Labor case Digest

Friday, May 2, 2014

PETITIONER Czarina T. Malvar filed a complaint for illegal suspension and illegal dismissal against
respondents Kraft Food Philippines, Inc. (KFPI) and/or Bienvenido
Bautista.
While her appeal was pending in the Supreme Court, she and respondents entered into a compromise
agreement, whereby she was paid P40,000,000 in addition to the P14,252,192.12 earlier paid to her.
She later filed a motion to dismiss/withdraw case but before it could be acted upon, a motion for
intervention to protect attorneys rights was filed by the law firm of Dasal, Llasos and Associates,
through its Of counsel, retired Supreme Court Associate Justice Josue N. Bellosillo. The motion sought,
among others, that both Malvar and KFPI be held and ordered to pay jointly and severally the
intervenors contingent fees.
In opposing the motion, Malvar claimed that the intervenor lacked the legal capacity to intervene
because it had ceased to exist after Atty. Marwil N. Llasos resigned from the intervenor and Atty.
Richard B. Dasal became barred from private practice upon his appointment to a position in a
government subsidiary. They both personally handled her case. Besides, their dismissal was based on
a justifiable cause. Does this contention find merit?
Supreme Court (First Division) ruling: No.
In the absence of the lawyers fault, consent or waiver, a client cannot deprive the lawyer of his just
fees already earned in the guise of a justifiable reason. Here, Malvar not only downplayed the worth of
the intervenors legal service to her but also attempted to camouflage her intent to defraud her lawyer
by offering excuses that were not only inconsistent with her actions but, most importantly, fell short of
being justifiable.
The letter Malvar addressed to Retired Justice Bellosillo, who represented the intervenor, debunked her
allegations of unsatisfactory legal service because she thereby lavishly lauded the intervenor for its
dedication and devotion to the prosecution of her case and to the protection of her interests. Also
significant was that the attorney-client relationship between her and the intervenor was not severed
upon Atty. Dasals appointment to public office and Atty. Llasos resignation from the law firm.
In other words, the intervenor remained as her counsel of record, for, as we held in Rilloraza, Africa, De
Ocampo and Africa v. Eastern Telecommunication Philippines, Inc., G.R. No. 104600, July 2, 1999, 309
SCRA 566, 574, a client who employs a law firm engages the entire law firm; hence, the resignation,
retirement or separation from the law firm of the handling lawyer does not terminate the relationship,
because the law firm is bound to provide a replacement.
The stipulations of the written agreement between Malvar and the intervenors, not being contrary to
law, morals, public policy, public order or good customs, were valid and binding on her. They expressly
gave rise to the right of the intervenor to demand compensation.

In a word, she could not simply walk away from her contractual obligations toward the Intervenor, for
Article 1159 of the Civil Code provides that obligations arising from contracts have the force of law
between the parties and should be complied with in good faith

THIRD DIVISION
BECMEN SERVICE EXPORTER
AND PROMOTION, INC.,
Petitioner,
- versus -

G.R. Nos. 182978-79

Present:
Ynares-Santiago, J.(Chairperson),
Carpio Morales,*
Chico-Nazario,
Nachura, and
Peralta, JJ.

SPOUSES SIMPLICIO and MILA

CUARESMA (for and in behalf of
their daughter, Jasmin G. Cuaresma),
WHITE FALCON SERVICES, INC.
and JAIME ORTIZ (President,
White Falcon Services, Inc.),
Respondents.
x ------------------------------------------------------ x
SPOUSES SIMPLICIO and MILA
CUARESMA (for and in behalf of
their daughter, Jasmin G. Cuaresma),
Petitioners,

G.R. Nos. 184298-99

- versus WHITE FALCON SERVICES, INC.

Promulgated:
and BECMEN SERVICE EXPORTER
AND PROMOTION, INC.,
Respondents.
April 7, 2009
x ---------------------------------------------------------------------------------------- x

DECISION
YNARES-SANTIAGO, J.:
These consolidated petitions assail the Amended Decision[1] of the Court of
Appeals dated May 14, 2008 in CA-G.R. SP No. 80619 and CA-G.R. SP No.
81030 finding White Falcon Services, Inc. and Becmen Service Exporter and
Promotion, Inc. solidarily liable to indemnify spouses Simplicio and Mila
Cuaresma the amount of US$4,686.73 in actual damages with interest.
On January 6, 1997, Jasmin Cuaresma (Jasmin) was deployed by Becmen
Service Exporter and Promotion, Inc.[2] (Becmen) to serve as assistant nurse in AlBirk Hospital in the Kingdom of Saudi Arabia (KSA), for a contract duration of
three years, with a corresponding salary of US$247.00 per month.
Over a year later, she died allegedly of poisoning.
Jessie Fajardo, a co-worker of Jasmin, narrated that on June 21, 1998,
Jasmin was found dead by a female cleaner lying on the floor inside her dormitory
room with her mouth foaming and smelling of poison.[3]
Based on the police report and the medical report of the examining physician
of the Al-Birk Hospital, who conducted an autopsy of Jasmins body, the likely
cause of her death was poisoning. Thus:
According to letter No. 199, dated 27.2.1419H, issued by Al-Birk Police
Station, for examining the corpse of Jasmin Cuaresma, 12.20 P.M. 27.2.1419H,
Sunday, at Al-Birk Hospital.
1. The Police Report on the Death
2. The Medical Diagnosis
Sex: Female

Age: 25 years Relg: Christian

The said person was brought to the Emergency Room of the hospital; time
12.20 P.M. and she was unconscious, blue, no pulse, no respiration and the
first aid esd undertaken but without success.

3. Diagnosis and Opinion: Halt in blood circulation respiratory system and

brain damage due to an apparent poisoning which is under
investigation.[4]
Name: Jasmin Cuaresma
Sex: Female
Marital Status: Single
Religion: Christian
Address: Al-Birk Genrl. Hospital

Nationality: Philipino (sic)

Profession: Nurse
Birth Place: The Philippines

On 27.2.1419H, Dr. Tariq Abdulminnem and Dr. Ashoki Komar, both have
examined the dead body of Jasmin Cuaresma, at 12.20 P.M., Sunday,
22.2.14189H, and the result was:
1. Report of the Police on the death
2. Medical Examination: Blue skin and paleness on the Extrimes (sic),
total halt to blood circulation and respiratory system and brain damage.
There were no external injuries. Likelypoisoning by taking poisonous
substance, yet not determined. There was a bad smell in the mouth and
unknown to us.[5] (Emphasis supplied)

Jasmins body was repatriated to Manila on September 3, 1998. The

following day, the City Health Officer of Cabanatuan City conducted an autopsy
and the resulting medical report indicated that Jasmin died under violent
circumstances, and not poisoning as originally found by the KSA examining
physician. The City Health Officer found that Jasmin had abrasions at her inner lip
and gums; lacerated wounds and abrasions on her left and right ears; lacerated
wounds and hematoma (contusions) on her elbows; abrasions and hematoma on
her thigh and legs; intra-muscular hemorrhage at the anterior chest; rib fracture;
puncture wounds; and abrasions on the labia minora of the vaginal area.[6]
On March 11, 1999, Jasmins remains were exhumed and examined by the
National Bureau of Investigation (NBI). The toxicology report of the NBI,
however, tested negative for non-volatile, metallic poison and insecticides.[7]
Simplicio and Mila Cuaresma (the Cuaresmas), Jasmins parents and her
surviving heirs, received from the Overseas Workers Welfare Administration
(OWWA) the following amounts: P50,000.00 for death benefits; P50,000.00 for
loss of life; P20,000.00 for funeral expenses; and P10,000.00 for medical
reimbursement.

On November 22, 1999, the Cuaresmas filed a complaint against Becmen

and its principal in the KSA, Rajab & Silsilah Company (Rajab), claiming death
and insurance benefits, as well as moral and exemplary damages for Jasmins
death.[8]
In their complaint, the Cuaresmas claim that Jasmins death was workrelated, having occurred at the employers premises; [9] that under Jasmins contract
with Becmen, she is entitled to iqama insurance coverage; that Jasmin is entitled
to compensatory damages in the amount of US$103,740.00, which is the sum total
of her monthly salary of US$247.00 per month under her employment contract,
multiplied by 35 years (or the remaining years of her productive life had death not
supervened at age 25, assuming that she lived and would have retired at age 60).
The Cuaresmas assert that as a result of Jasmins death under mysterious
circumstances, they suffered sleepless nights and mental anguish. The situation,
they claim, was aggravated by findings in the autopsy and exhumation reports
which evidently show that a grave injustice has been committed against them and
their daughter, for which those responsible should likewise be made to pay moral
and exemplary damages and attorneys fees.
In their position paper, Becmen and Rajab insist that Jasmin committed
suicide, citing a prior unsuccessful suicide attempt sometime in March or April
1998 and relying on the medical report of the examining physician of the Al-Birk
Hospital. They likewise deny liability because the Cuaresmas already recovered
death and other benefits totaling P130,000.00 from the OWWA. They insist that
the Cuaresmas are not entitled to iqama insurance because this refers to the
issuance not insurance of iqama, or residency/work permit required in the
KSA. On the issue of moral and exemplary damages, they claim that the
Cuaresmas are not entitled to the same because they have not acted with fraud, nor
have they been in bad faith in handling Jasmins case.
While the case was pending, Becmen filed a manifestation and motion for
substitution alleging that Rajab terminated their agency relationship and had
appointed White Falcon Services, Inc. (White Falcon) as its new recruitment agent
in the Philippines. Thus, White Falcon was impleaded as respondent as well, and it

adopted and reiterated Becmens arguments in the position paper it subsequently

filed.
On February 28, 2001, the Labor Arbiter rendered a Decision [10] dismissing
the complaint for lack of merit. Giving weight to the medical report of the Al-Birk
Hospital finding that Jasmin died of poisoning, the Labor Arbiter concluded that
Jasmin committed suicide. In any case, Jasmins death was not service-connected,
nor was it shown that it occurred while she was on duty; besides, her parents have
received all corresponding benefits they were entitled to under the law. In regard
to damages, the Labor Arbiter found no legal basis to warrant a grant thereof.
On appeal, the National Labor Relations Commission (Commission)
reversed the decision of the Labor Arbiter. Relying on the findings of the City
Health Officer of Cabanatuan City and the NBI as contained in their autopsy and
toxicology report, respectively, the Commission, via its November 22, 2002
Resolution[11] declared that, based on substantial evidence adduced, Jasmin was the
victim of compensable work-connected criminal aggression. It disregarded the AlBirk Hospital attending physicians report as well as the KSA police report, finding
the same to be inconclusive. It declared that Jasmins death was the result of an
accident occurring within the employers premises that is attributable to her
employment, or to the conditions under which she lived, and thus arose out of and
in the course of her employment as nurse. Thus, the Cuaresmas are entitled to
actual damages in the form of Jasmins lost earnings, including future earnings, in
the total amount of US$113,000.00. The Commission, however, dismissed all
other claims in the complaint.
Becmen, Rajab and White Falcon moved for reconsideration, whereupon the
Commission issued its October 9, 2003 Resolution[12] reducing the award of
US$113,000.00 as actual damages to US$80,000.00.[13] The NLRC likewise
declared Becmen and White Falcon as solidarily liable for payment of the award.
Becmen and White Falcon brought separate petitions for certiorari to the
Court of Appeals.[14] On June 28, 2006, the appellate court rendered its Decision,
[15]
the dispositive portion of which reads, as follows:

