Mla.

Water co inc vs pena

MANILA WATER COMPANY, INC., petitioner, vs. HERMINIO D. PENA, ESTEBAN B. BALDOZA,
JORGE D. CANONIGO, JR., IKE S. DELFIN, RIZALINO M. INTAL, REY T. MANLEGRO, JOHN
L. MARTEJA,
MARLON
B. MORADA,
ALLAN
D.
ESPINA,
EDUARDO ONG, AGNESIO D. QUEBRAL, EDMUNDO B. VICTA, VICTOR C. ZAFARALLA,
EDILBERTO C.PINGUL and FEDERICO M. RIVERA, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition assails the decision[1] of the Court of Appeals dated , in CA-G.R. SP No. 67134, which
reversed the decision of the National Labor Relations Commission and reinstated the decision of the Labor
Arbiter with modification.
Petitioner Manila Water Company, Inc. is one of the two private concessionaires contracted by the
Metropolitan Waterworks and Sewerage System (MWSS) to manage the water distribution system in the East
Zone of Metro Manila, pursuant to Republic Act No. 8041, otherwise known as the National Water Crisis Act of
1995. Under the Concession Agreement, petitioner undertook to absorb former employees of the MWSS whose
names and positions were in the list furnished by the latter, while the employment of those not in the list was
terminated on the day petitioner took over the operation of the East Zone, which was on . Private respondents,
being contractual collectors of the MWSS, were among the 121 employees not included in the list; nevertheless,
petitioner engaged their services without written contract from to . Thereafter, on , they signed a three-month
contract to perform collection services for eight branches of petitioner in the East Zone.[2]
Before the end of the three-month contract, the 121 collectors incorporated the Association Collectors
Group,
Inc.
(ACGI),[3] which
was
contracted
by
petitioner
to
collect
charges
for
the Balara Branch. Subsequently, most of the 121 collectors were asked by the petitioner to transfer to the First
Classic Courier Services, a newly registered corporation. Only private respondents herein remained
with ACGI. Petitioner continued to transact with ACGI to do its collection needs until , when petitioner
terminated its contract with ACGI.[4]
Private respondents filed a complaint for illegal dismissal and money claims against petitioner, contending
that they were petitioners employees as all the methods and procedures of their collections were controlled by
the latter.
On the other hand, petitioner asserts that private respondents were employees of ACGI, an independent
contractor. It maintained that it had no control and supervision over private respondents manner of performing
their work except as to the results. Thus, petitioner did not have an employer-employee relationship with the
private respondents, but only a service contractor-client relationship with ACGI.
On , Labor Arbiter Eduardo J. Carpio rendered a decision finding the dismissal of private respondents
illegal.He held that private respondents were regular employees of petitioner not only because the tasks

performed by them were controlled by it but, also, the tasks were obviously necessary and desirable to
petitioners principal business. The dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered, finding that complainants were employees of
respondent [petitioner herein], that they were illegally dismissed, and respondent [petitioner herein] is hereby
ordered to pay their separation pay based on the following computed amounts:
HERMINIO D. PENA P15,000.00
ESTEBAN BALDOZA P12,000.00
JORGE D. CANONIGO, JR. P16,000.00
IKE P12,000.00
RIZALINO M. INTAL P16,000.00
REY T. MANLEGRO P16,000.00
JOHN L. MARTEJA P12,000.00
MARLON B. MORADA P16,000.00
ALLAN D. ESPINA P14,000.00
EDUARDO ONG P15,000.00
AGNESIO D. QUEBRAL P16,000.00
EDMUNDO B. VICTA P13,000.00
VICTOR P. ZAFARALLA P15,000.00
EDILBERTO C. PINGUL P19,500.00
FEDERICO M. RIVERA P15,000.00
------------------------------TOTAL P222,500.00
Respondent [petitioner herein] is further directed to pay ten (10%) percent of the total award as attorneys fee or
the sum of P22,250.00.
SO ORDERED.[5]
Both parties appealed to the NLRC, which reversed the decision of the Labor Arbiter and ruled that the
documentary evidence, e.g., letters and memoranda by the petitioner to ACGI regarding the poor performance of
the collectors, did not constitute proof of control since these documents merely identified the erring collectors;
the appropriate disciplinary actions were left to the corporation to impose.[6] Further, there was no evidence
showing that the incorporation of ACGI was irregular.
Private respondents filed a petition for certiorari with the Court of Appeals, contending that the NLRC
acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it reversed the decision of
the Labor Arbiter.

The Court of Appeals reversed the decision of the NLRC and reinstated with modification the decision of
the Labor Arbiter.[7] It held that petitioner deliberately prevented the creation of an employment relationship
with the private respondents; and that ACGI was not an independent contractor. It likewise denied petitioners
motion for reconsideration.[8]
Hence, this petition for review raising the following errors:
THE HONORABLE COURT OF APPEALS IN RENDERING THE ASSAILED DECISION AND
RESOLUTION COMMITTED GRAVE REVERSIBLE ERRORS:
A. IN GOING BEYOND ITS JURISDICTION AND PROCEEDING TO GIVE DUE COURSE TO
RESPONDENTS PETITION FOR CERTIORARI UNDER RULE 65 OF THE RULES OF
COURT, NOTWITHSTANDING THE ABSENCE OF ANY PROOF OF GRAVE ABUSE OF
DISCRETION ON THE PART OF THE NATIONAL LABOR RELATIONS COMMISSION
WHEN IT RENDERED THE DECISION ASSAILED BY HEREIN RESPONDENTS.
B. WHEN IT MANIFESTLY OVERLOOKED THE EVIDENCE PRESENTED BY THE
PETITIONER COMPANY AND RULING THAT THE PETITIONERS DEFENSE OF LACK OF
EMPLOYER-EMPLOYEE RELATIONS IS WITHOUT MERIT.
C. IN CONCLUDING THAT PETITIONER COMPANY REQUIRED RESPONDENTS TO
INCORPORATE
THE
ASSOCIATED
COLLECTORS
GROUP,
INC.
[ACGI]
NOTWITHSTANDING ABSENCE OF ANY SPECIFIC EVIDENCE IN SUPPORT OF THE
SAME.
D. IN FINDING PETITIONER COMPANY GUILTY OF BAD FAITH NOTWITHSTANDING
ABSENCE OF ANY SPECIFIC EVIDENCE IN SUPPORT OF THE SAME, AND AWARDING
MORAL AND EXEMPLARY DAMAGES TO HEREIN RESPONDENTS.[9]
The pivotal issue to be resolved in this petition is whether or not there exists an employer-employee
relationship between petitioner and private respondents. Corollary thereto is the issue of whether or not private
respondents were illegally dismissed by petitioner.
The issue of whether or not an employer-employee relationship exists in a given case is essentially a
question of fact.[10]As a rule, the Supreme Court is not a trier of facts, and this applies with greater force in
labor cases. Hence, factual findings of quasi-judicial bodies like the NLRC, particularly when they coincide with
those of the Labor Arbiter and if supported by substantial evidence, are accorded respect and even finality by this
Court.[11] However, a disharmony between the factual findings of the Labor Arbiter and the National Labor
Relations Commission opens the door to a review thereof by this Court.Factual findings of administrative
agencies are not infallible and will be set aside when they fail the test of arbitrariness.Moreover, when the
findings of the National Labor Relations Commission contradict with those of the labor arbiter, this Court, in the
exercise of its equity jurisdiction, may look into the records of the case and reexamine the questioned findings.
[12]
The resolution of the foregoing issues initially boils down to a determination of the true status
of ACGI, i.e., whether it is an independent contractor or a labor-only contractor.
Petitioner asserts that ACGI, a duly organized corporation primarily engaged in collection services, is an
independent contractor which entered into a service contract for the collection of petitioners accounts

starting until the early part of February 1999. Thus, it has no employment relationship with private respondents,
being employees of ACGI.
The existence of an employment relationship between petitioner and private respondents cannot be negated
by simply alleging that the latter are employees of ACGI as an independent contractor, it being crucial
that ACGIs status, whether as labor-only contractor or independent contractor, be measured in terms of and
determined by the criteria set by statute.
The case of De los Santos v. NLRC[13] succinctly enunciates this statutory criteria
Job contracting is permissible only if the following conditions are met: 1) the contractor carries on an
independent business and undertakes the contract work on his own account under his own responsibility
according to his own manner and method, free from the control and direction of his employer or principal in all
matters connected with the performance of the work except as to the results thereof; and 2) the contractor has
substantial capital or investment in the form of tools, equipment, machineries, work premises, and other
materials which are necessary in the conduct of the business.
Labor-only contracting as defined in Section 5, Department Order No. 18-02, Rules Implementing Articles
106-109 of the Labor Code[14]refers to an arrangement where the contractor or subcontractor merely recruits,
supplies or places workers to perform job, work or service for a principal, and any of the following elements is
present:
(i) The contractor or subcontractor does not have substantial capital or investment which relates to the
job, work or service to be performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are directly related to the main business
of the principal; or
(ii) The contractor does not exercise the right to control over the performance of the work of the
contractual employee.
Given the above criteria, we agree with the Labor Arbiter that ACGI was not an independent contractor.
First, ACGI does not have substantial capitalization or investment in the form of tools, equipment,
machineries, work premises, and other materials, to qualify as an independent contractor. While it has an
authorized capital stock of P1,000,000.00, only P62,500.00 is actually paid-in, which cannot be considered
substantial capitalization. The 121 collectors subscribed to four shares each and paid only the amount of P625.00
in order to comply with the incorporation requirements.[15] Further, private respondents reported daily to the
branch office of the petitioner because ACGI has no office or work premises. In fact, the corporate address
of ACGI was the residence of its president, Mr. Herminio D. Pea.[16] Moreover, in dealing with the consumers,
private respondents used the receipts and identification cards issued by petitioner.[17]
Second, the work of the private respondents was directly related to the principal business or operation of the
petitioner.Being in the business of providing water to the consumers in the East Zone, the collection of the
charges therefor by private respondents for the petitioner can only be categorized as clearly related to, and in the
pursuit of the latters business.
Lastly, ACGI did not carry on an independent business or undertake the performance of its service contract
according to its own manner and method, free from the control and supervision of its principal, petitioner. Prior
to private respondents alleged employment with ACGI, they were already working for petitioner, subject to its
rules and regulations in regard to the manner and method of performing their tasks. This form of control and

supervision never changed although they were already under the seeming employ of ACGI. Petitioner issued
memoranda regarding the billing methods and distribution of books to the collectors;[18] it required private
respondents to report daily and to remit their collections on the same day to the branch office or to deposit them
with Bank of the Philippine Islands; it monitored strictly their attendance as when a collector cannot perform his
daily collection, he must notify petitioner or the branch office in the morning of the day that he will be absent;
and although it was ACGI which ultimately disciplined private respondents, the penalty to be imposed was
dictated by petitioner as shown in the letters it sent to ACGI specifying the penalties to be meted on the erring
private respondents.[19]These are indications that ACGI was not left alone in the supervision and control of its
alleged employees. Consequently, it can be concluded that ACGI was not an independent contractor since it did
not carry a distinct business free from the control and supervision of petitioner.
Under this factual milieu, there is no doubt that ACGI was engaged in labor-only contracting, and as such,
is considered merely an agent of the petitioner. In labor-only contracting, the statute creates an employeremployee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is
considered merely an agent of the principal employer and the latter is responsible to the employees of the laboronly contractor as if such employees had been directly employed by the principal employer.[20] Since ACGI is
only a labor-only contractor, the workers it supplied should be considered as employees of the petitioner.
Even the four-fold test will show that petitioner is the employer of private respondents. The elements to
determine the existence of an employment relationship are: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees
conduct. The most important element is the employers control of the employees conduct, not only as to the result
of the work to be done, but also as to the means and methods to accomplish it.[21]
We agree with the Labor Arbiter that in the three stages of private respondents services with the
petitioner, i.e., (1) from to ; (2) from to ; and (3) from to, the latter exercised control and supervision over the
formers conduct.
Petitioner contends that the employment of private respondents from to was only temporary and done to
accommodate their request to be absorbed since petitioner was still undergoing a transition period. It was only
when its business became settled that petitioner employed private respondents for a fixed term of three months.
Although petitioner was not obliged to absorb the private respondents, by engaging their services, paying
their wages in the form of commission, subjecting them to its rules and imposing punishment in case of breach
thereof, and controlling not only the end result but the manner of achieving the same as well, an employment
relationship existed between them.
Notably, private respondents performed activities which were necessary or desirable to its principal trade or
business.Thus, they were regular employees of petitioner, regardless of whether the engagement was merely an
accommodation of their request, pursuant to Article 280 of the Labor Code which reads:
The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement
of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.

As such regular employees, private respondents are entitled to security of tenure which may not be
circumvented by mere stipulation in a subsequent contract that their employment is one with a fixed
period. While this Court has upheld the legality of fixed-term employment, where from the circumstances it is
apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they
should be struck down or disregarded as contrary to public policy and morals.[22]
In the case at bar, we find that the term fixed in the subsequent contract was used to defeat
the tenurial security which private respondents already enjoy. Thus, we concur with the Labor Arbiter, as
affirmed by the Court of Appeals, when it held that:
The next question if whether, with respect to the period, the individual contracts are valid. Not all contracts of
employment fixing a period are invalid. Under Article 280, the evil sought to be prevented is singled out:
agreements entered into precisely to circumvent security of tenure. It has no application where a fixed period of
employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper
pressure being brought upon the employee and absent any circumstances vitiating his consent, or where it
satisfactorily appears that the employer and employee dealt with each other on more or less terms with no moral
dominance whatever being exercised by the former over the latter. That is the doctrine in Brent School, Inc. v.
Zamora, 181 SCRA 702. The individual contracts in question were prepared by MWC in the form of the letter
addressed to complainants. The letter-contract is dated , when complainants were already working for MWC as
collectors. With their employment as their means of survival, there was no room then for complainants to
disagree with the presented letter-contracts. Their choice then was not to negotiate for the terms of the contract
but to lose or not to lose their employment employment which they already had at that time. The choice is
obvious, as what they did, to sign the ready made letter-contract to retain their employment, and survive. It is a
defiance of the teaching in Brent School, Inc. v. Zamora if this Office rules that the individual contracts in
question are valid, so, in deference to Brent School ruling, this Office rules they are null and void.[23]
In view of the foregoing, we hold that an employment relationship exists between petitioner and private
respondents. We now proceed to ascertain whether private respondents were dismissed in accordance with law.
As private respondents employer, petitioner has the burden of proving that the dismissal was for a cause
allowed under the law and that they were afforded procedural due process.[24] Petitioner failed to discharge this
burden by substantial evidence as it maintained the defense that it was not the employer of private
respondents. Having established that the schemes employed by petitioner were devious attempts to defeat
the tenurial rights of private respondents and that it failed to comply with the requirements of termination under
the Labor Code, the dismissal of the private respondent is tainted with illegality.
Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work is entitled to
reinstatement without loss of seniority rights and other privileges, and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. However, if reinstatement is no longer possible, the
employer has the alternative of paying the employee his separation pay in lieu of reinstatement.[25]
This Court however cannot sustain the award of moral and exemplary damages in favor of private
respondents. Such an award cannot be justified solely upon the premise that the employer dismissed his
employee without just cause or due process. Additional facts must be pleaded and proved to warrant the grant of
moral damages under the Civil Code. The act of dismissal must be attended with bad faith, or fraud, or was
oppressive to labor or done in a manner contrary to morals, good customs or public policy and, of course, that
social humiliation, wounded feelings, or grave anxiety resulted therefrom.Similarly, exemplary damages are

recoverable only when the dismissal was effected in a wanton, oppressive or malevolent manner. [26] Those
circumstances have not been adequately established.
However, private respondents are entitled to attorneys fees as they were compelled to litigate with
petitioners and incur expenses to enforce and protect their interests.[27] The award by the Labor Arbiter of
P22,250.00 as attorneys fees to private respondents, being reasonable, is sustained.
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals dated November 29, 2002,
in CA-G.R. SP No. 67134, reversing the decision of the National Labor Relations Commission and reinstating
the decision of the Labor Arbiter is AFFIRMED with the MODIFICATION that the awards of P10,000.00 as
moral damages and P5,000.00 as exemplary damages are DELETED for lack of evidentiary basis.
______________
SAN MIGUEL CORPORATION, petitioner, vs. PROSPERO A. ABALLA, BONNY J. ABARING,
EDWIN M. ADLA-ON, ALVIN C. ALCALDE, CELANIO D. ARROLLADO, EDDIE A. ARROLLADO,
REYNALDO T. ASONG, RENE A. ASPERA, JOEL D. BALATERIA, JOSEPH D. BALATERIA, JOSE
JOLLEN BALLADOS, WILFREDO B. BASAS, EDWIN E. BEATINGO, SONNY V. BERONDO,
CHRISTOPHER D. BRIONES, MARLON D. BRIONES, JOEL C. BOOC, ENRIQUE CABALIDA,
DIOSCORO R. CAHINOD, ERNESTO P. CAHINOD, RENANTE S. CAHINOD, RUDERICK R.
CALIXTON, RONILO C. CALVEZ, PANCHO CAETE, JUNNY CASTEL, JUDY S. CELESTE,
ROMEO CHUA, DANILO COBRA, ARMANDO C. DEDOYCO, JOEY R. DELA CRUZ, JOHN D.
DELFIN, RENELITO P. DEON, ARNEL C. DE PEDRO, ORLANDO DERDER, CLIFFORD A. DESPI,
RAMIE A. DESPI, SR., VICTOR A. DESPI, ROLANDO L. DINGLE, ANTONIO D. DOLORFINO,
LARRY DUMA-OP, NOEL DUMOL, CHITO L. DUNGOG, RODERICK C. DUQUEZA, ROMMEL
ESTREBOR, RIC E. GALPO, MANSUETO GILLE, MAXIMO L. HILA-US, GERARDO J. JIMENEZ,
ROBERTLY Y. HOFILEA, ROBERTO HOFILEA, VICENTE INDENCIO, JONATHAN T. INVENTOR,
PETER PAUL T. INVENTOR, JOEBERT G. LAGARTO, RENATO LAMINA, ALVIN LAS POBRES,
ALBERT LAS POBRES, LEONARD LEMONCHITO, JERRY LIM, JOSE COLLY S. LUCERO,
ROBERTO E. MARTIL, HERNANDO MATILLANO, VICENTE M. MATILLANO, TANNY C.
MENDOZA, WILLIAM P. NAVARRO, WILSON P. NAVARRO, LEO A. OLVIDO, ROBERTO G.
OTERO, BIENVENIDO C. PAROCHILIN, REYNALDO C. PAROCHILIN, RICKY PALANOG,
BERNIE O. PILLO, ALBERTO O. PILLO, JOE-MARIE S. PUGNA, EDWIN G. RIBON, RAUL A.
RUBIO, HENRY S. SAMILLANO, EDGAR SANTIAGO, ROLAND B. SANTILLANA, ROLDAN V.
SAYAM, JOSEPH S. SAYSON, RENE SUARNABA, ELMAR TABLIGAN, JERRY D. TALITE, OSCAR
TALITE, WINIFREDO TALITE, CAMILO N. TEMPOROSA, JOSE TEMPOROSA, RANDY
TINGALA, TRISTAN A. TINGSON, ROGELIO TOMESA, DIONISE A. TORMIS, ADELINO C.
UNTAL, FELIX T. UNTAL, RONILO E. VISTA, JOAN C. VIYO and JOSE JOFER C. VIYO and the
COURT OF APPEALS, respondents.
DECISION
CARPIO-MORALES, J.:
Petitioner San Miguel Corporation (SMC), represented by its Assistant Vice President and Visayas Area
Manager for Aquaculture Operations Leopoldo S. Titular, and Sunflower Multi-Purpose Cooperative
(Sunflower), represented by the Chairman of its Board of Directors Roy G. Asong, entered into a one-year

