled.

Aliling is entitled to Attorney’s Fees and Legal Interest

Petitioner Aliling is also entitled to attorney’s fees in the amount of ten percent (10%) of his total
monetary award, having been forced to litigate in order to seek redress of his grievances, pursuant to
Article 111 of the Labor Code and following our ruling in Exodus International Construction Corporation
v. Biscocho,53 to wit:

In Rutaquio v. National Labor Relations Commission, this Court held that:

It is settled that in actions for recovery of wages or where an employee was forced to litigate and, thus,
incur expenses to protect his rights and interest, the award of attorney’s fees is legally and morally
justifiable.

In Producers Bank of the Philippines v. Court of Appeals this Court ruled that:

Attorney’s fees may be awarded when a party is compelled to litigate or to incur expenses to protect his
interest by reason of an unjustified act of the other party.

While in Lambert Pawnbrokers and Jewelry Corporation,54 the Court specifically ruled:

However, the award of attorney’s fee is warranted pursuant to Article 111 of the Labor Code. Ten (10%)
percent of the total award is usually the reasonable amount of attorney’s fees awarded. It is settled that
where an employee was forced to litigate and, thus, incur expenses to protect his rights and interest,
the award of attorney’s fees is legally and morally justifiable.

Finally, legal interest shall be imposed on the monetary awards herein granted at the rate of 6% per
annum from October 6, 2004 (date of termination) until fully paid.
WHEREFORE, the petition is PARTIALLY GRANTED. The July 3, 2008 Decision of the Court of Appeals in
CA-G.R. SP No. 101309 is hereby MODIFIED to read:

WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Resolutions of respondent (Third
Division) National Labor Relations Commission are AFFIRMED, with the following
MODIFICATION/CLARIFICATION: Respondent Wide Wide World Express Corp. is liable to pay Armando
Aliling the following: (a) backwages reckoned from October 6, 2004 up to the finality of this Decision
based on a salary of PhP 17,300 a month, with interest at 6% per annum on the principal amount from
October 6, 2004 until fully paid; (b) the additional sum equivalent to one (1) month salary for every year
of service, with a fraction of at least six (6) months considered as one whole year based on the period
from June 11, 2004 (date of employment contract) until the finality of this Decision, as separation pay;
(c) PhP 30,000 as nominal damages; and (d) Attorney’s Fees equivalent to 10% of the total award.

SO ORDERED.
G.R. No. L-63316 July 31, 1984

ILUMINADA VER BUISER, MA. CECILIA RILLOACUÑA and MA. MERCEDES P. INTENGAN, petitioners,

vs.

HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of the Ministry of Labor &
Employment, and GENERAL TELEPHONE DIRECTORY, CO., respondents.

Jimenez, Apolo & Leynes Law Office for petitioners.

The Solicitor General for respondent Deputy Minister.

Abad, Legayada & Associates for private respondent.

GUERRERO, J.:

This is a petition for certiorari seeking to set aside the Order of the Deputy Minister of Labor and
Employment, affirming the Order of the Regional Director, National Capital Region, in Case No. NCR-STF-
5-2851-81, which dismissed the petitioners' complainant for alleged illegal dismissal and unpaid
commission.

Petitioners were employed by the private respondent GENERAL TELEPHONE DIRECTORY COMPANY as
sales representatives and charged with the duty of soliciting advertisements for inclusion in a telephone
directory.

The records show that petitioners Iluminada Ver Buiser and Ma. Mercedes P. Intengan entered into an
"Employment Contract (on Probationary Status)" on May 26, 1980 with private respondent, a
corporation engaged in the business of publication and circulation of the directory of the Philippine Long
Distance Telephone Company. Petitioner Ma. Cecilia Rillo-Acuna entered into the same employment
contract on June 11, 1980 with the private respondent.
Among others, the "Employment Contract (On Probationary Status)" included the following common
provisions:

l. The company hereby employs the employee as telephone representative on a probationary status for
a period of eighteen (18) months, i.e. from May 1980 to October 1981, inclusive. It is understood that
darung the probationary period of employment, the Employee may be terminated at the pleasure of the
company without the necessity of giving notice of termination or the payment of termination pay.

The Employee recognizes the fact that the nature of the telephone sales representative's job is such that
the company would be able to determine his true character, conduct and selling capabilities only after
the publication of the directory, and that it takes about eighteen (18) months before his worth as a
telephone saw representative can be fully evaluated inasmuch as the advertisement solicited by him for
a particular year are published in the directory only the following year.

Corollary to this, the private respondent prescribed sales quotas to be accomplished or met by the
petitioners. Failing to meet their respective sales quotas, the petitioners were dismissed from the
service by the private respondent. The records show that the private respondent terminated the
services of petitioners Iluminada Ver Buiser and Cecilia Rillo-Acuna on May 14, 1981 and petitioner Ma.
Mercedes P. Intengan on May 18, 1981 for their failure to meet their sales quotas.

Thus, on May 27, 1981, petitioners filed with the National Capital Region, Ministry of Labor and
Employment, a complaint for illegal dismissal with claims for backwages, earned commissions and other
benefits, docketed as Case No. NCR-STF-5-2851-81.

The Regional Director of said ministry, in an Order dated September 21, 1982, dismissed the complaints
of the petitioners, except the claim for allowances which private respondent was ordered to pay. A
reconsideration of the Order was sought by the petitioners in a motion filed on September 30, 1982.
This motion, however, was treated as an appeal to the Minister of Labor.

On appeal, Deputy Minister Vicente Leogardo, Jr. of the Ministry of Labor issued an Order dated January
7, 1983, affirming the Regional Director's Order dated September 21, 1982, wherein it ruled that the
petitioners have not attained permanent status since private respondent was justified in requiring a
longer period of probation, and that the termination of petitioners' services was valid since the latter
failed to meet their sales quotas.

Hence, this petition for certiorari on the alleged ground that public respondent committed grave abuse
of discretion amounting to lack of jurisdiction. Specifically, petitioners submit that:
1. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion
amounting to lack of jurisdiction in ruling that the probationary employment of petitioners herein is
eighteen (18) months instead of the mandated six (6) months under the Labor Code, and in
consequently further ruling that petitioners are not entitled to security of tenure while under said
probation for 18 months.

2. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion
amounting to lack of jurisdiction in ruling that petitioners were dismissed for a just and valid cause.

3. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion
amounting to lack of jurisdiction in ruling that petitioners are not entitled to the commissions they have
earned and accrued during their period of employment.

Petitioners contend that under Articles 281-282 of the Labor Code, having served the respondent
company continuously for over six (6) months, they have become automatically regular employees
notwithstanding an agreement to the contrary. Articles 281-282 read thus:

Art. 282. Probationary Employment. — Probationary employment shall not exceed six (6) months from
the date the employee started working, unless it iscCovered by an apprenticeship agreement stipulating
a longer period. The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be considered a regular employee.
(As amended by PD 850).

Art. 281. Regular and Casual Employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed
to be regular where the employee has been engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceeding 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. (As amended by PD 850).

It is petitioners' submission that probationary employment cannot exceed six (6) months, the only
exception being apprenticeship and learnership agreements as provided in the Labor Code; that the
Policy Instruction of the Minister of Labor and Employment nor any agreement of the parties could
prevail over this mandatory requirement of the law; that this six months prescription of the Labor Code
was mandated to give further efficacy to the constitutionally-guaranteed security of tenure of workers;
and that the law does not allow any discretion on the part of the Minister of Labor and Employment to
extend the probationary period for a longer period except in the aforecited instances. Finally, petitioners
maintain that since they are regular employees, they can only be removed or dismissed for any of the
just and valid causes enumerated under Article 283 of the Labor Code.

We reject petitioners' contentions. They have no basis in law.

Generally, the probationary period of employment is limited to six (6) months. The exception to this
general rule is When the parties to an employment contract may agree otherwise, such as when the
same is established by company policy or when the same is required by the nature of work to be
performed by the employee. In the latter case, there is recognition of the exercise of managerial
prerogatives in requiring a longer period of probationary employment, such as in the present case
where the probationary period was set for eighteen (18) months, i.e. from May, 1980 to October, 1981
inclusive, especially where the employee must learn a particular kind of work such as selling, or when
the job requires certain qualifications, skills, experience or training.

Policy Instruction No. 11 of the Minister of Labor and Employment has clarified any and all doubts on
the period of probationary employment. It states as follows:

Probationary Employment has been the subject of misunderstanding in some quarter. Some people
believe six (6) months is the probationary period in all cases. On the other hand employs who have
already served the probationary period are sometimes required to serve again on probation.

Under the Labor Code, six (6) months is the general probationary period ' but the probationary period is
actually the period needed to determine fitness for the job. This period, for lack of a better
measurement is deemed to be the period needed to learn the job.
The purpose of this policy is to protect the worker at the same time enable the employer to make a
meaningful employee selection. This purpose should be kept in mind in enforcing this provision of the
Code. This issuance shall take effect immediately.

In the case at bar, it is shown that private respondent Company needs at least eighteen (18) months to
determine the character and selling capabilities of the petitioners as sales representatives. The Company
is engaged in advertisement and publication in the Yellow Pages of the PLDT Telephone Directories.
Publication of solicited ads are only made a year after the sale has been made and only then win the
company be able to evaluate the efficiency, conduct, and selling ability of its sales representatives, the
evaluation being based on the published ads. Moreover, an eighteen month probationary period is
recognized by the Labor Union in the private respondent company, which is Article V of the Collective
Bargaining Agreement, ... thus:

Probationary Period — New employees hired for regular or permanent shall undergo a probationary or
trial period of six (6) months, except in the cases of telephone or sales representatives where the
probationary period shall be eighteen (I 8) months.

And as indicated earlier, the very contracts of employment signed and acquiesced to by the petitioners
specifically indicate that "the company hereby employs the employee as telephone sales representative
on a probationary status for a period of eighteen (18) months, i.e. from May 1980 to October 1981,
inclusive. This stipulation is not contrary to law, morals and public policy.

We, therefore, hold and rule that the probationary employment of petitioners set to eighteen (18)
months is legal and valid and that the Regional Director and the Deputy Minister of Labor and
Employment committed no abuse of discretion in ruling accordingly.

On the second assignment of error that public respondent committed grave abuse of discretion in ruling
that petitioners were dismissed for a just and valid cause, this is not the first time that this issue has
been raised before this Court. Earlier, in the case of "Arthur Golez vs. The National Labor Relations
Commission and General Telephone Directory Co. "G.R. No. L-64459, July 25, 1983, the petition for
certiorari which raised the same issue against the herein private respondent was dismissed by this Court
for lack of merit.

The practice of a company in laying off workers because they failed to make the work quota has been
recognized in this jurisdiction. (Philippine American Embroideries vs. Embroidery and Garment Workers,
26 SCRA 634, 639). In the case at bar, the petitioners' failure to meet the sales quota assigned to each of
them constitute a just cause of their dismissal, regardless of the permanent or probationary status of
their employment. Failure to observe prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood
to mean failure to attain work goals or work quotas, either by failing to complete the same within the
alloted reasonable period, or by producing unsatisfactory results. This management prerogative of
requiring standards availed of so long as they are exercised in good faith for the advancement of the
employer's interest.

Petitioners anchor their claim for commission pay on the Collective Bargaining Agreement (CBA) of
September 1981, in support of their third assignment of error. Petitioners cannot avail of this agreement
since their services had been terminated in May, 1981, at a time when the CBA of September, 1981 was
not yet in existence.

In fine, there is nothing in the records to show any abuse or misuse of power properly vested in the
respondent Deputy Minister of Labor and Employment. For certiorari to lie, "there must be capricious,
arbitrary and whimsical exercise of power, the very antithesis of the judicial prerogative inaccordance
with centuries of both civil and common law traditions." (Panaligan vs. Adolfo, 67 SCRA 176, 180). The
"abuse of discretion must be grave and patent, and it must be shown that the discretion was exercised
arbitrarily or despotically." (Palma and Ignacio vs. Q. & S., Inc., et al., 17 SCRA 97, 100; Philippine Virginia
Tobacco Administration vs. Lucero, 125 SCRA 337, 343).

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.
591 Phil. 154

NACHURA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to set aside the
Court of Appeals (CA) Decision[1] dated June 30, 2003 and its Resolution[2] dated September 26, 2003
in CA-G.R. SP No. 75249. The assailed decision in turn set aside the Resolution[3] of the National Labor
Relations Commission (NLRC) dated June 28, 2002 in NLRC Case No. RAB-IV-3-13593-01-C (CA No.
030579-02).

The factual and procedural antecedents follow:

Petitioner Woodridge School is a private educational institution located at Woodwinds Village, Molino 6,
Bacoor, Cavite. Respondents Joanne C. Pe Benito (Pe Benito) and Randy T. Balaguer (Balaguer) were
hired as probationary high school teachers effective June 1998 and June 1999, respectively.[4] Their
contracts of employment covered a three (3) year probationary period. Pe Benito handled Chemistry
and Physics while Balaguer taught Values Education and Christian Living.[5]

On February 19, 2001, respondents, together with twenty other teachers, presented petitioner with a
Manifesto Establishing Relevant Issues Concerning the School[6] raising various issues which they
wanted addressed, among which were:

I. NSAT/NEAT ANOMALY:

We emphatically condemn the school's grave act of wrongdoing when it involved itself on the NSAT and
NEAT anomaly. We demand that we be given assurance "in writing" that this illegal and immoral
conduct will never happen again, otherwise, we will be obligated as moral guardians of the youth to
make more proper action.