WHEREFORE, the subject petitions are DENIED but in the execution of

the decision, it should first be enforced against White Falcon Services and then
against Becmen Services when it is already impossible, impractical and futile to
go against it (White Falcon).
SO ORDERED.[16]

The appellate court affirmed the NLRCs findings that Jasmins death was
compensable, the same having occurred at the dormitory, which was contractually
provided by the employer. Thus her death should be considered to have occurred
within the employers premises, arising out of and in the course of her
employment.
Becmen and White Falcon moved for reconsideration. On May 14, 2008,
the appellate court rendered the assailed Amended Decision, the dispositive portion
of which reads, as follows:
WHEREFORE, the motions for reconsideration are GRANTED.
Accordingly, the award of US$80,000.00 in actual damages is hereby reduced to
US$4,686.73 plus interest at the legal rate computed from the time it became due
until fully paid. Petitioners are hereby adjudged jointly and solidarily liable with
the employer for the monetary awards with Becmen Service Exporter and
Promotions, Inc. having a right of reimbursement from White Falcon Services,
Inc.
SO ORDERED.[17]

In the Amended Decision, the Court of Appeals found that although Jasmins
death was compensable, however, there is no evidentiary basis to support an award
of actual damages in the amount of US$80,000.00. Nor may lost earnings be
collected, because the same may be charged only against the perpetrator of the
crime or quasi-delict. Instead, the appellate court held that Jasmins beneficiaries
should be entitled only to the sum equivalent of the remainder of her 36-month
employment contract, or her monthly salary of US$247.00 multiplied by nineteen
(19) months, with legal interest.
Becmen filed the instant petition for review on certiorari (G.R. Nos. 18297879). The Cuaresmas, on the other hand, moved for a reconsideration of the

amended decision, but it was denied. They are now before us via G.R. Nos.
184298-99.
On October 6, 2008, the Court resolved to consolidate G.R. Nos. 184298-99
with G.R. Nos. 182978-79.
In G.R. Nos. 182978-79, Becmen raises the following issues for our
resolution:
(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT GAVE
MORE CREDENCE AND WEIGHT TO THE AUTOPSY REPORT
CONDUCTED BY THE CABANATUAN CITY HEALTH OFFICE THAN THE
MEDICAL AND POLICE REPORTS ISSUED BY THE MINISTRY OF
HEALTH OF KINGDOM OF SAUDI ARABIA AND AL-BIRK HOSPITAL.
(THE COURT OF APPEALS) GRAVELY ERRED WHEN ON THE
BASIS OF THE POSITION PAPERS AND ANNEXES THERETO INCLUDING
THE AUTOPSY REPORT, IT CONCLUDED THAT THE DEATH OF JASMIN
CUARESMA WAS CAUSED BY CRIMINAL AGGRESSION.
(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD
THAT THE DEATH OF JASMIN CUARESMA WAS COMPENSABLE
PURSUANT TO THE RULING OF THE SUPREME COURT IN TALLER VS.
YNCHAUSTI, G.R. NO. 35741, DECEMBER 20, 1932, WHICH IT FOUND TO
BE STILL GOOD LAW.
(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD
BECMEN LIABLE FOR THE DEATH OF JASMIN CUARESMA
NOTWITHSTANDING ITS ADMISSIONS THAT IQAMA INSURANCE
WAS A TYPOGRAPHICAL ERROR SINCE IQAMA IS NOT AN
INSURANCE.
(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT
CONCLUDED THAT THE DEATH OF JASMIN WAS WORK RELATED.
(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD
BECMEN LIABLE TO JASMINS BENEFICIARIES FOR THE REMAINDER
OF HER 36-MONTH CONTRACT COMPUTED IN THIS MANNER:
MONTHLY SALARY OF US$246.67 MULTIPLIED BY 19 MONTHS, THE
REMAINDER OF THE TERM OF JASMINS EMPLOYMENT CONTRACT,
IS EQUAL TO US$4,686.73.

(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD

BECMEN LIABLE TO PAY INTEREST AT THE LEGAL RATE FROM THE
TIME IT WAS DUE UNTIL FULLY PAID.
(THE COURT OF APPEALS) GRAVELY ERRED WHEN IT HELD
BECMEN AND WHITE FALCON JOINTLY AND SEVERALLY LIABLE
WITH THE EMPLOYER NOTWITHSTANDING THE ASSUMPTION OF
LIABILITY EXECUTED BY WHITE FALCON IN FAVOR OF BECMEN.

On the other hand, in G.R. Nos. 184298-99, the Cuaresmas raise the
following issues:
(THE COURT OF APPEALS) GRAVELY ERRED IN APPLYING THE
PROVISIONS OF THE CIVIL CODE CONSIDERED GENERAL LAW
DESPITE THE CASE BEING COVERED BY E.O. 247, R.A. 8042 AND
LABOR CODE CONSIDERED AS SPECIAL LAWS.
(THE COURT OF APPEALS) GRAVELY ERRED IN NOT APPLYING
THE DECEASEDS FUTURE EARNINGS WHICH IS (AN) INHERENT
FACTOR IN THE COMPUTATION OF DEATH BENEFITS OF OVERSEAS
FILIPINO CONTRACT WORKERS.
(THE COURT OF APPEALS) GRAVELY ERRED IN REDUCING THE
DEATH BENEFITS AWARDED BY NLRC CONSIDERED FINDINGS OF
FACT THAT CANNOT BE DISTURBED THROUGH CERTIORARI UNDER
RULE 65 OF THE RULES OF COURT.

The issue for resolution is whether the Cuaresmas are entitled to monetary
claims, by way of benefits and damages, for the death of their daughter Jasmin.
The terms and conditions of Jasmins 1996 Employment Agreement which
she and her employer Rajab freely entered into constitute the law between
them. As a rule, stipulations in an employment contract not contrary to statutes,
public policy, public order or morals have the force of law between the contracting
parties.[18] An examination of said employment agreement shows that it provides
for no other monetary or other benefits/privileges than the following:
1.
2.

1,300 rials (or US$247.00) monthly salary;

Free air tickets to KSA at the start of her contract and to the Philippines at
the end thereof, as well as for her vacation at the end of each twenty fourmonth service;

3.

Transportation to and from work;

4.

Free living accommodations;

5.

Free medical treatment, except for optical and dental operations, plastic
surgery charges and lenses, and medical treatment obtained outside of
KSA;

6.

Entry visa fees will be shared equally between her and her employer, but
the exit/re-entry visa fees, fees for Iqama issuance, renewal, replacement,
passport renewal, sponsorship transfer and other liabilities shall be borne
by her;

7.

Thirty days paid vacation leave with round trip tickets to Manila after
twenty four-months of continuous service;

8.
9.

Eight days public holidays per year;

The indemnity benefit due her at the end of her service will be calculated
as per labor laws of KSA.

Thus, the agreement does not include provisions for insurance, or for
accident, death or other benefits that the Cuaresmas seek to recover, and which the
labor tribunals and appellate court granted variably in the guise of compensatory
damages.
However, the absence of provisions for social security and other benefits
does not make Jasmins employment contract infirm. Under KSA law, her foreign
employer is not obliged to provide her these benefits; and neither is Jasmin entitled
to minimum wage unless of course the KSA labor laws have been amended to the
opposite effect, or that a bilateral wage agreement has been entered into.
Our next inquiry is, should Jasmins death be considered as work-connected
and thus compensable? The evidence indicates that it is not. At the time of her
death, she was not on duty, or else evidence to the contrary would have been
adduced. Neither was she within hospital premises at the time. Instead, she was at
her dormitory room on personal time when she died. Neither has it been shown,
nor does the evidence suggest, that at the time she died, Jasmin was performing an
act reasonably necessary or incidental to her employment as nurse, because she

was at her dormitory room. It is reasonable to suppose that all her work is
performed at the Al-birk Hospital, and not at her dormitory room.
We cannot expect that the foreign employer should ensure her safety even
while she is not on duty. It is not fair to require employers to answer even for their
employees personal time away from work, which the latter are free to spend of
their own choosing. Whether they choose to spend their free time in the pursuit of
safe or perilous undertakings, in the company of friends or strangers, lovers or
enemies, this is not one area which their employers should be made accountable
for. While we have emphasized the need to observe official work time strictly,
[19]
what an employee does on free time is beyond the employers sphere of inquiry.
While the employers premises may be defined very broadly not only to
include premises owned by it, but also premises it leases, hires, supplies or uses,
[20]
we are not prepared to rule that the dormitory wherein Jasmin stayed should
constitute employers premises as would allow a finding that death or injury
therein is considered to have been incurred or sustained in the course of or arose
out of her employment. There are certainly exceptions,[21] but they do not appear to
apply here. Moreover, a complete determination would have to depend on the
unique circumstances obtaining and the overall factual environment of the case,
which are here lacking.
But, did Jasmin commit suicide? Rajab, Becmen and White Falcon
vehemently insist that she did; thus, her heirs may not claim benefits or damages
based on criminal aggression. On the other hand, the Cuaresmas do not believe so.
The Court cannot subscribe to the idea that Jasmin committed suicide while
halfway into her employment contract. It is beyond human comprehension that a
25-year old Filipina, in the prime of her life and working abroad with a chance at
making a decent living with a high-paying job which she could not find in her own
country, would simply commit suicide for no compelling reason.
The Saudi police and autopsy reports which state that Jasmin is a likely/or
apparent victim of poisoning are patently inconclusive. They are thus
unreliable as evidence.