Contract of Services[1] commencing on January 1, 1993, to be renewed on a month to month basis until
terminated by either party. The pertinent provisions of the contract read:
1. The cooperative agrees and undertakes to perform and/or provide for the company, on a non-exclusive basis
for a period of one year the following services for the Bacolod Shrimp Processing Plant:
A. Messengerial/Janitorial
B. Shrimp Harvesting/Receiving
C. Sanitation/Washing/Cold Storage[2]
2. To carry out the undertaking specified in the immediately preceding paragraph, the cooperative shall employ
the necessary personnel and provide adequate equipment, materials, tools and apparatus, to efficiently, fully and
speedily accomplish the work and services undertaken by the cooperative. xxx
3. In consideration of the above undertaking the company expressly agrees to pay the cooperative the following
rates per activity:
A. Messengerial/Janitorial Monthly Fixed Service Charge of: Nineteen Thousand Five Hundred Pesos Only
(P19,500.00)
B. Harvesting/Shrimp Receiving. Piece rate of P0.34/kg. Or P100.00 minimum per person/activity whichever is
higher, with provisions as follows:
P25.00 Fixed Fee per person
Additional meal allowance P15.00 every meal time in case harvest duration exceeds one meal.
This will be pre-set every harvest based on harvest plan approved by the Senior Buyer.
C. Sanitation/Washing and Cold Storage P125.00/person for 3 shifts.
One-half of the payment for all services rendered shall be payable on the fifteenth and the other half, on the end
of each month. The cooperative shall pay taxes, fees, dues and other impositions that shall become due as a
result of this contract.
The cooperative shall have the entire charge, control and supervision of the work and services herein agreed
upon. xxx
4. There is no employer-employee relationship between the company and the cooperative, or the cooperative and
any of its members, or the company and any members of the cooperative. The cooperative is an association of
self-employed members, an independent contractor, and an entrepreneur. It is subject to the control and direction
of the company only as to the result to be accomplished by the work or services herein specified, and not as to
the work herein contracted. The cooperative and its members recognize that it is taking a business risk in
accepting a fixed service fee to provide the services contracted for and its realization of profit or loss from its
undertaking, in relation to all its other undertakings, will depend on how efficiently it deploys and fields its
members and how they perform the work and manage its operations.
5. The cooperative shall, whenever possible, maintain and keep under its control the premises where the work
under this contract shall be performed.
6. The cooperative shall have exclusive discretion in the selection, engagement and discharge of its memberworkers or otherwise in the direction and control thereof. The determination of the wages, salaries and
compensation of the member-workers of the cooperative shall be within its full control. It is further understood

that the cooperative is an independent contractor, and as such, the cooperative agrees to comply with all the
requirements of all pertinent laws and ordinances, rules and regulations. Although it is understood and agreed
between the parties hereto that the cooperative, in the performance of its obligations, is subject to the control or
direction of the company merely as a (sic) result to be accomplished by the work or services herein specified,
and not as to the means and methods of accomplishing such result, the cooperative hereby warrants that it will
perform such work or services in such manner as will be consistent with the achievement of the result herein
contracted for.
xxx
8. The cooperative undertakes to pay the wages or salaries of its member-workers, as well as all benefits,
premiums and protection in accordance with the provisions of the labor code, cooperative code and other
applicable laws and decrees and the rules and regulations promulgated by competent authorities, assuming all
responsibility therefor.
The cooperative further undertakes to submit to the company within the first ten (10) days of every month, a
statement made, signed and sworn to by its duly authorized representative before a notary public or other officer
authorized by law to administer oaths, to the effect that the cooperative has paid all wages or salaries due to its
employees or personnel for services rendered by them during the month immediately preceding, including
overtime, if any, and that such payments were all in accordance with the requirements of law.
xxx
12. Unless sooner terminated for the reasons stated in paragraph 9 this contract shall be for a period of one (1)
year commencing on January 1, 1993. Thereafter, this Contract will be deemed renewed on a month-to-month
basis until terminated by either party by sending a written notice to the other at least thirty (30) days prior to the
intended date of termination.
xxx[3] (Underscoring supplied)
Pursuant to the contract, Sunflower engaged private respondents to, as they did, render services at SMCs
Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod City. The contract was deemed renewed by the parties
every month after its expiration on January 1, 1994 and private respondents continued to perform their tasks
until September 11, 1995.
In July 1995, private respondents filed a complaint before the NLRC, Regional Arbitration Branch No. VI,
Bacolod City, praying to be declared as regular employees of SMC, with claims for recovery of all benefits and
privileges enjoyed by SMC rank and file employees.
Private respondents subsequently filed on September 25, 1995 an Amended Complaint[4] to include illegal
dismissal as additional cause of action following SMCs closure of its Bacolod Shrimp Processing Plant on
September 15, 1995[5] which resulted in the termination of their services.
SMC filed a Motion for Leave to File Attached Third Party Complaint[6] dated November 27, 1995 to
implead Sunflower as Third Party Defendant which was, by Order[7] of December 11, 1995, granted by Labor
Arbiter Ray Alan T. Drilon.
In the meantime, on September 30, 1996, SMC filed before the Regional Office at Iloilo City of the
Department of Labor and Employment (DOLE) a Notice of Closure[8] of its aquaculture operations effective on
even date, citing serious business losses.

By Decision of September 23, 1997, Labor Arbiter Drilon dismissed private respondents complaint for lack
of merit, ratiocinating as follows:
We sustain the stand of the respondent SMC that it could properly exercise its management prerogative to
contract out the preparation and processing aspects of its aquaculture operations. Judicial notice has already been
taken regarding the general practice adopted in government and private institutions and industries of hiring
independent contractors to perform special services. xxx
xxx
Indeed, the law allows job contracting. Job contracting is permissible under the Labor Code under specific
conditions and we do not see how this activity could not be legally undertaken by an independent service
cooperative like the third-party respondent herein.
There is no basis to the demand for regularization simply on the theory that complainants performed activities
which are necessary and desirable in the business of respondent. It has been held that the definition of regular
employees as those who perform activities which are necessary and desirable for the business of the employer is
not always determinative because any agreement may provide for one (1) party to render services for and in
behalf of another for a consideration even without being hired as an employee.
The charge of the complainants that third-party respondent is a mere labor-only contractor is a sweeping
generalization and completely unsubstantiated. xxx In the absence of clear and convincing evidence showing
that third-party respondent acted merely as a labor only contractor, we are firmly convinced of the legitimacy
and the integrity of its service contract with respondent SMC.
In the same vein, the closure of the Bacolod Shrimp Processing Plant was a management decision purely
dictated by economic factors which was (sic) mainly serious business losses. The law recognizes the right of the
employer to close his business or cease his operations for bonafide reasons, as much as it recognizes the right of
the employer to terminate the employment of any employee due to closure or cessation of business operations,
unless the closing is for the purpose of circumventing the provisions of the law on security of tenure. The
decision of respondent SMC to close its Bacolod Shrimp Processing Plant, due to serious business losses which
has (sic) clearly been established, is a management prerogative which could hardly be interfered with.
xxx The closure did affect the regular employees and workers of the Bacolod Processing Plant, who were
accordingly terminated following the legal requisites prescribed by law. The closure, however, in so far as the
complainants are concerned, resulted in the termination of SMCs service contract with their cooperative xxx[9]
(Underscoring supplied)
Private respondents appealed to the NLRC.
By Decision of December 29, 1998, the NLRC dismissed the appeal for lack of merit, it finding that third
party respondent Sunflower was an independent contractor in light of its observation that [i]n all the activities of
private respondents, they were under the actual direction, control and supervision of third party respondent
Sunflower, as well as the payment of wages, and power of dismissal.[10]
Private respondents Motion for Reconsideration[11] having been denied by the NLRC for lack of merit by
Resolution of September 10, 1999, they filed a petition for certiorari[12] before the Court of Appeals (CA).
Before the CA, SMC filed a Motion to Dismiss[13] private respondents petition for non-compliance with
the Rules on Civil Procedure and failure to show grave abuse of discretion on the part of the NLRC.

SMC subsequently filed its Comment[14] to the petition on March 30, 2000.
By Decision of February 7, 2001, the appellate court reversed the NLRC decision and accordingly found
for private respondents, disposing as follows:
WHEREFORE, the petition is GRANTED. Accordingly, judgment is hereby RENDERED: (1) REVERSING
and SETTING ASIDE both the 29 December 1998 decision and 10 September 1999 resolution of the National
Labor Relations Commission (NLRC), Fourth Division, Cebu City in NLRC Case No. V-0361-97 as well as the
23 September 1997 decision of the labor arbiter in RAB Case No. 06-07-10316-95; (2) ORDERING the
respondent, San Miguel Corporation, to GRANT petitioners: (a) separation pay in accordance with the
computation given to the regular SMC employees working at its Bacolod Shrimp Processing Plant with full
backwages, inclusive of allowances and other benefits or their monetary equivalent, from 11 September 1995,
the time their actual compensation was withheld from them, up to the time of the finality of this decision;
(b) differentials pays (sic) effective as of and from the time petitioners acquired regular employment status
pursuant to the disquisition mentioned above, and all such other and further benefits as provided by applicable
collective bargaining agreement(s) or other relations, or by law, beginning such time up to their termination from
employment on 11 September 1995; and ORDERING private respondent SMC to PAY unto the
petitioners attorneys fees equivalent to ten (10%) percent of the total award.
No pronouncement as to costs.
SO ORDERED.[15] (Underscoring supplied)
Justifying its reversal of the findings of the labor arbiter and the NLRC, the appellate court reasoned:
Although the terms of the non-exclusive contract of service between SMC and [Sunflower] showed a clear intent
to abstain from establishing an employer-employee relationship between SMC and [Sunflower] or the latters
members, the extent to which the parties successfully realized this intent in the light of the applicable law is the
controlling factor in determining the real and actual relationship between or among the parties.
xxx
With respect to the power to control petitioners conduct, it appears that petitioners were under the direct control
and supervision of SMC supervisors both as to the manner they performed their functions and as to the end
results thereof. It was only after petitioners lodged a complaint to have their status declared as regular employees
of SMC that certain members of [Sunflower] began to countersign petitioners daily time records to make it
appear that they (petitioners) were under the control and supervision of [Sunflower] team leaders (rollo, pp. 523527). xxx
Even without these instances indicative of control by SMC over the petitioners, it is safe to assume that SMC
would never have allowed the petitioners to work within its premises, using its own facilities, equipment and
tools, alongside SMC employees discharging similar or identical activities unless it exercised a substantial
degree of control and supervision over the petitioners not only as to the manner they performed their functions
but also as to the end results of such functions.
xxx
xxx it becomes apparent that [Sunflower] and the petitioners do not qualify as independent
contractors. [Sunflower] and the petitioners did not have substantial capital or investment in the form of tools,
equipment, implements, work premises, et cetera necessary to actually perform the service under their own

account, responsibility, and method. The only work premises maintained by [Sunflower] was a small office
within the confines of a small carinderia or refreshment parlor owned by the mother of its chair, Roy Asong; the
only equipment it owned was a typewriter (rollo, pp. 525-525) and, the only assets it provided SMC were the
bare bodies of its members, the petitioners herein (rollo, p. 523).
In addition, as shown earlier, petitioners, who worked inside the premises of SMC, were under the control and
supervision of SMC both as to the manner and method in discharging their functions and as to
the results thereof.
Besides, it should be taken into account that the activities undertaken by the petitioners as cleaners, janitors,
messengers and shrimp harvesters, packers and handlers were directly related to the aquaculture business of
SMC (See Guarin vs. NLRC, 198 SCRA 267, 273). This is confirmed by the renewal of the service contract from
January 1993 to September 1995, a period of close to three (3) years.
Moreover, the petitioners here numbering ninety seven (97), by itself, is a considerable workforce and raises the
suspicion that the non-exclusive service contract between SMC and [Sunflower] was designed to evade the
obligations inherent in an employer-employee relationship (See Rhone-Poulenc Agrochemicals Philippines, Inc.
vs. NLRC, 217 SCRA 249, 259).
Equally suspicious is the fact that the notary public who signed the by-laws of [Sunflower] and its
[Sunflower] retained counsel are both partners of the local counsel of SMC (rollo, p. 9).
xxx
With these observations, no other logical conclusion can be reached except that [Sunflower] acted as an agent of
SMC, facilitating the manpower requirements of the latter, the real employer of the petitioners. We simply
cannot allow these two entities through the convenience of a non-exclusive service contract to stipulate on the
existence of employer-employee relation. Such existence is a question of law which cannot be made the subject
of agreement to the detriment of the petitioners (Tabas vs. California Manufacturing, Inc., 169 SCRA 497, 500).
xxx
There being a finding of labor-only contracting, liability must be shouldered either by SMC or [Sunflower] or
shared by both (See Tabas vs. California Manufacturing, Inc.,supra, p. 502). SMC however should be
held solely liable for [Sunflower] became non-existent with the closure of the aquaculture business of SMC.
Furthermore, since the closure of the aquaculture operations of SMC appears to be valid, reinstatement is no
longer feasible. Consistent with the pronouncement inBustamante, et al., vs. NLRC, G.R. No. 111651, 28
November 1996, petitioners are thus entitled to separation pay (in the computation similar to those given to
regular SMC employees at its Bacolod Shrimp Processing Plant) with full backwages, inclusive of allowances
and other benefits or their monetary equivalent, from the time their actual compensation was withheld from them
up to the time of the finality of this decision. This is without prejudice to differentials pays (sic) effective as of
and from the time petitioners acquired regular employment status pursuant to the discussion mentioned above,
and all such other and further benefits as provided by applicable collective bargaining agreement(s) or other
relations, or by law, beginning such time up to their termination from employment on 11 September 1995.
[16] (Emphasis and underscoring supplied)
SMCs Motion for Reconsideration[17] having been denied for lack of merit by Resolution of July 11, 2001,
it comes before this Court via the present petition for review on certiorari assigning to the CA the following
errors:

I
THE COURT OF APPEALS GRAVELY ERRED IN GIVING DUE COURSE AND GRANTING
RESPONDENTS PATENTLY DEFECTIVE PETITION FOR CERTIORARI. IN DOING SO, THE COURT OF
APPEALS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS.
II
THE COURT OF APPEALS GRAVELY ERRED IN RECOGNIZING ALL THE RESPONDENTS AS
COMPLAINANTS IN THE CASE BEFORE THE LABOR ARBITER. IN DOING SO, THE COURT OF
APPEALS DECIDED THIS CASE IN A MANNER NOT IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE SUPREME COURT.
III
THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RESPONDENTS ARE EMPLOYEES
OF SMC.
IV
THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDNG (sic) THAT RESPONDENTS ARE NOT
ENTITLED TO ANY RELIEF. THE CLOSURE OF THE BACOLOD SHRIMP PROCESSING PLANT WAS
DUE TO SERIOUS BUSINESS LOSSES.[18] (Underscoring supplied)
SMC bewails the failure of the appellate court to outrightly dismiss the petition for certiorari as only three
out of the ninety seven named petitioners signed the verification and certification against forum-shopping.
While the general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs or
petitioners in a case and the signature of only one of them is insufficient, [19] this Court has stressed that the
rules on forum shopping, which were designed to promote and facilitate the orderly administration of justice,
should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective.
[20] Strict compliance with the provisions regarding the certificate of non-forum shopping merely underscores
its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely
disregarded.[21] It does not, however, thereby interdict substantial compliance with its provisions under
justifiable circumstances.[22]
Thus in the recent case of HLC Construction and Development Corporation v. Emily Homes Subdivision
Homeowners Association,[23] this Court held:
Respondents (who were plaintiffs in the trial court) filed the complaint against petitioners as a group, represented
by their homeowners association president who was likewise one of the plaintiffs, Mr. Samaon M.
Buat. Respondents raised one cause of action which was the breach of contractual obligations and payment of
damages. They shared a common interest in the subject matter of the case, being the aggrieved residents of the
poorly constructed and developed Emily Homes Subdivision. Due to the collective nature of the case, there was
no doubt that Mr. Samaon M. Buat could validly sign the certificate of non-forum shopping in behalf of all his
co-plaintiffs. In cases therefore where it is highly impractical to require all the plaintiffs to sign the certificate of
non-forum shopping, it is sufficient, in order not to defeat the ends of justice, for one of the plaintiffs, acting as
representative, to sign the certificate provided that xxx the plaintiffs share a common interest in the subject
matter of the case or filed the case as a collective, raising only one common cause of action or defense.
[24] (Emphasis and underscoring supplied)

Given the collective nature of the petition filed before the appellate court by herein private respondents,
raising one common cause of action against SMC, the execution by private respondents Winifredo Talite,
Renelito Deon and Jose Temporosa in behalf of all the other private respondents of the certificate of non-forum
shopping constitutes substantial compliance with the Rules.[25] That the three indeed represented their copetitioners before the appellate court is, as it correctly found, subsequently proven to be true as shown by the
signatures of the majority of the petitioners appearing in their memorandum filed before Us.[26]
Additionally, the merits of the substantive aspects of the case may also be deemed as special circumstance
or compelling reason to take cognizance of a petition although the certification against forum shopping was not
executed and signed by all of the petitioners.[27]
SMC goes on to argue that the petition filed before the CA is fatally defective as it was not accompanied by
copies of all pleadings and documents relevant and pertinent thereto in contravention of Section 1, Rule 65 of the
Rules of Court.[28]
This Court is not persuaded. The records show that private respondents appended the following documents
to their petition before the appellate court: the September 23, 1997 Decision of the Labor Arbiter,
[29] their Notice of Appeal with Appeal Memorandum dated October 16, 1997 filed before the NLRC,[30] the
December 29, 1998 NLRC Decision,[31] their Motionfor Reconsideration dated March 26, 1999 filed with the
NLRC[32] and the September 10, 1999 NLRC Resolution.[33]
It bears stressing at any rate that it is the appellate court which ultimately determines if the supporting
documents are sufficient to make out a prima facie case.[34] It discerns whether on the basis of what have been
submitted it could already judiciously determine the merits of the petition.[35] In the case at bar, the CA found
that the petition was adequately supported by relevant and pertinent documents.
At all events, this Court has allowed a liberal construction of the rule on the accomplishment of a certificate
of non-forum shopping in the following cases: (1) where a rigid application will result in manifest failure or
miscarriage of justice; (2) where the interest of substantial justice will be served; (3) where the resolution of the
motion is addressed solely to the sound and judicious discretion of the court; and (4) where the injustice to the
adverse party is not commensurate with the degree of his thoughtlessness in not complying with the procedure
prescribed.[36]
Rules of procedure should indeed be viewed as mere tools designed to facilitate the attainment of justice.
Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote
substantial justice, must always be eschewed.[37]
SMC further argues that the appellate court exceeded its jurisdiction in reversing the decisions of the labor
arbiter and the NLRC as findings of facts of quasi-judicial bodies like the NLRC are accorded great respect and
finality, and that this principle acquires greater weight and application in the case at bar as the labor arbiter and
the NLRC have the same factual findings.
The general rule, no doubt, is that findings of facts of an administrative agency which has acquired
expertise in the particular field of its endeavor are accorded great weight on appeal.[38] The rule is not absolute
and admits of certain well-recognized exceptions, however. Thus, when the findings of fact of the labor arbiter
and the NLRC are not supported by substantial evidence or their judgment was based on a misapprehension of
facts, the appellate court may make an independent evaluation of the facts of the case.[39]