II. TEACHER'S RIGHT FOR A DUE PROCESS:

We felt betrayed when one of our former colleague[s] who was then regularly employed and was
perceived to be harmless and an asset to the school, for no solid basis or apparent investigation
conducted by the school, was suddenly expelled from his job.
xxxx

III. ISSUANCE OF INDIVIDUAL CONTRACTS:

We wonder until now even after a number of years have already passed, our copies of individual
contracts with the school have not yet been furnished to us. We demand that this legal document will
be (sic) issued to us for job security and other legal purposes it may serve.

We also demand that AN APPOINTMENT OF PERMANENCY shall be (sic) given to a permanent teacher
from the time the teacher is qualified to be permanent based on the duly set terms/standards of
permanency of the school.

IV. NON-CLEAR-CUT SCHOOL POLICIES:

It has been observed and experienced from the past school years and until the present that there are a
lot of inconsistencies regarding the school's policies like:

A. Changing of:

The narrative forms of students

Grades, and

Behavioral rating sheets

With these experiences, the teachers felt cheated and that these affect (sic) their sense of worth and
credibility. We then ask that the school should as always respect what the teachers deemed to be right
and just fitting for the students. After all, the teachers are the ones meeting and facing the students and
they know what is due to the students better that (sic) anyone else in the school.

B. Others.[7]

A confrontation between the school administrators and the concerned teachers was held, but no
settlement was arrived at.

For failure of the parties to resolve the issues, especially the alleged NSAT/NEAT anomaly, respondents
filed a formal complaint against petitioner with the Department of Education, Culture and Sports
(DECS)[8] requesting the latter to undertake a formal investigation, institute appropriate charges, and
impose proper sanctions against petitioner.[9] During the pendency of the DECS case, and for lack of a
positive action from petitioner, respondents appeared on television and spoke over the radio on the
alleged NEAT/NSAT anomaly.

On February 28, 2001, petitioner sent two separate Memoranda[10] to respondents placing them under
preventive suspension for a period of thirty days on the following grounds: 1) uttering defamatory
remarks against the school principal in the presence of their co-teachers; 2) announcing to the students
and teachers their alleged immediate termination from service; 3) tardiness; 4) spreading false
accusations against petitioner; 5) absence without official leave; and 6) appearing on television and
speaking over the radio to malign petitioner. In the same memoranda, respondents were required to
explain in writing within seventy-two (72) hours why they should not be terminated from their
employment. This prompted respondents to commence an action for illegal suspension before the
NLRC. The case was docketed as NLRC NCR CASE NO. RAB-IV-3-13593-01-C.

On March 19, 2001, petitioner issued respondents their Notice of Termination,[11] each to take effect
similarly on March 31, 2001, citing the foregoing grounds. In addition, petitioner informed respondents
that they did not qualify as regular employees for their failure to meet the performance standards made
known to them at the start of their probationary period.

Respondents then amended their initial complaint, to include illegal dismissal.

After the submission of the parties' position papers, on November 29, 2001, Labor Arbiter Vicente R.
Layawen rendered a Decision dismissing the complaint.[12] He concluded that the termination of the
respondents' probationary employment was justified because of their failure to submit vital teaching
documents. Specifically, Pe Benito failed to submit her day book/lesson plans; while Balaguer failed to
submit the subject syllabi and he had no record of class requirements as to quizzes, seatworks,
homeworks, and recitation which were supposed to be the bases in rating the students'
performance.[13] More importantly, the Labor Arbiter found respondents guilty of serious misconduct
warranting their dismissal from service because of maliciously spreading false accusation against the
school through the mass media. These acts, according to the Labor Arbiter, made them unfit to remain
in the school's roster of teachers.[14] The Labor Arbiter also validated the preventive suspension of
respondents for their having used the classroom as venue in spreading uncorroborated charges against
petitioner, thus posing a serious threat to petitioner's business and reputation as a respectable
institution.[15]

On appeal to the NLRC, the Commission affirmed[16] the Labor Arbiter's disposition in its entirety. The
Commission concluded that respondents' acts, taken together, constitute serious misconduct,
warranting their dismissal from service.
Aggrieved, respondents elevated the matter to the CA in CA-G.R. SP No. 75249. The CA granted the
petition and set aside the NLRC ruling in a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the present petition is hereby GIVEN DUE COURSE and the writ
prayed for accordingly GRANTED. Consequently, the assailed Resolutions of public respondent NLRC are
hereby SET ASIDE and a new one is hereby entered declaring the thirty (30)-day suspension of
petitioners on February 28, 2001 as illegal and ordering private respondent Woodridge School to pay to
both petitioners Joanne C. Pe Benito and Randy T. Balaguer their salaries and benefits accruing during
said period of illegal suspension. Woodridge School is also ordered to pay to petitioner Balaguer back
wages for the period April 1, 2001 up to March 31, 2002. Finally, it is further ordered to pay each of the
petitioners the sums of P50,000.00 as moral damages, P50,000.00 as exemplary damages and attorney's
fees equivalent to ten percent (10%) of the total amount due.

No pronouncement as to costs.

SO ORDERED.[17]

The appellate court declared the preventive suspension of respondents invalid because it was based on
the alleged violation of school regulations on the wearing of uniform, tardiness or absence, and
maliciously spreading false accusations against the school, grounds that do not pose a serious threat to
the life or property of the employer or of the workers.[18] Contrary to the Labor Arbiter and the
Commission's findings, the CA concluded that respondents' acts do not constitute serious misconduct.
Respondents' act of exposing the alleged NSAT/NEAT anomaly, as well as raising the other issues
haunting the school administration, only indicates their concern for the integrity of the government
examination and of the school. The use of the mass media was simply the respondents' response to the
petitioner's inaction on their grievances.[19] No bad faith could be attributed to respondents in acting
the way they did.

The appellate court likewise refused to sustain petitioner's contention that respondents failed to qualify
for permanent employment, as there was no sufficient evidence to prove the same.[20] The appellate
court emphasized that because respondents are probationary employees, legal protection extends only
to the period of their probation.[21] The dismissal breached their probationary employment, and being
tainted with bad faith, the court upheld the award of moral and exemplary damages.[22]

Aggrieved, petitioner comes before this Court in this petition for review on certiorari, raising the sole
issue of:

WHETHER OR NOT THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN GRANTING RESPONDENTS'
PETITION FOR CERTIORARI AND IN SETTING ASIDE THE FINDINGS OF BOTH THE NLRC AND THE LABOR
ARBITER A QUO.[23]
We deny the petition.

Petitioner asserts that the CA should have outrightly dismissed the petition, because the verification and
certificate of non-forum shopping was signed by only one of the respondents, without the authority of
the other.[24]

Time and again, we have said that the lack of verification is merely a formal defect that is neither
jurisdictional nor fatal. In a proper case, the court may order the correction of the pleading, or act on
the unverified pleading, if the attending circumstances are such that the rule may be dispensed with in
order to serve the ends of justice. It should be stressed that rules of procedure were conceived and
promulgated to effectively aid the court in the dispensation of justice.[25] Verification is mainly
intended to secure the assurance that the allegations in the petition are done in good faith or are true
and correct and not mere speculation.[26]

In the instant case, this requirement was substantially complied with when one of the petitioners
(respondents herein), who undoubtedly had sufficient knowledge and belief to swear to the truth of the
allegations in the petition, signed the verification attached to it. Indeed, the Court has ruled in the past
that a pleading required by the Rules of Court to be verified may be given due course even without a
verification, if the circumstances warrant the suspension of the rules in the interest of justice, as in the
present case. [27]

As to the certification against forum shopping, the CA correctly relaxed the Rules in order to serve the
ends of justice. While the general rule is that the certificate of non-forum shopping must be signed by all
the plaintiffs or petitioners in a case and the signature of only one of them is insufficient, this Court has
stressed that the rules on forum shopping, which were designed to promote and facilitate the orderly
administration of justice, should not be interpreted with absolute literalness as to subvert its own
ultimate and legitimate objective. Strict compliance with the provisions regarding the certificate of non-
forum shopping merely underscores its mandatory nature in that the certification cannot be altogether
dispensed with or its requirements completely disregarded. It does not, however, interdict substantial
compliance with its provisions under justifiable circumstances.[28]

In fact, we have relaxed the rules in a number of cases for two compelling reasons: social justice
considerations[29] and the apparent merit[30] of the petition. In light of these jurisprudential
pronouncements, the CA should not be faulted in setting aside the procedural infirmity, allowing the
petition to proceed and deciding the case on the merits. In rendering justice, courts have always been,
as they ought to be, conscientiously guided by the norm that on the balance, technicalities take a
backseat vis-à-vis substantive rights, and not the other way around.[31]
Now on the substantive issue of the validity of the dismissal and preventive suspension of respondents.

Petitioner insists that respondents' dismissal from service was lawful and justified by the following
grounds: 1) as probationary employees, respondents failed to meet the reasonable standards for their
permanent employment; and 2) in publicly accusing petitioner on radio and national television, of
dishonesty and wrongdoing, during the pendency of the administrative investigation of the alleged
dishonest acts, undertaken by the proper government agency.[32]

Initially, it should be clarified that this controversy revolves only on respondents' probationary
employment. On March 31, 2001, the effective date of their dismissal,[33] respondents were not regular
or permanent employees; they had not yet completed three (3) years of satisfactory service as academic
personnel which would have entitled them to tenure as permanent employees in accordance with the
Manual of Regulations for Private Schools.[34] On that date, Pe Benito's contract of employment still
had two months to run, while Balaguer's probationary employment was to expire after one year and
two months.

A probationary employee is one who, for a given period of time, is being observed and evaluated to
determine whether or not he is qualified for permanent employment. A probationary appointment
affords the employer an opportunity to observe the skill, competence and attitude of a probationer. The
word "probationary," as used to describe the period of employment, implies the purpose of the term or
period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment, the probationer at the same time, seeks to prove to
the employer that he has the qualifications to meet the reasonable standards for permanent
employment.[35]

Probationary employees enjoy security of tenure in the sense that during their probationary
employment, they cannot be dismissed except for cause or when he fails to qualify as a regular
employee.[36] However, upon expiration of their contract of employment, probationary employees
cannot claim security of tenure and compel their employers to renew their employment contracts. In
fact, the services of an employee hired on probationary basis may be terminated when he fails to qualify
as a regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. There is nothing that would hinder the employer from
extending a regular or permanent appointment to an employee once the employer finds that the
employee is qualified for regular employment even before the expiration of the probationary period.
Conversely, if the purpose sought by the employer is neither attained nor attainable within the said
period, the law does not preclude the employer from terminating the probationary employment on
justifiable ground.[37]
The notices of termination sent by petitioner to respondents stated that the latter failed to qualify as
regular employees.[38] However, nowhere in the notices did petitioner explain the details of said
"failure to qualify" and the standards not met by respondents. We can only speculate that this
conclusion was based on the alleged acts of respondents in uttering defamatory remarks against the
school and the school principal;[39] failure to report for work for two or three times;[40] going to class
without wearing proper uniform;[41] delay in the submission of class records; and non-submission of
class syllabi. Yet, other than bare allegations, petitioner failed to substantiate the same by documentary
evidence. Considering that respondents were on probation for three years, and they were subjected to
yearly evaluation by the students and by the school administrators (principal and vice-principal), it is
safe to assume that the results thereof were definitely documented. As such, petitioner should have
presented the evaluation reports and other related documents to support its claim, instead of relying
solely on the affidavits of their witnesses. The unavoidable inference, therefore, remains that the
respondents' dismissal is invalid.

If respondents could not be dismissed on the above-mentioned ground, could their services have been
validly terminated on the ground of serious misconduct?

The Labor Code commands that before an employer may legally dismiss an employee from the service,
the requirement of substantial and procedural due process must be complied with.[42] Under the
requirement of substantial due process, the grounds for termination of employment must be based on
just[43] or authorized causes.[44]

Misconduct is defined as improper or wrong conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error of judgment. The misconduct to be serious within the meaning of the Act,
must be of such a grave and aggravated character and not merely trivial or unimportant.[45] Such
misconduct, however serious, must nevertheless be in connection with the work of the employee to
constitute just cause for his separation.[46] It is not sufficient that the act or conduct complained of has
violated some established rules or policies. It is equally important and required that the act or conduct
must have been performed with wrongful intent.[47]

Petitioner anchored its imputation of serious misconduct principally on the respondents' expose of the
NSAT/NEAT anomaly. Petitioner argues that by appearing on television and speaking over the radio,
respondents were undeserving to become part of the school community, and the school, therefore,
could not be compelled to retain in its employ such undisciplined teachers.

In this regard, we find it necessary to go back to where the controversy started, when the concerned
teachers, including respondents, presented to petitioner a manifesto, setting forth the issues they
wanted the school to address. As correctly observed by the CA, the tenor of the manifesto indicated
good faith, as the teachers, in fact, expressly stated that their ultimate objective was not to put the
school down, but to work for some changes which would be beneficial to the students, teachers, the
school and the country as a whole.[48] In their effort to settle the issues amicably, the teachers
(including respondents) asked for a dialogue with petitioner but the latter, instead of engaging in
creative resolution of the matter, uttered unnecessary statement against respondents. This incident was
followed by subsequent acts of petitioner showing abuse of its power over the teachers, especially
respondents, who at that time, were under probation. Notwithstanding its claim that respondents were
remiss in their duties as teachers during the whole period of probation, it was only after the NSAT/NEAT
exposé when petitioner informed respondents of their alleged substandard performance. The
chronology of events, therefore, supports the view that respondents' suspension and eventual dismissal
from service were tainted with bad faith, as obvious retaliatory acts on the part of petitioner.