On the contrary, the autopsy report of the Cabanatuan City Health Officer
and the exhumation report of the NBI categorically and unqualifiedly show that
Jasmin sustained external and internal injuries, specifically abrasions at her inner
lip and gums; lacerated wounds and abrasions on her left and right
ears; lacerated wounds and hematoma (contusions) on her elbows; abrasions
and hematoma on her thigh and legs; intra-muscular hemorrhage at the
anterior chest; a fractured rib; puncture wounds; and abrasions on the labia
minora of the vaginal area. The NBI toxicology report came up negative on the
presence of poison.
All these show that Jasmin was manhandled and possibly raped prior to
her death.
Even if we were to agree with the Saudi police and autopsy reports that
indicate Jasmin was poisoned to death, we do not believe that it was selfinduced. If ever Jasmin was poisoned, the assailants who beat her up and
possibly raped her are certainly responsible therefor.
We are not exactly ignorant of what goes on with our OFWs. Nor is the rest
of the world blind to the realities of life being suffered by migrant workers in the
hands of some foreign employers. It is inconceivable that our Filipina women
would seek employment abroad and face uncertainty in a foreign land, only to
commit suicide for unexplained reasons. Deciding to leave their family, loved
ones, and the comfort and safety of home, to work in a strange land requires
unrivaled strength and courage. Indeed, many of our women OFWs who are
unfortunate to end up with undesirable employers have been there more times than
they care to, beaten up and broken in body yet they have remained strong in
mind, refusing to give up the will to live. Raped, burned with cigarettes, kicked in
the chest with sharp high-heeled shoes, starved for days or even weeks, stabbed,
slaved with incessant work, locked in their rooms, forced to serve their masters
naked, grossly debased, dehumanized and insulted, their spirits fought on and they
lived for the day that they would once again be reunited with their families and
loved ones. Their bodies surrendered, but their will to survive remained strong.
It is surprising, therefore, that Rajab, Becmen and White Falcon should
insist on suicide, without even lifting a finger to help solve the mystery of Jasmins

death. Being in the business of sending OFWs to work abroad, Becmen and White
Falcon should know what happens to some of our OFWs. It is impossible for them
to be completely unaware that cruelties and inhumanities are inflicted on OFWs
who are unfortunate to be employed by vicious employers, or upon those who
work in communities or environments where they are liable to become victims of
crime. By now they should know that our women OFWs do not readily succumb
to the temptation of killing themselves even when assaulted, abused, starved,
debased and, worst, raped.
Indeed, what we have seen is Rajab and Becmens revolting scheme of
conveniently avoiding responsibility by clinging to the absurd theory that Jasmin
took her own life. Abandoning their legal, moral and social obligation (as
employer and recruiter) to assist Jasmins family in obtaining justice for her death,
they immediately gave up on Jasmins case, which has remained under
investigation as the autopsy and police reports themselves indicate. Instead of
taking the cudgels for Jasmin, who had no relative or representative in the KSA
who would naturally demand and seek an investigation of her case, Rajab and
Becmen chose to take the most convenient route to avoiding and denying liability,
by casting Jasmins fate to oblivion. It appears from the record that to this date, no
follow up of Jasmins case was ever made at all by them, and they seem to have
expediently treated Jasmins death as a closed case. Despite being given the lead
via the autopsy and toxicology reports of the Philippine authorities, they failed and
refused to act and pursue justice for Jasmins sake and to restore honor to her
name.
Indeed, their nonchalant and uncaring attitude may be seen from how
Jasmins remains were repatriated. No official representative from Rajab or
Becmen was kind enough to make personal representations with Jasmins parents,
if only to extend their condolences or sympathies; instead, a mere colleague, nurse
Jessie Fajardo, was designated to accompany Jasmins body home.
Of all lifes tragedies, the death of ones own child must be the most painful
for a parent. Not knowing why or how Jasmins life was snuffed out makes the
pain doubly unbearable for Jasmins parents, and further aggravated by Rajab,
Becmen, and White Falcons baseless insistence and accusation that it was a selfinflicted death, a mortal sin by any religious standard.

Thus we categorically hold, based on the evidence; the actual experiences of

our OFWs; and the resilient and courageous spirit of the Filipina that transcends
the vilest desecration of her physical self, that Jasmin did not commit suicide but a
victim of murderous aggression.
Rajab, Becmen, and White Falcons indifference to Jasmins case has caused
unfathomable pain and suffering upon her parents. They have turned away from
their moral obligation, as employer and recruiter and as entities laden with social
and civic obligations in society, to pursue justice for and in behalf of Jasmin, her
parents and those she left behind. Possessed with the resources to determine the
truth and to pursue justice, they chose to stand idly for the sake of convenience and
in order that they may avoid pecuniary liability, turning a blind eye to the
Philippine authorities autopsy and toxicology reports instead of taking action upon
them as leads in pursuing justice for Jasmins death. They have placed their own
financial and corporate interests above their moral and social obligations, and
chose to secure and insulate themselves from the perceived responsibility of having
to answer for and indemnify Jasmins heirs for her death.
Under Republic Act No. 8042 (R.A. 8042), or the Migrant Workers and
Overseas Filipinos Act of 1995,[22] the State shall, at all times, uphold the dignity of
its citizens whether in country or overseas, in general, and Filipino migrant
workers, in particular.[23] The State shall provide adequate and timely social,
economic and legal services to Filipino migrant workers. [24] The rights and interest
of distressed[25] overseas Filipinos, in general, and Filipino migrant workers, in
particular, documented or undocumented, are adequately protected and
safeguarded.[26]
Becmen and White Falcon, as licensed local recruitment agencies, miserably
failed to abide by the provisions of R.A. 8042. Recruitment agencies are expected
to extend assistance to their deployed OFWs, especially those in distress. Instead,
they abandoned Jasmins case and allowed it to remain unsolved to further their
interests and avoid anticipated liability which parents or relatives of Jasmin would
certainly exact from them. They willfully refused to protect and tend to the
welfare of the deceased Jasmin, treating her case as just one of those unsolved
crimes that is not worth wasting their time and resources on. The evidence does

not even show that Becmen and Rajab lifted a finger to provide legal
representation and seek an investigation of Jasmins case. Worst of all, they
unnecessarily trampled upon the person and dignity of Jasmin by standing pat on
the argument that Jasmin committed suicide, which is a grave accusation given its
un-Christian nature.
We cannot reasonably expect that Jasmins parents should be the ones to
actively pursue a just resolution of her case in the KSA, unless they are provided
with the finances to undertake this herculean task. Sadly, Becmen and Rajab did
not lend any assistance at all in this respect. The most Jasmins parents can do is to
coordinate with Philippine authorities as mandated under R.A. 8042, obtain free
legal assistance and secure the aid of the Department of Foreign Affairs, the
Department of Labor and Employment, the POEA and the OWWA in trying to
solve the case or obtain relief, in accordance with Section 23[27] of R.A. 8042. To
our mind, the Cuaresmas did all that was within their power, short of actually
flying to the KSA. Indeed, the Cuaresmas went even further. To the best of their
abilities and capacities, they ventured to investigate Jasmins case on their own:
they caused another autopsy on Jasmins remains as soon as it arrived to inquire
into the true cause of her death. Beyond that, they subjected themselves to the
painful and distressful experience of exhuming Jasmins remains in order to obtain
another autopsy for the sole purpose of determining whether or not their daughter
was poisoned. Their quest for the truth and justice is equally to be expected of all
loving parents. All this time, Rajab and Becmen instead of extending their full
cooperation to the Cuaresma family merely sat on their laurels in seeming
unconcern.
In Interorient Maritime Enterprises, Inc. v. NLRC,[28] a seaman who was
being repatriated after his employment contract expired, failed to make his
Bangkok to Manila connecting flight as he began to wander the streets of Bangkok
aimlessly. He was shot to death by Thai police four days after, on account of
running amuck with a knife in hand and threatening to harm anybody within
sight. The employer, sued for death and other benefits as well as damages,
interposed as defense the provision in the seafarer agreement which provides that
no compensation shall be payable in respect of any injury, incapacity, disability or
death resulting from a willful act on his own life by the seaman. The Court
rejected the defense on the view, among others, that the recruitment agency should

have observed some precautionary measures and should not have allowed the
seaman, who was later on found to be mentally ill, to travel home alone, and its
failure to do so rendered it liable for the seamans death. We ruled therein that
The foreign employer may not have been obligated by its contract to
provide a companion for a returning employee, but it cannot deny that it was
expressly tasked by its agreement to assure the safe return of said worker. The
uncaring attitude displayed by petitioners who, knowing fully well that its
employee had been suffering from some mental disorder, nevertheless still
allowed him to travel home alone, is appalling to say the least. Such attitude
harks back to another time when the landed gentry practically owned the
serfs, and disposed of them when the latter had grown old, sick or otherwise
lost their usefulness.[29] (Emphasis supplied)

Thus, more than just recruiting and deploying OFWs to their foreign
principals, recruitment agencies have equally significant responsibilities. In a
foreign land where OFWs are likely to encounter uneven if not discriminatory
treatment from the foreign government, and certainly a delayed access to language
interpretation, legal aid, and the Philippine consulate, the recruitment agencies
should be the first to come to the rescue of our distressed OFWs since they know
the employers and the addresses where they are deployed or stationed. Upon them
lies the primary obligation to protect the rights and ensure the welfare of our
OFWs, whether distressed or not. Who else is in a better position, if not these
recruitment agencies, to render immediate aid to their deployed OFWs abroad?
Article 19 of the Civil Code provides that every person must, in the exercise
of his rights and in the performance of his duties, act with justice, give everyone
his due, and observe honesty and good faith. Article 21 of the Code states that any
person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the
damage. And, lastly, Article 24 requires that in all contractual, property or other
relations, when one of the parties is at a disadvantage on account of his moral
dependence, ignorance, indigence, mental weakness, tender age or other handicap,
the courts must be vigilant for his protection.
Clearly, Rajab, Becmen and White Falcons acts and omissions are against
public policy because they undermine and subvert the interest and general welfare
of our OFWs abroad, who are entitled to full protection under the law. They set an

awful example of how foreign employers and recruitment agencies should treat and
act with respect to their distressed employees and workers abroad. Their shabby
and callous treatment of Jasmins case; their uncaring attitude; their unjustified
failure and refusal to assist in the determination of the true circumstances
surrounding her mysterious death, and instead finding satisfaction in the
unreasonable insistence that she committed suicide just so they can conveniently
avoid pecuniary liability; placing their own corporate interests above of the welfare
of their employees all these are contrary to morals, good customs and public
policy, and constitute taking advantage of the poor employee and her familys
ignorance, helplessness, indigence and lack of power and resources to seek the
truth and obtain justice for the death of a loved one.
Giving in handily to the idea that Jasmin committed suicide, and adamantly
insisting on it just to protect Rajab and Becmens material interest despite
evidence to the contrary is against the moral law and runs contrary to the good
custom of not denouncing ones fellowmen for alleged grave wrongdoings that
undermine their good name and honor.[30]
Whether employed locally or overseas, all Filipino workers enjoy the
protective mantle of Philippine labor and social legislation, contract stipulations to
the contrary notwithstanding. This pronouncement is in keeping with the basic
public policy of the State to afford protection to labor, promote full employment,
ensure equal work opportunities regardless of sex, race or creed, and regulate the
relations between workers and employers. This ruling is likewise rendered
imperative by Article 17 of the Civil Code which states that laws which have for
their object public order, public policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by determinations or conventions
agreed upon in a foreign country.[31]
The relations between capital and labor are so impressed with public
interest,[32] and neither shall act oppressively against the other, or impair the interest
or convenience of the public.[33] In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living for the laborer.
[34]