SMC further faults the appellate court in giving due course to private respondents petition despite the fact
that the complaint filed before the labor arbiter was signed and verified only by private respondent Winifredo
Talite; that private respondents position paper[40] was verified by only six[41] out of the ninety seven
complainants; and that their Joint-Affidavit[42] was executed only by twelve[43] of the complainants.
Specifically with respect to the Joint-Affidavit of private respondents, SMC asserts that it should not have
been considered by the appellate court in establishing the claims of those who did not sign the same, citing this
Courts ruling inSouthern Cotabato Development and Construction, Inc. v. NLRC.[44]
SMCs position does not lie.
A perusal of the complaint shows that the ninety seven complainants were being represented by their
counsel of choice. Thus the first sentence of their complaint alleges: xxx complainants, by counsel and unto this
Honorable Office respectfully state xxx. And the complaint was signed by Atty. Jose Max S. Ortiz as counsel for
the complainants. Following Section 6, Rule III of the 1990 Rules of Procedure of the NLRC, now Section 7,
Rule III of the 1999 NLRC Rules, Atty. Ortiz is presumed to be properly authorized by private respondents in
filing the complaint.
That the verification wherein it is manifested that private respondent Talite was one of the complainants and
was causing the preparation of the complaint with the authority of my co-complainants indubitably shows that
Talite was representing the rest of his co-complainants in signing the verification in accordance with Section 7,
Rule III of the 1990 NLRC Rules, now Section 8, Rule 3 of the 1999 NLRC Rules, which states:
Section 7. Authority to bind party. Attorneys and other representatives of parties shall have authority to bind
their clients in all matters of procedure; but they cannot, without a special power of attorney or express consent,
enter into a compromise agreement with the opposing party in full or partial discharge of a clients claim.
(Underscoring supplied)
As regards private respondents position paper which bore the signatures of only six of them, appended to it
was an Authority/Confirmation of Authority[45] signed by the ninety one others conferring authority to their
counsel to file RAB Case No. 06-07-10316-95, entitled Winifredo Talite et al. v. San Miguel Corporation
presently pending before the sala of Labor Arbiter Ray Alan Drilon at the NLRC Regional Arbitration Branch
No. VI in Bacolod City and appointing him as their retained counsel to represent them in the said case.
That there has been substantial compliance with the requirement on verification of position papers under
Section 3, Rule V of the 1990 NLRC Rules of Procedure[46] is not difficult to appreciate in light of the
provision of Section 7, Rule V of the 1990 NLRC Rules, now Section 9, Rule V of the 1999 NLRC Rules which
reads:
Section 7. Nature of Proceedings. The proceedings before a Labor Arbiter shall be non-litigious in nature.
Subject to the requirements of due process, the technicalities of law and procedure and the rules obtaining in the
courts of law shall not strictly apply thereto. The Labor Arbiter may avail himself of all reasonable means to
ascertain the facts of the controversy speedily, including ocular inspection and examination of well-informed
persons. (underscoring supplied)
As regards private respondents Joint-Affidavit which is being assailed in view of the failure of some
complainants to affix their signatures thereon, this Court quotes with approval the appellate courts ratiocinations:
A perusal of the Southern Cotabato Development Case would reveal that movant did not quote the whole text of
paragraph 5 on page 865 of 280 SCRA. The whole paragraph reads:

Clearly then, as to those who opted to move for the dismissal of their complaints, or did not submit their
affidavits nor appear during trial and in whose favor no other independent evidence was adduced, no award for
back wages could have been validly and properly made for want of factual basis. There is no showing at all that
any of the affidavits of the thirty-four (34) complainants were offered as evidence for those who did not submit
their affidavits, or that such affidavits had any bearing at all on the rights and interest of the latter. In the same
vein, private respondents position paper was not of any help to these delinquent complainants.
The implication is that as long as the affidavits of the complainants were offered as evidence for those who
did not submit theirs, or the affidavits were material and relevant to the rights and interest of the latter,
such affidavits may be sufficient to establish the claims of those who did not give their affidavits.
Here, a reading of the joint affidavit signed by twelve (12) of the ninety-seven (97) complainants (petitioners
herein) would readily reveal that the affidavit was offered as evidence not only for the signatories therein but for
all of the complainants. (These ninety-seven (97) individuals were previously identified during the mandatory
conference as the only complainants in the proceedings before the labor arbiter) Moreover, the affidavit touched
on the common interest of all of the complainants as it supported their claim of the existence of an employeremployee relationship between them and respondent SMC. Thus, the said affidavit was enough to prove the
claims of the rest of the complainants.[47] (Emphasis supplied, underscoring in the original)
In any event, SMC is reminded that the rules of evidence prevailing in courts of law or equity do not control
proceedings before the Labor Arbiter. So Article 221 of the Labor Code enjoins:
ART. 221. Technical rules not binding and prior resort to amicable settlement. In any proceeding before the
Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be
controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor
Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and
without regard to technicalities of law or procedure, all in the interest of due process. xxx
As such, their application may be relaxed to serve the demands of substantial justice.[48]
On the merits, the petition just the same fails.
SMC insists that private respondents are the employees of Sunflower, an independent contractor. On the
other hand, private respondents assert that Sunflower is a labor-only contractor.
Article 106 of the Labor Code provides:
ART. 106. Contractor or subcontracting. Whenever an employer enters into a contract with another person for
the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any
shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this
Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to
the extent of the work performed under the contract, in the same manner and extent that he is liable to employees
directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect
the rights of workers established under the Code. In so prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job contracting as well as differentiations within these types of

contracting and determine who among the parties involved shall be considered the employer for purposes of this
Code, to prevent any violation or circumvention of any provision of this Code.
There is labor-only contracting where the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work premises, among others, and the
workers recruited and placed by such person are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of
the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly
employed by him.
Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by Department
Order No. 18, distinguishes between legitimate and labor-only contracting:
Section 3. Trilateral Relationship in Contracting Arrangements. In legitimate contracting, there exists a
trilateral relationship under which there is a contract for a specific job, work or service between the principal and
the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its
workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a
job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to
independently undertake the performance of the job, work or service, and the contractual workers engaged by
the contractor or subcontractor to accomplish the job, work or service.
Section 5. Prohibition against labor-only contracting. Labor-only contracting Sis hereby declared prohibited.
For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor
merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the
following elements are present:
i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work
or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor
are performing activities which are directly related to the main business of the principal, or
ii) The contractor does not exercise the right to control over the performance of the work of the contractual
employee.
The foregoing provisions shall be without prejudice to the application of Article 248 (c) of the Labor Code, as
amended.
Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations,
tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or
subcontractor in the performance or completion of the job, work or service contracted out.
The right to control shall refer to the right reserved to the person for whom the services of the contractual
workers are performed, to determine not only the end to be achieved, but also the manner and means to be used
in reaching that end.
The test to determine the existence of independent contractorship is whether one claiming to be an
independent contractor has contracted to do the work according to his own methods and without being
subject to the control of the employer, except only as to the results of the work.[49]
In legitimate labor contracting, the law creates an employer-employee relationship for a limited
purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly and

severally liable with the job contractor, only for the payment of the employees wages whenever the contractor
fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the
employees.[50]
In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive
purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal
employer and the latter is responsible to the employees of the labor-only contractor as if such employees had
been directly employed by the principal employer.[51]
The Contract of Services between SMC and Sunflower shows that the parties clearly disavowed the
existence of an employer-employee relationship between SMC and private respondents. The language of a
contract is not, however, determinative of the parties relationship; rather it is the totality of the facts and
surrounding circumstances of the case.[52] A party cannot dictate, by the mere expedient of a unilateral
declaration in a contract, the character of its business, i.e.,whether as labor-only contractor or job contractor, it
being crucial that its character be measured in terms of and determined by the criteria set by statute.[53]
SMC argues that Sunflower could not have been issued a certificate of registration as a cooperative if it had
no substantial capital.[54]
While indeed Sunflower was issued Certificate of Registration No. IL0-875[55] on February 10, 1992 by
the Cooperative Development Authority, this merely shows that it had at least P2,000.00 in paid-up share capital
as mandated by Section 5 of Article 14[56] of Republic Act No. 6938, otherwise known as the Cooperative
Code, which amount cannot be considered substantial capitalization.
What appears is that Sunflower does not have substantial capitalization or investment in the form of tools,
equipment, machineries, work premises and other materials to qualify it as an independent contractor.
On the other hand, it is gathered that the lot, building, machineries and all other working tools utilized by
private respondents in carrying out their tasks were owned and provided by SMC. Consider the following
uncontroverted allegations of private respondents in the Joint Affidavit:
[Sunflower], during the existence of its service contract with respondent SMC, did not own a single machinery,
equipment, or working tool used in the processing plant. Everything was owned and provided by respondent
SMC. The lot, the building, and working facilities are owned by respondent SMC. The machineries and
equipments (sic) like washer machine, oven or cooking machine, sizer machine, freezer, storage, and chilling
tanks, push carts, hydrolic (sic) jack, tables, and chairs were all owned by respondent SMC. All the boxes, trays,
molding pan used in the processing are also owned by respondent SMC. The gloves and boots used by the
complainants were also owned by respondent SMC. Even the mops, electric floor cleaners, brush, hoose (sic),
soaps, floor waxes, chlorine, liquid stain removers, lysol and the like used by the complainants assigned as
cleaners were all owned and provided by respondent SMC.
Simply stated, third-party respondent did not own even a small capital in the form of tools, machineries, or
facilities used in said prawn processing
xxx
The alleged office of [Sunflower] is found within the confines of a small carinderia or refreshment (sic) owned
by the mother of the Cooperative Chairman Roy Asong.
xxx In said . . . office, the only equipment used and owned by [Sunflower] was a typewriter. [57]

And from the job description provided by SMC itself, the work assigned to private respondents
was directly related to the aquaculture operations of SMC. Undoubtedly, the nature of the work performed by
private respondents in shrimp harvesting, receiving and packing formed an integral part of the shrimp processing
operations of SMC. As for janitorial and messengerial services, that they are considered directly related to the
principal business of the employer[58] has been jurisprudentially recognized.
Furthermore, Sunflower did not carry on an independent business or undertake the performance of its
service contract according to its own manner and method, free from the control and supervision of its principal,
SMC, its apparent role having been merely to recruit persons to work for SMC.
Thus, it is gathered from the evidence adduced by private respondents before the labor arbiter that
their daily time records were signed by SMC supervisors Ike Puentebella, Joemel Haro, Joemari Raca, Erwin
Tumonong, Edison Arguello, and Stephen Palabrica, which fact shows that SMC exercised the power of control
and supervision over its employees.[59] Andcontrol of the premises in which private respondents worked was by
SMC. These tend to disprove the independence of the contractor.[60]
More. Private respondents had been working in the aqua processing plant inside the SMC compound
alongside regular SMC shrimp processing workers performing identical jobs under the same SMC supervisors.
[61] This circumstance is another indicium of the existence of a labor-only contractorship.[62]
And as private respondents alleged in their Joint Affidavit which did not escape the observation of the CA,
no showing to the contrary having been proffered by SMC, Sunflower did not cater to clients other than SMC,
[63] and with the closure of SMCs Bacolod Shrimp Processing Plant, Sunflower likewise ceased to exist. This
Courts ruling in San Miguel Corporation v. MAERC Integrated Services, Inc.[64] is thus instructive.
xxx Nor do we believe MAERC to have an independent business. Not only was it set up to specifically meet the
pressing needs of SMC which was then having labor problems in its segregation division, none of its workers
was also ever assigned to any other establishment, thus convincing us that it was created solely to service the
needs of SMC. Naturally, with the severance of relationship between MAERC and SMC followed MAERCs
cessation of operations, the loss of jobs for the whole MAERC workforce and the resulting actions instituted by
the workers.[65] (Underscoring supplied)
All the foregoing considerations affirm by more than substantial evidence the existence of an employeremployee relationship between SMC and private respondents.
Since private respondents who were engaged in shrimp processing performed tasks usually necessary or
desirable in the aquaculture business of SMC, they should be deemed regular employees of the latter[66] and as
such are entitled to all the benefits and rights appurtenant to regular employment.[67] They should thus be
awarded differential pay corresponding to the difference between the wages and benefits given them and those
accorded SMCs other regular employees.
Respecting the private respondents who were tasked with janitorial and messengerial duties, this Court
quotes with approval the appellate courts ruling thereon:
Those performing janitorial and messengerial services however acquired regular status only after rendering oneyear service pursuant to Article 280 of the Labor Code. Although janitorial and messengerial services are
considered directly related to the aquaculture business of SMC, they are deemed unnecessary in the conduct of
its principal business; hence, the distinction (See Coca Cola Bottlers Phils., Inc. v. NLRC, 307 SCRA 131, 136137 and Philippine Bank of Communications v. NLRC, supra, p. 359).[68]

The law of course provides for two kinds of regular employees, namely: (1) those who are engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2)
those who have rendered at least one year of service, whether continuous or broken, with respect to the activity
in which they are employed.[69]
As for those of private respondents who were engaged in janitorial and messengerial tasks, they fall under
the second category and are thus entitled to differential pay and benefits extended to other SMC regular
employees from the day immediately following their first year of service.[70]
Regarding the closure of SMCs aquaculture operations and the consequent termination of private
respondents, Article 283 of the Labor Code provides:
ART. 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is
for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the
Department of Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year
of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
(Underscoring supplied)
In the case at bar, a particular department under the SMC group of companies was closed allegedly due to
serious business reverses. This constitutes retrenchment by, and not closure of, the enterprise or the company
itself as SMC has not totally ceased operations but is still very much an on-going and highly viable business
concern.[71]
Retrenchment is a management prerogative consistently recognized and affirmed by this Court. It is,
however, subject to faithful compliance with the substantive and procedural requirements laid down by law and
jurisprudence.[72]
For retrenchment to be considered valid the following substantial requirements must be met: (a) the losses
expected should be substantial and not merely de minimis in extent; (b) the substantial losses apprehended must
be reasonably imminent such as can be perceived objectively and in good faith by the employer; (c) the
retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and (d) the
alleged losses, if already incurred, and the expected imminent losses sought to be forestalled, must be proved by
sufficient and convincing evidence.[73]
In the discharge of these requirements, it is the employer who has the onus, being in the nature of an
affirmative defense.[74]
Normally, the condition of business losses is shown by audited financial documents like yearly balance
sheets, profit and loss statements and annual income tax returns. The financial statements must be prepared and
signed by independent auditors failing which they can be assailed as self-serving documents.[75]

In the case at bar, company losses were duly established by financial documents audited by Joaquin
Cunanan & Co. showing that the aquaculture operations of SMCs Agribusiness Division accumulated losses
amounting to P145,848,172.00 in 1992 resulting in the closure of its Calatrava Aquaculture Center in Negros
Occidental, P11,393,071.00 in 1993 andP80,325,608.00 in 1994 which led to the closure of its San Fernando
Shrimp Processing Plant in Pampanga and the Bacolod Shrimp Processing Plant in 1995.
SMC has thus proven substantial business reverses justifying retrenchment of its employees.
For termination due to retrenchment to be valid, however, the law requires that written notices of the
intended retrenchment be served by the employer on the worker and on the DOLE at least one (1) month before
the actual date of the retrenchment,[76] in order to give employees some time to prepare for the eventual loss of
their jobs, as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of termination.
[77]
Private respondents, however, were merely verbally informed on September 10, 1995 by SMC Prawn
Manager Ponciano Capay that effective the following day or on September 11, 1995, they were no longer to
report for work as SMC would be closing its operations.[78]
Where the dismissal is based on an authorized cause under Article 283 of the Labor Code but the employer
failed to comply with the notice requirement, the sanction should be stiff as the dismissal process was initiated
by the employers exercise of his management prerogative, as opposed to a dismissal based on a just cause under
Article 282 with the same procedural infirmity where the sanction to be imposed upon the employer should be
tempered as the dismissal process was, in effect, initiated by an act imputable to the employee.[79]
In light of the factual circumstances of the case at bar, this Court awards P50,000.00 to each private
respondent as nominal damages.
The grant of separation pay as an incidence of termination of employment due to retrenchment to prevent
losses is a statutory obligation on the part of the employer and a demandable right on the part of the employee.
Private respondents should thus be awarded separation pay equivalent to at least one (1) month pay or to at least
one-half month pay for every year of service, whichever is higher, as mandated by Article 283 of the Labor Code
or the separation pay awarded by SMC to other regular SMC employees that were terminated as a result of the
retrenchment, depending on which is most beneficial to private respondents.
Considering that private respondents were not illegally dismissed, however, no backwages need be
awarded. It is well settled that backwages may be granted only when there is a finding of illegal dismissal.
[80] The appellate court thus erred in awarding backwages to private respondents upon the authority
of Bustamante v. NLRC,[81] what was involved in that case being one of illegal dismissal.
With respect to attorneys fees, in actions for recovery of wages or where an employee was forced to litigate
and thus incurred expenses to protect his rights and interests,[82] a maximum of ten percent (10%) of the total
monetary award[83] by way of attorneys fees is justifiable under Article 111 of the Labor Code,[84] Section 8,
Rule VIII, Book III of its Implementing Rules,[85] and paragraph 7, Article 2208 of the Civil Code.
[86] Although an express finding of facts and law is still necessary to prove the merit of the award, there need
not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need
only be a showing that the lawful wages were not paid accordingly, as in this case.[87]

Absent any evidence showing that Sunflower has been dissolved in accordance with law, pursuant to Rule
VIII-A, Section 19[88] of the Omnibus Rules Implementing the Labor Code, Sunflower is held solidarily liable
with SMC for all the rightful claims of private respondents.
WHEREFORE, the petition is DENIED. The assailed Decision dated February 7, 2001 and Resolution
dated July 11, 2001 of the Court of Appeals are AFFIRMED with MODIFICATION.
Petitioner San Miguel Corporation and Sunflower Multi-Purpose Cooperative are hereby ORDERED to
jointly and severally pay each private respondent differential pay from the time they became regular employees
up to the date of their termination; separation pay equivalent to at least one (1) month pay or to at least one-half
month pay for every year of service, whichever is higher, as mandated by Article 283 of the Labor Code or the
separation pay awarded by SMC to other regular SMC employees that were terminated as a result of the
retrenchment, depending on which is most beneficial to private respondents; and ten percent (10%) attorneys
fees based on the herein modified award.
Petitioner San Miguel Corporation is further ORDERED to pay each private respondent the amount
of P50,000.00, representing nominal damages for non-compliance with statutory due process.
The award of backwages is DELETED.
SO ORDERED.
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liability of indirect employee
eparwa security and janitorial services inc. v liceo de Cagayan university
The Case
This is a petition for certiorari[1] of the Decision[2] dated 20 April 2001 and the Resolution dated 21 September
2001 of the Court of Appeals (appellate court) in CA-G.R. SP No. 59120, Liceo de Cagayan University v. The
Hon. National Labor Relations Commission, Fifth Division,Eparwa Security and Janitorial Services, Inc., et
al. The appellate court reinstated the 18 August 1999 decision[3] of the Labor Arbiter and remanded the case to
the Regional Arbitration Board, Branch No. 10 of Cagayan de Oro City to compute what is due
to Liceo de CagayanUniversity (LDCU) from Eparwa Security and Janitorial Services, Inc. (Eparwa).