The totality of the acts of respondents cannot be characterized as "misconduct" under the law, serious
enough to warrant the severe penalty of dismissal. This is especially true because there is no finding of
malice or wrongful intent attributable to respondents. We quote with approval the CA's ratiocination in
this wise:

Petitioners [respondents herein], along with their colleagues, initiated the dialogue and brought the
above issues to the school authorities but the School Principal's reaction was far from what the teachers
expected. Instead of taking serious concern and properly addressing the teachers' grievances as
expressed in the Manifesto, Mrs. Palabrica got angry and hysterical accusing the petitioners
[respondents] of malice and bad faith and even threatened to dismiss them. Petitioners' [respondents']
subsequent media exposé and filing of a formal complaint was necessitated by private respondents'
[petitioner's] inaction and refusal to heed their legitimate complaint. Being but a legitimate exercise of
their rights as such teachers/educators and as citizens, under the circumstances, We cannot readily
impute malice and bad faith on the part of the petitioners [respondents] who, in fact, risked such the
harsh consequence of loss of their job and non-renewal of their probationary employment contract just
so the issue of the NEAT/NSAT anomaly involving their school would be ventilated in the proper forum
as to compel or somehow pressure not only their school but more important, the government's
education officials at the DECS to undertake proper and urgent measures. Hardly would such acts in
relation to a matter impressed with public interest - i.e. the integrity of the NEAT/NSAT process as a tool
designed by the DECS to measure or gauge the achievement level of pupils and students in the schools
nationwide - be considered as showing moral depravity or ill will on the part of the petitioners. x x x[49]

In light of this disquisition, it is settled that petitioner failed to comply with the requirement of
substantial due process in terminating the employment of respondents.

We now determine whether petitioner had complied with the procedural aspect of lawful dismissal.

In the termination of employment, the employer must (a) give the employee a written notice specifying
the ground or grounds of termination, giving to said employee reasonable opportunity within which to
explain his side; (b) conduct a hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given the opportunity to respond to the charge,
present his evidence or rebut the evidence presented against him; and (c) give the employee a written
notice of termination indicating that upon due consideration of all circumstances, grounds have been
established to justify his termination.[50]

Suffice it to state that respondents were afforded their rights to answer to petitioner's allegation and
were given the opportunity to present evidence in support of their defense. Nowhere in any of their
pleadings did they question the procedure for their termination except to challenge the ground relied
upon by petitioner. Ostensibly, therefore, petitioner had complied with the procedural aspect of due
process in terminating the employment of respondents. However, we still hold that the dismissal is
illegal, because of petitioner's failure to satisfy the substantive aspect thereof, as discussed above.

We are not unmindful of the equally important right of petitioner, as employer, under our Constitution,
to be protected in their property and interest. Nevertheless, the particular circumstances surrounding
this case convince us that the supreme penalty of dismissal upon respondents is not justified. The law
regards the workers with compassion. This is not only because of the law's concern for the workingman.
There is, in addition, his family to consider. Unemployment brings untold hardships and sorrows on
those dependent upon the wage-earner.[51]

Respondents likewise questioned their preventive suspension, but the Labor Arbiter and the NLRC
sustained its validity. The CA, on the other hand, declared the same to be illegal. Thus, petitioner insists
that respondents' preventive suspension was proper, in view of the latter's acts of utilizing their time,
not to teach, but to spread rumors that the former was about to cease operation.[52]

The law is clear on this matter. While the employer may place the worker concerned under preventive
suspension, it can do so only if the latter's continued employment poses a serious and imminent threat
to the life or property of the employer or of his co-workers.[53] In this case, the grounds relied upon by
petitioner in placing respondents under preventive suspension were the alleged violation of school rules
and regulations on the wearing of uniform, tardiness or absence, and maliciously spreading false
accusations against the school.[54] These grounds do not, in any way, pose a threat to the life or
property of the school, of the teachers or of the students and their parents. Hence, we affirm the CA's
conclusion that respondents' preventive suspension was illegal.

As probationary employees, respondents' security of tenure is limited to the period of their probation -
for Pe Benito, until June 2001[55] and for Balaguer, June 2002.[56] As they were no longer extended
new appointments, they are not entitled to reinstatement and full backwages. Rather, Pe Benito is only
entitled to her salary for her 30-day preventive suspension.[57] As to Balaguer, in addition to his 30-day
salary during his illegal preventive suspension, he is entitled to his backwages for the unexpired term of
his contract of probationary employment.
Lastly, petitioner faults the appellate court for awarding moral and exemplary damages in favor of
respondents despite lack of sufficient basis to support the award.[58]

A dismissed employee is entitled to moral damages when the dismissal is attended by bad faith or fraud;
or constitutes an act oppressive to labor; or is done in a manner contrary to good morals, good customs
or public policy. Exemplary damages, on the other hand, may be awarded if the dismissal is effected in a
wanton, oppressive or malevolent manner.[59] The award of said damages cannot be justified solely
upon the premise that the employer fired his employee without just cause or due process. It is
necessary that additional facts be pleaded and proven that the act of dismissal was attended by bad
faith, fraud, et al., and that social humiliation, wounded feelings and grave anxiety resulted
therefrom.[60]

Be that as it may, we find the award of moral and exemplary damages proper, as we quote with
approval the CA's justification for the award, thus:

At any rate, there is no question that both petitioners [respondents herein] are entitled to the award of
moral and exemplary damages, in view of the proven acts done in bad faith on the part of private
respondents [petitioner herein] who threatened petitioners' [respondents'] immediate dismissal when
the Manifesto was presented by petitioners [respondents], berating and verbally castigating petitioner
[respondent] Pe Benito, portraying them as mere detractors in an open letter to the parents who were
merely motivated by the design to malign the integrity of the school. x x x We find such bad faith on the
part of private respondents [petitioner] in effectively exerting pressure to silence the petitioners
[respondents] regarding their legitimate grievances against the school as sufficiently established in the
records, private respondents' [petitioner's] actuations having sullied the professional integrity of the
petitioners [respondents] and divided the faculty members on the controversy. For such unjustified acts
in relation to the NEAT/NSAT controversy that resulted to loss, prejudice and damage to petitioners
[respondents], private respondents [petitioner] are liable for moral and exemplary damages.[61]

WHEREFORE, premises considered, the petition is hereby DENIED. The Court of Appeals Decision and
Resolution dated June 30, 2003 and September 26, 2003, respectively, in CA-G.R. SP No. 75249, are
AFFIRMED.

SO ORDERED
G.R. NO. 164532 : July 24, 2007]

PHILIPPINE DAILY INQUIRER, INC., Petitioner, v. LEON M. MAGTIBAY, JR. and PHILIPPINE DAILY INQUIRER
EMPLOYEES UNION (PDIEU), Respondents.

DECISION

GARCIA, J.:

By this Petition for Review on Certiorari under Rule 45 of the Rules of Court, petitioner Philippine Daily
Inquirer, Inc. (PDI) seeks the reversal and setting aside of the decision1 dated May 25, 2004 of the Court
of Appeals (CA) in CA G.R. SP No. 78963, affirming the resolution dated September 23, 2002 of the
National Labor Relations Commission (NLRC) in NLRC Case No. 00-03-01945-96. The affirmed NLRC
resolution reversed an earlier decision dated July 29, 1996 of the Labor Arbiter in NLRC Case No.
011800-96, which dismissed the complaint for illegal dismissal filed by the herein respondent Leon
Magtibay, Jr. against the petitioner.

The factual antecedents are undisputed:

On February 7, 1995, PDI hired Magtibay, on contractual basis, to assist, for a period of five months from
February 17, 1995, the regular phone operator. Before the expiration of Magtibay's contractual
employment, he and PDI agreed to a fifteen-day contract extension, or from July 17, 1995 up to July 31,
1995, under the same conditions as the existing contract.

After the expiration of Magtibay's contractual employment, as extended, PDI announced the creation
and availability of a new position for a second telephone operator who would undergo probationary
employment. Apparently, it was PDI's policy to accord regular employees preference for new vacancies
in the company. Thus, Ms. Regina M. Layague, a PDI employee and member of respondent PDI
Employees Union (PDIEU), filed her application for the new position. However, she later withdrew her
application, paving the way for outsiders or non-PDI employees, like Magtibay in this case, to apply.

After the usual interview for the second telephone operator slot, PDI chose to hire Magtibay on a
probationary basis for a period of six (6) months. The signing of a written contract of employment
followed.
On March 13, 1996, or a week before the end the agreed 6-month probationary period, PDI officer
Benita del Rosario handed Magtibay his termination paper, grounded on his alleged failure to meet
company standards. Aggrieved, Magtibay immediately filed a complaint for illegal dismissal and
damages before the Labor Arbiter. PDIEU later joined the fray by filing a supplemental complaint for
unfair labor practice.

Magtibay anchored his case principally on the postulate that he had become a regular employee by
operation of law, considering that he had been employed by and had worked for PDI for a total period of
ten months, i.e., four months more than the maximum six-month period provided for by law on
probationary employment. He also claimed that he was not apprised at the beginning of his
employment of the performance standards of the company, hence, there was no basis for his dismissal.
Finally, he described his dismissal as tainted with bad faith and effected without due process.

PDI, for its part, denied all the factual allegations of Magtibay, adding that his previous contractual
employment was validly terminated upon the expiration of the period stated therein. Pressing the point,
PDI alleged that the period covered by the contractual employment cannot be counted with or tacked to
the period for probation, inasmuch as there is no basis to consider Magtibay a regular employee. PDI
additionally claimed that Magtibay was dismissed for violation of company rules and policies, such as
allowing his lover to enter and linger inside the telephone operator's booth and for failure to meet
prescribed company standards which were allegedly made known to him at the start through an
orientation seminar conducted by the company.

After due proceedings, the Labor Arbiter found for PDI and accordingly dismissed Magtibay's complaint
for illegal dismissal. The Labor Arbiter premised his holding on the validity of the previous contractual
employment of Magtibay as an independent contract. He also declared as binding the stipulation in the
contract specifying a fixed period of employment. According to the Labor Arbiter, upon termination of
the period stated therein, the contractual employment was also effectively terminated, implying that
Magtibay was merely on a probationary status when his services were terminated inasmuch as the
reckoning period for probation should be from September 21, 1995 up to March 31, 1996 as expressly
provided in their probationary employment contract. In fine, it was the Labor Arbiter's position that
Magtibay's previous contractual employment, as later extended by 15 days, cannot be considered as
part of his subsequent probationary employment.

Apart from the foregoing consideration, the Labor Arbiter further ruled that Magtibay's dismissal from
his probationary employment was for a valid reason. Albeit the basis for termination was couched in the
abstract, i.e., "you did not meet the standards of the company," there were three specific reasons for
Magtibay's termination, to wit: (1) he repeatedly violated the company rule prohibiting unauthorized
persons from entering the telephone operator's room; (2) he intentionally omitted to indicate in his
application form his having a dependent child; and (3) he exhibited lack of sense of responsibility by
locking the door of the telephone operator's room on March 10, 1996 without switching the proper lines
to the company guards so that incoming calls may be answered by them.

The Labor Arbiter likewise dismissed allegations of denial of due process and the commission by PDI of
unfair labor practice.

PDIEU and Magtibay appealed the decision of the Labor Arbiter to the NLRC. As stated earlier, the NLRC
reversed and set aside said decision, effectively ruling that Magtibay was illegally dismissed. According
to the NLRC, Magtibay's probationary employment had ripened into a regular one.

With the NLRC's denial of its motion for reconsideration, PDI went to the CA on a petition for certiorari .
Eventually, the CA denied due course to PDI's petition on the strength of the following observations:

We agree with the findings of respondent NLRC.

Petitioner PDI failed to prove that such rules and regulations were included in or form part of the
standards that were supposed to be made known to respondent Magtibay at the time of his
engagement as telephone operator. Particularly, as regards the first stated infraction xxx petitioner PDI,
contrary to its assertion, stated in its position paper, motion for reconsideration and in this petition that
respondent Magtibay failed to abide by the rules and regulations of the company issued by Ms. Benita
del Rosario regarding the entry of persons in the operator's booth when respondent was already
working for petitioner PDI. Further, nowhere can it be found in the list of Basic Responsibility and
Specific Duties and Responsibilities (Annex D of the petition) of respondent Magtibay that he has to
abide by the duties, rules and regulations that he has allegedly violated. The infractions considered by
petitioner PDI as grounds for the dismissal of respondent Magtibay may at most be classified as just
causes for the termination of the latter's employment. x x x.

xxx xxx xxx

Finally, the three questionable grounds also relied upon by petitioner PDI in dismissing respondent
Magtibay may be considered as just causes. However, petitioner PDI did not raise the same as an issue
in the present petition because the procedure it adopted in dismissing respondent Magtibay fell short of
the minimum requirements provided by law.

PDI filed a motion for reconsideration but to no avail.

Hence, this recourse by PDI on the following submissions:

I.

THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FINDING THAT A PROBATIONARY EMPLOYEE'S
FAILURE TO FOLLOW AN EMPLOYER'S RULES AND REGULATIONS CANNOT BE DEEMED FAILURE BY SAID
EMPLOYEE TO MEET THE STANDARDS OF HIS EMPLOYER THUS EMASCULATING PETITIONER'S RIGHT TO
CHOOSE ITS EMPLOYEES.

II.

THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN REFUSING TO FIND THAT PROCEDURAL DUE
PROCESS AS LAID DOWN IN SECTION 2, RULE XXIII OF THE IMPLEMENTING RULES OF THE LABOR CODE
HAD BEEN OBSERVED BY THE PETITIONER.

We GRANT the petition.