The grant of moral damages to the employee by reason of misconduct on the

part of the employer is sanctioned by Article 2219 (10) [35] of the Civil Code, which
allows recovery of such damages in actions referred to in Article 21.[36]
Thus, in view of the foregoing, the Court holds that the Cuaresmas are
entitled to moral damages, which Becmen and White Falcon are jointly and
solidarily liable to pay, together with exemplary damages for wanton and
oppressive behavior, and by way of example for the public good.
Private employment agencies are held jointly and severally liable with the
foreign-based employer for any violation of the recruitment agreement or contract
of employment. This joint and solidary liability imposed by law against
recruitment agencies and foreign employers is meant to assure the aggrieved
worker of immediate and sufficient payment of what is due him. [37] If the
recruitment/placement agency is a juridical being, the corporate officers and
directors and partners as the case may be, shall themselves be jointly and solidarily
liable with the corporation or partnership for the aforesaid claims and damages.[38]
White Falcons assumption of Becmens liability does not automatically
result in Becmens freedom or release from liability. This has been ruled in ABD
Overseas Manpower Corporation v. NLRC.[39] Instead, both Becmen and White
Falcon should be held liable solidarily, without prejudice to each having the right
to be reimbursed under the provision of the Civil Code that whoever pays for
another may demand from the debtor what he has paid.[40]
WHEREFORE, the Amended Decision of the Court of Appeals dated May
14, 2008 in CA-G.R. SP No. 80619 and CA-G.R. SP No. 81030 is SET
ASIDE. Rajab & Silsilah Company, White Falcon Services, Inc., Becmen
Service Exporter and Promotion, Inc., and their corporate directors and
officers are found jointly and solidarily liable and ORDERED to indemnify the
heirs of Jasmin Cuaresma, spouses Simplicio and Mila Cuaresma, the following
amounts:

1Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 162839

October 12, 2006

INNODATA PHILIPPINES, INC., petitioner,

vs.
JOCELYN L. QUEJADA-LOPEZ and ESTELLA G. NATIVIDAD-PASCUAL, respondents.

DECISION

PANGANIBAN, J.:
A contract that misuses a purported fixed-term employment to block the acquisition of tenure by the
employees deserves to be struck down for being contrary to law, morals, good customs, public order
and public policy.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to reverse the
September 18, 2003 Decision2 of the Court of Appeals (CA) in CA-GR SP No. 73416, as well as its
March 15, 2004 Resolution3denying petitioners Motion for Reconsideration. The decretal portion of
the Decision states:
"WHEREFORE, the challenged decision of November 27, 2001 and resolution of July 22,
2002 of the National Labor Relations Commission are SET ASIDE, and the decision of the
Labor Arbiter of December 29, 1999 in NLRC NCR CASE NO. 00-03-02732-98
is REINSTATED and AFFIRMED in all respect."4
The Facts
The factual antecedents are narrated by the CA as follows:
"Innodata Philippines, Inc., is engaged in the encoding/data conversion business. It employs
encoders, indexers, formatters, programmers, quality/quantity staff, and others, to maintain
its business and do the job orders of its clients.
"Estrella G. Natividad and Jocelyn L. Quejada were employed as formatters by Innodata
Philippines, Inc. They [worked] from March 4, 1997, until their separation on March 3, 1998.

"Claiming that their job was necessary and desirable to the usual business of the company
which is data processing/conversion and that their employment is regular pursuant to Article
280 of the Labor Code, [respondents] filed a complaint for illegal dismissal and for damages
as well as for attorneys fees against Innodata Phils., Incorporated, Innodata Processing
Corporation and Todd Solomon. [Respondents] further invoke the stare decicis doctrine in
the case of Juanito Villanueva vs. National Labor Relations Commission, et al., G.R. No.
127448 dated September 17, 1998 and the case of Joaquin Servidad vs. National Labor
Relations Commission, et al., G.R. No. 128682 dated March 18, 1999, arguing that the
Highest Court has already ruled with finality that the nature of employment at [petitioner]
corporation is regular and not on a fixed term basis, as the job in the company is necessary
and desirable to the usual business of the corporation.
"On the other hand, [petitioner] contends that [respondents] employment contracts expired,
for [these were] only for a fixed period of one (1) year. [Petitioner] company further invoked
the Brent School case by saying that since the period expired, [respondents] employment
was likewise terminated.
"After examination of the pleadings filed, Labor Arbiter Donato G. Quinto rendered a
judgment in favor of complainants, the dispositive portion of which reads:
WHEREFORE, foregoing premises considered, judgment is hereby rendered:
(1) Holding complainants Estella G. Natividad and Jocelyn Quejada to have been
illegally dismissed by [Petitioners] Innodata Philippines Incorporated and Innodata
Processing Corporation and ordering said [petitioners] to reinstate them to their
former position without los[s] of seniority rights, or to a substantially equivalent
position, and to pay them jointly and severally, backwages computed from the time
they were illegally dismissed on March 3, 1998 up to the date of this decision in the
amount of P112,535.28 EACH, or in the total amount of P225,070.56 for the two of
them;
(2) Further, [petitioners] are ordered to pay, jointly and severally, [respondents]
attorneys fees in the amount equivalent to 10% of their respective awards; and
(3) All other claims are hereby dismissed for lack of merit.
SO ORDERED.
"Not satisfied, [petitioner] corporation interposed an appeal in the National Labor Relations
Commission, which reversed and set aside the Labor Arbiters decision and dismissed
[respondents] complaint for lack of merit. It declared that the contract between [respondents]
and [petitioner] company was for a fixed term and therefore, the dismissal of [respondents],
at the end of their one year term agreed upon, was valid.
"A motion for reconsideration was filed but was denied in an order dated July 22, 2002." 5
Ruling of the Court of Appeals
The CA ruled that respondents were regular employees in accordance with Section 280 of the Labor
Code. It said that the fixed-term contract prepared by petitioner was a crude attempt to circumvent
respondents right to security of tenure.

Hence, this Petition.6

Issues
Petitioner raises the followings issues for the Courts consideration:
I
"Whether or not the Court of Appeals committed serious reversible error when it did not take
into consideration that fixed-term employment contracts are valid under the law and
prevailing jurisprudence.
II
"Whether or not the Court of Appeals committed serious reversible error when it failed to take
into consideration the nature of the business of petitioner vis--vis its resort to fixed-term
employment contracts.
III
"Whether or not the Court of Appeals seriously erred when it failed to consider the fixed-term
employment contracts between petitioner and respondents as valid.
IV
"Whether or not the Court of Appeals seriously erred when it held that regularity of
employment is always premised on the fact that it is directly related to the business of the
employer.
V
"Whether or not the Court of Appeals committed serious reversible error in setting aside the
Decision of the National Labor Relations Commission, dated 27 November 2001 and
Resolution of 22 July 2002, respectively[,] and reinstated the decision of the Labor Arbiter
dated 29 December 1999."7
The foregoing issues may be reduced into one question: whether the alleged fixed-term employment
contracts entered into by petitioner and respondents are valid.
The Courts Ruling
The Petition has no merit.
Sole Issue:
Validity of the Fixed-Term Contract
Petitioner contends that the regularity of the employment of respondents does not depend on
whether their task may be necessary or desirable in the usual business of the employer. It argues
that the use of fixed-term employment contracts has long been recognized by this Court.

Petitioner adds that Villanueva v. NLRC8 and Servidad v. NLRC9 do not apply to the present factual
circumstances. These earlier cases struck down the employment contracts prepared by herein
Petitioner Innodata for being "devious, but crude, attempts to circumvent [the employees] right to
security of tenure x x x." Petitioner avers that the present employment contracts it entered into with
respondents no longer contain the so-called "double-bladed" provisions previously found
objectionable by the Court.
Petitioners contentions have no merit.
While this Court has recognized the validity of fixed-term employment contracts in a number of
cases,10 it has consistently emphasized that when the circumstances of a case show that the periods
were imposed to block the acquisition of security of tenure, they should be struck down for being
contrary to law, morals, good customs, public order or public policy.11
In a feeble attempt to conform to the earlier rulings of this Court
in Villanueva12 and Servidad,13 petitioner has reworded its present employment contracts. A close
scrutiny of the provisions, however, show that the double-bladed scheme to block the acquisition of
tenurial security still exists.
To stress, Servidad struck down the following objectionable contract provisions:
"Section 2. This Contract shall be effective for a period of 1 [year] commencing on May 10,
1994, until May 10, 1995 unless sooner terminated pursuant to the provisions hereof.
"From May 10, 1994 to November 10, 1994, or for a period of six (6) months, the
EMPLOYEE shall be contractual during which the EMPLOYER can terminate the
EMPLOYEES services by serving written notice to that effect. Such termination shall be
immediate, or at whatever date within the six-month period, as the EMPLOYER may
determine. Should the EMPLOYEE continue his employment beyond November 10, 1994,
he shall become a regular employee upon demonstration of sufficient skill in the terms of his
ability to meet the standards set by the EMPLOYER. If the EMPLOYEE fails to demonstrate
the ability to master his task during the first six months he can be placed on probation for
another six (6) months after which he will be evaluated for promotion as a regular
employee."14
In comparison, the pertinent portions of the present employment contracts in dispute read as follows:
"TERM/DURATION
1. The EMPLOYER hereby employs, engages and hires the EMPLOYEE, and the
EMPLOYEE hereby accepts such appointment as FORMATTER effective March 04, 1997 to
March 03, 1998, a period of one (1) year.
xxxxxxxxx
"TERMINATION
7.1 This Contract shall automatically terminate on March 03, 1998 without need of notice or
demand.
xxxxxxxxx