The Facts
On 1 December 1997, Eparwa and LDCU, through their representatives, entered into a Contract for Security
Services. The pertinent portion of the contract provides that:
5. For and in consideration of this security, protective and safety services, [LDCU] agrees to pay
[Eparwa] FIVE THOUSAND PESOS ONLY (P5,000.00), Philippine Currency per guard a
month payable within fifteen (15) days after [Eparwa] presents its service invoice. [Eparwa]

shall furnish [LDCU] a monthly copy of SSS contribution of guards and monthly payroll of each
guard assigned at [LDCUs] premises on a monthly basis[.][4]
Eparwa allocated the contracted amount of P5,000 per security guard per month in the following manner:
Basic Pay (P104.50 x 391.5/12)
P3,409.31
Night Diff. Pay
113.64
th
284.10
13 mo. Pay
5 day incentive leave
43.54
Uniform allowance
50.00
Employers SSS, Medicare, ECC contribution
224.80
Agency share
420.53
VAT
454.59
CONTRACT RATE
P5,000.50
(rounded off to P5,000.00)[5]
On 21 December 1998, 11 security guards (security guards) whom Eparwa assigned to LDCU from 1 December
1997 to 30 November 1998 filed a complaint before the National Labor Relations Commissions (NLRC)
Regional Arbitration Branch No. 10 in Cagayan de Oro City. Docketed as NLRC-RABX Case No. 10-01-0010299, the complaint was filed against both Eparwa and LDCU for underpayment of salary, legal holiday pay,
13th month pay, rest day, service incentive leave, night shift differential, overtime pay, and payment for attorneys
fees.
LDCU made a cross-claim and prayed that Eparwa should reimburse LDCU for any payment to the security
guards.
The Ruling of the Labor Arbiter
In its decision dated 18 August 1999, the Labor Arbiter found that the security guards are entitled to wage
differentials and premium for holiday and rest day work. The Labor Arbiter held Eparwa and
LDCU solidarily liable pursuant to Article 109 of the Labor Code. The dispositive portion of the Labor Arbiters
decision reads:
WHEREFORE, judgment is rendered[:]
1.
Ordering respondents [LDCU] and [Eparwa] solidarily liable to pay [the
security guards] for underpayment, holiday and rest day, as follows:
Name
Amount
1. Casiero
, Jovencio
P 46,819.95
2. Villarino
, Leonardo
46,819.95
3. Lumbab
, Adriano
46,819.95
4. Caballero
, Gregorio, Jr.
46,819.95
5. Cajilla
, Delfin, Jr.
37,918.95
6. Paduanga
,
20,321.10
7. Dungog
, Achimedes
46,819.95
8. Magallanes
, Eduardo
46,819.95
9. Dungog
, Luigi
46,819.95
10. Dungog
,
46,819.95
11. Bahian
, Wilfredo
30,741.30
P 463,540.95

2.
Denying the claim of unpaid 13 th month pay, service incentive leave and
night shift premium pay for lack of merit;
3.
Ordering respondent [Eparwa] to reimburse respondent [LDCU] for
whatever amount the latter may be required to pay [the security guards];
4.
Ordering respondent [Eparwa] to pay respondent [LDCU] P20,000.00
and P5,000.00 each of the [security guards], moral and exemplary damages;
5.
Ordering [Eparwa] to pay 10% of attorneys fee[s][;]
6.
The rest of the claims are denied for lack of merit.
So Ordered.[6]
LDCU filed an appeal before the NLRC. LDCU agreed with the Labor Arbiters decision on the security guards
entitlement to salary differential but challenged the propriety of the amount of the award. LDCU alleged that
security guards not similarly situated were granted uniform monetary awards and that the decision did not
include the basis of the computation of the amount of the award.
Eparwa also filed an appeal before the NLRC. For its part, Eparwa questioned its liability for the security guards
claims and the awarded cross-claim amounts.
The Ruling of the NLRC
The Fifth Division of the NLRC resolved Eparwa and LDCUs separate appeals in its Resolution[7] dated 19
January 2000. The NLRC found that the security guards are entitled to wage differentials and premium for
holiday and rest day work. Although the NLRC held Eparwa and LDCUsolidarily liable for the wage
differentials and premium for holiday and rest day work, the NLRC did not require Eparwa to reimburse LDCU
for its payments to the security guards. The NLRC also ordered the recomputation of the monetary awards
according to the dates actually worked by each security guard. The dispositive portion of the NLRC Resolution
reads thus:
WHEREFORE, the appealed decision is AFFIRMED, subject to the modification that the
portions thereof directing respondent EPARWA Security Agency and Janitorial Services, Inc. to
reimburse respondent Liceo de Cagayan University for whatever amount the latter may have
paid complainants and to pay respondent Liceo de Cagayan University the sum [sic]
[of] P20,000.00 and P5,000.00, representing moral and exemplary damages, respectively, of
each complainants [sic], are deleted for lack of legal basis. Further the monetary awards for
wage differential and premiums for holiday and rest day works shall be recomputed by the
Regional Arbitration Branch of origin at the execution stage of the proceedings.
Co[n]formably, the award of Attorneys fee[s] is equivalent to ten (10%) percent of the aggregate
monetary award as finally adjusted.
SO ORDERED.[8]

Eparwa and LDCU again filed separate motions for partial reconsideration of the 19 January 2000 NLRC
Resolution. LDCU questioned theNLRCs deletion of LDCUs entitlement to reimbursement by Eparwa. Eparwa,
on the other hand, prayed that LDCU be made to reimburse Eparwafor whatever amount it may pay to the
security guards.
In its Resolution dated 14 March 2000, the NLRC declared that although Eparwa and LDCU are solidarily liable
to the security guards for the monetary award, LDCU alone is ultimately liable. The NLRC resolved the issue
thus:
WHEREFORE, the
assailed
resolution,
dated ,
is MODIFIED in
that
respondent Liceo de Cagayan University
(LICEO)
is
ordered
to
reimburse
respondent Eparwa Security and Janitorial Services, Inc. (EPARWA) for whatever amount the
latter may have paid to complainants arising from this case.
SO ORDERED.[9]
LDCU filed a petition for certiorari[10] before the appellate court assailing the NLRCs decision. LDCU took
issue with the NLRCs order that LDCU should reimburse Eparwa. LDCU stated that this would
free Eparwa from any liability for payment of the security guards money claims.
The Ruling of the Appellate Court

In its Decision promulgated on 20 April 2001, the appellate court granted LDCUs petition and reinstated the
Labor Arbiters decision. The appellate court also allowed LDCU to claim reimbursement from Eparwa. The
appellate courts decision reads thus:
WHEREFORE, foregoing considered, the petition is hereby GRANTED. The decision
dated of
Labor
Arbiter Celenito N. Daing isREINSTATED. The
case
is
hereby REMANDED to the Regional Arbitration Board, Branch No. 10 of Cagayan de Oro City
to compute what is due to LDCU from EPARWA.
SO ORDERED.[11]
Eparwa filed a motion for reconsideration of the appellate courts decision. Eparwa stressed that jurisprudence is
consistent in ruling that the ultimate liability for the payment of the monetary award rests with LDCU alone.
The appellate court denied Eparwas motion for reconsideration for lack of merit.
Hence, this petition.
The Issue
The petition raises this sole legal issue: Is LDCU alone ultimately liable to the security guards for the wage
differentials and premium for holiday and rest day pay?

The Ruling of the Court

The petition has merit.
Eparwa and LDCUs Solidary Liability and
LDCUs Ultimate Liability
Articles 106, 107 and 109 of the Labor Code read:
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with
another person for the performance of the formers work, the employees of the contractor and of
the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor
or subcontractor to such employees to the extent of the work performed under the contract, in
the same manner and extent that he is liable to employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out
of labor to protect the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only contracting and job
contracting as well as differentiations within these types of contracting and determine who
among the parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code.
There is labor-only contracting where the person supplying workers to an employer does not
have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such persons are performing
activities which are directly related to the principal business of the employer. In such cases, the
person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed
by him.
Article 107. Indirect employer. The provisions of the immediately preceding Article shall
likewise apply to any person, partnership, association or corporation which, not being an
employer, contracts with an independent contractor for the performance of any work, task, job or
project.
Article 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding,
every employer or indirect employer shall be held responsible with his contractor or
subcontractor for any violation of any provision of this Code. For purposes of determining the
extent of their civil liability under this Chapter, they shall be considered as direct employers.
This Courts ruling in Eagle Security Agency, Inc. v. NLRC[12] squarely applies to the present case. In Eagle, we
ruled that:

This joint and several liability of the contractor and the principal is mandated by the Labor Code
to assure compliance of the provisions therein including the statutory minimum wage [Article
99, Labor Code]. The contractor is made liable by virtue of his status as direct employer. The
principal, on the other hand, is made the indirect employer of the contractors employees for
purposes of paying the employees their wages should the contractor be unable to pay them. This
joint and several liability facilitates, if not guarantees, payment of the workers performance of
any work, task, job or project, thus giving the workers ample protection as mandated by the
1987 Constitution [See Article II Sec. 18 and Article XIII Sec. 3].
In the case at bar, it is beyond dispute that the security guards are the employees of EAGLE [See
Article VII Sec. 2 of the Contract for Security Services; G.R. No. 81447, Rollo, p. 34]. That they
were assigned to guard the premises of PTSI pursuant to the latters contract with EAGLE and
that neither of these two entities paid their wage and allowance increases under the subject wage
orders are also admitted [See Labor Arbiters Decision, p. 2; G.R. No. 81447,Rollo, p. 75]. Thus,
the application of the aforecited provisions of the Labor Code on joint and several liability of the
principal and contractor is appropriate [See Del Rosario & Sons Logging Enterprises, Inc. v.
NLRC, G.R. No. 64204, May 31, 1985, 136 SCRA 669].
The solidary liability of PTSI and EAGLE, however, does not preclude the right of
reimbursement from his co-debtor by the one who paid [See Article 1217, Civil Code]. It is with
respect to this right of reimbursement that petitioners can find support in
the aforecited contractual stipulation and Wage Order provision.
The Wage Orders are explicit that payment of the increases are to be borne by the principal or
client. To be borne, however, does not mean that the principal, PTSI in this case, would directly
pay the security guards the wage and allowance increases because there is no privity of contract
between them. The security guards contractual relationship is with their immediate employer,
EAGLE. As an employer, EAGLE is tasked, among others, with the payment of their wages
[See Article VII Sec. 3 of the Contract for Security Services, supra and Bautista v. Inciong, G.R.
No. 52824, March 16, 1988, 158 SCRA 665].
On the other hand, there existed a contractual agreement between PTSI and EAGLE wherein the
former availed of the security services provided by the latter. In return, the security agency
collects from its client payment for its security services. This payment covers the wages for the
security guards and also expenses for their supervision and training, the guards bonds, firearms
with ammunitions, uniforms and other equipments, accessories, tools, materials and supplies
necessary for the maintenance of a security force.
Premises considered, the security guards immediate recourse for the payment of the
increases is with their direct employer, EAGLE. However, in order for the security agency to
comply with the new wage and allowance rates it has to pay the security guards, the Wage
Orders made specific provision to amend existing contracts for security services by allowing the
adjustment of the consideration paid by the principal to the security agency concerned. What the
Wage Orders require, therefore, is the amendment of the contract as to the consideration to cover

the service contractors payment of the increases mandated. In the end, therefore, ultimate
liability for the payment of the increases rests with the principal.
In view of the foregoing, the security guards should claim the amount of the increases from
EAGLE. Under the Labor Code, in case the agency fails to pay them the amounts claimed, PTSI
should be held solidarily liable with EAGLE [Articles 106,107 and 109]. Should EAGLE pay, it
can claim an adjustment from PTSI for an increase in consideration to cover the increases
payable to the security guards.
However, in the instant case, the contract for security services had already expired without being
amended consonant with the Wage Orders. It is also apparent from a reading of a record that
EAGLE does not now demand from PTSI any adjustment in the contract price and its main
concern is freeing itself from liability. Given these peculiar circumstances, if PTSI pays the
security guards, it cannot claim reimbursement from EAGLE. But in case it is EAGLE
that pays them, the latter can claim reimbursement from PTSI in lieu of an adjustment,
considering that the contract, [sic] had expired and had not been renewed.[13] (Emphasis
added)
We repeatedly upheld our ruling in Eagle regarding reimbursement in the subsequent cases of Spartan Security
& Detective Agency, Inc. v. NLRC,[14] Development Bank of the Philippines v. NLRC,[15] Alpha Investigation
and Security Agency, Inc. v. NLRC,[16] Helpmate, Inc. v. NLRC, et al.,[17] and Lapanday Agricultural
Development Corporation v. Court of Appeals.[18]
For the security guards, the actual source of the payment of their wage differentials and premium for holiday and
rest

day

work

does

not

matter

as

long

as

they

are

paid. This

is

the

import

of Eparwa and LDCUs solidary liability. Creditors, such as the security guards, may collect from anyone of
the solidary debtors. Solidary liability does not mean that, as between themselves, two solidary debtors are liable
for only half of the payment.
LDCUs ultimate liability comes into play because of the expiration of the Contract for Security Services. There
is no privity of contract between the security guards and LDCU, but LDCUs liability to the security guards
remains because of Articles 106, 107 and 109 of the Labor Code.Eparwa is already precluded from asking
LDCU for an adjustment in the contract price because of the expiration of the contract, but Eparwasliability to
the security guards remains because of their employer-employee relationship. In lieu of an adjustment in the
contract price, Eparwa may claim reimbursement from LDCU for any payment it may make to the security
guards. However, LDCU cannot claim any reimbursement fromEparwa for any payment it may make to the
security guards.

WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 20 April 2001 and the
Resolution dated 21 September 2001 of the Court of Appeals. We REINSTATE the Resolutions dated 19
January 2000 and 14 March 2000 of the National Labor Relations Commission.
SO ORDERED.
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hacienda fatima v national federation of sugarcane workers food and general trade
[G.R. No. 149440. January 28, 2003]
HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE
SEGURA, petitioners, vs. NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD
AND GENERAL TRADE, respondents.
DECISION
PANGANIBAN, J.:
Although the employers have shown that respondents performed work that was seasonal in nature, they
failed to prove that the latter worked only for the duration of one particular season. In fact, petitioners do not
deny that these workers have served them for several years already. Hence, they are regular -- not seasonal -employees.

The Case
Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the
February 20, 2001 Decision of the Court of Appeals[1] (CA) in CA-GR SP No. 51033. The dispositive part of
the Decision reads:
WHEREFORE, premises considered, the instant special civil action for certiorari is hereby DENIED. [2]
On the other hand, the National Labor Relations Commission (NLRC) Decision,[3] upheld by the CA,
disposed in this wise:
WHEREFORE, premises considered, the decision of the Labor Arbiter is
hereby SET ASIDE and VACATED and a new one entered declaring complainants to have been illegally
dismissed. Respondents are hereby ORDERED to reinstate complainants except Luisa Rombo, Ramona Rombo,
Bobong Abriga and Boboy Silva to their previous position and to pay full backwages from September 1991 until
reinstated. Respondents being guilty of unfair labor practice are further ordered to pay complainant union the
sum of P10,000.00 as moral damages and P5,000.00 as exemplary damages.[4]

The Facts
The facts are summarized in the NLRC Decision as follows:

Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused to work and/or were
choosy in the kind of jobs they wanted to perform, the records is replete with complainants persistence and
dogged determination in going back to work.
Indeed, it would appear that respondents did not look with favor workers having organized themselves into a
union. Thus, when complainant union was certified as the collective bargaining representative in the certification
elections, respondents under the pretext that the result was on appeal, refused to sit down with the union for the
purpose of entering into a collective bargaining agreement. Moreover, the workers including complainants herein
were not given work for more than one month. In protest, complainants staged a strike which was however
settled upon the signing of a Memorandum of Agreement which stipulated among others that:
a) The parties will initially meet for CBA negotiations on the 11th day of January 1991 and will endeavor to
conclude the same within thirty (30) days.
b) The management will give priority to the women workers who are members of the union in case work relative
x x x or amount[ing] to gahit and [dipol] arises.
c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week.
d) The management will provide fifteen (15) wagons for the workers and that existing workforce prior to the
actual strike will be given priority. However, in case the said workforce would not be enough, the management
can hire additional workers to supplement them.
e) The management will not anymore allow the scabs, numbering about eighteen (18) workers[,] to work in the
hacienda; and
f) The union will immediately lift the picket upon signing of this agreement.
However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its commitment to
sit down and bargain collectively. Instead, respondent employed all means including the use of private armed
guards to prevent the organizers from entering the premises.
Moreover, starting September 1991, respondents did not any more give work assignments to the complainants
forcing the union to stage a strike on January 2, 1992. But due to the conciliation efforts by the DOLE, another
Memorandum of Agreement was signed by the complainants and respondents which provides:
Whereas the union staged a strike against management on January 2, 1992 grounded on the dismissal of the
union officials and members;
Whereas parties to the present dispute agree to settle the case amicably once and for all;
Now therefore, in the interest of both labor and management, parties herein agree as follows:
1. That the list of the names of affected union members hereto attached and made part of this agreement shall be
referred to the Hacienda payroll of 1990 and determine whether or not this concerned Union members are
hacienda workers;
2. That in addition to the payroll of 1990 as reference, herein parties will use as guide the subjects of a
Memorandum of Agreement entered into by and between the parties last January 4, 1990;
3. That herein parties can use other employment references in support of their respective claims whether or not
any or all of the listed 36 union members are employees or hacienda workers or not as the case may be;

4. That in case conflict or disagreement arises in the determination of the status of the particular hacienda
workers subject of this agreement herein parties further agree to submit the same to voluntary arbitration;
5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby created to be composed of three
representatives each and is given five working days starting Jan. 23, 1992 to resolve the status of the subject 36
hacienda workers. (Union representatives: Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.)
Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed as follows:
The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko based on who received
their 13th month pay. The following are deemed not considered employees:
1. Luisa Rombo
2. Ramona Rombo
3. Bobong Abrega
4. Boboy Silva
The name Orencio Rombo shall be verified in the 1990 payroll.
The following employees shall be reinstated immediately upon availability of work:
1. Jose Dagle 7. Alejandro Tejares
2. Rico Dagle 8. Gaudioso Rombo
3. Ricardo Dagle 9. Martin Alas-as Jr.
4. Jesus Silva 10. Cresensio Abrega
5. Fernando Silva 11. Ariston Eruela Sr.
6. Ernesto Tejares 12. Ariston Eruela Jr.
When respondents again reneged on its commitment, complainants filed the present complaint.
But for all their persistence, the risk they had to undergo in conducting a strike in the face of overwhelming
odds, complainants in an ironic twist of fate now find themselves being accused of refusing to work and being
choosy in the kind of work they have to perform.[5] (Citations omitted)

Ruling of the Court of Appeals

The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be
merely on leave during the off-season and were therefore still employed by petitioners. Moreover, the workers
enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be tantamount to illegal
dismissal.
The appellate court found neither rhyme nor reason in petitioners argument that it was the workers
themselves who refused to or were choosy in their work. As found by the NLRC, the record of this case is
replete with complainants persistence and dogged determination in going back to work.[6]

The CA likewise concurred with the NLRCs finding that petitioners were guilty of unfair labor practice.
Hence this Petition.[7]

Issues
Petitioners raise the following issues for the Courts consideration:
A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal workers,
were regular employees, contrary to the clear provisions of Article 280 of the Labor Code, which
categorically state that seasonal employees are not covered by the definition of regular employees
under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual employees
who have served for at least one year.
B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, xxx, and relying
instead on rulings which are not directly applicable to the case at bench, viz, Philippine
Tobacco, Bacolod-Murcia, and Gaco, xxx.
C. Whether or not the Court of Appeals committed grave abuse of discretion in upholding the NLRCs
conclusion that private respondents were illegally dismissed, that petitioner[s were] guilty of unfair
labor practice, and that the union be awarded moral and exemplary damages.[8]
Consistent with the discussion in petitioners Memorandum, we shall take up Items A and B as the first issue
and Item C as the second.

The Courts Ruling

The Petition has no merit.

First Issue:
Regular Employment
At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for
review on certiorari of CA decisions.[9] Questions of fact are not entertained.[10] The Court is not a trier of facts
and, in labor cases, this doctrine applies with greater force.[11] Factual questions are for labor tribunals to
resolve.[12] In the present case, these have already been threshed out by the NLRC. Its findings were affirmed
by the appellate court.
Contrary to petitioners contention, the CA did not err when it held that respondents were regular employees.
Article 280 of the Labor Code, as amended, states:
Art. 280. Regular and Casual Employment. - The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or desirable in

the usual business or trade of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall
continue while such activity exist. (Italics supplied)
For respondents to be excluded from those classified as regular employees, it is not enough that they
perform work or services that are seasonal in nature. They must have also been employed only for the duration
of one season. The evidence proves the existence of the first, but not of the second, condition. The fact that
respondents -- with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva -repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter. Evidently,
petitioners employed respondents for more than one season. Therefore, the general rule of regular employment is
applicable.
In Abasolo v. National Labor Relations Commission,[13] the Court issued this clarification:
[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in
which this Court held:
The primary standard, therefore, of determining regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual trade or business of the employer. The test
is whether the former is usually necessary or desirable in the usual trade or business of the employer. The
connection can be determined by considering the nature of the work performed and its relation to the scheme of
the particular business or trade in its entirety. Also if the employee has been performing the job for at least a
year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the
business. Hence, the employment is considered regular, but only with respect to such activity and while such
activity exists.
xxxxxxxxx
x x x [T]he fact that [respondents] do not work continuously for one whole year but only for the duration of the x
x x season does not detract from considering them in regular employment since in a litany of cases this Court has
already settled that seasonal workers who are called to work from time to time and are temporarily laid off
during off-season are not separated from service in said period, but merely considered on leave until reemployed.[14]
The CA did not err when it ruled that Mercado v. NLRC[15] was not applicable to the case at bar. In the
earlier case, the workers were required to perform phases of agricultural work for a definite period of time, after
which their services would be available to any other farm owner. They were not hired regularly and repeatedly
for the same phase/s of agricultural work, but on and off for any single phase thereof. On the other hand, herein
respondents, having performed the same tasks for petitioners every season for several years, are considered the
latters regular employees for their respective tasks.Petitioners eventual refusal to use their services -- even if they
were ready, able and willing to perform their usual duties whenever these were available -- and hiring of other
workers to perform the tasks originally assigned to respondents amounted to illegal dismissal of the latter.