This Court, to be sure, has for a reason, consistently tended to be partial in favor of workers or
employees in labor cases whenever social legislations are involved. However, in its quest to strike a
balance between the employer's prerogative to choose his employees and the employee's right to
security of tenure, the Court remains guided by the gem of a holding in an old but still applicable case of
Pampanga Bus, Co. v. Pambusco Employees Union, Inc.2 In it, the Court said:

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 thus 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.

Management and labor, or the employer and the employee are more often not situated on the same
level playing field, so to speak. Recognizing this reality, the State has seen fit to adopt measures
envisaged to give those who have less in life more in law. Article 279 of the Labor Code which gives
employees the security of tenure is one playing field leveling measure:
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. x x x.

But hand in hand with the restraining effect of Section 279, the same Labor Code also gives the
employer a period within which to determine whether a particular employee is fit to work for him or
not. This employer's prerogative is spelled out in the following provision:

Art. 281. Probationary employment. ̶ Probationary employment shall not exceed six (6) months from the
date the employee started working, unless it is covered by an apprenticeship agreement stipulating a
longer period. The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be considered a regular employee.

In International Catholic Migration Commission v. NLRC,3 we have elucidated what probationary

employment entails:

x x x. A probationary employee, as understood under Article 282 (now Article 281) of the Labor Code, is
one who is on trial by an employer during which the employer determines whether or not he is qualified
for permanent employment. A probationary appointment is made to afford the employer an
opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will
become a proper and efficient employee. The word "probationary," as used to describe the period of
employment, implies the purpose of the term or period but not its length.

Being in the nature of a "trial period" the essence of a probationary period of employment
fundamentally lies in the purpose or objective sought to be attained by both the employer and the
employee during said period. The length of time is immaterial in determining the correlative rights of
both in dealing with each other during said period. While the employer, as stated earlier, observes the
fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent
employment, the probationer, on the other, seeks to prove to the employer, that he has the
qualifications to meet the reasonable standards for permanent employment.

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. In that sense, it is within the exercise of the right to select his employees that
the employer may set or fix a probationary period within which the latter may test and observe the
conduct of the former before hiring him permanently. x x x.
Within the limited legal six-month probationary period, probationary employees are still entitled to
security of tenure. It is expressly provided in the afore-quoted Article 281 that a probationary employee
may be terminated only on two grounds: (a) for just cause, or (b) when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer to the employee at
the time of his engagement.4

PDI invokes the second ground under the premises. In claiming that it had adequately apprised
Magtibay of the reasonable standards against which his performance will be gauged for purposes of
permanent employment, PDI cited the one-on-one seminar between Magtibay and its Personnel
Assistant, Ms. Rachel Isip-Cuzio. PDI also pointed to Magtibay's direct superior, Benita del Rosario, who
diligently briefed him about his responsibilities in PDI. These factual assertions were never denied nor
controverted by Magtibay. Neither did he belie the existence of a specific rule prohibiting unauthorized
persons from entering the telephone operator's booth and that he violated that prohibition. This
notwithstanding, the NLRC and the CA proceeded nonetheless to rule that the records of the case are
bereft of any evidence showing that these rules and regulations form part of the so-called company
standards.

We do not agree with the appellate court when it cleared the NLRC of commission of grave abuse of
discretion despite the latter's disregard of clear and convincing evidence that there were reasonable
standards made known by PDI to Magtibay during his probationary employment. It is on record that
Magtibay committed obstinate infractions of company rules and regulations, which in turn constitute
sufficient manifestations of his inadequacy to meet reasonable employment norms. The suggestion that
Magtibay ought to have been made to understand during his briefing and orientation that he is
expected to obey and comply with company rules and regulations strains credulity for acceptance. The
CA's observation that "nowhere can it be found in the list of Basic Responsibility and Specific Duties and
Responsibilities of respondent Magtibay that he has to abide by the duties, rules and regulations that he
has allegedly violated" is a strained rationalization of an unacceptable conduct of an employee.
Common industry practice and ordinary human experience do not support the CA's posture. All
employees, be they regular or probationary, are expected to comply with company-imposed rules and
regulations, else why establish them in the first place. Probationary employees unwilling to abide by
such rules have no right to expect, much less demand, permanent employment. We, therefore find
sufficient factual and legal basis, duly established by substantial evidence, for PDI to legally terminate
Magtibay's probationary employment effective upon the end of the 6-month probationary period.

It is undisputed that PDI apprised Magtibay of the ground of his termination, i.e., he failed to qualify as a
regular employee in accordance with reasonable standards made known to him at the time of
engagement, only a week before the expiration of the six-month probationary period. Given this
perspective, does this make his termination unlawful for being violative of his right to due process of
law?cralaw library
It does not.

Unlike under the first ground for the valid termination of probationary employment which is for just
cause, the second ground does not require notice and hearing. Due process of law for this second
ground consists of making the reasonable standards expected of the employee during his probationary
period known to him at the time of his probationary employment. By the very nature of a probationary
employment, the employee knows from the very start that he will be under close observation and his
performance of his assigned duties and functions would be under continuous scrutiny by his superiors. It
is in apprising him of the standards against which his performance shall be continuously assessed where
due process regarding the second ground lies, and not in notice and hearing as in the case of the first
ground.

Even if perhaps he wanted to, Magtibay cannot deny - as he has not denied - PDI's assertion that he was
duly apprised of the employment standards expected of him at the time of his probationary
employment when he underwent a one-on-one orientation with PDI's personnel assistant, Ms. Rachel
Isip-Cuzio. Neither has he denied nor rebutted PDI's further claim that his direct superior, Benita del
Rosario, briefed him regarding his responsibilities in PDI.

Lest it be overlooked, Magtibay had previously worked for PDI as telephone operator from February 7,
1995 to July 31, 1995 as a contractual employee. Thus, the Court entertains no doubt that when PDI
took him in on September 21, 1995, Magtibay was already very much aware of the level of competency
and professionalism PDI wanted out of him for the entire duration of his probationary employment.

PDI was only exercising its statutory hiring prerogative when it refused to hire Magtibay on a permanent
basis upon the expiration of the six-month probationary period. This was established during the
proceedings before the labor arbiter and borne out by the records and the pleadings before the Court.
When the NLRC disregarded the substantial evidence establishing the legal termination of Magtibay's
probationary employment and rendered judgment grossly and directly contradicting such clear
evidence, the NLRC commits grave abuse of discretion amounting to lack or excess of jurisdiction. It was,
therefore, reversible error on the part of the appellate court not to annul and set aside such void
judgment of the NLRC.chanrobles virtual law library

WHEREFORE, the assailed decision dated May 25, 2004 of the CA in CA G.R. SP No. 78963 is hereby
REVERSED and SET ASIDE, and the earlier resolution dated September 23, 2002 of the NLRC in NLRC
Case No. 00-03-01945-96 is declared NULL and VOID. The earlier decision dated July 29, 1996 of the
Labor Arbiter in NLRC Case No. 011800-96, dismissing respondent Leon Magtibay, Jr.'s complaint for
alleged illegal dismissal, is REINSTATED.

No pronouncement as to costs.

SO ORDERED.
Home > ChanRobles Virtual Law Library > Philippine Supreme Court Jurisprudence >

www.chanrobles.com

EN BANC

G.R. No. 96779 November 10, 1993

PINE CITY EDUCATIONAL CENTER and EUGENIO BALTAO, Petitioners, vs. THE NATIONAL LABOR
RELATIONS COMMISSION (THIRD DIVISION) and DANGWA BENTREZ, ROLAND PICART, APOLLO RIBAYA,
SR., RUPERTA RIBAYA, VIRGINIA BOADO, CECILIA EMOCLING, JANE BENTREZ, LEILA DOMINGUEZ, ROSE
ANN BERMUDEZ and LUCIA CHAN, Respondents.

Tenefrancia, Agranzamendez, Liceralde & Associates for petitioners.chanrobles virtual law library

Reynaldo B. Cajucom for private respondents.

NOCON, J.:

The is a petition for certiorari seeking the reversal of the resolution of public respondent National Labor
Relations Commission dated November 29, 1990, in NLRC Case No. 01-04-0056-89, which affirmed in
toto the decision of the Labor Arbiter dated February 28,1990.chanroblesvirtualawlibrary chanrobles
virtual law library

The antecedent facts are, a follows:chanrobles virtual law library

Private respondents Dangwa Bentrez, Roland Picart, Apollo Ribaya, Sr., Ruperta Ribaya, Virginia Boado,
Cecilia Emocling, Jane Bentrez, Leila Dominguez, Rose Ann Bermudez and Lucia Chan were all employed
as teachers on probationary basis by petitioner Pines City Educational Center, represented in this
proceedings by its President, Eugenio Baltao. With the exception of Jane Bentrez who was hired as a
grade school teacher, the remaining private respondents were hired as college instructors. All the
private respondents, except Roland Picart and Lucia Chan, signed contracts of employment with
petitioner for a fixed duration. On March 31, 1989, due to the expiration of private respondents'
contracts and their poor performance as teachers, they were notified of petitioners' decision not to
renew their contracts anymore.chanroblesvirtualawlibrarychanrobles virtual law library

On April 10, 1989, private respondents filed a complaint for illegal dismissal before the Labor Arbiter,
alleging that their dismissals were without cause and in violation of due process. Except for private
respondent Leila Dominguez who worked with petitioners for one semester, all other private
respondents were employed for one to two years. They were never informed in writing by petitioners
regarding the standards or criteria of evaluation so as to enable them to meet the requirements for
appointment as regular employees. They were merely notified in writing by petitioners, through its
chancellor, Dra. Nimia R. Concepcion, of the termination of their respective services as on March 31,
1989, on account of their below-par performance as teachers.chanroblesvirtualawlibrarychanrobles
virtual law library

For their part, petitioners contended that private respondents' separation from employment, apart from
their poor performance, was due to the expiration of the periods stipulated in their respective contracts.
In the case of private respondent Dangwa Bentrez, the duration of his employment contract was for one
year, or beginning June, 1988 to March 1989 whereas in the case of the other private respondents, the
duration of their employment contracts was for one semester, or beginning November, 1988 to March
1989. These stipulations were the laws that governed their relationships, and there was nothing in said
contracts which was contrary to law, morals, good customs and public policy. They argued further that
they cannot be compelled o enter into new contracts with private respondents. they concluded that the
separation of private respondents from the service was justified.chanroblesvirtualawlibrarychanrobles
virtual law library

On February 28, 1990, the Labor Arbiter rendered judgment in favor of private respondents, the
dispositive portion of which reads:

WHEREFORE, in the light of the foregoing considerations, judgment is hereby rendered ORDERING the
respondents to reinstate the complainants immediately to their former positions and to pay their full
backwages and other benefits and privileges without qualification and deduction from the time they
were dismissed up to their actual reinstatement.chanroblesvirtualawlibrarychanrobles virtual law library

Thus respondents should pay complainants the following:

BACKWAGES
NOTE: Computation covers only the period complainants were terminated up to January 31, 1990 or 10
months and does not include backwages from January 31, 1990 up to their actual reinstatement.

1) ROLAND PICART

a) Latest salary per month P2,136.00

b) Multiplied by period covered

(March 31, 1989 to January 31, 1990) x 10 months

-----

c) Equals backwages due P21,360.00

2) LUCIA CHAN

a) Latest salary per month P1,600.00

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P16,000.00

3) LEILA DOMINGUEZ

a) Latest salary per month P1,648.24

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P16,482.40

4) RUPERTA RIBAYA

a) Latest salary per month P1,856.00

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P18,560.00

5) CECILIA EMOCLING

a) Latest salary per month P1,648.00

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P16,480.00

6) ROSE ANN BERMUDEZ

a) Latest salary per month P2,600.00

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P26,000.00

7) DANGWA BENTREZ

a) Latest salary per month P1,700.00

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P17,000.00

8) JANE BENTREZ

a) Latest salary per month P1,315.44

b) ultiplied by period covered x 10 months

-----

c) Equals backwages due P13,154.40

9) APOLLO RIBAYA

a) Latest salary per month P1,875.00

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P18,7500.00

10) VIRGINIA BOADO

a) Latest salary per month P1,648.24

b) Multiplied by period covered x 10 months

-----

c) Equals backwages due P16,482.40

SUMMARY

1) Roland Picart 21,360.00

2) Lucia Chan 16,000.00

3) Leila Dominguez 16,482.40

4) Ruperta Ribaya 18,560.00

5) Cecilia Emocling 16,480.00

6) Rose Ann Bermudez 26,000.00

7) Dangwa Bentrez 17,000.00

8) Jane Bentrez 13,154.40

9) Apollo Ribaya 18,750.00

10) Virginia Boado 16,482.40

-----

GRAND TOTAL (Backwages) P180,269.20

Complainants claims for indemnity pay, premium pay for holidays and rest days, illegal deduction, 13th
month pay and underpayment are hereby DENIED for lack of
merit.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED. 1chanrobles virtual law library

In support of this decision, the Labor Arbiter rationalized that the teacher's contracts 2are vague and do
not include the specific description of duties and assignments of private respondents. They do not
categorically state that there will be no renewal because their appointments automatically terminate at
the end of the semester. Petitioners did not present any written evidence to substantiate their
allegation that the Academic Committee has evaluated private respondents' performance during their
one semester employment. On the contrary, they were hastily
dismissed.chanroblesvirtualawlibrarychanrobles virtual law library

On appeal to the National Labor Relations Commission, the decision was affirmed in toto in its
resolution dated November 29, 1990, with the additional reasoning that "the stipulation in the contract
providing for a definite period in the employment of complainant is obviously null and void, as such
stipulation directly assails the safeguards laid down in Article 280 (of the Labor Code), 3which explicitly
abhors the consideration of written or oral agreements pertaining to definite period in regular
employments. 4Hence, the present petition for certiorari with prayer for the issuance of a temporary
restraining order.chanroblesvirtualawlibrarychanrobles virtual law library

As prayed for, this Court issued a temporary restraining order on March 11, 1991, enjoining respondents
from enforcing the questioned resolution. 5chanrobles virtual law library

Petitioners raise this sole issue: "THAT THERE IS PRIMA FACIE EVIDENCE OF GRAVE ABUSE OF
DISCRETION ON THE PART OF THE LABOR ARBITER BY WANTONLY, CAPRICIOUSLY AND MALICIOUSLY
DISREGARDING PROVISIONS OF THE LAW AND JURISPRUDENCE LAID DOWN IN DECISIONS OF THE
HONORABLE SUPREME COURT." 6chanrobles virtual law library

Petitioners reiterate their previous arguments, relying heavily in the case of Brent School, Inc. et al., v.
Zamora, et al. 7chanrobles virtual law library
It is quite easy to resolve the present controversy because the Brent case, which is a product of
extensive research, already provides the answer. We were categorical therein that:

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 and 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 prevent 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 brought to bear upon the
employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears
that the employer or 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 expressly 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.)