7.4 The EMPLOYEE acknowledges that the EMPLOYER entered into this Contract upon his
express representation that he/she is qualified and possesses the skills necessary and
desirable for the position indicated herein. Thus, the EMPLOYER is hereby granted the
right to pre-terminate this Contract within the first three (3) months of its duration
upon failure of the EMPLOYEE to meet and pass the qualifications and standards set
by the EMPLOYER and made known to the EMPLOYEE prior to execution hereof.
Failure of the EMPLOYER to exercise its right hereunder shall be without prejudice to the
automatic termination of the EMPLOYEEs employment upon the expiration of this Contract
or cancellation thereof for other causes provided herein and by law." 15 (Emphasis supplied)
Like those in Villanueva and Servidad, the present contracts also provide for two periods. Aside from
the fixed one-year term set in paragraph 1, paragraph 7.4 provides for a three-month period during
which petitioner has the right to pre-terminate the employment for the "failure of the employees to
meet and pass the qualifications and standards set by the employer and made known to the
employee prior to" their employment. Thus, although couched in ambiguous language, paragraph
7.4 refers in reality to a probationary period.
Clearly, to avoid regularization, petitioner has again sought to resort alternatively to probationary
employment and employment for a fixed term. Noteworthy is the following pronouncement of this
Court in Servidad:
"If the contract was really for a fixed term, the [employer] should not have been given the
discretion to dismiss the [employee] during the one year period of employment for reasons
other than the just and authorized causes under the Labor Code. Settled is the rule that an
employer can terminate the services of an employee only for valid and just causes which
must be shown by clear and convincing evidence.
xxxxxxxxx
"The language of the contract in dispute is truly a double-bladed scheme to block the
acquisition of the employee of tenurial security. Thereunder, [the employer] has two options.
It can terminate the employee by reason of expiration of contract, or it may use failure to
meet work standards as the ground for the employees dismissal. In either case, the tenor of
the contract jeopardizes the right of the worker to security of tenure guaranteed by the
Constitution."16
In the interpretation of contracts, obscure words and provisions shall not favor the party that caused
the obscurity.17 Consequently, the terms of the present contract should be construed strictly against
petitioner, which prepared it.18
Article 1700 of the Civil Code declares:
"Art. 1700. The relations between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common good.
Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and
similar subjects."
Indeed, a contract of employment is impressed with public interest. For this reason, provisions of
applicable statutes are deemed written into the contract. Hence, 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."19Moreover, in case of doubt, the terms of a contract should be
construed in favor of labor.20
Lastly, petitioner claims that it was constrained by the nature of its business to enter into fixed-term
employment contracts with employees assigned to job orders. It argues that inasmuch as its
business is that of a mere service contractor, it relies on the availability of job orders or undertakings
from its clients. Hence, the continuity of work cannot be ascertained.
Petitioners contentions deserve little consideration.
By their very nature, businesses exist and thrive depending on the continued patronage of their
clients. Thus, to some degree, they are subject to the whims of clients who may decide to
discontinue patronizing their products or services for a variety of reasons. Being inherent in any
enterprise, this entrepreneurial risk may not be used as an excuse to circumvent labor laws;
otherwise, no worker could ever attain regular employment status.
Finally, it is worth noting that after its past employment contracts had been declared void by this
Court, petitioner was expected to ensure that the subsequent contracts would already comply with
the standards set by law and by this Court. Regrettably, petitioner failed to do so.
WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution are AFFIRMED.
Costs against petitioner.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.
Republic of the Philippines
SUPREME COURT
Baguio City
SECOND DIVISION
G.R. No. 170351

March 30, 2011

LEYTE GEOTHERMAL POWER PROGRESSIVE EMPLOYEES UNION - ALU - TUCP, Petitioner,

vs.
PHILIPPINE NATIONAL OIL COMPANY - ENERGY DEVELOPMENT
CORPORATION, Respondent.
DECISION
NACHURA, J.:
Under review is the Decision1 dated June 30, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 65760,
which dismissed the petition for certiorari filed by petitioner Leyte Geothermal Power Progressive Employees
Union ALUTUCP (petitioner Union) to annul and set aside the decision2 dated December 10, 1999 of the
National Labor Relations Commission (NLRC) in NLRC Certified Case No. V-02-99.
The facts, fairly summarized by the CA, follow.

[Respondent Philippine National Oil Corporation]-Energy Development Corporation [PNOC-EDC] is

a government-owned and controlled corporation engaged in exploration, development, utilization,
generation and distribution of energy resources like geothermal energy.
Petitioner is a legitimate labor organization, duly registered with the Department of Labor and
Employment (DOLE) Regional Office No. VIII, Tacloban City.
Among [respondents] geothermal projects is the Leyte Geothermal Power Project located at the
Greater Tongonan Geothermal Reservation in Leyte. The said Project is composed of the Tongonan
1 Geothermal Project (T1GP) and the Leyte Geothermal Production Field Project (LGPF) which
provide the power and electricity needed not only in the provinces and cities of Central and Eastern
Visayas (Region VII and VIII), but also in the island of Luzon as well. Thus, the [respondent] hired
and employed hundreds of employees on a contractual basis, whereby, their employment was only
good up to the completion or termination of the project and would automatically expire upon the
completion of such project.
Majority of the employees hired by [respondent] in its Leyte Geothermal Power Projects had become
members of petitioner. In view of that circumstance, the petitioner demands from the [respondent] for
recognition of it as the collective bargaining agent of said employees and for a CBA negotiation with
it. However, the [respondent] did not heed such demands of the petitioner. Sometime in 1998 when
the project was about to be completed, the [respondent] proceeded to serve Notices of Termination
of Employment upon the employees who are members of the petitioner.
On December 28, 1998, the petitioner filed a Notice of Strike with DOLE against the [respondent] on
the ground of purported commission by the latter of unfair labor practice for "refusal to bargain
collectively, union busting and mass termination." On the same day, the petitioner declared a strike
and staged such strike.
To avert any work stoppage, then Secretary of Labor Bienvenido E. Laguesma intervened and
issued the Order, dated January 4, 1999, certifying the labor dispute to the NLRC for compulsory
arbitration. Accordingly, all the striking workers were directed to return to work within twelve (12)
hours from receipt of the Order and for the [respondent] to accept them back under the same terms
and conditions of employment prior to the strike. Further, the parties were directed to cease and
desist from committing any act that would exacerbate the situation.
However, despite earnest efforts on the part of the Secretary of Labor and Employment to settle the
dispute amicably, the petitioner remained adamant and unreasonable in its position, causing the
failure of the negotiation towards a peaceful compromise. In effect, the petitioner did not abide by
[the] assumption order issued by the Secretary of Labor.
Consequently, on January 15, 1999, the [respondent] filed a Complaint for Strike Illegality,
Declaration of Loss of Employment and Damages at the NLRC-RAB VIII in Tacloban City and at the
same time, filed a Petition for Cancellation of Petitioners Certificate of Registration with DOLE,
Regional Office No. VIII. The two cases were later on consolidated pursuant to the New NLRC Rules
of Procedure. The consolidated case was docketed as NLRC Certified Case No. V-02-99 (NCMBRAB VIII-NS-12-0190-98; RAB Case No. VIII-1-0019-99). The said certified case was indorsed to the
NLRC 4th Division in Cebu City on June 21, 1999 for the proper disposition thereof. 3
In due course, the NLRC 4th Division rendered a decision in favor of respondent, to wit:
WHEREFORE, based on the foregoing premises, judgment is hereby rendered as follows:

1. Declaring the officers and members of [petitioner] Union as project employees;

2. Declaring the termination of their employment by reason of the completion of the project,
or a phase or portion thereof, to which they were assigned, as valid and legal;
3. Declaring the strike staged and conducted by [petitioner] Union through its officers and
members on December 28, 1998 to January 6, 1999 as illegal for failure to comply with the
mandatory requirements of the law on strike[;]
4. Declaring all the officers and members of the board of [petitioner] Union who instigated
and spearheaded the illegal strike to have lost their employment[;]
5. Dismissing the claim of [petitioner] Union against PNOC-EDC for unfair labor practice for
lack of merit[;]
6. Dismissing both parties claims against each other for violation of the Assumption Order
dated January 4, 1999 for lack of factual basis[;]
7. Dismissing all other claims for lack of merit. 4
Petitioner Union filed a motion for reconsideration of the NLRC decision, which was subsequently
denied. Posthaste, petitioner Union filed a petition for certiorari before the CA, alleging grave abuse
of discretion in the decision of the NLRC. As previously adverted to, the CA dismissed the petition for
certiorari, thus:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING
the Petition. The assailed Decision dated December 10, 1999 of the NLRC 4th Division in NLRC
Certified Case No. V-02-99 (NCMB-RAB VIII-NS-12-0190-98; RAB Case No. VIII-1-0019-99) and its
Order dated March 30, 2001 are hereby AFFIRMED.
Costs against the Petitioner.5
Hence, this appeal by certiorari filed by petitioner Union, positing the following questions of law:
1. MAY THE HONORABLE COURT OF APPEALS SUSTAIN THE "PROJECT CONTRACTS" THAT
ARE DESIGNED TO DENY AND DEPRIVE THE EMPLOYEES THEIR RIGHT TO SECURITY OF
TENURE BY MAKING IT APPEAR THAT THEY ARE MERE PROJECT EMPLOYEES?
2. WHEN THERE ARE NO INTERVALS IN THE EMPLOYEES CONTRACT, SUCH THAT THE SOCALLED UNDERTAKING WAS CONTINUOUS, ARE THE EMPLOYEES PROPERLY TREATED AS
PROJECT EMPLOYEES?
3. MAY THE HONORABLE COURT OF APPEALS IGNORE THE FIRMS OWN ESTIMATE OF JOB
COMPLETION, PROVING THAT THERE IS STILL 56.25% CIVIL/STRUCTURAL WORK TO BE
ACCOMPLISHED, AND RULE THAT THE EMPLOYEES WERE DISMISSED FOR COMPLETION
[OF] THE "PROJECT?"
4. MAY A FIRM HIDE UNDER THE SPURIOUS CLOAK OF "PROJECT COMPLETION" TO
DISMISS EN MASSE THE EMPLOYEES WHO HAVE ORGANIZED AMONG THEMSELVES A
LEGITIMATE LABOR ORGANIZATION TO PROTECT THEIR RIGHTS?