The Court finds no reason to disturb the CAs dismissal of what petitioners claim was their valid exercise of
a management prerogative. The sudden changes in work assignments reeked of bad faith. These changes were
implemented immediately after respondents had organized themselves into a union and started demanding
collective bargaining. Those who were union members were effectively deprived of their jobs. Petitioners move
actually amounted to unjustified dismissal of respondents, in violation of the Labor Code.
Where there is no showing of clear, valid and legal cause for the termination of employment, the law
considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination
was for a valid and authorized cause.[16] In the case at bar, petitioners failed to prove any such cause for the
dismissal of respondents who, as discussed above, are regular employees.

Second Issue:
Unfair Labor Practice
The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows:
Indeed, from respondents refusal to bargain, to their acts of economic inducements resulting in the promotion of
those who withdrew from the union, the use of armed guards to prevent the organizers to come in, and the
dismissal of union officials and members, one cannot but conclude that respondents did not want a union in their
haciendaa clear interference in the right of the workers to self-organization.[17]
We uphold the CAs affirmation of the above findings. Indeed, factual findings of labor officials, who are
deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not
only respect but even finality.Their findings are binding on the Supreme Court.[18] Verily, their conclusions are
accorded great weight upon appeal, especially when supported by substantial evidence.[19] Consequently, the
Court is not duty-bound to delve into the accuracy of their factual findings, in the absence of a clear showing that
these were arbitrary and bereft of any rational basis.[20]
The finding of unfair labor practice done in bad faith carries with it the sanction of moral and exemplary
damages.[21]
WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against
petitioners.
SO ORDERED.

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association of trade unions v abella
ASSOCIATION OF TRADE UNIONS (ATU), RODOLFO MONTECLARO and EDGAR
JUESAN, petitioners, vs. HON. COMISSIONERS OSCAR N. ABELLA, MUSIB N. BUAT, LEON
GONZAGA JR., ALGON ENGINEERING CONSTRUCTION CORP., ALEX GONZALES and EDITHA
YAP, respondents.
DECISION

QUISUMBING, J.:
This special civil action for certiorari under Rule 65 of the Rules of Court assails the resolution of the National
Labor Relations Commission promulgated on May 17, 1991, which modified the decision of the labor arbiter.
Respondent company is a domestic corporation engaged in road construction projects of the government. From
1968 to 1989, it engaged the services of the following workers to work on various projects on different dates:
Rodolfo Monteclaro (mechanic), Edgar Juesan[1] (painter), Victorio Lunzaga (tanker driver), Alfredo Jalet
(batteryman), Julito Macabodbod (trailer helper), Ramon Tabada (carpenter), Remsy,[2] Asensi (machinist),
Armand Acero (helper mechanic), Lordito Tatad (painter helper), Rogelio Tantuan (painter), Teodoro Tabio
(checker), Gemudo[3] Asejo (electrician), Roland Olivar (latheman), Valeriano Mijas[4] (driver), Jose Noval
(welder), Felimon Lagbao (mechanic), Pedro Roche (head welder), and Justiniano Sollano (carpenter). Their
contracts indicate the particular project they are assigned, the duration of their employment and their daily wage.
In February 1989, the above-named workers joined petitioner union as members. Accordingly, petitioner union
filed a petition for certification election with the regional office of the labor department. Respondent company
opposed the petition on the ground that the workers were project employees and therefore not qualified to form
part of the rank and file collective bargaining unit. Not for long, the Med-Arbiter dismissed the petition for
certification election. On appeal, the Secretary of Labor and Employment reversed the Med-Arbiter's decision
and ordered the immediate holding of a certification election. Oldmis o
Meanwhile, the national president of petitioner union sent a demand letter to respondent company seeking the
payment of wage differentials to some affected union members. As said demand was unheeded, petitioner union
and the concerned workers filed a complaint for payment of wage differentials and other benefits before the
Regional Office of the Department of Labor and Employment.
Shortly thereafter, respondent company terminated the employment of aforementioned workers owing to the
completion of its projects or the expiration of workers' contracts. Respondent company explained the
circumstances surrounding the separation of the workers from the service as follows:
"(1) The Contract No. 2AIPD-C-10 Second Agusan Irrigation Project of NIA wherein some of
the herein complainants were assigned was already 98% completed when complaints were filed.
With the near completion of the contract, services of the following complainants were no longer
needed:
(a) Gerundio Asejo
(b) Victorio Lunzaga
(c) Ramon R. Tabada
(d) Alfredo E. Julet (sic)
(e) Julito C. Macabodbod
(2) In the case of Contract No. 2AIPD-C-II-second Agusan Irrigation Project of NIA, the
following complainants were terminated because of the 95% completion of the phase of the
project and expiration of their contract of employment:
(a) Remsy B. Asensi
(b) Rolando G. Olivar
(c) Edgar A. Juezan
(d) Rodolfo G. Monteclaro

(e) Valeriano S. Meyas (sic)

(f) Jose F. Noval
(g) Pedro M. Roche
(3) In Contract Package R11 1/209, Davao del Norte, the contracts of employment of Armand T.
Acero and Felimon J. Dagbao (sic) Jr. expired.
(4) In the Widening and Improvement of Rafael Castillo St., Davao City Project, where
complainant Teodoro Tabio was assigned, he was terminated because he went on absent without
leave (AWOL) while Lordito Tatad's contract of employment expired."[5] Ncmmis
However, the affected workers claim that they were dismissed because of their union activities. In view of the
alleged illegal dismissals and harassment by their employer, the workers staged a strike on May 17, 1989. Upon
complaint of respondent company, Labor Arbiter Newton Sancho declared said strike illegal and decreed further
that Victorio Lunzaga, Alfred Jalet, Julito Macabodbod, Ramon Tabada and Remsy Asensi, who had participated
in the strike, were deemed to have lost their employment status.
On appeal, the National Labor Relations Commission affirmed said decision. Petitioner union then elevated the
matter to this Court by way of petition for certiorari which was eventually dismissed.[6]
Meanwhile, the aggrieved workers filed with the Regional Arbitration Branch of the NLRC their individual
complaints against private respondent company for illegal dismissal, unfair labor practice, underpayment of
wages, 13th month pay, holiday pay and overtime pay. They also sought reinstatement with back wages. The
cases were consolidated and assigned to Labor Arbiter Nicolas Sayon for arbitration. However, noting that a
similar case had been filed before the regional office of the labor department, the labor arbiter refrained from
resolving the issue of underpayment of monetary benefits. He also found the charge of unfair labor practice
untenable. But, on the charge of illegal dismissal, he ruled on October 31, 1989, as follows:
"WHEREFORE in view of the foregoing, judgment is hereby rendered declaring the dismissal
of the following complainants illegal; namely:
1. Victorio C. Lunzaga
2. Julito C. Macabodbod
3. Alfredo E. Jalet
4. Gerundio F. Asejo
5. Ramon R. Tabada
"Respondent ALGON Engineering Construction Corporation and Alex Gonzales and Edith Yap,
are hereby ordered to reinstate the above-named complainants to their former positions without
loss of seniority rights plus six months backwages based on their latest salary rate at the time of
their dismissal, which is P65.00 per day equivalent to monthly rate of P1,700.83, a total ofP
10,204.99 per complainant or in the total amount of P51,024.95.
"The case of illegal dismissal filed by Armand Acero, Lordito Tatad, Teodoro Tabio, Ramon
Olivar, Valeriano Miyas, Jose Noval, Felimon Lagbao, Pedro Roche, Remsy Asensi, Rodolfo
Monteclaro, Edgar Juesan and Justiniano Sollano are hereby ordered dismissed for lack of merit.
"SO ORDERED."[7] Scnc m

Petitioners and private respondents separately appealed the Labor Arbiters ruling to the National Labor Relations
Commission. Pending appeal, Edgar Juesan, Lordito Tatad and Ramon Tabada filed their respective duly sworn
affidavits of desistance and motions to withdraw their complaints and money claims against private respondents.
Said motions were seasonably granted.
On May 17, 1991, the NLRC promulgated its resolution modifying the decision of Labor Arbiter Nicolas Sayon.
It held that the labor arbiter erred in not resolving the issue of underpayment of wages because not all of the
original complainants filed the same money claims with the labor department.[8] Thus, it awarded monetary
benefits to qualified workers. The NLRC disposed of the case as follows:
"Accordingly, the appealed decision is hereby modified as follows:
"1. Respondent ALGON Engineering Construction Corporation is hereby ordered to pay the
complainants hereinafter enumerated, the following sums:
WAGE DIFFERENTIALS:
1. VALERIANO MIJAS
December 14, 1987 to April 15, 1989
419 days x P64.00/day . = P26,816.00
Less:
December 14, 1987 to April 15, 1989
419 days x P61.00/day . = P25,559.00
TOTAL. . .= P 1,257.00
SERVICE INCENTIVE LEAVE PAY: Sdaa miso
1) RAMSI ASENSI
5 days x P64.00 . . .= P320.00
2) VICTORIO LUNZAGA
10 days x P64.00 . . = 640.00
5 days x 53.00 . . .= 265.00 P905.00
3) JULIETO MACABODBOD
10 days x P64.00 . . = P640.00
5 days x 53.00 . . .= .265.00..P905.00
4) GERONIMO ASEJO
10 days x P64.00 . . = 640.00
5 days x 53.00 . . .= .265.000..P905.00
5) ALFREDO JALET
10 days x P64.00 . . = 640.00
5 days x 53.00 . . .=. 265.00 P905.00
6) VALERIANO MIJAS

10 days x P64.00 . . = 640.00

5 days x 53.00 . . .= . 265.00 . P905.00
7) PEDRO ROCHE
5 days x P64.00 . . .= 320.00
8) RODOLFO MONTECLARO
5 days x P64.00 . . .= 320.00
13th MONTH PAY:
1) RAMSI ASENSI
26 days x P64.00 x 10 mos. =
P16,640.00 x 1/12 . = P1,386.67
2) VICTORIO LUNZAGA
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = P1,664.00
3) JULIETO MACABODBOD Sdaad
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = P1,664.00
4) GERONIMO ASEJO
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = P1,664.00
5) ALFREDO JALET
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = P1,664.00
6) VALERIANO MIJAS
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = P1,664.00
7) PEDRO ROCHE
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = P1,664.00
8) RODOLFO MONTECLARO
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = Pl,664.00
9) JOSE NAVAL
26 days x P64.00 x 3 mos. =
P4,992.00 x 1/12 . = P 416.00

"2. The complaints of Edgar Juezon (sic), Lordito Tadtad and Ramon Tabada are hereby
dismissed as prayed for by said complainants.
"3. The complainants for illegal dismissal filed by Victorio Lunzaga (Lonzaga) and Alfredo Jalet
(Jalit) are hereby dismissed for having been rendered moot and academic by Our decision in
Case No. RAB-11-05-00352-89.
"4. The complaints of Macabodbod and Asejo for illegal dismissal are hereby DISMISSED for
lack of merit. Juris
"5. The charge of unfair labor practice is hereby dismissed for lack of merit.
"SO ORDERED."[9]
As noted by the Solicitor General, private respondents filed their motion for reconsideration, which was denied.
[10] We find, however, that herein petitioners did not move for reconsideration, as the petition did not so indicate
and none appears on the records before us.
Filing a petition for certiorari under Rule 65 without first moving for reconsideration of the assailed resolution
generally warrants the petition's outright dismissal. As we consistently held in numerous cases,[11] a motion for
reconsideration by a concerned party is indispensable for it affords the NLRC an opportunity to rectify errors or
mistakes it might have committed before resort to the courts can be had.
It is settled that certiorari will lie only if there is no appeal or any other plain, speedy and adequate remedy in
the ordinary course of law against acts of public respondents.[12] Here, the plain and adequate remedy expressly
provided by law was a motion for reconsideration of the impugned resolution, based on palpable or patent errors,
to be made under oath and filed within ten (10) days from receipt of the questioned resolution of the NLRC, a
procedure which is jurisdictional.[13] Further, it should be stressed that without a motion for reconsideration
seasonably filed within the ten-day reglementary period, the questioned order, resolution or decision of NLRC,
becomes final and executory after ten (10) calendar days from receipt thereof.[14] Moreover, even if procedural
lapses were to be set aside, we find no cogent reason sufficient to justify a departure from public respondent's
decision, as hereafter elucidated.
In this recourse, petitioners impute the following errors on the part of public respondent:
[I]
"THAT THE HONORABLE COMMISSION ERRED IN HOLDING THAT THE DISMISSAL
OF FIVE COMPLAINANTS WERE JUSTIFIED IN VIEW OF THE FACT THAT THEIR
COMPLAINT HAVE BEEN RENDERED MOOT AND ACADEMIC BY ITS DECISION IN
CASE NO. RAB-O5-00353-89.
[II]
THAT HONORABLE COMMISSION AGAIN ERRED IN DISMISSING THE COMPLAINT
OF THE COMPLAINANTS MACABODBOD AND ASEJO FOR LACK OF
MERIT. Sup rema
[III]

THE HONORABLE COMMISSION SERIOUSLY ERRED IN AFFIRMING THE DECISION

OF THE LABOR ARBITER DISMISSING PETITIONER'S CHARGE OF UNFAIR LABOR
PRACTICE AGAINST THE RESPONDENT CORPORATION.
[IV]
QUESTION OF LAW."[15]
In petitions for certiorari under Rule 65 of the Rules of Court, it may be noted that "want of jurisdiction" and
"grave abuse of discretion,"[16] and not merely reversible error, are the proper grounds for review. The
respondent acts without jurisdiction if he does not have the legal authority to decide a case. There is excess of
jurisdiction if the respondent, having the power to determine the case, oversteps his lawful authority. And there is
grave abuse of discretion where the respondent acts in a capricious, whimsical, arbitrary or despotic manner, in
effect equivalent to lack of jurisdiction.[17] Here, petitioners neither assail the jurisdiction of public respondent
nor attribute any grave abuse of discretion on the part of the labor tribunal. Necessarily, this petition must fail,
for lack of substantial requisites under Rule 65.
Nevertheless, if only to cast aside all doubts for the benefit of the concerned workers, we assayed into the merits
of the case. As properly stated by the Solicitor General, the point of inquiry here is whether petitioners
are regular or project employees of respondent company.
The Labor Code defines regular, project and casual employees as follows:
"ART 280. Regular and Casual Employment. - The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
And employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists."
(Italics supplied.) Juris sc
Thus, regular employees are those who have been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer even if the parties enter into an agreement stating
otherwise.[18] In contrast, project employees are those whose employment has been fixed for a specific project
or undertaking the completion or termination of which has been determined at the time of the engagement of the
employee, or where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.[19]
Furthermore, Policy Instruction No. 20,[20] which was in force during the period of petitioners' employment,
stated:

"Project employees are those employed in connection with a particular construction project.
Non-project (regular) employees are those employed by a construction company without
reference to any particular project.
Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the
number of projects in which they have been employed by a particular construction company.
Moreover, the company is not required to obtain clearance from the Secretary of Labor in
connection with such termination. What is required of the company is report to the nearest
Public Employment Office for statistical purposes."
In the case at bar, the contracts of employment of the petitioners attest to the fact that they had been hired for
specific projects, and their employment was coterminous with the completion of the project for which they had
been hired. Said contracts expressly provide that the workers' tenure of employment would depend on the
duration of any phase of the project or the completion of the awarded government construction projects in any of
their planned phases. Further, petitioners were informed in advance that said project or undertaking for which
they were hired would end on a stated or determinable date. Besides, public respondent noted that respondent
company regularly submitted reports of termination of services of project workers to the regional office of the
labor department as required under Policy Instruction No. 20. This compliance with the reportorial requirement
confirms that petitioners were project employees.
Considering that petitioners were project employees, whose nature of employment they were fully informed
about, at the time of their engagement, related to a specific project, work or undertaking, their employment
legally ended upon completion of said project. The termination of their employment could not be regarded as
illegal dismissal.
WHEREFORE, the instant petition is DISMISSED, and the assailed RESOLUTION of respondent NLRC
dated May 17, 1991, is AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
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www
abs cbn broadcasting corp vs nazareno
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No.
76582 and the Resolution denying the motion for reconsideration thereof. The CA affirmed the Decision2 and
Resolution3 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000762-2001 (RAB
Case No. VII-10-1661-2001) which likewise affirmed, with modification, the decision of the Labor Arbiter
declaring the respondents Marlyn Nazareno, Merlou Gerzon, Jennifer Deiparine and Josephine Lerasan as
regular employees.
The Antecedents

Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a
network of television and radio stations, whose operations revolve around the broadcast, transmission, and relay
of telecommunication signals. It sells and deals in or otherwise utilizes the airtime it generates from its radio and
television operations. It has a franchise as a broadcasting company, and was likewise issued a license and
authority to operate by the National Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on
different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu
Broadcasting Station, with a monthly compensation ofP4,000. They were issued ABS-CBN employees
identification cards and were required to work for a minimum of eight hours a day, including Sundays and
holidays. They were made to perform the following tasks and duties:
a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of
respondent ABS-CBN;
b) Coordinate, arrange personalities for air interviews;
c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports;
d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints;
e) Assist, anchor program interview, etc; and
f) Record, log clerical reports, man based control radio.4
Their respective working hours were as follows:
Name Time No. of Hours
1. Marlene Nazareno 4:30 A.M.-8:00 A.M. 7
8:00 A.M.-12:00 noon
2. Jennifer Deiparine 4:30 A.M.-12:00M.N. (sic) 7
3. Joy Sanchez 1:00 P.M.-10:00 P.M.(Sunday) 9 hrs.
9:00 A.M.-6:00 P.M. (WF) 9 hrs.
4. Merlou Gerzon 9:00 A.M.-6:00 P.M. 9 hrs.5
The PAs were under the control and supervision of Assistant Station Manager Dante J. Luzon, and News
Manager Leo Lastimosa.
On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a Collective
Bargaining Agreement (CBA) to be effective during the period from December 11, 1996 to December 11, 1999.
However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included
to the CBA.6
On July 20, 2000, petitioner, through Dante Luzon, issued a Memorandum informing the PAs that effective
August 1, 2000, they would be assigned to non-drama programs, and that the DYAB studio operations would be
handled by the studio technician. Thus, their revised schedule and other assignments would be as follows:
Monday Saturday

4:30 A.M. 8:00 A.M. Marlene Nazareno.