The ruling was reiterated in Pakistan International Airlines Corporation v. Ople, etc., et al. 8and La
Sallete of Santiago, Inc. v. NLRC, et al. 9

In the present case, however, We have to make a distinction.chanroblesvirtualawlibrarychanrobles

virtual law library

Insofar as the private respondents who knowingly and voluntarily agreed upon fixed periods of
employment are concerned, their services were lawfully terminated by reason of the expiration of the
periods of their respective contracts. These are Dangwa Bentrez, Apollo Ribaya, Sr., Ruperta Ribaya,
Virginia Boado, Cecilia Emocling, Jose Bentrez, Leila Dominguez and Rose Ann Bermudez. Thus, public
respondent committed grave abuse of discretion in affirming the decision of the Labor Arbiter ordering
the reinstatement and payment of full backwages and other benefits and
privileges.chanroblesvirtualawlibrarychanrobles virtual law library

With respect to private respondents Roland Picart and Lucia Chan, both of whom did not sign any
contract fixing the periods of their employment nor to have knowingly and voluntarily agreed upon fixed
periods of employment, petitioners had the burden of proving that the termination of their services was
legal. As probationary employees, they are likewise protected by the security of tenure provision of the
Constitution. Consequently, they cannot be removed from their positions unless for cause. 10On the
other hand, petitioner contended that base don the evaluation of the Academic Committee their
performance as teachers was poor. The Labor Arbiter, however, was not convinced. Thus he found as
follows:

Respondents likewise aver that the Academic Committee has evaluated their performance during their
one semester employment (see Annexes "M" to "X" of complainants' position paper). However, they did
not present any written proofs or evidence to support their allegation. 11

xxx xxx xxxchanrobles virtual law library

There is absolutely nothing in the record which will show that the complainants were afforded even an
iota of chance to refute respondents' allegations that the complainants did not meet the reasonable
standards and criteria set by the school. . . . 12chanrobles virtual law library

We concur with these factual findings, there being no showing that they were resolved arbitrarily. 13
Thus, the order for their reinstatement and payment of full backwages and other benefits and privileges
from the time they were dismissed up to their actual reinstatement is proper, conformably with Article
279 of the Labor Code, as amended by Section 34 of Republic Act No. 6715, 14which took effect on
March 21, 1989. 15It should be noted that private respondents Roland Picart and Lucia Chan were
dismissed illegally on March 31, 1989, or after the effectivity of said amendatory law. However, in
ascertaining the total amount of backwages payable to them, we go back to the rule prior to the
mercury drug rule 16that the total amount derived from employment elsewhere by the employee from
the date of dismissal up to the date of reinstatement, if any, should be deducted therefrom. 17 We
restate the underlying reason that employees should not be permitted to enrich themselves at the
expense of their employer. 18 In addition, the law abhors double compensation. 19 to this extent, our
ruling in Alex Ferrer, et al., v. NLRC, et al., G.R. No. 100898, promulgated on July 5, 1993, is hereby
modified.chanroblesvirtualawlibrarychanrobles virtual law library

Public respondent cannot claim not knowing the ruling in the Brent case because in its questioned
resolution, it is stated that one of the cases invoked by petitioners in their appeal is said case. 20 This
notwithstanding, it disregarded Our ruling therein without any reason at all and expressed the
erroneous view that:

The agreement of the parties fixing a definite date for the termination of the employment relations is
contrary to the specific provision of Article 280. being contrary to law, the agreement cannot be
legitimized. . . . 21chanrobles virtual law library
Stare decisis et no quieta movere. Once a case ha been decided one way, then another case, involving
exactly the same point at issue, should be decided in the same manner. Public respondent had no choice
on the matter. It could not have ruled in any other way. This Tribunal having spoken in the Brent case,
its duty was to obey. 22Let it be warned that to defy its decisions is to court contempt. 23chanrobles
virtual law library

WHEREFORE, the resolution of public respondent National Labor Relations Commission dated November
29, 1990 is hereby MODIFIED. private respondents Roland Picart and Lucia Chan are ordered reinstated
without loss of seniority rights and other privileges and their backwages paid in full inclusive of
allowances, and to their other benefits or their monetary equivalent pursuant to Article 279 of the Labor
Code, as amended by Section 34 of Republic Act No. 6715, subject to deduction of income earned
elsewhere during the period of dismissal, if any, to be computed from the time they were dismissed up
to the time of their actual reinstatement. the rest of the Labor Arbiter's decision dated February 28,
1990, as affirmed by the NLRC is set aside. The temporary restraining order issued on March 11, 1991 is
made permanent.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.
G.R. No. 204406 February 26, 2014

MACARTHUR MALICDEM and HERMENIGILDO FLORES, Petitioners,

vs.

MARULAS INDUSTRIAL CORPORATION and MIKE MANCILLA, Respondents.

DECISION

MENDOZA, J.:

This petition for review on certiorari1 under Rule 45 of the Rules of Court filed by Macarthur Malicdem
(Malicdem) and Hermenigildo Flores (Flores) assails the July 18, 2012 Decision2 and the November 12,
2012 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 1244 70, dismissing their petition for
certiorari under Rule 65 in an action for illegal dismissal.

The Facts:

A complaint4 for illegal dismissal, separation pay, money claims, moral and exemplary damages, and
attorney's fees was filed by petitioners Malicdem and Flores against respondents Marulas Industrial
Corporation (Marulas) and Mike Mancilla (Mancilla), who were engaged in the business of
manufacturing sacks intended for local and export markets.

Malicdem and Flores were first hired by Marulas as extruder operators in 2006, as shown by their
employment contracts. They were responsible for the bagging of filament yarn, the quality of pp yarn
package and the cleanliness of the work place area. Their employment contracts were for a period of
one (1) year. Every year thereafter, they would sign a Resignation/Quitclaim in favor of Marulas a day
after their contracts ended, and then sign another contract for one (1) year. Until one day, on December
16, 2010, Flores was told not to report for work anymore after being asked to sign a paper by Marulas'
HR Head to the effect that he acknowledged the completion of his contractual status. On February 1,
2011, Malicdem was also terminated after signing a similar document. Thus, both claimed to have been
illegally dismissed.
Marulas countered that their contracts showed that they were fixed-term employees for a specific
undertaking which was to work on a particular order of a customer for a specific period. Their severance
from employment was due to the expiration of their contracts.

On February 7, 2011, Malicdem and Flores lodged a complaint against Marulas and Mancilla for illegal
dismissal.

On July 13, 2011, the Labor Arbiter (LA) rendered a decision5 in favor of the respondents, finding no
illegal dismissal. He ruled that Malicdem and Flores were not terminated and that their employment
naturally ceased when their contracts expired. The LA, however, ordered Marulas to pay Malicdem and
Flores their respective wage differentials, to wit:

WHEREFORE, the complaints for illegal dismissal are dismissed for lack of merit. Respondent Marulas
Industrial Corporation is, however, ordered to pay complainants wage differential in the following
amounts:

1. Macarthur Malicdem ₱20,111.26

2/2/07 – 6/13/08 = None

6/14/08 – 8/27/08 = 2.47 mos.

₱377 – 362 = ₱15

x 26 days x 2.47 mos. = 963.30

8/28/08 – 6/30/10 = 22.06 mos.

₱382 – ₱362 = ₱20

x 26 days x 22.06 mos. = 11,471.20

7/1/10 – 2/2/11 = 7.03 mos.

₱404 – ₱362 = ₱42

x 26 days x 7.03 mos. = 7,676.76

20,111.26

; and

2. Herminigildo Flores ₱18,440.50

2/2/08 – 6/13/08 = 4.36 mos. None

6/14/08 – 8/27/08 = 963.30

8/28/08 – 6/30/10 = 11,471.20

7/1/10 – 12/16/10 = 5.50 mos.

₱404 x ₱362 = ₱42

x 26 days x 5.50 mos. = 6,006.00

18,440.50

All other claims are dismissed for lack of merit.

SO ORDERED.6

Malicdem and Flores appealed to the NLRC which partially granted their appeal with the award of
payment of 13th month pay, service incentive leave and holiday pay for three (3) years. The dispositive
portion of its December 19, 2011 Decision7 reads:

WHEREFORE, the appeal is GRANTED IN PART. The Decision of Labor Arbiter Raymund M. Celino, dated
July 13, 2011, is MODIFIED. In addition to the award of salary differentials, complainants should also be
awarded 13th month pay, service incentive leave and holiday pay for three years.

SO ORDERED.8

Still, petitioners filed a motion for reconsideration, but it was denied by the NLRC on February 29, 2011.

Aggrieved, Malicdem and Flores filed a petition for certiorari under Rule 65 with the CA.

On July 18, 2012, the CA denied the petition,9 finding no grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the NLRC. It ruled that the issue of whether or not the petitioners
were project employees or regular employees was factual in nature and, thus, not within the ambit of a
petition for certiorari. Moreover, it accorded respect and due consideration to the factual findings of the
NLRC, affirming those of the LA, as they were supported by substantial evidence.

On the substantive issue, the CA explained that "the repeated and successive rehiring of project
employees do not qualify them as regular employees, as length of service is not the controlling
determinant of the employment tenure of a project employee, but whether the employment has been
fixed for a specific project or undertaking, its completion has been determined at the time of the
engagement of the employee."10

Corollarily, considering that there was no illegal dismissal, the CA ruled that payment of backwages,
separation pay, damages, and attorney's fees had no factual and legal bases. Hence, they could not be
awarded to the petitioners.

Aggrieved, Malicdem and Flores filed a motion for reconsideration, but their pleas were denied in the CA
Resolution, dated November 12, 2012.

The Petition

Malicdem and Flores now come before this Court by way of a petition for review on certiorari under
Rule 45 of the Rules of Court praying for the reversal of the CA decision anchored on the principal
argument that the appellate court erred in affirming the NLRC decision that there was no illegal
dismissal because the petitioners’ contracts of employment with the respondents simply expired. They
claim that their continuous rehiring paved the way for their regularization and, for said reason, they
could not be terminated from their jobs without just cause.

In their Comment,11 the respondents averred that the petitioners failed to show that the CA erred in
affirming the NLRC decision. They posit that the petitioners were contractual employees and their
rehiring did not amount to regularization. The CA cited William Uy Construction Corp. v. Trinidad,12
where it was held that the repeated and successive rehiring of project employees did not qualify them
as regular employees, as length of service was not the controlling determinant of the employment
tenure of a project employee, but whether the employment had been fixed for a specific project or
undertaking, its completion had been determined at the time of the engagement of the employee. The
respondents add that for said reason, the petitioners were not entitled to full backwages, separation
pay, moral and exemplary damages, and attorney’s fees.

Now, the question is whether or not the CA erred in not finding any grave abuse of discretion amounting
to lack or excess of jurisdiction on the part of the NLRC.

The Court’s Ruling:

The Court grants the petition.

The petitioners have convincingly shown that they should be considered regular employees and, as
such, entitled to full backwages and other entitlements.

A reading of the 2008 employment contracts,13 denominated as "Project Employment Agreement,"

reveals that there was a stipulated probationary period of six (6) months from its commencement. It
was provided therein that in the event that they would be able to comply with the company’s standards
and criteria within such period, they shall be reclassified as project employees with respect to the
remaining period of the effectivity of the contract. Specifically, paragraph 3(b) of the agreement reads:

The SECOND PARTY hereby acknowledges, agrees and understands that the nature of his/her
employment is probationary and on a project-basis. The SECOND PARTY further acknowledges, agrees
and understands that within the effectivity of this Contract, his/her job performance will be evaluated in
accordance with the standards and criteria explained and disclosed to him/her prior to signing of this
Contract. In the event that the SECOND PARTY is able to comply with the said standards and criteria
within the probationary period of six month/s from commencement of this Contract, he/she shall be
reclassified as a project employee of (o)f the FIRST PARTY with respect to the remaining period of the
effectivity of this Contract.