5. WHEN THERE IS NO STOPPAGE OF WORK, MAY A PROTEST ACTIVITY BE CONSIDERED

AS A STRIKE CONTRARY TO ITS CONCEPTUAL DEFINITION UNDER ARTICLE 212 (O) OF THE
LABOR CODE OF THE PHILIPPINES?
6. WHEN THE DISMISSAL IS AIMED AT RIDDING THE COMPANY OF MEMBERS OF THE
UNION, IS THIS UNION BUSTING?6
Stripped of rhetoric, the issues for our resolution are:
1. Whether the officers and members of petitioner Union are project employees of
respondent; and
2. Whether the officers and members of petitioner Union engaged in an illegal strike.
On the first issue, petitioner Union contends that its officers and members performed activities that
were usually necessary and desirable to respondents usual business. In fact, petitioner Union
reiterates that its officers and members were assigned to the Construction Department of
respondent as carpenters and masons, and to other jobs pursuant to civil works, which are usually
necessary and desirable to the department. Petitioner Union likewise points out that there was no
interval in the employment contract of its officers and members, who were all employees of
respondent, which lack of interval, for petitioner Union, "manifests that the undertaking is usually
necessary and desirable to the usual trade or business of the employer."
We cannot subscribe to the view taken by petitioner Union.
The distinction between a regular and a project employment is provided in Article 280, paragraph 1,
of the Labor Code:
ART. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or 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 actually exists. 7
The foregoing contemplates four (4) 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"; (c) seasonal employees or those who work or perform
services which are seasonal in nature, and the employment is for the duration of the season; 8 and
(d) casual employees or those who are not regular, project, or seasonal employees. Jurisprudence
has added a fifth kind a fixed-term employee. 9

Article 280 of the Labor Code, as worded, establishes that the nature of the employment is
determined by law, regardless of any contract expressing otherwise. The supremacy of the law over
the nomenclature of the contract and the stipulations contained therein is to bring to life the policy
enshrined in the Constitution to "afford full protection to labor." 10 Thus, labor contracts are placed on
a higher plane than ordinary contracts; these are imbued with public interest and therefore subject to
the police power of the State. 11
However, notwithstanding the foregoing iterations, project employment contracts which fix the
employment for a specific project or undertaking remain valid under the law:
x x x By entering into such a 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 employers 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. 12
In the case at bar, the records reveal that the officers and the members of petitioner Union signed
employment contracts indicating the specific project or phase of work for which they were hired, with
a fixed period of employment. The NLRC correctly disposed of this issue:
A deeper examination also shows that [the individual members of petitioner Union] indeed signed
and accepted the [employment contracts] freely and voluntarily. No evidence was presented by
[petitioner] Union to prove improper pressure or undue influence when they entered, perfected and
consummated [the employment] contracts. In fact, it was clearly established in the course of the trial
of this case, as explained by no less than the President of [petitioner] Union, that the contracts of
employment were read, comprehended, and voluntarily accepted by them. x x x.
xxxx
As clearly shown by [petitioner] Unions own admission, both parties had executed the contracts
freely and voluntarily without force, duress or acts tending to vitiate the worker[s] consent. Thus, we
see no reason not to honor and give effect to the terms and conditions stipulated therein. x x x. 13
Thus, we are hard pressed to find cause to disturb the findings of the NLRC which are supported by
substantial evidence.
It is well-settled in jurisprudence that factual findings of administrative or quasi-judicial bodies, which
are deemed to have acquired expertise in matters within their respective jurisdictions, are generally
accorded not only respect but even finality, and bind the Court when supported by substantial
evidence.14 Rule 133, Section 5 defines substantial evidence as "that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion."
Consistent therewith is the doctrine that this Court is not a trier of facts, and this is strictly adhered to
in labor cases.15 We may take cognizance of and resolve factual issues, only when the findings of
fact and conclusions of law of the Labor Arbiter or the NLRC are inconsistent with those of the CA. 16

In the case at bar, both the NLRC and the CA were one in the conclusion that the officers and the
members of petitioner Union were project employees. Nonetheless, petitioner Union insists that they
were regular employees since they performed work which was usually necessary or desirable to the
usual business or trade of the Construction Department of respondent.
The landmark case of ALU-TUCP v. NLRC17 instructs on the two (2) categories of project employees:
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 parameters of the "project" becomes fairly
easy. x x x. 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." 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 [distinct] 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. 18
Plainly, the litmus test to determine whether an individual is a project employee lies in setting a fixed
period of employment involving a specific undertaking which completion or termination has been
determined at the time of the particular employees engagement.
In this case, as previously adverted to, the officers and the members of petitioner Union were
specifically hired as project employees for respondents Leyte Geothermal Power Project located at
the Greater Tongonan Geothermal Reservation in Leyte. Consequently, upon the completion of the
project or substantial phase thereof, the officers and the members of petitioner Union could be
validly terminated.

Petitioner Union is adamant, however, that the lack of interval in the employment contracts of its
officer and members negates the latters status
as mere project employees. For petitioner Union, the lack of interval further drives home its point that
its officers and members are regular employees who performed work which was usually necessary
or desirable to the usual business or trade of respondent.
We are not persuaded.
Petitioner Unions members employment for more than a year does equate to their regular
employment with respondent. In this regard, Mercado, Sr. v. NLRC19 illuminates:
The first paragraph [of Article 280 of the Labor Code] answers the question of who are regular
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 season, as in the present case.
The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do
not fall under the definition of the preceding paragraph. The proviso, in said second paragraph,
deems as regular employees those "casual" employees who have rendered at least one year of
service regardless of the fact that such service may be continuous or broken.
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. 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. The only
exception to this rule is where the clear legislative intent is to restrain or qualify not only the phrase
immediately preceding it (the proviso) but also earlier provisions of the statute or even the statute
itself as a whole.
Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of
regular and casual employees was designed to put an end to casual employment in regular jobs,
which has been abused by many employers to prevent so 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 [end of the] season.
The termination of their employment cannot and should not constitute an illegal dismissal.
Considering our holding that the officers and the members of petitioner Union were project
employees, its claim of union busting is likewise dismissed.
On the second issue, petitioner Union contends that there was no stoppage of work; hence, they did
not strike. Euphemistically, petitioner Union avers that it "only engaged in picketing," 20 and maintains
that "without any work stoppage, [its officers and members] only engaged in xxx protest activity."
We are not convinced. Petitioner Union splits hairs.
To begin with, quite evident from the records is the undisputed fact that petitioner Union filed a
Notice of Strike on December 28, 1998 with the Department of Labor and Employment, grounded on
respondents purported
unfair labor practices, i.e., "refusal to bargain collectively, union busting and mass termination." On
even date, petitioner Union declared and staged a strike.
Second, then Secretary of Labor, Bienvenido E. Laguesma, intervened and issued a Return-to-Work
Order21dated January 4, 1999, certifying the labor dispute to the NLRC for compulsory arbitration.
The Order narrates the facts leading to the labor dispute, to wit:
On 28 December 1998, [petitioner Union] filed a Notice of Strike against [respondent] citing unfair
labor practices, specifically: refusal to bargain collectively, union busting and mass termination as
the grounds [therefor]. On the same day, [petitioner] Union went on strike and took control over
[respondents] facilities of its Leyte Geothermal Project.
Attempts by the National Conciliation and Mediation Board RBVIII to forge a mutually acceptable
solution proved futile.
In the meantime, the strike continues with no settlement in sight placing in jeopardy the supply of
much needed power supply in the Luzon and Visayas grids.
xxxx
The on-going strike threatens the availability of continuous electricity to these areas which is critical
to day-to-day life, industry, commerce and trade. Without doubt, [respondents] operations [are]
indispensable to the national interest and falls (sic) within the purview of Article 263 (g) of the Labor
Code, as amended, which warrants (sic) the intervention of this Office.
Third, petitioner Union itself, in its pleadings, used the word "strike."
Ultimately, petitioner Unions asseverations are belied by the factual findings of the NLRC, as
affirmed by the CA:
The failure to comply with the mandatory requisites for the conduct of strike is both admitted and
clearly shown on record. Hence, it is undisputed that no strike vote was conducted; likewise, the
cooling-off period was not observed and that the 7-day strike ban after the submission of the strike
vote was not complied with since there was no strike vote taken.

xxxx
The factual issue of whether a notice of strike was timely filed by [petitioner] Union was resolved by
the evidence on record. The evidence revealed that [petitioner] Union struck even before it could file
the required notice of strike. Once again, this relied on [petitioner] Unions proof. [Petitioner] Union[s]
witness said:
Atty. Sinsuat : You stated that you struck on 28 December 1998 is that correct?
Witness : Early in the morning of December 1998.
xxxx
Atty. Sinsuat : And you went there to conduct the strike did you not?
Witness : Our plan then was to strike at noon of December 28 and the strikers will be positioned at
their respective areas.22
Article 263 of the Labor Code enumerates the requisites for holding a strike:
Art. 263. Strikes, picketing, and lockouts. (a) x x x.
x x x x.
(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may
file a notice of strike or the employer may file a notice of lockout with the Department at least
30 days before the intended date thereof. In cases of unfair labor practice, the period of
notice shall be 15 days and in the absence of a duly certified bargaining agent, the notice of
strike may be filed by any legitimate labor organization in behalf of its members. However, in
case of dismissal from employment of union officers duly elected in accordance with the
union constitution and by-laws, which may constitute union busting, where the existence of
the union is threatened, the 15-day cooling-off period shall not apply and the union may take
action immediately.
(d) The notice must be in accordance with such implementing rules and regulations as the
Department of Labor and Employment may promulgate.
(e) During the cooling-off period, it shall be the duty of the Department to exert all efforts at
mediation and conciliation to effect a voluntary settlement. Should the dispute remain
unsettled until the lapse of the requisite number of days from the mandatory filing of the
notice, the labor union may strike or the employer may declare a lockout.
(f) A decision to declare a strike must be approved by a majority of the total union
membership in the bargaining unit concerned, obtained by secret ballot in meetings or
referenda called for that purpose. A decision to declare a lockout must be approved by a
majority of the board of directors of the corporation or association or of the partners in a
partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall
be valid for the duration of the dispute based on substantially the same grounds considered
when the strike or lockout vote was taken. The Department may, at its own initiative or upon
the request of any affected party, supervise the conduct of the secret balloting. In every case,
the union or the employer shall furnish the Department the results of the voting at least

seven days before the intended strike or lockout, subject to the cooling-off period herein
provided.
In fine, petitioner Unions bare contention that it did not hold a strike cannot trump the factual
findings of the NLRC that petitioner Union indeed struck against respondent. In fact, and more
importantly, petitioner Union failed to comply with the requirements set by law prior to holding a
strike.
1avvphi1

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No.
65760 is AFFIRMED. Costs against petitioner Union.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
DIOSDADO M. PERALTA
Associate Justice

ROBERTO A. ABAD
Associate Justice

JOSE CATRAL MENDOZA

Associate Justice
ATT E S TATI O N

LEYTE GEOTHERMAL POWER PROGRESSIVE EMPLOYEES UNION - ALU - TUCP, Petitioner, vs. PHILIPPINE
NATIONAL OIL COMPANY - ENERGY DEVELOPMENT CORPORATION, Respondent.'
G.R. No. 170351
March 30, 2011
NACHURA, J.:
FACTS:
PNOC is a government-owned and controlled corporation engaged in, among others of energy resources
like geothermal energy. Petitioner is a legitimate labor organization, duly registered with the DOLE.
PNOC hired employees for its Leyte Geothermal Power Project whereby, their employment was only
good up to the completion or termination of the project and would automatically expire upon the
completion of such project. Majority of the employees hired had become members of petitioner. In
view of that circumstance, the petitioner demands for recognition of it as the collective bargaining
agent of said employees and for a CBA negotiation with it. However, PNOC did not heed such demands.