Miss Nazareno will then be assigned at the Research Dept.
From 8:00 A.M. to 12:00
4:30 P.M. 12:00 MN Jennifer Deiparine
Sunday
5:00 A.M. 1:00 P.M. Jennifer Deiparine
1:00 P.M. 10:00 P.M. Joy Sanchez
Respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo
Lastimosa.
On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th
Month Pay with Damages against the petitioner before the NLRC. The Labor Arbiter directed the parties to
submit their respective position papers. Upon respondents failure to file their position papers within the
reglementary period, Labor Arbiter Jose G. Gutierrez issued an Order dated April 30, 2001, dismissing the
complaint without prejudice for lack of interest to pursue the case. Respondents received a copy of the Order on
May 16, 2001.7 Instead of re-filing their complaint with the NLRC within 10 days from May 16, 2001, they
filed, on June 11, 2001, an Earnest Motion to Refile Complaint with Motion to Admit Position Paper and Motion
to Submit Case For Resolution.8 The Labor Arbiter granted this motion in an Order dated June 18, 2001, and
forthwith admitted the position paper of the complainants. Respondents made the following allegations:
1. Complainants were engaged by respondent ABS-CBN as regular and full-time employees for a continuous
period of more than five (5) years with a monthly salary rate of Four Thousand (P4,000.00) pesos beginning
1995 up until the filing of this complaint on November 20, 2000.
Machine copies of complainants ABS-CBN Employees Identification Card and salary vouchers are hereto
attached as follows, thus:
I. Jennifer Deiparine:
Exhibit "A" - ABS-CBN Employees Identification Card
Exhibit "B", - ABS-CBN Salary Voucher from Nov.
Exhibit "B-1"& 1999 to July 2000 at P4,000.00
Exhibit "B-2"
Date employed: September 15, 1995
Length of service: 5 years & nine (9) months
II. Merlou Gerzon - ABS-CBN Employees Identification Card
Exhibit "C"
Exhibit "D"
Exhibit "D-1"&

Exhibit "D-2" - ABS-CBN Salary Voucher from March

1999 to January 2001 at P4,000.00
Date employed: September 1, 1995
Length of service: 5 years & 10 months
III. Marlene Nazareno
Exhibit "E" - ABS-CBN Employees Identification Card
Exhibit "E" - ABS-CBN Salary Voucher from Nov.
Exhibit "E-1"& 1999 to December 2000
Exhibit :E-2"
Date employed: April 17, 1996
Length of service: 5 years and one (1) month
IV. Joy Sanchez Lerasan
Exhibit "F" - ABS-CBN Employees Identification Card
Exhibit "F-1" - ABS-CBN Salary Voucher from Aug.
Exhibit "F-2"& 2000 to Jan. 2001
Exhibit "F-3"
Exhibit "F-4" - Certification dated July 6, 2000
Acknowledging regular status of
Complainant Joy Sanchez Lerasan
Signed by ABS-CBN Administrative
Officer May Kima Hife
Date employed: April 15, 1998
Length of service: 3 yrs. and one (1) month9
Respondents insisted that they belonged to a "work pool" from which petitioner chose persons to be given
specific assignments at its discretion, and were thus under its direct supervision and control regardless of
nomenclature. They prayed that judgment be rendered in their favor, thus:
WHEREFORE, premises considered, this Honorable Arbiter is most respectfully prayed, to issue an order
compelling defendants to pay complainants the following:
1. One Hundred Thousand Pesos (P100,000.00) each
and by way of moral damages;
2. Minimum wage differential;
3. Thirteenth month pay differential;

4. Unpaid service incentive leave benefits;

5. Sick leave;
6. Holiday pay;
7. Premium pay;
8. Overtime pay;
9. Night shift differential.
Complainants further pray of this Arbiter to declare them regular and permanent employees of respondent ABSCBN as a condition precedent for their admission into the existing union and collective bargaining unit of
respondent company where they may as such acquire or otherwise perform their obligations thereto or enjoy the
benefits due therefrom.
Complainants pray for such other reliefs as are just and equitable under the premises.10
For its part, petitioner alleged in its position paper that the respondents were PAs who basically assist in the
conduct of a particular program ran by an anchor or talent. Among their duties include monitoring and receiving
incoming calls from listeners and field reporters and calls of news sources; generally, they perform leg work for
the anchors during a program or a particular production. They are considered in the industry as "program
employees" in that, as distinguished from regular or station employees, they are basically engaged by the station
for a particular or specific program broadcasted by the radio station. Petitioner asserted that as PAs, the
complainants were issued talent information sheets which are updated from time to time, and are thus made the
basis to determine the programs to which they shall later be called on to assist. The program assignments of
complainants were as follows:
a. Complainant Nazareno assists in the programs:
1) Nagbagang Balita (early morning edition)
2) Infor Hayupan
3) Arangkada (morning edition)
4) Nagbagang Balita (mid-day edition)
b. Complainant Deiparine assists in the programs:
1) Unzanith
2) Serbisyo de Arevalo
3) Arangkada (evening edition)
4) Balitang K (local version)
5) Abante Subu
6) Pangutana Lang
c. Complainant Gerzon assists in the program:
1) On Mondays and Tuesdays:

(a) Unzanith
(b) Serbisyo de Arevalo
(c) Arangkada (evening edition)
(d) Balitang K (local version)
(e) Abante Sugbu
(f) Pangutana Lang
2) On Thursdays
Nagbagang Balita
3) On Saturdays
(a) Nagbagang Balita
(b) Info Hayupan
(c) Arangkada (morning edition)
(d) Nagbagang Balita (mid-day edition)
4) On Sundays:
(a) Siesta Serenata
(b) Sunday Chismisan
(c) Timbangan sa Hustisya
(d) Sayri ang Lungsod
(e) Haranahan11
Petitioner maintained that PAs, reporters, anchors and talents occasionally "sideline" for other programs they
produce, such as drama talents in other productions. As program employees, a PAs engagement is coterminous
with the completion of the program, and may be extended/renewed provided that the program is on-going; a PA
may also be assigned to new programs upon the cancellation of one program and the commencement of another.
As such program employees, their compensation is computed on a program basis, a fixed amount for
performance services irrespective of the time consumed. At any rate, petitioner claimed, as the payroll will show,
respondents were paid all salaries and benefits due them under the law.12
Petitioner also alleged that the Labor Arbiter had no jurisdiction to involve the CBA and interpret the same,
especially since respondents were not covered by the bargaining unit.
On July 30, 2001, the Labor Arbiter rendered judgment in favor of the respondents, and declared that they were
regular employees of petitioner; as such, they were awarded monetary benefits. The fallo of the decision reads:
WHEREFORE, the foregoing premises considered, judgment is hereby rendered declaring the complainants
regular employees of the respondent ABS-CBN Broadcasting Corporation and directing the same respondent to
pay complainants as follows:
I - Merlou A. Gerzon P12,025.00

II - Marlyn Nazareno 12,025.00

III - Jennifer Deiparine 12,025.00
IV - Josephine Sanchez Lerazan 12,025.00
_________
P48,100.00
plus ten (10%) percent Attorneys Fees or a TOTAL aggregate amount of PESOS: FIFTY TWO THOUSAND
NINE HUNDRED TEN (P52,910.00).
Respondent Veneranda C. Sy is absolved from any liability.
SO ORDERED.13
However, the Labor Arbiter did not award money benefits as provided in the CBA on his belief that he had no
jurisdiction to interpret and apply the agreement, as the same was within the jurisdiction of the Voluntary
Arbitrator as provided in Article 261 of the Labor Code.
Respondents counsel received a copy of the decision on August 29, 2001. Respondent Nazareno received her
copy on August 27, 2001, while the other respondents received theirs on September 8, 2001. Respondents signed
and filed their Appeal Memorandum on September 18, 2001.
For its part, petitioner filed a motion for reconsideration, which the Labor Arbiter denied and considered as an
appeal, conformably with Section 5, Rule V, of the NLRC Rules of Procedure. Petitioner forthwith appealed the
decision to the NLRC, while respondents filed a partial appeal.
In its appeal, petitioner alleged the following:
1. That the Labor Arbiter erred in reviving or re-opening this case which had long been dismissed without
prejudice for more than thirty (30) calendar days;
2. That the Labor Arbiter erred in depriving the respondent of its Constitutional right to due process of law;
3. That the Labor Arbiter erred in denying respondents Motion for Reconsideration on an interlocutory order on
the ground that the same is a prohibited pleading;
4. That the Labor Arbiter erred when he ruled that the complainants are regular employees of the respondent;
5. That the Labor Arbiter erred when he ruled that the complainants are entitled to 13th month pay, service
incentive leave pay and salary differential; and
6. That the Labor Arbiter erred when he ruled that complainants are entitled to attorneys fees.14
On November 14, 2002, the NLRC rendered judgment modifying the decision of the Labor Arbiter. The fallo of
the decision reads:
WHEREFORE, premises considered, the decision of Labor Arbiter Jose G. Gutierrez dated 30 July 2001 is SET
ASIDE and VACATED and a new one is entered ORDERING respondent ABS-CBN Broadcasting Corporation,
as follows:

1. To pay complainants of their wage differentials and other benefits arising from the CBA as of 30 September
2002 in the aggregate amount of Two Million Five Hundred, Sixty-One Thousand Nine Hundred Forty-Eight
Pesos and 22/100 (P2,561,948.22), broken down as follows:
a. Deiparine, Jennifer - P 716,113.49
b. Gerzon, Merlou - 716,113.49
c. Nazareno, Marlyn - 716,113.49
d. Lerazan, Josephine Sanchez - 413,607.75
Total - P 2,561,948.22
2. To deliver to the complainants Two Hundred Thirty-Three (233) sacks of rice as of 30 September 2002
representing their rice subsidy in the CBA, broken down as follows:
a. Deiparine, Jennifer - 60 Sacks
b. Gerzon, Merlou - 60 Sacks
c. Nazareno, Marlyn - 60 Sacks
d. Lerazan, Josephine Sanchez - 53 Sacks
Total 233 Sacks; and
3. To grant to the complainants all the benefits of the CBA after 30 September 2002.
SO ORDERED.15
The NLRC declared that the Labor Arbiter acted conformably with the Labor Code when it granted respondents
motion to refile the complaint and admit their position paper. Although respondents were not parties to the CBA
between petitioner and the ABS-CBN Rank-and-File Employees Union, the NLRC nevertheless granted and
computed respondents monetary benefits based on the 1999 CBA, which was effective until September 2002.
The NLRC also ruled that the Labor Arbiter had jurisdiction over the complaint of respondents because they
acted in their individual capacities and not as members of the union. Their claim for monetary benefits was
within the context of Article 217(6) of the Labor Code. The validity of respondents claim does not depend upon
the interpretation of the CBA.
The NLRC ruled that respondents were entitled to the benefits under the CBA because they were regular
employees who contributed to the profits of petitioner through their labor. The NLRC cited the ruling of this
Court in New Pacific Timber & Supply Company v. National Labor Relations Commission.16
Petitioner filed a motion for reconsideration, which the NLRC denied.
Petitioner thus filed a petition for certiorari under Rule 65 of the Rules of Court before the CA, raising both
procedural and substantive issues, as follows: (a) whether the NLRC acted without jurisdiction in admitting the
appeal of respondents; (b) whether the NLRC committed palpable error in scrutinizing the reopening and revival
of the complaint of respondents with the Labor Arbiter upon due notice despite the lapse of 10 days from their
receipt of the July 30, 2001 Order of the Labor Arbiter; (c) whether respondents were regular employees; (d)
whether the NLRC acted without jurisdiction in entertaining and resolving the claim of the respondents under
the CBA instead of referring the same to the Voluntary Arbitrators as provided in the CBA; and (e) whether the

NLRC acted with grave abuse of discretion when it awarded monetary benefits to respondents under the CBA
although they are not members of the appropriate bargaining unit.
On February 10, 2004, the CA rendered judgment dismissing the petition. It held that the perfection of an appeal
shall be upon the expiration of the last day to appeal by all parties, should there be several parties to a case.
Since respondents received their copies of the decision on September 8, 2001 (except respondent Nazareno who
received her copy of the decision on August 27, 2001), they had until September 18, 2001 within which to file
their Appeal Memorandum. Moreover, the CA declared that respondents failure to submit their position paper
on time is not a ground to strike out the paper from the records, much less dismiss a complaint.
Anent the substantive issues, the appellate court stated that respondents are not mere project employees, but
regular employees who perform tasks necessary and desirable in the usual trade and business of petitioner and
not just its project employees. Moreover, the CA added, the award of benefits accorded to rank-and-file
employees under the 1996-1999 CBA is a necessary consequence of the NLRC ruling that respondents, as PAs,
are regular employees.
Finding no merit in petitioners motion for reconsideration, the CA denied the same in a Resolution17 dated June
16, 2004.
Petitioner thus filed the instant petition for review on certiorari and raises the following assignments of error:
1. THE HONORABLE COURT OF APPEALS ACTED WITHOUT JURISDICTION AND GRAVELY ERRED
IN UPHOLDING THE NATIONAL LABOR RELATIONS COMMISSION NOTWITHSTANDING THE
PATENT NULLITY OF THE LATTERS DECISION AND RESOLUTION.
2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE
NLRC FINDING RESPONDENTS REGULAR EMPLOYEES.
3. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE
NLRC AWARDING CBA BENEFITS TO RESPONDENTS.18
Considering that the assignments of error are interrelated, the Court shall resolve them simultaneously.
Petitioner asserts that the appellate court committed palpable and serious error of law when it affirmed the
rulings of the NLRC, and entertained respondents appeal from the decision of the Labor Arbiter despite the
admitted lapse of the reglementary period within which to perfect the same. Petitioner likewise maintains that
the 10-day period to appeal must be reckoned from receipt of a partys counsel, not from the time the party
learns of the decision, that is, notice to counsel is notice to party and not the other way around. Finally, petitioner
argues that the reopening of a complaint which the Labor Arbiter has dismissed without prejudice is a clear
violation of Section 1, Rule V of the NLRC Rules; such order of dismissal had already attained finality and can
no longer be set aside.
Respondents, on the other hand, allege that their late appeal is a non-issue because it was petitioners own timely
appeal that empowered the NLRC to reopen the case. They assert that although the appeal was filed 10 days late,
it may still be given due course in the interest of substantial justice as an exception to the general rule that the
negligence of a counsel binds the client. On the issue of the late filing of their position paper, they maintain that
this is not a ground to strike it out from the records or dismiss the complaint.
We find no merit in the petition.

We agree with petitioners contention that the perfection of an appeal within the statutory or reglementary period
is not only mandatory, but also jurisdictional; failure to do so renders the assailed decision final and executory
and deprives the appellate court or body of the legal authority to alter the final judgment, much less entertain the
appeal. However, this Court has time and again ruled that in exceptional cases, a belated appeal may be given
due course if greater injustice may occur if an appeal is not given due course than if the reglementary period to
appeal were strictly followed.19 The Court resorted to this extraordinary measure even at the expense of
sacrificing order and efficiency if only to serve the greater principles of substantial justice and equity.20
In the case at bar, the NLRC did not commit a grave abuse of its discretion in giving Article 22321 of the Labor
Code a liberal application to prevent the miscarriage of justice. Technicality should not be allowed to stand in the
way of equitably and completely resolving the rights and obligations of the parties.22 We have held in a catena
of cases that technical rules are not binding in labor cases and are not to be applied strictly if the result would be
detrimental to the workingman.23
Admittedly, respondents failed to perfect their appeal from the decision of the Labor Arbiter within the
reglementary period therefor. However, petitioner perfected its appeal within the period, and since petitioner had
filed a timely appeal, the NLRC acquired jurisdiction over the case to give due course to its appeal and render
the decision of November 14, 2002. Case law is that the party who failed to appeal from the decision of the
Labor Arbiter to the NLRC can still participate in a separate appeal timely filed by the adverse party as the
situation is considered to be of greater benefit to both parties.24
We find no merit in petitioners contention that the Labor Arbiter abused his discretion when he admitted
respondents position paper which had been belatedly filed. It bears stressing that the Labor Arbiter is mandated
by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without
technicalities of law or procedure, all in the interest of due process.25 Indeed, as stressed by the appellate court,
respondents failure to submit a position paper on time is not a ground for striking out the paper from the
records, much less for dismissing a complaint.26 Likewise, there is simply no truth to petitioners assertion that
it was denied due process when the Labor Arbiter admitted respondents position paper without requiring it to
file a comment before admitting said position paper. The essence of due process in administrative proceedings is
simply an opportunity to explain ones side or an opportunity to seek reconsideration of the action or ruling
complained of. Obviously, there is nothing in the records that would suggest that petitioner had absolute lack of
opportunity to be heard.27 Petitioner had the right to file a motion for reconsideration of the Labor Arbiters
admission of respondents position paper, and even file a Reply thereto. In fact, petitioner filed its position paper
on April 2, 2001. It must be stressed that Article 280 of the Labor Code was encoded in our statute books to
hinder the circumvention by unscrupulous employers of the employees right to security of tenure by
indiscriminately and absolutely ruling out all written and oral agreements inharmonious with the concept of
regular employment defined therein.28
We quote with approval the following pronouncement of the NLRC:
The complainants, on the other hand, contend that respondents assailed the Labor Arbiters order dated 18 June
2001 as violative of the NLRC Rules of Procedure and as such is violative of their right to procedural due
process. That while suggesting that an Order be instead issued by the Labor Arbiter for complainants to refile
this case, respondents impliedly submit that there is not any substantial damage or prejudice upon the refiling,
even so, respondents suggestion acknowledges complainants right to prosecute this case, albeit with the burden
of repeating the same procedure, thus, entailing additional time, efforts, litigation cost and precious time for the

Arbiter to repeat the same process twice. Respondents suggestion, betrays its notion of prolonging, rather than
promoting the early resolution of the case.
Although the Labor Arbiter in his Order dated 18 June 2001 which revived and re-opened the dismissed case
without prejudice beyond the ten (10) day reglementary period had inadvertently failed to follow Section 16,
Rule V, Rules Procedure of the NLRC which states:
"A party may file a motion to revive or re-open a case dismissed without prejudice within ten (10) calendar days
from receipt of notice of the order dismissing the same; otherwise, his only remedy shall be to re-file the case in
the arbitration branch of origin."
the same is not a serious flaw that had prejudiced the respondents right to due process. The case can still be
refiled because it has not yet prescribed. Anyway, Article 221 of the Labor Code provides:
"In any proceedings before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in
courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission
and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each
case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due
process."
The admission by the Labor Arbiter of the complainants Position Paper and Supplemental Manifestation which
were belatedly filed just only shows that he acted within his discretion as he is enjoined by law to use every
reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of
law or procedure, all in the interest of due process. Indeed, the failure to submit a position paper on time is not a
ground for striking out the paper from the records, much less for dismissing a complaint in the case of the
complainant. (University of Immaculate Conception vs. UIC Teaching and Non-Teaching Personnel Employees,
G.R. No. 144702, July 31, 2001).
"In admitting the respondents position paper albeit late, the Labor Arbiter acted within her discretion. In fact,
she is enjoined by law to use every reasonable means to ascertain the facts in each case speedily and objectively,
without technicalities of law or procedure, all in the interest of due process". (Panlilio vs. NLRC, 281 SCRA 53).
The respondents were given by the Labor Arbiter the opportunity to submit position paper. In fact, the
respondents had filed their position paper on 2 April 2001. What is material in the compliance of due process is
the fact that the parties are given the opportunities to submit position papers.
"Due process requirements are satisfied where the parties are given the opportunities to submit position papers".
(Laurence vs. NLRC, 205 SCRA 737).
Thus, the respondent was not deprived of its Constitutional right to due process of law.29
We reject, as barren of factual basis, petitioners contention that respondents are considered as its talents, hence,
not regular employees of the broadcasting company. Petitioners claim that the functions performed by the
respondents are not at all necessary, desirable, or even vital to its trade or business is belied by the evidence on
record.
Case law is that this Court has always accorded respect and finality to the findings of fact of the CA, particularly
if they coincide with those of the Labor Arbiter and the National Labor Relations Commission, when supported
by substantial evidence.30 The question of whether respondents are regular or project employees or independent

contractors is essentially factual in nature; nonetheless, the Court is constrained to resolve it due to its
tremendous effects to the legions of production assistants working in the Philippine broadcasting industry.
We agree with respondents contention that where a person has rendered at least one year of service, regardless
of the nature of the activity performed, or where the work is continuous or intermittent, the employment is
considered regular as long as the activity exists, the reason being that a customary appointment is not
indispensable before one may be formally declared as having attained regular status. Article 280 of the Labor
Code provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
In Universal Robina Corporation v. Catapang,31 the Court reiterated the test in determining whether one is a
regular employee:
The primary standard, therefore, of determining regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual trade or business of the employer. The test
is whether the former is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of work performed and its relation to the scheme of the
particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year,
even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need
for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business.
Hence, the employment is considered regular, but only with respect to such activity and while such activity
exists.32
As elaborated by this Court in Magsalin v. National Organization of Working Men:33
Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure
a "regular" workers security of tenure, however, can hardly be doubted. In determining whether an employment
should be considered regular or non-regular, the applicable test is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer. The
standard, supplied by the law itself, is whether the work undertaken is necessary or desirable in the usual
business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered
and its relation to the general scheme under which the business or trade is pursued in the usual course. It is
distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the
particular business or trade. But, although the work to be performed is only for a specific project or seasonal,
where a person thus engaged has been performing the job for at least one year, even if the performance is not
continuous or is merely intermittent, the law deems the repeated and continuing need for its performance as
being sufficient to indicate the necessity or desirability of that activity to the business or trade of the employer.
The employment of such person is also then deemed to be regular with respect to such activity and while such
activity exists.34