Under Article 281 of the Labor Code, however, "an employee who is allowed to work after a
probationary period shall be considered a regular employee." When an employer renews a contract of
employment after the lapse of the six-month probationary period, the employee thereby becomes a
regular employee. No employer is allowed to determine indefinitely the fitness of its employees.14
While length of time is not the controlling test for project employment, it is vital in determining if the
employee was hired for a specific undertaking or tasked to perform functions vital, necessary and
indispensable to the usual business of trade of the employer.15 Thus, in the earlier case of Maraguinot,
Jr. v. NLRC,16 it was ruled that a project or work pool employee, who has been: (1) continuously, as
opposed to intermittently, rehired by the same employer for the same tasks or nature of tasks; and (2)
those tasks are vital, necessary and indispensable to the usual business or trade of the employer, must
be deemed a regular employee. Thus:

x x x. Lest it be misunderstood, this ruling does not mean that simply because an employee is a project
or work pool employee even outside the construction industry, he is deemed, ipso jure, a regular
employee. All that we hold today is that once a project or work pool employee has been: (1)
continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or nature
of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the
employer, then the employee must be deemed a regular employee, pursuant to Article 280 of the Labor
Code and jurisprudence. To rule otherwise would allow circumvention of labor laws in industries not
falling within the ambit of Policy Instruction No. 20/Department Order No. 19, hence allowing the
prevention of acquisition of tenurial security by project or work pool employees who have already
gained the status of regular employees by the employer's conduct.1âwphi1

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.
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.17

Guided by the foregoing, the Court is of the considered view that there was clearly a deliberate intent to
prevent the regularization of the petitioners.

To begin with, there is no actual project. The only stipulations in the contracts were the dates of their
effectivity, the duties and responsibilities of the petitioners as extruder operators, the rights and
obligations of the parties, and the petitioners’ compensation and allowances. As there was no specific
project or undertaking to speak of, the respondents cannot invoke the exception in Article 280 of the
Labor Code.18 This is a clear attempt to frustrate the regularization of the petitioners and to circumvent
the law.

Next, granting that they were project employees, the petitioners could only be considered as regular
employees as the two factors enumerated in Maraguinot, Jr., are present in this case. It is undisputed
that the petitioners were continuously rehired by the same employer for the same position as extruder
operators. As such, they were responsible for the operation of machines that produced the sacks.
Hence, their work was vital, necessary and indispensable to the usual business or trade of the employer.

In D.M. Consunji, Inc. v. Estelito Jamin19 and Liganza v. RBL Shipyard Corporation,20 the Court
reiterated the ruling that an employment ceases to be coterminous with specific projects when the
employee is continuously rehired due to the demands of the employer’s business and re-engaged for
many more projects without interruption.

The respondents cannot use the alleged expiration of the employment contracts of the petitioners as a
shield of their illegal acts. The project employment contracts that the petitioners were made to sign
every year since the start of their employment were only a stratagem to violate their security of tenure
in the company. As restated in Poseidon Fishing v. NLRC,21 "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."
The respondents’ invocation of William Uy Construction Corp. v. Trinidad22 is misplaced because it is
applicable only in cases involving the tenure of project employees in the construction industry. It is
widely known that in the construction industry, a project employee's work depends on the availability of
projects, necessarily the duration of his employment.23 It is not permanent but coterminous with the
work to which he is assigned.24 It would be extremely burdensome for the employer, who depends on
the availability of projects, to carry him as a permanent employee and pay him wages even if there are
no projects for him to work on.25 The rationale behind this is that once the project is completed it
would be unjust to require the employer to maintain these employees in their payroll. To do so would
make the employee a privileged retainer who collects payment from his employer for work not done.
This is extremely unfair to the employers and amounts to labor coddling at the expense of
management.26"

Now that it has been clearly established that the petitioners were regular employees, their termination
is considered illegal for lack of just or authorized causes. Under Article 279 of the Labor Code, an
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld from him
up to the time of his actual reinstatement. The law intends the award of backwages and similar benefits
to accumulate past the date of the LA decision until the dismissed employee is actually reinstated.

WHEREFORE, the petition is GRANTED. The assailed July 18, 2012 decision of the Court of Appeals and
its November 12, 2012 Resolution in CA-G.R. SP No. 1244 70, are hereby ANNULLED and SET ASIDE.

Accordingly, respondent Marulas Industrial Corporation is hereby ordered to reinstate petitioners

Macarthur Malicdem and Hermenigildo Flores to their former positions without loss of seniority rights
and other privileges and to pay their full backwages, inclusive of allowances and their other benefits or
their monetary equivalent computed from the time their compensations were withheld from them up to
the time of their actual reinstatement plus the wage differentials stated in the July 13, 2011 decision of
the Labor Arbiter, as modified by the December 19, 2011 NLRC decision.

SO ORDERED.
G.R. Nos. 196280 & 196286 April 2, 2014

UNIVERSIDAD DE STA. ISABEL, Petitioner,

vs.

MARVIN-JULIAN L. SAMBAJON, JR., Respondent.

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 urging this Court to set aside the Decision1
dated March 25, 2011 of the Court of Appeals (CA) in CA-GR. SP Nos. 108103 and 108168 which affirmed
with modification the Decision2 dated August 1, 2008 of the National Labor Relations Commission
(NLRC). The NLRC affirmed the Decision3 dated August 22, 2006 of the Labor Arbiter in NLRC Sub-RAB V-
05-04-00053-05) declaring petitioner liable for illegal dismissal of respondent.

The Facts

Universidad de Sta. Isabel (petitioner) is a non-stock, non-profit religious educational institution in Naga
City. Petitioner hired Marvin-Julian L. Sambajon, Jr. (respondent) as a full-time college faculty member
with the rank of Assistant Professor on probationary status, as evidenced by an Appointment Contract4
dated November 1, 2002, effective November 1, 2002 up to March 30, 2003.

After the aforesaid contract expired, petitioner continued to give teaching loads to respondent who
remained a full-time faculty member of the Department of Religious Education for the two semesters of
school-year (SY) 2003-2004 (June 1, 2003 to March 31, 2004); and two semesters of SY 2004-2005 (June
2004 to March 31, 2005).5

Sometime in June 2003, after respondent completed his course in Master of Arts in Education, major in
Guidance and Counseling, he submitted the corresponding Special Order from the Commission on
Higher Education (CHED), together with his credentials for the said master’s degree, to the Human
Resources Department of petitioner for the purpose of salary adjustment/increase. Subsequently,
respondent’s salary was increased, as reflected in his pay slips starting October 1-15, 2004.6 He was
likewise re-ranked from Assistant Professor to Associate Professor.

In a letter dated October 15, 2004 addressed to the President of petitioner, Sr. Ma. Asuncion G.
Evidente, D.C., respondent vigorously argued that his salary increase should be made effective as of June
2003 and demanded the payment of his salary differential. The school administration thru Sr. Purita
Gatongay, D.C., replied by explaining its policy on re-ranking of faculty members7, viz:

xxxx

Please be informed that teachers in the Universidad are not re-ranked during their probationary period.
The Faculty Manual as revised for school year 2002-2003 provides (page 38) "Re-ranking is done every
two years, hence the personnel hold their present rank for two years. Those undergoing probationary
period and those on part-time basis of employment are not covered by this provision." This provision is
found also in the 2000-2001 Operations Manual.

Your personnel file shows that you were hired as a probationary teacher in the second semester of
school year 2002-2003. By October 2004, you will be completing four (4) semesters (two school years) of
service. Even permanent teachers are re-ranked only every two years, and you are not even a
permanent teacher. I am informed that you have been told several times and made to read the
Provision in the Faculty Manual by the personnel office that you cannot be re-ranked because you are
still a probationary teacher.

x x x x8

Respondent insisted on his demand for retroactive pay. In a letter dated January 10, 2005, Sr. Evidente
reiterated the school policy on re-ranking of teachers, viz:

xxx

Under the Faculty Manual a permanent teacher is not entitled to re-ranking oftener than once every
two years. From this it should be obvious that, with all the more reason, a probationary teacher would
not be entitled to "evaluation," which could result in re-ranking or "adjustment in salary" oftener than
once every two years.
Since you are a probationary teacher, the University is under no obligation to re-rank you or adjust your
salary after what you refer to as "evaluation." Nevertheless, considering that in October 2004 you were
completing two years of service, the University adjusted your salary in the light of the CHED Special
Order you submitted showing that you had obtained the degree of Master of Arts in Education. Instead
of being grateful for the adjustment, you insist that the adjustment be made retroactive to June 2003.
Simply stated, you want your salary adjusted after one semester of probationary service. We do not
think a probationary teacher has better rights than a permanent teacher in the matter of re-ranking or
"evaluation."9

However, respondent found the above explanation insufficient and not clear enough. In his letter dated
January 12, 2005, he pointed out the case of another faculty member -- whom he did not name -- also
on probationary status whose salary was supposedly adjusted by petitioner at the start of school year
(June) after he/she had completed his/her master’s degree in March. Respondent thus pleaded for the
release of his salary differential, or at the very least, that petitioner give him categorical answers to his
questions.10

Apparently, to resolve the issue, a dialogue was held between respondent and Sr. Evidente. As to the
outcome of this conversation, the parties gave conflicting accounts. Respondent claimed that Sr.
Evidente told him that the school administration had decided to shorten his probationary period to two
years on the basis of his satisfactory performance.11 This was categorically denied by Sr. Evidente
though the latter admitted having informed respondent "that he was made Associate Professor on
account of his incessant requests for a salary increase which the Universidad de Santa Isabel eventually
accommodated…considering that [respondent] had obtained a Master’s Degree in June 2003." She
further informed respondent that "his appointment as Associate Professor did not affect his status as a
probationary employee" and that petitioner "was not and did not exercise its prerogative to shorten his
probationary period to only two years." Sr. Stella O. Real, D.C., who issued a Certificate of Employment
to respondent, likewise denied that she confirmed to respondent that petitioner has shortened his
probationary employment.12

On February 26, 2005, respondent received his letter of termination which stated:

Greetings of Peace in the Lord!

We regret to inform your good self that your full time probationary appointment will not be renewed
when it expires at the end of this coming March 31, 2005.
Thank you so much for the services that you have rendered to USI and to her clientele the past several
semesters. We strongly and sincerely encourage you to pursue your desire to complete your Post
Graduate studies in the University of your choice as soon as you are able.

God bless you in all your future endeavors.

Godspeed!13

On April 14, 2005, respondent filed a complaint for illegal dismissal against the petitioner.

In his Decision dated August 22, 2006, Labor Arbiter Jesus Orlando M. Quinones ruled that there was no
just or authorized cause in the termination of respondent’s probationary employment. Consequently,
petitioner was found liable for illegal dismissal, thus:

WHEREFORE, in view of the foregoing, judgment is hereby rendered finding respondent school
UNIVERSIDAD DE SANTA ISABEL liable for the illegal dismissal of complainant MARVIN-JULIAN L.
SAMBAJON, JR.

Accordingly, and consistent with Article 279 of the Labor Code, respondent school is hereby directed to
pay complainant full backwages covering the period/duration of the 1st semester of academic year
2005-2006. Reinstatement being rendered moot by the expiration of the probationary period,
respondent school is directed to pay complainant separation pay in lieu of reinstatement computed at
one (1) month’s pay for every year of service. An award of 10% attorney’s fees in favor of complainant is
also held in order.

(please see attached computation of monetary award as integral part of this decision).

All other claims and charges are DISMISSED for lack of legal and factual basis.

SO ORDERED.14

Petitioner appealed to the NLRC raising the issue of the correct interpretation of Section 92 of the
Manual of Regulations for Private Schools and DOLE-DECS-CHED-TESDA Order No. 01, series of 1996,
and alleging grave abuse of discretion committed by the Labor Arbiter in ruling on a cause of
action/issue not raised by the complainant (respondent) in his position paper.

On August 1, 2008, the NLRC rendered its Decision affirming the Labor Arbiter and holding that
respondent had acquired a permanent status pursuant to Sections 91, 92 and 93 of the 1992 Manual of
Regulations for Private Schools, in relation to Article 281 of the Labor Code, as amended. Thus:

In the instant case, the first contract (records, pp. 36; 92) executed by the parties provides that he was
hired on a probationary status effective November 1, 2002 to March 30, 2003. While his employment
continued beyond the above-mentioned period and lasted for a total of five (5) consecutive semesters,
it appears that the only other contract he signed is the one (records, p. 103) for the second semester of
SY 2003-2004. A portion of this contract reads:

"I am pleased to inform you that you are designated and commissioned to be an Apostle of Love and
Service, Unity and Peace as you dedicate and commit yourself in the exercise of your duties and
responsibilities as a:

FULL-TIME FACULTY MEMBER

of the Religious Education Department from November 1, 2003 to March 31, 2004.

Unless otherwise renewed in writing this designation automatically terminates as of the date expiration
above stated without further notice."

There is no showing that the complainant signed a contract for the first and second semesters of SY
2004-2005.

Under the circumstances, it must be concluded that the complainant has acquired permanent status.
The last paragraph of Article 281 of the Labor Code provides that "an employee who is allowed to work
after a probationary period shall be considered a regular employee." Based thereon, the complainant
required [sic] permanent status on the first day of the first semester of SY 2003-2004.

As presently worded, Section 92 of the revised Manual of Regulations for Private Schools merely
provides for the maximum lengths of the probationary periods of academic personnel of private schools
in the three (3) levels of education (elementary, secondary, tertiary). The periods provided therein are
not requirements for the acquisition, by them, of permanent status.
WHEREFORE, the decision appealed from is hereby AFFIRMED.

SO ORDERED.15

Petitioner and respondent sought reconsideration of the above decision, with the former contending
that the NLRC resolved an issue not raised in the appeal memorandum, while the latter asserted that
the NLRC erred in not awarding him full back wages so as to conform to the finding that he had acquired
a permanent status. Both motions were denied by the NLRC which ruled that regardless of whether or
not the parties were aware of the rules for the acquisition of permanent status by private school
teachers, these rules applied to them and overrode their mistaken beliefs. As to respondent’s plea for
back wages, the NLRC said the award of back wages was not done in this case because respondent did
not appeal the Labor Arbiter’s decision.