Sometime in 1998 when the project was about to be completed, PNOC proceeded to serve Notices of
Termination of Employment upon the employees who are members of the petitioner.
The petitioner filed a Notice of Strike with DOLE against PNOC on the ground of purported commission
by the latter of ULP for "refusal to bargain collectively, union busting and mass termination." On the
same day, the petitioner declared a strike and staged such strike. PNOC filed a complaint for, among
others, Strike Illegality with NLRC which ruled in its favour and whose decision was affirmed by the CA.
ISSUE: WON the officers and members of petitioner Union are project employees of respondent.
RULING:
The litmus test to determine whether an individual is a project employee lies in setting a fixed period
of employment involving a specific undertaking which completion or termination has been determined
at the time of the particular employees engagement.
In this case, as previously adverted to, the officers and the members of petitioner Union were
specifically hired as project employees for respondents Leyte Geothermal Power Project located at the
Greater Tongonan Geothermal Reservation in Leyte. Consequently, upon the completion of the project
or substantial phase thereof, the officers and the members of petitioner Union could be validly
terminated. 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 [end of the]
season. The termination of their employment cannot and should not constitute an illegal dismissal.
G.R. No. 170351, March 30, 2011
LEYTE GEOTHERMAL POWER PROGRESSIVE EMPLOYEES UNION ALU TUCP, Petitioner,
vs.
PHILIPPINE NATIONAL OIL COMPANY ENERGY DEVELOPMENT CORPORATION,
Respondent.
FACTS: Respondent is a GOCC while petitioner is a legitimate labor organization. Among
[respondents] geothermal projects is the Leyte Geothermal Power Project located at the
Greater Tongonan Geothermal Reservation in Leyte. Thus, the [respondent] hired and
employed hundreds of employees on a contractual basis, whereby, their employment was
only good up to the completion or termination of the project and would automatically expire
upon the completion of such project.
Majority of the employees hired by [respondent] in its Leyte Geothermal Power Projects
had become members of petitioner. In view of that circumstance, the petitioner demands
from the [respondent] for recognition of it as the collective bargaining agent of said
employees and for a CBA negotiation with it. However, the [respondent] did not heed such
demands of the petitioner. Sometime in 1998 when the project was about to be completed,
the [respondent] proceeded to serve Notices of Termination of Employment upon the
employees who are members of the petitioner.
On December 28, 1998, the petitioner filed a Notice of Strike with DOLE against the
[respondent] on the ground of purported commission by the latter of unfair labor practice
for refusal to bargain collectively, union busting and mass termination. On the same day,
the petitioner declared a strike and staged such strike.
Secretary of Labor intervened and ordered all workers to return to work. However,

petitioner did not abide.

NLRC: ruled that the employees are PROJECT EMPLOYEES, and the strike as ILLEGAL
Petitioner Union contends that its officers and members performed activities that were
usually necessary and desirable to respondents usual business.
ISSUE: WON they are project employees
HELD: They are PROJECT EMPLOYEES
Article 280 of the Labor Code contemplates four (4) 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;
(c) seasonal employees or those who work or perform services which are seasonal in
nature, and the employment is for the duration of the season; and
(d) casual employees or those who are not regular, project, or seasonal employees.
Jurisprudence has added a fifth kind a fixed-term employee.
By entering into such a 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
employers 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.
Unions own admission, both parties had executed the contracts freely and voluntarily
without force, duress or acts tending to vitiate the worker[s] consent. Thus, we see no
reason not to honor and give effect to the terms and conditions stipulated therein.
The litmus test to determine whether an individual is a project employee lies in setting a
fixed period of employment involving a specific undertaking which completion or
termination has been determined at the time of the particular employees engagement.
NOTES:
WHAT IS A 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 [distinct] 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.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 102132. March 19, 1993.

DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN V. ABARQUEZ, in
his capacity as an accredited Voluntary Arbitrator and THE ASSOCIATION OF TRADE UNIONS
(ATU-TUCP), respondents.
Libron, Gaspar & Associates for petitioner.
Bansalan B. Metilla for Association of Trade Unions (ATUTUCP).
SYLLABUS
1. LABOR LAWS AND SOCIAL LEGISLATION; LABOR RELATIONS; COLLECTIVE BARGAINING
AGREEMENT; DEFINED; NATURE THEREOF; CONSTRUCTION TO BE PLACED THEREON. A
collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers to a contract
executed upon request of either the employer or the exclusive bargaining representative
incorporating the agreement reached after negotiations with respect to wages, hours of work and all
other terms and conditions of employment, including proposals for adjusting any grievances or
questions arising under such agreement. While the terms and conditions of a CBA constitute the law
between the parties, it is not, however, an ordinary contract to which is applied the principles of law
governing ordinary contracts. A CBA, as a labor contract within the contemplation of Article 1700 of
the Civil Code of the Philippines which governs the relations between labor and capital, is not merely
contractual in nature but impressed with public interest, thus, it must yield to the common good. As
such, it must be construed liberally rather than narrowly and technically, and the courts must place a

practical and realistic construction upon it, giving due consideration to the context in which it is
negotiated and purpose which it is intended to serve.
2. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. It is thus erroneous for petitioner to isolate Section 1,
Article VIII of the 1989 CBA from the other related section on sick leave with pay benefits,
specifically Section 3 thereof, in its attempt to justify the discontinuance or withdrawal of the privilege
of commutation or conversion to cash of the unenjoyed portion of the sick leave benefit to regular
intermittent workers. The manner they were deprived of the privilege previously recognized and
extended to them by petitioner-company during the lifetime of the CBA of October 16, 1985 until
three (3) months from its renewal on April 15, 1989, or a period of three (3) years and nine (9)
months, is not only tainted with arbitrariness but likewise discriminatory in nature. It must be noted
that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to two (2) distinct
classes of workers in petitioner's company, namely: (1) the regular non-intermittent workers or those
workers who render a daily eight-hour service to the company and are governed by Section 1, Article
VIII of the 1989 CBA; and (2) intermittent field workers who are members of the regular labor pool
and the present regular extra labor pool as of the signing of the agreement on April 15, 1989 or
those workers who have irregular working days and are governed by Section 3, Article VIII of the
1989 CBA. It is not disputed that both classes of workers are entitled to sick leave with pay benefits
provided they comply with the conditions set forth under Section 1 in relation to the last paragraph of
Section 3, to wit: (1) the employee-applicant must be regular or must have rendered at least one
year of service with the company; and (2) the application must be accompanied by a certification
from a company-designated physician. the phrase "herein sick leave privilege," as used in the last
sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave with pay which, as
mandated by Section 1, only the non-intermittent workers are entitled to. This fixed 15-day sick leave
with pay benefit should be distinguished from the variable number of days of sick leave, not to
exceed 15 days, extended to intermittent workers under Section 3 depending on the number of
hours of service rendered to the company, including overtime pursuant to the schedule provided
therein. It is only fair and reasonable for petitioner-company not to stipulate a fixed 15-day sick leave
with pay for its regular intermittent workers since, as the term "intermittent" implies, there is
irregularity in their work-days. Reasonable and practical interpretation must be placed on contractual
provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such interpretation is to be
adopted, that the thing may continue to have efficacy rather than fail.
3. ID.; ID.; ID.; SICK LEAVE BENEFITS; NATURE AND PURPOSE. Sick leave benefits, like other
economic benefits stipulated in the CBA such as maternity leave and vacation leave benefits, among
others, are by their nature, intended to be replacements for regular income which otherwise would
not be earned because an employee is not working during the period of said leaves. They are noncontributory in nature, in the sense that the employees contribute nothing to the operation of the
benefits. By their nature, upon agreement of the parties, they are intended to alleviate the economic
condition of the workers.
4. ID.; ID.; JURISDICTION OF VOLUNTARY ARBITRATOR; CASE AT BAR. Petitioner-company's
objection to the authority of the Voluntary Arbitrator to direct the commutation of the unenjoyed
portion of the sick leave with pay benefits of intermittent workers in his decision is misplaced. Article
261 of the Labor Code is clear. The questioned directive of the herein public respondent is the
necessary consequence of the exercise of his arbitral power as Voluntary Arbitrator under Article 261
of the Labor Code "to hear and decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement." We, therefore, find that no grave abuse of
discretion was committed by public respondent in issuing the award (decision). Moreover, his
interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is
absolutely correct.

5. ID.; CONDITIONS OF EMPLOYMENT; PROHIBITION AGAINST ELIMINATION OR DIMINUTION

OF BENEFITS; BENEFITS GRANTED PURSUANT TO COMPANY PRACTICE OR POLICY
CANNOT BE PEREMPTORILY WITHDRAWN. Whatever doubt there may have been early on
was clearly obliterated when petitioner-company recognized the said privilege and paid its
intermittent workers the cash equivalent of the unenjoyed portion of their sick leave with pay benefits
during the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April 15,
1989. Well-settled is it that the said privilege of commutation or conversion to cash, being an existing
benefit, the petitioner-company may not unilaterally withdraw, or diminish such benefits. It is a fact
that petitioner-company had, on several instances in the past, granted and paid the cash equivalent
of the unenjoyed portion of the sick leave benefits of some intermittent workers. Under the
circumstances, these may be deemed to have ripened into company practice or policy which cannot
be peremptorily withdrawn.
DECISION
ROMERO, J p:
In this petition for certiorari, petitioner Davao Integrated Port Services Corporation seeks to reverse
the Award 1 issued on September 10, 1991 by respondent Ruben V. Abarquez, in his capacity as
Voluntary Arbitrator of the National Conciliation and Mediation Board, Regional Arbitration Branch XI
in Davao City in Case No. AC-211-BX1-10-003-91 which directed petitioner to grant and extend the
privilege of commutation of the unenjoyed portion of the sick leave with pay benefits to its
intermittent field workers who are members of the regular labor pool and the present regular extra
pool in accordance with the Collective Bargaining Agreement (CBA) executed between petitioner
and private respondent Association of Trade Unions (ATU-TUCP), from the time it was discontinued
and henceforth.
The facts are as follows:
Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private respondent
ATU-TUCP (Union), the exclusive collective bargaining agent of the rank and file workers of
petitioner-company, entered into a collective bargaining agreement (CBA) on October 16, 1985
which, under Sections 1 and 3, Article VIII thereof, provide for sick leave with pay benefits each year
to its employees who have rendered at least one (1) year of service with the company, thus:
"ARTICLE VIII
Section 1. Sick Leaves The Company agrees to grant 15 days sick leave with pay each year to
every regular non-intermittent worker who already rendered at least one year of service with the
company. However, such sick leave can only be enjoyed upon certification by a company designated
physician, and if the same is not enjoyed within one year period of the current year, any unenjoyed
portion thereof, shall be converted to cash and shall be paid at the end of the said one year period.
And provided however, that only those regular workers of the company whose work are not
intermittent, are entitled to the herein sick leave privilege.
xxx xxx xxx
Section 3. All intermittent field workers of the company who are members of the Regular Labor
Pool shall be entitled to vacation and sick leaves per year of service with pay under the following
schedule based on the number of hours rendered including overtime, to wit:

Hours of Service Per Vacation Sick Leave

Calendar Year Leave
Less than 750 NII NII
751 825 6 days 6 days
826 900 7 7
901 925 8 8
926 1,050 9 9
1,051 1,125 10 10
1,126 1,200 11 11
1,201 1,275 12 12
1,276 1,350 13 13
1,351 1,425 14 14
1,426 1,500 15 15
The conditions for the availment of the herein vacation and sick leaves shall be in accordance with
the above provided Sections 1 and 2 hereof, respectively."
Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits were reproduced
under Sections 1 and 3, Article VIII of the new CBA, but the coverage of the said benefits was
expanded to include the "present Regular Extra Labor Pool as of the signing of this Agreement."
Section 3, Article VIII, as revised, provides, thus:
"Section 3. All intermittent field workers of the company who are members of the Regular Labor
Pool and present Regular Extra Labor Pool as of the signing of this agreement shall be entitled to
vacation and sick leaves per year of service with pay under the following schedule based on the
number of hours rendered including overtime, to wit:
Hours of Service Per Vacation Sick Leave
Calendar Year Leave
Less than 750 NII NII
751 825 6 days 6 days
826 900 7 7
901 925 8 8

926 1,050 9 9
1,051 1,125 10 10
1,126 1,200 11 11
1,201 1,275 12 12
1,276 1,350 13 13
1,351 1,425 14 14
1,426 1,500 15 15
The conditions for the availment of the herein vacation and sick leaves shall be in accordance with
the above provided Sections 1 and 2 hereof, respectively."
During the effectivity of the CBA of October 16, 1985 until three (3) months after its renewal on April
15, 1989, or until July 1989 (a total of three (3) years and nine (9) months), all the field workers of
petitioner who are members of the regular labor pool and the present regular extra labor pool who
had rendered at least 750 hours up to 1,500 hours were extended sick leave with pay benefits. Any
unenjoyed portion thereof at the end of the current year was converted to cash and paid at the end
of the said one-year period pursuant to Sections 1 and 3, Article VIII of the CBA. The number of days
of their sick leave per year depends on the number of hours of service per calendar year in
accordance with the schedule provided in Section 3, Article VIII of the CBA.
The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent
workers or its conversion to cash was, however, discontinued or withdrawn when petitioner-company
under a new assistant manager, Mr. Benjamin Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the
latter's resignation in June 1989), stopped the payment of its cash equivalent on the ground that they
are not entitled to the said benefits under Sections 1 and 3 of the 1989 CBA.
The Union objected to the said discontinuance of commutation or conversion to cash of the
unenjoyed sick leave with pay benefits of petitioner's intermittent workers contending that it is a
deviation from the true intent of the parties that negotiated the CBA; that it would violate the principle
in labor laws that benefits already extended shall not be taken away and that it would result in
discrimination between the non-intermittent and the intermittent workers of the petitioner-company.
Upon failure of the parties to amicably settle the issue on the interpretation of Sections 1 and 3,
Article VIII of the 1989 CBA, the Union brought the matter for voluntary arbitration before the
National Conciliation and Mediation Board, Regional Arbitration Branch XI at Davao City by way of
complaint for enforcement of the CBA. The parties mutually designated public respondent Ruben
Abarquez, Jr. to act as voluntary arbitrator.
After the parties had filed their respective position papers, 2 public respondent Ruben Abarquez, Jr.
issued on September 10, 1991 an Award in favor of the Union ruling that the regular intermittent
workers are entitled to commutation of their unenjoyed sick leave with pay benefits under Sections 1
and 3 of the 1989 CBA, the dispositive portion of which reads:
"WHEREFORE, premises considered, the management of the respondent Davao Integrated Port
Stevedoring Services Corporation is hereby directed to grant and extend the sick leave privilege of

the commutation of the unenjoyed portion of the sick leave of all the intermittent field workers who
are members of the regular labor pool and the present extra pool in accordance with the CBA from
the time it was discontinued and henceforth.
SO ORDERED."
Petitioner-company disagreed with the aforementioned ruling of public respondent, hence, the
instant petition.
Petitioner-company argued that it is clear from the language and intent of the last sentence of
Section 1, Article VIII of the 1989 CBA that only the regular workers whose work are not intermittent
are entitled to the benefit of conversion to cash of the unenjoyed portion of sick leave, thus: ". . . And
provided, however, that only those regular workers of the Company whose work are not intermittent
are entitled to the herein sick leave privilege."
Petitioner-company further argued that while the intermittent workers were paid the cash equivalent
of their unenjoyed sick leave with pay benefits during the previous management of Mr. Beltran who
misinterpreted Sections 1 and 3 of Article VIII of the 1985 CBA, it was well within petitionercompany's rights to rectify the error it had committed and stop the payment of the said sick leave
with pay benefits. An error in payment, according to petitioner-company, can never ripen into a
practice.
We find the arguments unmeritorious.
A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers to a
contract executed upon request of either the employer or the exclusive bargaining representative
incorporating the agreement reached after negotiations with respect to wages, hours of work and all
other terms and conditions of employment, including proposals for adjusting any grievances or
questions arising under such agreement.
While the terms and conditions of a CBA constitute the law between the parties, 3 it is not, however,
an ordinary contract to which is applied the principles of law governing ordinary contracts. 4 A CBA,
as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which
governs the relations between labor and capital, is not merely contractual in nature but impressed
with public interest, thus, it must yield to the common good. As such, it must be construed liberally
rather than narrowly and technically, and the courts must place a practical and realistic construction
upon it, giving due consideration to the context in which it is negotiated and purpose which it is
intended to serve. 5
It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from the other
related section on sick leave with pay benefits, specifically Section 3 thereof, in its attempt to justify
the discontinuance or withdrawal of the privilege of commutation or conversion to cash of the
unenjoyed portion of the sick leave benefit to regular intermittent workers. The manner they were
deprived of the privilege previously recognized and extended to them by petitioner-company during
the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989,
or a period of three (3) years and nine (9) months, is not only tainted with arbitrariness but likewise
discriminatory in nature. Petitioner-company is of the mistaken notion that since the privilege of
commutation or conversion to cash of the unenjoyed portion of the sick leave with pay benefits is
found in Section 1, Article VIII, only the regular non-intermittent workers and no other can avail of the
said privilege because of the proviso found in the last sentence thereof.

It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply
to two (2) distinct classes of workers in petitioner's company, namely: (1) the regular non-intermittent
workers or those workers who render a daily eight-hour service to the company and are governed by
Section 1, Article VIII of the 1989 CBA; and (2) intermittent field workers who are members of the
regular labor pool and the present regular extra labor pool as of the signing of the agreement on
April 15, 1989 or those workers who have irregular working days and are governed by Section 3,
Article VIII of the 1989 CBA.
It is not disputed that both classes of workers are entitled to sick leave with pay benefits provided
they comply with the conditions set forth under Section 1 in relation to the last paragraph of Section
3, to wit: (1) the employee-applicant must be regular or must have rendered at least one year of
service with the company; and (2) the application must be accompanied by a certification from a
company-designated physician.
Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave and
vacation leave benefits, among others, are by their nature, intended to be replacements for regular
income which otherwise would not be earned because an employee is not working during the period
of said leaves. 6 They are non-contributory in nature, in the sense that the employees contribute
nothing to the operation of the benefits. 7 By their nature, upon agreement of the parties, they are
intended to alleviate the economic condition of the workers.
After a careful examination of Section 1 in relation to Section 3, Article VIII of the 1989 CBA in light of
the facts and circumstances attendant in the instant case, we find and so hold that the last sentence
of Section 1, Article VIII of the 1989 CBA, invoked by petitioner-company does not bar the regular
intermittent workers from the privilege of commutation or conversion to cash of the unenjoyed
portion of their sick leave with pay benefits, if qualified. For the phrase "herein sick leave privilege,"
as used in the last sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave
with pay which, as mandated by Section 1, only the non-intermittent workers are entitled to. This
fixed 15-day sick leave with pay benefit should be distinguished from the variable number of days of
sick leave, not to exceed 15 days, extended to intermittent workers under Section 3 depending on
the number of hours of service rendered to the company, including overtime pursuant to the
schedule provided therein. It is only fair and reasonable for petitioner-company not to stipulate a
fixed 15-day sick leave with pay for its regular intermittent workers since, as the term "intermittent"
implies, there is irregularity in their work-days. Reasonable and practical interpretation must be
placed on contractual provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such
interpretation is to be adopted, that the thing may continue to have efficacy rather than fail. 8
We find the same to be a reasonable and practical distinction readily discernible in Section 1, in
relation to Section 3, Article VIII of the 1989 CBA between the two classes of workers in the
company insofar as sick leave with pay benefits are concerned. Any other distinction would cause
discrimination on the part of intermittent workers contrary to the intention of the parties that mutually
agreed in incorporating the questioned provisions in the 1989 CBA.
Public respondent correctly observed that the parties to the CBA clearly intended the same sick
leave privilege to be accorded the intermittent workers in the same way that they are both given the
same treatment with respect to vacation leaves - non-commutable and non-cumulative. If they are
treated equally with respect to vacation leave privilege, with more reason should they be on par with
each other with respect to sick leave privileges. 9 Besides, if the intention were otherwise, during its
renegotiation, why did not the parties expressly stipulate in the 1989 CBA that regular intermittent
workers are not entitled to commutation of the unenjoyed portion of their sick leave with pay
benefits?

Whatever doubt there may have been early on was clearly obliterated when petitioner-company
recognized the said privilege and paid its intermittent workers the cash equivalent of the unenjoyed
portion of their sick leave with pay benefits during the lifetime of the CBA of October 16, 1985 until
three (3) months from its renewal on April 15, 1989. Well-settled is it that the said privilege of
commutation or conversion to cash, being an existing benefit, the petitioner-company may not
unilaterally withdraw, or diminish such benefits. 10 It is a fact that petitioner-company had, on
several instances in the past, granted and paid the cash equivalent of the unenjoyed portion of the
sick leave benefits of some intermittent workers. 11 Under the circumstances, these may be deemed
to have ripened into company practice or policy which cannot be peremptorily withdrawn. 12
Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the
commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in
his decision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of the
herein public respondent is the necessary consequence of the exercise of his arbitral power as
Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved
grievances arising from the interpretation or implementation of the Collective Bargaining Agreement."
We, therefore, find that no grave abuse of discretion was committed by public respondent in issuing
the award (decision). Moreover, his interpretation of Sections 1 and 3, Article VIII of the 1989 CBA
cannot be faulted with and is absolutely correct.
WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award (decision) of public
respondent dated September 10, 1991 is hereby AFFIRMED. No costs.
SO ORDERED.
Feliciano, Bidin, Davide, Jr. and Melo, JJ., concur.
Gutierrez, Jr., on terminal leave.