Both parties filed separate appeals before the CA. On motion by respondent, the two cases were
consolidated (CA-G.R. SP Nos. 108103 and 108168).16

By Decision dated March 25, 2011, the CA sustained the conclusion of the NLRC that respondent had
already acquired permanent status when he was allowed to continue teaching after the expiration of his
first appointment-contract on March 30, 2003. However, the CA found it necessary to modify the
decision of the NLRC to include the award of back wages to respondent. The dispositive portion of the
said decision reads:

WHEREFORE, premises considered, the petition docketed as CA-G.R. SP No. 108103 is GRANTED. The
challenged Decision of the NLRC dated August 1, 2008 in NLRC NCR CA No. 050481-06 (NLRC Sub-RAB V-
05-04-00053-05) is AFFIRMED with MODIFICATION in that Universidad de Sta. Isabel is directed to
reinstate Marvin-Julian L. Sambajon, Jr. to his former position without loss of seniority rights and to pay
him full backwages computed from the time his compensation was withheld from him up to the time of
his actual reinstatement. All other aspects are AFFIRMED.

As regards CA-G.R. SP No. 108168, the petition is DENIED for lack of merit.

SO ORDERED.17

The Petition/Issues
Before this Court, petitioner ascribes grave error on the part of the CA in sustaining the NLRC which
ruled that respondent was dismissed without just or authorized cause at the time he had already
acquired permanent or regular status since petitioner allowed him to continue teaching despite the
expiration of the first contract of probationary employment for the second semester of SY 2002-2003.
Petitioner at the outset underscores the fact that the NLRC decided an issue which was not raised on
appeal, i.e., whether respondent had attained regular status. It points out that the Labor Arbiter’s
finding that respondent was dismissed while still a probationary employee was not appealed by him,
and hence such finding had already become final.

In fine, petitioner asks this Court to rule on the following issues: (1) whether the NLRC correctly resolved
an issue not raised in petitioner’s appeal memorandum; and (2) whether respondent’s probationary
employment was validly terminated by petitioner.

Our Ruling

The petition is partly meritorious.

Issues on Appeal before the NLRC

Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC, which was in force at the time
petitioner appealed the Labor Arbiter’s decision, expressly provided that, on appeal, the NLRC shall limit
itself only to the specific issues that were elevated for review, to wit:

Section 4. Requisites for perfection of appeal. x x x.

xxxx

(d) Subject to the provisions of Article 218 of the Labor Code, once the appeal is perfected in accordance
with these Rules, the Commission shall limit itself to reviewing and deciding only the specific issues that
were elevated on appeal.

We have clarified that the clear import of the aforementioned procedural rule is that the NLRC shall, in
cases of perfected appeals, limit itself to reviewing those issues which are raised on appeal. As a
consequence thereof, any other issues which were not included in the appeal shall become final and
executory.18

In this case, petitioner sets forth the following issues in its appeal memorandum:

5.01

WHETHER THE MARVIN JULIAN L. SAMBAJON, JR. WAS ILLEGALLY DISMISSED FROM THE UNIVERSIDAD
DE STA. ISABEL.

5.02

WHETHER THE UNIVERSIDAD DE STA. ISABEL SHORTENED THE PROBATIONARY PERIOD OF MARVIN
JULIAN L. SAMBAJON.

5.03

WHETHER RESPONDENTS-APPELLANTS ARE ENTITLED TO DAMAGES.19

Specifically, petitioner sought the correct interpretation of the Manual of Regulations for Private School
Teachers and DOLE-DECS-CHED-TESDA Order No. 01, series of 1996, insofar as the probationary period
for teachers.

In reviewing the Labor Arbiter’s finding of illegal dismissal, the NLRC concluded that respondent had
already attained regular status after the expiration of his first appointment contract as probationary
employee. Such conclusion was but a logical result of the NLRC’s own interpretation of the law. Since
petitioner elevated the questions of the validity of respondent’s dismissal and the applicable
probationary period under the aforesaid regulations, the NLRC did not gravely abuse its discretion in
fully resolving the said issues.

As the Court held in Roche (Phils.) v. NLRC20:

Petitioners then suggest that the respondent Commission abused its discretion in awarding reliefs in
excess of those stated in the decision of the labor arbiter despite the absence of an appeal by Villareal.
To stress this point, they cited Section 5(c) of the Rules of Procedure of the National Labor Relations
Commission which provides that the Commission shall, in cases of perfected appeals, limits itself to
reviewing those issues which were raised on appeal. Consequently, those which were not raised on
appeal shall be final and executory.

There is no merit to this contention. The records show that the petitioners elevated the issues regarding
the correctness of the award of damages, reinstatement with backpay, retirement benefits and the cost-
saving bonus to the respondent Commission in their appeal. This opened the said issues for review and
any action taken thereon by the Commission was well within the parameters of its jurisdiction.
(Emphasis supplied.)

Probationary Employment Period

A probationary employee is one who is on trial by the employer during which the employer determines
whether or not said employee is qualified for permanent employment. A probationary appointment is
made to afford the employer an opportunity to observe the fitness of a probationary employee while at
work, and to ascertain whether he will become a proper and efficient employee. The word probationary
as used to describe the period of employment implies the purpose of the term or period, but not its
length.21

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. In that sense, it is within the exercise of the right to select his employees that
the employer may set or fix a probationary period within which the latter may test and observe the
conduct of the former before hiring him permanently.22 The law, however, regulates the exercise of this
prerogative to fix the period of probationary employment. While there is no statutory cap on the
minimum term of probation, the law sets a maximum "trial period" during which the employer may test
the fitness and efficiency of the employee.23

Article 281 of the Labor Code provides:

ART. 281. Probationary Employment.–Probationary employment shall not exceed six (6) months from
the date the employee started working, unless it is covered by an apprenticeship agreement stipulating
a longer period. The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be considered a regular employee.
The probationary employment of teachers in private schools is not governed purely by the Labor Code.
The Labor Code is supplemented with respect to the period of probation by special rules found in the
Manual of Regulations for Private Schools.24 On the matter of probationary period, Section 92 of the
1992 Manual of Regulations for Private Schools regulations states:

Section 92. Probationary Period. – Subject in all instances to compliance with the Department and
school requirements, the probationary period for academic personnel shall not be more than three (3)
consecutive years of satisfactory service for those in the elementary and secondary levels, six (6)
consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9)
consecutive trimesters of satisfactory service for those in the tertiary level where collegiate courses are
offered on a trimester basis. (Emphasis supplied.)

Thus, it is the Manual of Regulations for Private Schools, and not the Labor Code, that determines
whether or not a faculty member in an educational institution has attained regular or permanent
status.25 Section 9326 of the 1992 Manual of Regulations for Private Schools provides that full-time
teachers who have satisfactorily completed their probationary period shall be considered regular or
permanent.

In this case, the CA sustained the NLRC’s ruling that respondent was illegally dismissed considering that
he had become a regular employee when petitioner allowed him to work beyond the date specified in
his first probationary appointment contract which expired on March 30, 2003. According to the CA:

… As can be gleaned from Section 92 of the 1992 Manual of Regulations for Private Schools, the
probationary period applicable in this case is not more than six (6) consecutive regular semesters of
satisfactory service. In other words, the probationary period for academic personnel in the tertiary level
runs from one (1) semester to six (6) consecutive regular semesters of satisfactory service. In the instant
case, records reveal that Sambajon, Jr. only signed two appointment contracts. The first appointment-
contract which he signed was dated November 2002 for the period November 1, 2002 to March 30,
2003, as Assistant Professor 10 on probationary status. x x x The second appointment-contract which
Sambajon, Jr. executed was dated February 26, 2004, for the period November 1, 2003 to March 31,
2004. x x x Compared with the first appointment-contract, it was not indicated in the February 26, 2004
appointment-contract that Sambajon, Jr. was hired on probationary status, which explains the NLRC’s
conclusion that Sambajon, Jr. already attained permanent status. At this juncture, it is worthy to
emphasize that other than the period provided under Article 281 of the Labor Code, the following
quoted portion of Article 281 of the Labor Code still applies:

"ART. 281. PROBATIONARY EMPLOYMENT. –

x x x x An employee who is allowed to work after a probationary period shall be considered a regular
employee."

Thus, We sustain the NLRC’s conclusion that Sambajon, Jr. acquired permanent status on the first day of
the first semester of SY 2003-2004 when he was allowed to continue with his teaching stint after the
expiration of his first appointment-contract on March 30, 2003.27

On record are five appointment contracts28 of respondent:

Date Contract Period

November 1, 2002 November 1, 2002-March 30, 2003

September 28, 2003 June 1, 2003-October 31, 2003

February 26, 2004 November 1, 2003-March 31, 2004

September 30, 2004 June 1, 2004-October 31, 2004

October 28, 2004 November 3, 2004-March 31, 2005

Only the first and third contracts were signed by the respondent. However, such lack of signature in the
second contract appears not to be the crucial element considered by the CA but the fact that the third
contract dated February 26, 2004, unlike the previous contracts, does not indicate the nature of the
appointment as probationary employment. According to the CA, this implies, as concluded by the NLRC,
that respondent was already a regular employee.

We disagree.

The third appointment contract dated February 26, 2004 reads:

February 26, 2004

MR. MARVIN JULIAN SAMBAJON

Religious Education Department

Dear Mr. Sambajon,

I am pleased to inform you that you are designated and commissioned to be an Apostle of Love and
Service, Unity and Peace as you dedicate and commit yourself in the exercise of your duties and
responsibilities as a:

FULL TIME FACULTY MEMBER

of the Religious Education Department from November 1, 2003 to March 31, 2004.

Unless otherwise renewed in writing, this designation automatically terminates as of the date expiration
above states without further notice.

As a member of the academic/clinical community, you are expected to live by and give your full support
to the promotion and attainment of the Vision-Mission, goals and objectives, the rules and regulations,
the Core Values which the University professes to believe and live by.

Congratulations and keep your work full in the spirit of the Lord for the Charity of Christ urges us to live
life to the fullest.

God bless

In Christ,

Sr. Ma. Asuncion G. Evidente, D.C.

USI President

Witness:

Sr. Stella O. Real, D.C.

HR Officer
I, ______________________ understand that unless renewed in writing, my services as
________________ expires automatically on the specific date above stated.

Furthermore, I fully accept this appointment to help build the Kingdom of God here and now and to
facilitate the living of the Core Values and the attainment of the Vision-Mission and the goals and
objectives of the University.

Received and Conforme:

(SGD.) MARVIN-JULIAN L. SAMBAJON, JR.29

Since it was explicitly provided in the above contract that unless renewed in writing respondent’s
appointment automatically expires at the end of the stipulated period of employment, the CA erred in
concluding that simply because the word "probationary" no longer appears below the designation (Full-
Time Faculty Member), respondent had already become a permanent employee. Noteworthy is
respondent’s admission of being still under probationary period in his January 12, 2005 letter to Sr.
Evidente reiterating his demand for salary differential, which letter was sent almost one year after he
signed the February 26, 2004 appointment contract, to wit:

The problem is that your good office has never categorically resolved whether or not probationary
teachers can also be evaluated for salary adjustment. Nevertheless, inferring from your statement that
evaluation precedes re-ranking and in fact is the basis for re-ranking, may I categorically ask: does it
really mean that since, it precedes re-ranking, evaluation should not take place among probationary
teachers for they can not yet be re-ranked? If so, then how pitiful are we, probationary teachers for our
credentials are never evaluated since we cannot yet be re-ranked. Oh my goodness! Can your good
office not give me a clearer and more convincing argument shedding light on this matter?30

Respondent nonetheless claims that subsequently, the probationary period of three years under the
regulations was shortened by petitioner as relayed to him by Sr. Evidente herself. However, the latter,
together with Sr. Real, categorically denied having informed respondent that his probationary period
was abbreviated, allegedly the reason his salary adjustment was not made retroactive. Apart from his
bare assertion, respondent has not adduced proof of any decision of the school administration to
shorten his probationary period.

In Rev. Fr. Labajo v. Alejandro,31 we held that:

The three (3)-year period of service mentioned in paragraph 75 [of the Manual of Regulations for Private
Schools] is of course the maximum period or upper limit, so to speak, of probationary employment
allowed in the case of private school teachers. This necessarily implies that a regular or permanent
employment status may, under certain conditions, be attained in less than three (3) years. By and large,
however, whether or not one has indeed attained permanent status in one’s employment, before the
passage of three (3) years, is a matter of proof. (Emphasis supplied.)

There can be no dispute that the period of probation may be reduced if the employer, convinced of the
fitness and efficiency of a probationary employee, voluntarily extends a permanent appointment even
before the three-year period ends. Conversely, if the purpose sought by the employer is neither attained
nor attainable within the said period, the law does not preclude the employer from terminating the
probationary employment on justifiable ground; or, a shorter probationary period may be incorporated
in a collective bargaining agreement. But absent any circumstances which unmistakably show that an
abbreviated probationary period has been agreed upon, the three-year probationary term governs.32

As to the Certificate of Employment33 issued by Sr. Real on January 31, 2005, it simply stated that
respondent "was a full time faculty member in the Religious Education Department of this same
institution" and that he holds the rank of Associate Professor. There was no description or qualification
of respondent’s employment as regular or permanent. Neither did the similar Certification34 also issued
by Sr. Real on March 18, 2005 prove respondent’s status as a permanent faculty member of petitioner.

It bears stressing that full-time teaching primarily refers to the extent of services rendered by the
teacher to the employer school and not to the nature of his appointment. Its significance lies in the rule
that only full-time teaching personnel can acquire regular or permanent status. The provisions of DOLE-
DECS-CHED-TESDA Order No. 01, series of 1996, "Guidelines on Status of Employment of Teachers and
of Academic Personnel in Private Educational Institutions" are herein reproduced:

2. Subject in all instances to compliance with the concerned agency and school requirements, the
probationary period for teaching or academic personnel shall not be more than three (3) consecutive
school years of satisfactory service for those in the elementary and secondary levels; six (6) consecutive
regular semesters of satisfactory service for those in the tertiary and graduate levels, and nine (9)
consecutive trimesters of satisfactory service for those in the tertiary level where collegiate courses are
offered on a trimester basis.

Unless otherwise provided by contract, school academic personnel who are under probationary
employment cannot be dismissed during the applicable probationary period, unless dismissal is
compelled by a just cause or causes.
3. Teachers or academic personnel who have served the probationary period as provided for in the
immediately preceding paragraph shall be made regular or permanent if allowed to work after such
probationary period. The educational institution, however, may shorten the probationary period after
taking into account the qualifications and performance of the probationary teachers and academic
personnel.

Full-time teaching or academic personnel are those meeting all the following requirements:

3.1. Who possess at least the minimum academic qualifications prescribed by the Department of
Education, Culture and Sports for Basic Education, the Commission on Higher Education for Tertiary
Education, and the Technical Education and Skills Development Authority for Technical and Vocational
Education under their respective Manual of Regulations governing said personnel;

3.2 Who are paid monthly or hourly, based on the normal or regular teaching loads as provided for in
the policies, rules and standards of the agency concerned;

3.3 Whose regular working day of not more than eight (8) hours a day is devoted to the school;

3.4 Who have no other remunerative occupation elsewhere requiring regular hours of work that will
conflict with the working hours in the school; and

3.5 Who are not teaching full-time in any other educational institution.

All teaching or academic personnel who do not meet the foregoing qualifications are considered part
time.

4. Part-time teaching or academic personnel cannot acquire regular or permanent employment status.

5. Teaching or academic personnel who do not meet the minimum academic qualifications shall not
acquire tenure or regular status. The school may terminate their services when a qualified teacher
becomes available.35
In this case, petitioner applied the maximum three-year probationary period – equivalent to six
consecutive semesters – provided in the Manual of Regulations. This can be gleaned from the letter
dated March 24, 2004 of Sr. Grace Namocancat, D.C. addressed to respondent, informing the latter of
the result of evaluation of his performance for SY 2003-2004 and stating that November 2004 marks his
second year of full-time teaching, which means he had one more year to become a permanent
employee.36

The circumstance that respondent’s services were hired on semester basis did not negate the applicable
probationary period, which is three school years or six consecutive semesters. In Magis Young Achievers’
Learning Center37 the Court explained the three years probationary period rule in this wise:

The common practice is for the employer and the teacher to enter into a contract, effective for one
school year. At the end of the school year, the employer has the option not to renew the contract,
particularly considering the teacher’s performance. If the contract is not renewed, the employment
relationship terminates. If the contract is renewed, usually for another school year, the probationary
employment continues. Again, at the end of that period, the parties may opt to renew or not to renew
the contract. If renewed, this second renewal of the contract for another school year would then be the
last year – since it would be the third school year – of probationary employment. At the end of this third
year, the employer may now decide whether to extend a permanent appointment to the employee,
primarily on the basis of the employee having met the reasonable standards of competence and
efficiency set by the employer. For the entire duration of this three-year period, the teacher remains
under probation. Upon the expiration of his contract of employment, being simply on probation, he
cannot automatically claim security of tenure and compel the employer to renew his employment
contract. It is when the yearly contract is renewed for the third time that Section 93 of the Manual
becomes operative, and the teacher then is entitled to regular or permanent employment status.38
(Emphasis supplied.)

Petitioner argues that respondent’s probationary period expires after each semester he was contracted
to teach and hence it was not obligated to renew his services at the end of the fifth semester (March
2005) of his probationary employment. It asserts that the practice of issuing appointment contracts for
every semester was legal and therefore respondent was not terminated when petitioner did not renew
his contract for another semester as his probationary contract merely expired. Plainly, petitioner
considered the subject appointment contracts as fixed-term contracts such that it can validly dismiss
respondent at the end of each semester for the reason that his contract had expired.

The Court finds no merit in petitioner’s interpretation of the Manual of Regulations, supplemented by
DOLE-DECS-CHED-TESDA Order No. 01, series of 1996. As we made clear in the afore-cited case of Magis
Young Achievers’ Learning Center, the teacher remains under probation for the entire duration of the
three-year period. Subsequently, in the case of Mercado v. AMA Computer College-Parañaque City,
Inc.39 the Court, speaking through Justice Arturo D. Brion, recognized the right of respondent school to
determine for itself that it shall use fixed-term employment contracts as its medium for hiring its
teachers. Nevertheless, the Court held that the teachers’ probationary status should not be disregarded
simply because their contracts were fixed-term. Thus:

The Conflict: Probationary Status

and Fixed-term Employment

The existence of the term-to-term contracts covering the petitioners’ employment is not disputed, nor is
it disputed that they were on probationary status – not permanent or regular status – from the time
they were employed on May 25, 1998 and until the expiration of their Teaching Contracts on September
7, 2000. As the CA correctly found, their teaching stints only covered a period of at least seven (7)
consecutive trimesters or two (2) years and three (3) months of service. This case, however, brings to
the fore the essential question of which, between the two factors affecting employment, should prevail
given AMACC’s position that the teachers contracts expired and it had the right not to renew them. In
other words, should the teachers’ probationary status be disregarded simply because the contracts
were fixed-term?

The provision on employment on probationary status under the Labor Code is a primary example of the
fine balancing of interests between labor and management that the Code has institutionalized pursuant
to the underlying intent of the Constitution.

On the one hand, employment on probationary status affords management the chance to fully
scrutinize the true worth of hired personnel before the full force of the security of tenure guarantee of
the Constitution comes into play. Based on the standards set at the start of the probationary period,
management is given the widest opportunity during the probationary period to reject hirees who fail to
meet its own adopted but reasonable standards. These standards, together with the just and authorized
causes for termination of employment the Labor Code expressly provides, are the grounds available to
terminate the employment of a teacher on probationary status. For example, the school may impose
reasonably stricter attendance or report compliance records on teachers on probation, and reject a
probationary teacher for failing in this regard, although the same attendance or compliance record may
not be required for a teacher already on permanent status. At the same time, the same just and
authorize[d] causes for dismissal under the Labor Code apply to probationary teachers, so that they may
be the first to be laid-off if the school does not have enough students for a given semester or trimester.
Termination of employment on this basis is an authorized cause under the Labor Code.

Labor, for its part, is given the protection during the probationary period of knowing the company
standards the new hires have to meet during the probationary period, and to be judged on the basis of
these standards, aside from the usual standards applicable to employees after they achieve permanent
status. Under the terms of the Labor Code, these standards should be made known to the teachers on
probationary status at the start of their probationary period, or at the very least under the
circumstances of the present case, at the start of the semester or the trimester during which the
probationary standards are to be applied. Of critical importance in invoking a failure to meet the
probationary standards, is that the school should show – as a matter of due process – how these
standards have been applied. This is effectively the second notice in a dismissal situation that the law
requires as a due process guarantee supporting the security of tenure provision, and is in furtherance,
too, of the basic rule in employee dismissal that the employer carries the burden of justifying a
dismissal. These rules ensure compliance with the limited security of tenure guarantee the law extends
to probationary employees.

When fixed-term employment is brought into play under the above probationary period rules, the
situation – as in the present case – may at first blush look muddled as fixed-term employment is in itself
a valid employment mode under Philippine law and jurisprudence. The conflict, however, is more
apparent than real when the respective nature of fixed-term employment and of employment on
probationary status are closely examined.

The fixed-term character of employment essentially refers to the period agreed upon between the
employer and the employee; employment exists only for the duration of the term and ends on its own
when the term expires. In a sense, employment on probationary status also refers to a period because
of the technical meaning "probation" carries in Philippine labor law – a maximum period of six months,
or in the academe, a period of three years for those engaged in teaching jobs. Their similarity ends
there, however, because of the overriding meaning that being "on probation" connotes, i.e., a process
of testing and observing the character or abilities of a person who is new to a role or job.

Understood in the above sense, the essentially protective character of probationary status for
management can readily be appreciated. But this same protective character gives rise to the
countervailing but equally protective rule that the probationary period can only last for a specific
maximum period and under reasonable, well-laid and properly communicated standards. Otherwise
stated, within the period of the probation, any employer move based on the probationary standards and
affecting the continuity of the employment must strictly conform to the probationary rules.

Under the given facts where the school year is divided into trimesters, the school apparently utilizes its
fixed-term contracts as a convenient arrangement dictated by the trimestral system and not because
the workplace parties really intended to limit the period of their relationship to any fixed term and to
finish this relationship at the end of that term. If we pierce the veil, so to speak, of the parties’ so-called
fixed-term employment contracts, what undeniably comes out at the core is a fixed-term contract
conveniently used by the school to define and regulate its relations with its teachers during their
probationary period.
To be sure, nothing is illegitimate in defining the school-teacher relationship in this manner. The school,
however, cannot forget that its system of fixed-term contract is a system that operates during the
probationary period and for this reason is subject to the terms of Article 281 of the Labor Code. Unless
this reconciliation is made, the requirements of this Article on probationary status would be fully
negated as the school may freely choose not to renew contracts simply because their terms have
expired. The inevitable effect of course is to wreck the scheme that the Constitution and the Labor Code
established to balance relationships between labor and management.

Given the clear constitutional and statutory intents, we cannot but conclude that in a situation where
the probationary status overlaps with a fixed-term contract not specifically used for the fixed term it
offers, Article 281 should assume primacy and the fixed-period character of the contract must give way.
This conclusion is immeasurably strengthened by the petitioners’ and the AMACC’s hardly concealed
expectation that the employment on probation could lead to permanent status, and that the contracts
are renewable unless the petitioners fail to pass the school’s standards.40 (Additional emphasis
supplied.)

Illegal Dismissal

Notwithstanding the limited engagement of probationary employees, they are entitled to constitutional
protection of security of tenure during and before the end of the probationary period.41 The services of
an employee who has been engaged on probationary basis may be terminated for any of the following:
(a) a just or (b) an authorized cause; and (c) when he fails to qualify as a regular employee in accordance
with reasonable standards prescribed by the employer.42

Thus, while no vested right to a permanent appointment had as yet accrued in favor of respondent since
he had not completed the prerequisite three-year period (six consecutive semesters) necessary for the
acquisition of permanent status as required by the Manual of Regulations for Private Schools43 -- which
has the force of law44 -- he enjoys a limited tenure. During the said probationary period, he cannot be
terminated except for just or authorized causes, or if he fails to qualify in accordance with reasonable
standards prescribed by petitioner for the acquisition of permanent status of its teaching personnel.

In a letter dated February 26, 2005, petitioner terminated the services of respondent stating that his
probationary employment as teacher will no longer be renewed upon its expiry on March 31, 2005,
respondent’s fifth semester of teaching. No just or authorized cause was given by petitioner. Prior to
this, respondent had consistently achieved above average rating based on evaluation by petitioner’s
officials and students. He had also been promoted to the rank of Associate Professor after finishing his
master’s degree course on his third semester of teaching. Clearly, respondent’s termination after five
semesters of satisfactory service was illegal.

Respondent therefore is entitled to continue his three-year probationary period, such that from March
31, 2005, his probationary employment is deemed renewed for the following semester (1st semester of
SY 2005-2006). However, given the discordant relations that had arisen from the parties’ dispute, it can
be inferred with certainty that petitioner had opted not to retain respondent in its employ beyond the
three-year period.

On the appropriate relief and damages, we adhere to our disposition in Magis Young Achievers’ Learning
Center45:

Finally, we rule on the propriety of the monetary awards.1âwphi1 Petitioner, as employer, is entitled to
decide whether to extend respondent a permanent status by renewing her contract beyond the three-
year period. Given the acrimony between the parties which must have been generated by this
controversy, it can be said unequivocally that petitioner had opted not to extend respondent's
employment beyond this period. Therefore, the award of backwages as a consequence of the finding of
illegal dismissal in favor of respondent should be confined to the three-year probationary period.
Computing her monthly salary of F15,000.00 for the next two school years (F15,000.00 x 10 months x 2),
respondent already having received her full salaries for the year 2002-2003, she is entitled to a total
amount of F300,000.00. Moreover, respondent is also entitled to receive her 13th month pay
correspondent to the said two school years, computed as yearly salary, divided by 12 months in a year,
multiplied by 2, corresponding to the school years 2003-2004 and 2004-2005, or F150,000.00 I 12
months x 2 = F25,000.00. Thus, the NLRC was correct in awarding respondent the amount of
F325,000.00 as backwages, inclusive of 13th month pay for the school years 2003-2004 and 2004-2005,
and the amount of ₱3,750.00 as pro-rated 13th month pay.

WHEREFORE, the petition for review on certiorari is PARTLY GRANTED. The Decision dated March 25,
2011 of the Court of Appeals in CA-G.R. SP Nos. 108103 & 108168 is hereby MODIFIED. Petitioner
Universidad de Sta. Isabel is hereby DIRECTED to PAY respondent Marvin-Julian L. Sambajon, Jr. back
wages corresponding to his full monthly salaries for one semester (1st semester of SY 2005-2006) and
pro-rated 13th month pay.

The case is REMANDED to the Labor Arbiter for a recomputation of the amounts due to respondent in
conformity with this Decision.

No pronouncement as to costs.

SO ORDERED.