Not considered regular employees are "project employees," the completion or termination of which is more or
less determinable at the time of employment, such as those employed in connection with a particular
construction project, and "seasonal employees" whose employment by its nature is only desirable for a limited
period of time. Even then, any employee who has rendered at least one year of service, whether continuous or
intermittent, is deemed regular with respect to the activity performed and while such activity actually exists.
It is of no moment that petitioner hired respondents as "talents." The fact that respondents received pre-agreed
"talent fees" instead of salaries, that they did not observe the required office hours, and that they were permitted
to join other productions during their free time are not conclusive of the nature of their employment.
Respondents cannot be considered "talents" because they are not actors or actresses or radio specialists or mere
clerks or utility employees. They are regular employees who perform several different duties under the control
and direction of ABS-CBN executives and supervisors.
Thus, there are two kinds of regular employees under the law: (1) those engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have
rendered at least one year of service, whether continuous or broken, with respect to the activities in which they
are employed.35
The law overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining
situation necessitates the succor of the State. What determines whether a certain employment is regular or
otherwise is not the will or word of the employer, to which the worker oftentimes acquiesces, much less the
procedure of hiring the employee or the manner of paying the salary or the actual time spent at work. It is the
character of the activities performed in relation to the particular trade or business taking into account all the
circumstances, and in some cases the length of time of its performance and its continued existence. 36 It is
obvious that one year after they were employed by petitioner, respondents became regular employees by
operation of law.37
Additionally, respondents cannot be considered as project or program employees because no evidence was
presented to show that the duration and scope of the project were determined or specified at the time of their
engagement. Under existing jurisprudence, project could refer to two distinguishable types of activities. First, a
project may refer to a particular job or undertaking that is within the regular or usual business of the employer,
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. Second, the term project may also refer to a
particular job or undertaking that is not within the regular business of the employer. 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.38
The principal test 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.39
In this case, it is undisputed that respondents had continuously performed the same activities for an average of
five years. Their assigned tasks are necessary or desirable in the usual business or trade of the petitioner. The
persisting need for their services is sufficient evidence of the necessity and indispensability of such services to
petitioners business or trade.40 While length of time may not be a sole controlling test for project employment,
it can be a strong factor to determine whether the employee was hired for a specific undertaking or in fact tasked
to perform functions which are vital, necessary and indispensable to the usual trade or business of the
employer.41 We note further that petitioner did not report the termination of respondents employment in the

particular "project" to the Department of Labor and Employment Regional Office having jurisdiction over the
workplace within 30 days following the date of their separation from work, using the prescribed form on
employees termination/ dismissals/suspensions.42
As gleaned from the records of this case, petitioner itself is not certain how to categorize respondents. In its
earlier pleadings, petitioner classified respondents as program employees, and in later pleadings, independent
contractors. Program employees, or project employees, are different from independent contractors because in the
case of the latter, no employer-employee relationship exists.
Petitioners reliance on the ruling of this Court in Sonza v. ABS-CBN Broadcasting Corporation43 is misplaced.
In that case, the Court explained why Jose Sonza, a well-known television and radio personality, was an
independent contractor and not a regular employee:
A. Selection and Engagement of Employee
ABS-CBN engaged SONZAS services to co-host its television and radio programs because of SONZAS
peculiar skills, talent and celebrity status. SONZA contends that the "discretion used by respondent in
specifically selecting and hiring complainant over other broadcasters of possibly similar experience and
qualification as complainant belies respondents claim of independent contractorship."
Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them
from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and
celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status,
ABS-CBN would not have entered into the Agreement with SONZA but would have hired him through its
personnel department just like any other employee.
In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We must
consider all the circumstances of the relationship, with the control test being the most important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA
asserts that this mode of fee payment shows that he was an employee of ABS-CBN. SONZA also points out that
ABS-CBN granted him benefits and privileges "which he would not have enjoyed if he were truly the subject of
a valid job contract."
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If
SONZA were ABS-CBNs employee, there would be no need for the parties to stipulate on benefits such as
"SSS, Medicare, x x x and 13th month pay which the law automatically incorporates into every employeremployee contract. Whatever benefits SONZA enjoyed arose from contract and not because of an employeremployee relationship.
SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the
ordinary that they indicate more an independent contractual relationship rather than an employer-employee
relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZAS unique
skills, talent and celebrity status not possessed by ordinary employees. Obviously, SONZA acting alone
possessed enough bargaining power to demand and receive such huge talent fees for his services. The power to
bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not
conclusive, of an independent contractual relationship.

The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an
independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC
is the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee accruing under the
Agreement.44
In the case at bar, however, the employer-employee relationship between petitioner and respondents has been
proven.
First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was
required from them because they were merely hired through petitioners personnel department just like any
ordinary employee.
Second. The so-called "talent fees" of respondents correspond to wages given as a result of an employeremployee relationship. Respondents did not have the power to bargain for huge talent fees, a circumstance
negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and respondents
are highly dependent on the petitioner for continued work.
Fourth. The degree of control and supervision exercised by petitioner over respondents through its supervisors
negates the allegation that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular business of the employer and when
the worker, relative to the employer, does not furnish an independent business or professional service, such work
is a regular employment of such employee and not an independent contractor.45 The Court will peruse beyond
any such agreement to examine the facts that typify the parties actual relationship.46
It follows then that respondents are entitled to the benefits provided for in the existing CBA between petitioner
and its rank-and-file employees. As regular employees, respondents are entitled to the benefits granted to all
other regular employees of petitioner under the CBA.47We quote with approval the ruling of the appellate court,
that the reason why production assistants were excluded from the CBA is precisely because they were
erroneously classified and treated as project employees by petitioner:
x x x The award in favor of private respondents of the benefits accorded to rank-and-file employees of ABSCBN under the 1996-1999 CBA is a necessary consequence of public respondents ruling that private
respondents as production assistants of petitioner are regular employees. The monetary award is not considered
as claims involving the interpretation or implementation of the collective bargaining agreement. The reason why
production assistants were excluded from the said agreement is precisely because they were classified and
treated as project employees by petitioner.
As earlier stated, it is not the will or word of the employer which determines the nature of employment of an
employee but the nature of the activities performed by such employee in relation to the particular business or
trade of the employer. Considering that We have clearly found that private respondents are regular employees of
petitioner, their exclusion from the said CBA on the misplaced belief of the parties to the said agreement that
they are project employees, is therefore not proper. Finding said private respondents as regular employees and
not as mere project employees, they must be accorded the benefits due under the said Collective Bargaining
Agreement.
A collective bargaining agreement is a contract entered into by the union representing the employees and the
employer. However, even the non-member employees are entitled to the benefits of the contract. To accord its

benefits only to members of the union without any valid reason would constitute undue discrimination against
non-members. A collective bargaining agreement is binding on all employees of the company. Therefore,
whatever benefits are given to the other employees of ABS-CBN must likewise be accorded to private
respondents who were regular employees of petitioner.48
Besides, only talent-artists were excluded from the CBA and not production assistants who are regular
employees of the respondents. Moreover, under Article 1702 of the New Civil Code: "In case of doubt, all labor
legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer."
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The assailed Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 76582 are AFFIRMED. Costs against petitioner.
SO ORDERED.

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brent school inc vs zamora
BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners,
vs.
RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President, and
DOROTEO R. ALEGRE, respondents.
Quasha, Asperilla, Ancheta, Pea & Nolasco for petitioners.
Mauricio G. Domogon for respondent Alegre.

NARVASA, J.:
The question presented by the proceedings at bar 1 is whether or not the provisions of the Labor Code, 2 as
amended, 3 have anathematized "fixed period employment" or employment for a term.
The root of the controversy at bar is an employment contract in virtue of which Doroteo R. Alegre was engaged
as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. 4 The contract fixed a specific
term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17,
1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974
reiterated the same terms and conditions, including the expiry date, as those contained in the original contract of
July 18, 1971. 5
Some three months before the expiration of the stipulated period, or more precisely on April 20,1976, Alegre
was given a copy of the report filed by Brent School with the Department of Labor advising of the termination of
his services effective on July 16, 1976. The stated ground for the termination was "completion of contract,
expiration of the definite period of employment." And a month or so later, on May 26, 1976, Alegre accepted the
amount of P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for the
period May 16, to July 17, 1976 as full payment of contract."
However, at the investigation conducted by a Labor Conciliator of said report of termination of his services,
Alegre protested the announced termination of his employment. He argued that although his contract did
stipulate that the same would terminate on July 17, 1976, since his services were necessary and desirable in the

usual business of his employer, and his employment had lasted for five years, he had acquired the status of a
regular employee and could not be removed except for valid cause. 6 The Regional Director considered Brent
School's report as anapplication for clearance to terminate employment (not a report of termination), and
accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead required the
reinstatement of Alegre, as a "permanent employee," to his former position without loss of seniority rights and
with full back wages. The Director pronounced "the ground relied upon by the respondent (Brent) in terminating
the services of the complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite oddly, as prohibited by
Circular No. 8, series of 1969, of the Bureau of Private Schools. 7
Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded the
case to the Secretary of Labor for review. 8 The latter sustained the Regional Director. 9 Brent appealed to the
Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack of merit and affirmed the
Labor Secretary's decision, ruling that Alegre was a permanent employee who could not be dismissed except for
just cause, and expiration of the employment contract was not one of the just causes provided in the Labor Code
for termination of services. 10
The School is now before this Court in a last attempt at vindication. That it will get here.
The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the
Labor Code of the Philippines (P.D. 442) had not yet been promulgated. Indeed, the Code did not come into
effect until November 1, 1974, some three years after the perfection of the employment contract, and rights and
obligations thereunder had arisen and been mutually observed and enforced.
At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity of term
employment. It was impliedly but nonetheless clearly recognized by the Termination Pay Law, R.A. 1052, 11 as
amended by R.A. 1787. 12 Basically, this statute provided that
In cases of employment, without a definite period, in a commercial, industrial, or agricultural
establishment or enterprise, the employer or the employee may terminate at any time the
employment with just cause; or without just cause in the case of an employee by serving written
notice on the employer at least one month in advance, or in the case of an employer, by serving
such notice to the employee at least one month in advance or one-half month for every year of
service of the employee, whichever is longer, a fraction of at least six months being considered
as one whole year.
The employer, upon whom no such notice was served in case of termination of employment
without just cause, may hold the employee liable for damages.
The employee, upon whom no such notice was served in case of termination of employment
without just cause, shall be entitled to compensation from the date of termination of his
employment in an amount equivalent to his salaries or wages corresponding to the required
period of notice.
There was, to repeat, clear albeit implied recognition of the licitness of term employment. RA 1787 also
enumerated what it considered to be just causes for terminating an employment without a definite period, either
by the employer or by the employee without incurring any liability therefor.
Prior, thereto, it was the Code of Commerce which governed employment without a fixed period, and also
implicitly acknowledged the propriety of employment with a fixed period. Its Article 302 provided that

In cases in which the contract of employment does not have a fixed period, any of the parties
may terminate it, notifying the other thereof one month in advance.
The factor or shop clerk shall have a right, in this case, to the salary corresponding to said
month.
The salary for the month directed to be given by the said Article 302 of the Code of Commerce to the
factor or shop clerk, was known as the mesada (from mes, Spanish for "month"). When Article 302
(together with many other provisions of the Code of Commerce) was repealed by the Civil Code of the
Philippines, Republic Act No. 1052 was enacted avowedly for the precise purpose of reinstating
the mesada.
Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on August
30,1950, itself deals with obligations with a period in section 2, Chapter 3, Title I, Book IV; and with contracts
of labor and for a piece of work, in Sections 2 and 3, Chapter 3, Title VIII, respectively, of Book IV. No
prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise deducible
therefrom.
It is plain then that when the employment contract was signed between Brent School and Alegre on July 18,
1971, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof Stipulations for
a term were explicitly recognized as valid by this Court, for instance, in Biboso v. Victorias Milling Co., Inc.,
promulgated on March 31, 1977, 13 and J.Walter Thompson Co. (Phil.) v. NLRC, promulgated on December 29,
1983. 14 The Thompson case involved an executive who had been engaged for a fixed period of three (3)
years. Biboso involved teachers in a private school as regards whom, the following pronouncement was made:
What is decisive is that petitioners (teachers) were well aware an the time that their tenure was
for a limited duration. Upon its termination, both parties to the employment relationship were
free to renew it or to let it lapse. (p. 254)
Under American law 15 the principle is the same. "Where a contract specifies the period of its duration, it
terminates on the expiration of such period." 16 "A contract of employment for a definite period terminates by its
own terms at the end of such period." 17
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code
(Presidential Decree No. 442), which went into effect on November 1, 1974. The Code contained explicit
references to fixed period employment, or employment with a fixed ordefinite period. Nevertheless, obscuration
of the principle of licitness of term employment began to take place at about this time
Article 320, entitled "Probationary and fixed period employment," originally stated that the "termination of
employment of probationary employees and those employed WITH A FIXED PERIODshall be subject to such
regulations as the Secretary of Labor may prescribe." The asserted objective to was "prevent the circumvention
of the right of the employee to be secured in their employment as provided . . . (in the Code)."
Article 321 prescribed the just causes for which an employer could terminate "an employment without a definite
period."
And Article 319 undertook to define "employment without a fixed period" in the following manner: 18
An employment shall be deemed to be without a definite period for purposes of this Chapter
where the employee has been engaged to perform activities which are usually necessary or

desirable in the usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season.
The question immediately provoked by a reading of Article 319 is whether or not a voluntary agreement on a
fixed term or period would be valid where the employee "has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer." The definition seems a non
sequitur. From the premise that the duties of an employee entail "activities which are usually necessary or
desirable in the usual business or trade of the employer the" conclusion does not necessarily follow that the
employer and employee should be forbidden to stipulate any period of time for the performance of those
activities. There is nothing essentially contradictory between a definite period of an employment contract and the
nature of the employee's duties set down in that contract as being "usually necessary or desirable in the usual
business or trade of the employer." The concept of the employee's duties as being "usually necessary or desirable
in the usual business or trade of the employer" is not synonymous with or identical to employment with a fixed
term. Logically, the decisive determinant in term employment should not be the activities that the employee is
called upon to perform, but the day certain agreed upon by the parties for the commencement and termination of
their employment relationship, a day certainbeing understood to be "that which must necessarily come, although
it may not be known when." 19 Seasonal employment, and employment for a particular project are merely
instances employment in which a period, where not expressly set down, necessarily implied.
Of course, the term period has a definite and settled signification. It means, "Length of existence; duration. A
point of time marking a termination as of a cause or an activity; an end, a limit, a bound; conclusion;
termination. A series of years, months or days in which something is completed. A time of definite length. . . . the
period from one fixed date to another fixed date . . ." 20 It connotes a "space of time which has an influence on
an obligation as a result of a juridical act, and either suspends its demandableness or produces its
extinguishment." 21It should be apparent that this settled and familiar notion of a period, in the context of a
contract of employment, takes no account at all of the nature of the duties of the employee; it has absolutely no
relevance to the character of his duties as being "usually necessary or desirable to the usual business of the
employer," or not.
Subsequently, the foregoing articles regarding employment with "a definite period" and "regular" employment
were amended by Presidential Decree No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered byeliminating the
reference to persons "employed with a fixed period," and was renumbered (becoming Article 271). The
article 22 now reads:
. . . Probationary employment.Probationary employment shall not exceed six months from the
date the employee started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has been engaged in a probationary
basis may be terminated for a just cause or when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the employee at the time
of his engagement. An employee who is allowed to work after a probationary period shall be
considered a regular employee.
Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra) by
(a) deleting mention of employment with a fixed or definite period, (b) adding a general exclusion clause

declaring irrelevant written or oral agreements "to the contrary," and (c) making the provision treat exclusively
of "regular" and "casual" employment. As revised, said article, renumbered 270, 23 now reads:
. . . Regular and Casual Employment.The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
service to be employed is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to he casual if it is not covered by the preceding
paragraph: provided, that, any employee who has rendered at least one year of service, whether
such service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.
The first paragraph is identical to Article 319 except that, as just mentioned, a clause has been added, to
wit: "The provisions of written agreement to the contrary notwithstanding and regardless of the oral
agreements of the parties . . ." The clause would appear to be addressed inter alia to agreements fixing a
definite period for employment. There is withal no clear indication of the intent to deny validity to
employment for a definite period. Indeed, not only is the concept of regular employment not essentially
inconsistent with employment for a fixed term, as above pointed out,Article 272 of the Labor Code, as
amended by said PD 850, still impliedly acknowledged the propriety of term employment: it listed the
"just causes" for which "an employer may terminate employment without a definite period," thus giving
rise to the inference that if the employment be with a definite period, there need be no just cause for
termination thereof if the ground be precisely the expiration of the term agreed upon by the parties for
the duration of such employment.
Still later, however, said Article 272 (formerly Article 321) was further amended by Batas Pambansa
Bilang 130, 24 to eliminate altogether reference to employment without a definite period. As lastly amended, the
opening lines of the article (renumbered 283), now pertinently read: "An employer may terminate an
employment for any of the following just causes: . . . " BP 130 thus completed the elimination of every reference
in the Labor Code, express or implied, to employment with a fixed or definite period or term.
It is in the light of the foregoing description of the development of the provisions of the Labor Code bearing on
term or fixed-period employment that the question posed in the opening paragraph of this opinion should now be
addressed. Is it then the legislative intention to outlaw stipulations in employment contracts laying down a
definite period therefor? Are such stipulations in essence contrary to public policy and should not on this account
be accorded legitimacy?
On the one hand, there is the gradual and progressive elimination of references to term or fixed-period
employment in the Labor Code, and the specific statement of the rule 25 that
. . . Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer except where the

employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
service to be employed is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: provided, that, any employee who has rendered at least one year of service, whether
such service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.
There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the
validity and propriety of contracts and obligations with a fixed or definite period, and imposes no restraints on
the freedom of the parties to fix the duration of a contract, whatever its object, be it specie, goods or services,
except the general admonition against stipulations contrary to law, morals, good customs, public order or public
policy. 26Under the Civil Code, therefore, and as a general proposition, fixed-term employment contracts are not
limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects with predetermined dates of completion; they also include those to which the parties by free choice have assigned a
specific date of termination.
Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for
specific projects, but to which a fixed term is an essential and natural appurtenance: overseas employment
contracts, for one, to which, whatever the nature of the engagement, the concept of regular employment will all
that it implies does not appear ever to have been applied, Article 280 of the Labor Code not withstanding; also
appointments to the positions of dean, assistant dean, college secretary, principal, and other administrative
offices in educational institutions, which are by practice or tradition rotated among the faculty members, and
where fixed terms are a necessity, without which no reasonable rotation would be possible. Similarly, despite the
provisions of Article 280, Policy, Instructions No. 8 of the Minister of Labor 27 implicitly recognize that certain
company officials may be elected for what would amount to fixed periods, at the expiration of which they would
have to stand down, in providing that these officials," . . . may lose their jobs as president, executive vicepresident or vice-president, etc. because the stockholders or the board of directors for one reason or another did
not re-elect them."
There can of course be no quarrel with the proposition that where from the circumstances it is apparent that
periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck
down or disregarded as contrary to public policy, morals, etc. But where no such intent to circumvent the law is
shown, or stated otherwise, where the reason for the law does not exist, e.g., where it is indeed the employee
himself who insists upon a period or where the nature of the engagement is such that, without being seasonal or
for a specific project, a definite date of termination is a sine qua non, would an agreement fixing a period be
essentially evil or illicit, therefore anathema? Would such an agreement come within the scope of Article 280
which admittedly was enacted "to prevent the circumvention of the right of the employee to be secured in . . .
(his) employment?"
As it is evident from even only the three examples already given that Article 280 of the Labor Code, under a
narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack
of a fixed period would be an anomaly, but would also appear to restrict, without reasonable distinctions, the
right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows
that such a literal interpretation should be eschewed or avoided. The law must be given a reasonable

interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and
subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a means to
prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more
relevantly, curing a headache by lopping off the head.
It is a salutary principle in statutory construction that there exists a valid presumption that
undesirable consequences were never intended by a legislative measure, and that a construction
of which the statute is fairly susceptible is favored, which will avoid all objecionable
mischievous, undefensible, wrongful, evil and injurious consequences. 28
Nothing is better settled than that courts are not to give words a meaning which would lead to
absurd or unreasonable consequences. That s a principle that does back to In re Allen decided oil
October 27, 1903, where it was held that a literal interpretation is to be rejected if it would be
unjust or lead to absurd results. That is a strong argument against its adoption. The words of
Justice Laurel are particularly apt. Thus: "The fact that the construction placed upon the statute
by the appellants would lead to an absurdity is another argument for rejecting it. . . ." 29
. . . We have, here, then a case where the true intent of the law is clear that calls for the
application of the cardinal rule of statutory construction that such intent of spirit must prevail
over the letter thereof, for whatever is within the spirit of a statute is within the statute, since
adherence to the letter would result in absurdity, injustice and contradictions and would defeat
the plain and vital purpose of the statute. 30
Accordingly, and since the entire purpose behind the development of legislation culminating in the present
Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the
employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out
all written or oral agreements conflicting with the concept of regular employment as defined therein should be
construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to
circumvent security of tenure. It should have no application to instances where a fixed period of employment
was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it
satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the
law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes
pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences.
Such interpretation puts the seal on Bibiso 31 upon the effect of the expiry of an agreed period of employment as
still good rulea rule reaffirmed in the recent case of Escudero vs. Office of the President(G.R. No. 57822, April
26, 1989) where, in the fairly analogous case of a teacher being served by her school a notice of termination
following the expiration of the last of three successive fixed-term employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment
was probationary, contractual in nature, and one with a definitive period. At the expiration of the
period stipulated in the contract, her appointment was deemed terminated and the letter
informing her of the non-renewal of her contract is not a condition sine qua non before Reyes
may be deemed to have ceased in the employ of petitioner UST. The notice is a mere reminder
that Reyes' contract of employment was due to expire and that the contract would no longer be

renewed. It is not a letter of termination. The interpretation that the notice is only a reminder is
consistent with the court's finding in Labajo supra. ... 32
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last contract
with Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the
Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his
contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of
the Department of Labor to make the termination of his services effective. In any case, such clearance should
properly have been given, not denied.
WHEREFORE, the public respondent's Decision complained of is REVERSED and SET ASIDE. Respondent
Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the
expiration of the agreed term of period thereof, he is declared not entitled to reinstatement and the other relief
awarded and confirmed on appeal in the proceedings below. No pronouncement as to costs.
SO ORDERED.
Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Corts, Grio-Aquino,
Medialdea and Regalado, JJ., concur.
Fernan, C.J., took no part.
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columbus philippines bus cor v nlrc
COLUMBUS PHILIPPINES BUS CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, ZENAIDA DOMASIG and ROMAN DOMASIG, respondents.
DECISION
DE LEON, JR., J.:
This is a petition for certiorari[1] which seeks to nullify the Resolution[2] dated October 29, 1993 of the
National Labor Relations Commission (NLRC) affirming the Decision[3] dated September 8, 1992 of the Labor
Arbiter Ceferina J. Diosana who found and adjudged that private respondents Roman and Zenaida Domasig were
illegally dismissed by petitioner Columbus Philippines Bus Corporation from their positions as driver and bus
conductress, respectively.
Petitioner Columbus Philippines Bus Corporation is engaged in the business of operating passenger
buses. Since the start of its operations in 1990, it has maintained a list of drivers and conductors who rendered
service in its bus units allegedly on a first come first served basis and compensated purely on commission. The
drivers and conductors/conductress worked for about ten (10) to fifteen (15) days a month and were allegedly
not required to work everyday.
Private respondent Roman Domasig started working as a driver with the petitioner on August 30, 1990 with
a daily income ranging from Three Hundred Fifty Pesos (P350.00) to Six Hundred Fifty Pesos (P650.00), while
his wife and co-respondent, Zenaida Domasig, was employed as a bus conductress on October 1, 1990 with a
daily income of Two Hundred Fifty Pesos (P250.00) to Five Hundred Pesos (P500.00). The employment of

private respondents Roman and Zenaida Domasig with the petitioner was abruptly terminated on January 21 and
22, 1992, respectively, for their having allegedly formed a labor union.
Thus, these two (2) related cases of unfair labor practice, illegal dismissal, illegal deductions from
salary, and non-payment of service incentive leave pay and 13 thmonth pay were instituted by private
respondents against petitioner Columbus Philippines Bus Corporation and its officers, Atty. Ferdinand Catabian
and Mrs. Amelia de Dios, before the Department of Labor and Employment (DOLE), Arbitration Branch in
Manila, National Capital Region. The said related cases were assigned to Labor Arbiter Ceferina J. Diosa.
In his Sinumpaang Salaysay private respondent Roman Domasig alleged, among others, the following in his
affidavit-complaint, to wit:
xxx xxx xxx
3. Sa tindi ng galit ng pangasiwaan at upang hindi mabuo ang itinatayo naming unyon, akoy basta na lamang
pinababa mula sa aking regular na bus na may numerong 109 nuong ika-21 ng Enero 1992, bandang alas 4:30 ng
madaling araw nang akoy papalabas na sa garahe at bumiyahe na sana. Simula na noon hindi na ako pinalabas sa
biyahe. Ibinigay na sa iba ang aking regular na bus.
4. Kamiy napilitang magtayo ng unyon dahil sa mahirap na kalagayan namin sa trabaho. Hinaharap namin ang
sumusunod:
(a) Mahabang oras sa trabaho. Umaabot sa higit kumulang 19 hanggang 20 oras ang ginugugol namin sa
trabaho. Kailangang nasa garahe na kami at lumabas ng alas-4 ng madaling araw at makaalis lamang pagkatapos
makapag-engreso ng collection bandang hatinggabi na.
(b) Illegal deductions. Tuwing may labas kami, sapilitang kinakaltasan ang aming sahod para daw sa pulis. Hindi
na nga kami binibigyan ng mga benepisyong itinatakda ng batas gaya ng 13 th month pay at service incentive
leave, kinakaltasan pa kami para daw sa pulis.
(k) Wala kaming kaseguruhan sa trabaho. Kapag kamiy nagreklamo, kami agad nilang tatanggalin. Napakadali
nilang gawin. Hindi ka lang bibigyan ng bus assignment, wala ka ng magagawa.
5. Tulad ng ganitong kalagayan namin sa trabaho, inumpisahan naming mangumbinsi sa kapwa naming
empleyado noong Disyembre pa ng nakaraang taon. Ang ilan sa mga kasama ko ay sina Leon Agarao, Santiago
Tagum, Alejandro Bayroon at Zenaida Domasig. Silay tinanggal din sa trabaho. Kumuha kami ng Sama-Samang
Pahayag mula sa National Federation of Labor para papirmahan sa mga nais sumapi sa Unyon. Columbus
Workers Union ang aming lokal at itoy isinapi namin sa National Federation of Labor (NFL).
6. Pagpasok ng bagong taon, 1992, mayroon na kaming napapirma na higit sa limampu (50). Mahigit tatlong
daan kami, drayber at konduktor. Sa unang linggo pa lamang ng Enero 1992. Natutunan ng kompanya ang kilos
namin. Tinawag na ako ni Atty. Ferdinand Catabian, General Manager ng CPBC bago akoy tuluyan niyang
tinanggal noong ika-21 ng Enero 1992 at tinanong kung totoo na mayroon kaming itinatatag na
unyon. Tinanggihan ko noon at akoy kanyang binigyan ng babala ng ganito: Domasig, ayaw ko ng unyon. Kapag
mayroon akong mapapanghawakang ebidensiya na kayoy nagtatayo ng unyon at ikaw ay kasama, titiyakin ko sa
iyo na tanggal ka agad.
7. Dumating ang araw namin noong ika-21 ng Enero. Noong araw na iyon, humigit kumulang alas 4:30 ng
madaling araw, akoy papalabas ng garahe. Dala-Dala ko ang aking regular bus No. 109. Pinahinto ako ni

Legorio Vellesar, dating dispatcher at ngayon ay traffic supervisor at sinabihan na itabi ko ang bus dahil
kakausapin daw ako ni Atty. Catabian. Kinabahan na ako nang ibigay sa iba ang aking minamanehong bus.
8. Pagpasok ko sa opisina ni Atty. Catabian, sinabihan agad ako ni Atty. Catabian ng ganito: Domasig, Hindi ka
na makakalusot pa. Tingnan mo ito. Mayroon siyang ipinakitang xerox copy ng aming pinapipirmahan SamaSamang Pahayag. Sa xerox na ito nakita ko ang pirma ni Zenaida Domasig. Domasig, ito ang ebidensiya na ikaw
ay kasama sa unyon. Alam mo Domasig, akoy , mabuting kaibigan ngunit masamang kaaway. Sinabi ko sa iyo
noon na kapag may mahawakan akong ebidensiya na nagtatayo kayo ng unyon maghihiwalay tayo. Ayaw na
ayaw ko ng unyon. Pagkasabi nito ni Atty. Catabian, akoy kanyang pinalabas na dahil marami pang driver at
konductor na nakapila sa labas.
9. Katunayan, bago kinausap ni Atty. Catabian, marami na sa mga kapwa ko employado ang kinausap ni Atty.
Catabian. Pinapipirma sila sa isang kasulatan na kung saan binabawi nila ang kanilang pirma sa Sama-Samang
Pahayag. Ang hindi pumirma ay hindi na pinalabas sa biyahe.
10. Ganon man ang nangyari, pinagpasiyahan pa rin ng mga kasama kong namumuno, kasama ako, na
ipagpatuloy pa rin ang pagtatayo ng unyon. Dahil dito, ipinasiya ng mga namumuno, kasama ako at si Zenaida
Domasig, na huwag pumirma sa kasulatan at ihain na ang petition for certification election.
11. Nagdulot na matinding pagkabalisa at takot sa amin ni Zenaida Domasig ang biglang pagtanggal nila sa
amin. Wala na kaming aasahan para sa araw-araw na pangangailangan ng aming pamilya. Nabaon kami sa utang
at malaking kahihiyan sa mga kapit-bahay at kaibigan namin. Tuloy hating-gabi na kung minsan, pinag-iisipan
pa rin namin ang kinabukasan ng mga bata: ano kaya ang kanilang kinabukasan. Kung kami o isa sa amin ay
tatalikod sa aming pinirmahan, mapapahamak din ang kapwa naming empleyado at tuluyang mawasak ang
unyon.
12. Sadyang napakalupit at hindi makatao ang ginawa ng kompanya sa aming mag-asawa at sa kapwa
namin empleyado. Wala man lamang notice sa amin. Hindi man lang kami pinagpaliwanag. Wala naman
anumang violations na nagawa namin kundi ang pagtatayo ng unyon.
13. Dahil dito, hinihingi ko sa Tanggapan ito na ibalik sa akin, para sa pamilya, ang nawalang sahod ko sa
panahon na akoy tanggal sa trabaho. Tuwing labas kumikita ako mula P350 hanggang P650.00 sa loob ng 20
oras humigit kumulang. Hinihingi ko rin na ibalik ako sa trabaho at pagbayarin ang kompanya ng damages
bunga ng pinsalang tinamasa namin.
Private respondent Zenaida Domasig also made the following allegations in her affidavit-complaint, to wit:
3. Kami'y nagtayo ng unyon dahil sa api naming kalagayan sa trabaho. Napakahaba ang oras ng trabaho
namin. Kailangan pumasok kami ng alas-4 ng madaling araw at makakuwi kami ng alas-12 ng
hatinggabi. Salitan ng trabaho at pahinga ang aming pagtatarabaho: dalawang (2) araw na labas at dalawang (2)
araw na pahinga.Maraming sapilitang kaltas mula sa sahod namin. Tuwing labas namin kinakaltasan kami ng
halagang P18.50 ngunit hindi maliwanag kung para saan ito. Mayroon P300 namang resibong ibinibigay. Kapag
magreklamo kami, hindi naman kami pasasampahin sa bus.
4. Ang benepisyong itinatakda ng batas ay hindi pa ibinibigay. Akoy nagkasakit mula ika-15 ng Nobyembre
1991 hanggang ika-14 ng Disyembre1991. Gumawa ako ng sick leave application: isa para sa SSS at isa para sa
Employees Compensation Commission. Si Ginoong Roman Domasig ang nagpapirma ng aking applications sa
kompanya.Ngunit, hindi nila ibinalik kay Ginoong Domasig and aking applications. Noong lamang ika-12 ng

Enero 1992 nila ibinigay sa SSS ang aking sick leave application. Hindi nila ibinigay sa ECC ang isang
application ko at ibinalik na lang basta sa akin.
5. Ang hindi nila pagfile agad ng aking sick leave ay ginawa ng kompanya upang magipit kaming mga
nangungunang kasapi ng unyon.
6. Sa layuning mapabuti ang aming kalagayan, inumpisahan naming buuin ang unyon noong mga huling buwan
ng 1991. Kumuha kami ng application for membership sa National Federation of Labor (NFL). Itoy ang Samasamang Pahayag. Bago matapos ang taong 1991, kamiy nakapagpapirma ng hindi kukulangin sa tatlumpu. Sa
una o pangalawang linggong Enero 1992, umabot na malamang sa 70 ang nakapirma. Ngunit sa unang linggo pa
lamang ng Enero 1992, mukhang natutunogan ng pangasiwaan na mayroong nagtatayo ng unyon. Inumpisahan
na ni Atty. Ferdinand Catabian na isa-isang pagtatanungin ang kanilang pinaghihinalaang lider ng unyon.
Isa sa aking asawa sa mga tinatawag at pinagtatanong ni Atty. Catabian. Silay binigyan ng mahigpit na
babala. Tinawag uli si Ginoong Domasig noong ika-21 ng Enero 1992. Bago siya tinawag marami ng drayber at
konduktor/konduktora na pinatawag ni Atty. Catabian at silay naghihintay na kausapin ni Atty. Catabian. Ang
mga kinausap ay hindi pinalalabas hanggang hindi sila pumirma sa kasulatan na kanilang binabawi ang kanilang
pagsapi sa unyon, ang Columbus Workers Union. Hindi na pinalabas si Ginoong Domasig mula ng araw na iyon
dahil hindi siya pumirma sa kasulatan.
7. Kinabukasan, ika-22 ng Enero 1992, akoy hindi na rin binigyan ng bus assignment. Wala namang ibinibintang
na violation laban sa akin. Gaya ng nasabi ko na, wala namang memorandum na ibinigay sa akin. Basta na
lamang hindi ako binibigyan ng bus assignment mula noon magpahanggang ngayon. Ang tanging dahilan ng
pagtanggal nila sa akin ay ang aking pagsapi sa unyon. Akoy isa sa mga naunang pumirma sa Sama-Samang
Pahayag ng pagsapi sa unyon na kinuha namin mula sa National Federation.
8. Agad agad na pinag-usapan ng liderato ng unyon ang panggigipit ng isinagawa ng pangasiwaan. Nagpasiya
and iba na para makalabas sila at may makain ang pamilya nila na pumirma sa kasulatan ng pagbawi ng pagiging
kasapi nila ng CWU. Silay pinalabas. Si Felipe Madrid, isa sa lider namin, ay inilipat pa nga sa Air Conditioned
bus pagkatapos niyang pumirma sa kasulatan. Ang dati niyang bus ay No. 109. Hindi ito Air Con. Ngayon, ang
kanyang minamaneho ay Bus No. 17 isang Air Con Bus. Ang mga hindi pumirma ay hindi na pinalabas.
9. Ganon paman, pinagpasiyahan na ituloy namin ang pagtatayo ng unyon. Kayat naghain na kami ng isang
petition for certification election sa Department of Labor and Employment.
10. Ang ginawang pagtanggal sa aming mag-asawa ay nagdulot ng malaking pinsala sa aming pamilya. Nabalisa
kaming mag-asawa dahil wala na kaming maasahang trabaho. Napilitan kami umutang na sa mga kaibigan at
kapit-bahay. Dahil hindi kami makapagbayad sa takdang araw, malaking kahihiyan ang inaabot
namin.Naguguluhan din ang pag-iisip namin lalung-lalo na kapag gutom ang mga anak namin at wala man lang
kaming pambili ng panawid-gutom. Hindi naman namin maaaring talikuran ang unyon. Kami ang nauna sa
pagpapirma sa unyon.
In support of their respective allegations, private respondents submitted documentary evidence such as the
Petition for Certification Election, Sama-samang Pahayag ng Pagsapi, Payroll Slips and Parking Fee Slip
Receipt.
On the other hand, the petitioner failed to attend the scheduled hearings of the said cases on the alleged
ground that it was not notified. It was only after an adverse judgment of the Labor Arbiter that petitioner finally
filed its position papers.

In her Decision dated September 8, 1992, the Labor Arbiter found for the complainants, herein private
respondents, and ordered the petitioner to reinstate private respondents Roman and Zenaida Domasig to their
former positions as driver and bus conductress, respectively, without loss of seniority rights and with backpay
accruing from January 21, 1992 and January 22, 1992 up to their actual reinstatement. However, private
respondents other money claims were dismissed for lack of merit.
Aggrieved by the adverse judgment of the Labor Arbiter, petitioner appealed to public respondent National
Labor Relations Commission (NLRC) where it was assigned to the First Division. On October 29, 1993, the
NLRC affirmed in toto the Labor Arbiters decision, and in its Order[4] dated January 7, 1994 denied the
petitioners motion for reconsideration. The petitioner now challenges the correctness of the NLRCs
decision via the instant petition.
The petitioner Columbus Philippines Bus Corporation alleges that the private respondents like its other
drivers and conductors are not regular employees, that the services of private respondents were rendered on a
first come first served basis and compensated purely on commission basis; that they worked for only about ten
(10) to fifteen (15) days a month, and only when they felt like doing so.
To determine whether the employment of an employee is regular or casual, Article 280 [5] of the Labor
Code is definitive; and whether such employment is regular or casual has nothing to do with the manner of
computing and paying the employees wages or compensation. Rather the said provision of the Labor Code
provides that:
The primary standard, x x x of determining a regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer. The test
is whether the former is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and its relation to the scheme of
the particular business or trade in its entirety. Also, if the employee has been performing the job for at least one
year, even if the performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity
to the business. Hence, the employment is also consider regular, but only with respect to such activity and while
such activity exists.[6]
Considering the above-quoted standard for determining a regular employment, it appears that the
employment of private respondents is regular. They perform work necessary and desirable in the business of the
petitioner. Without the services of the bus drivers and conductors, like the private respondents, the petitioner
could not have operated and managed its business of providing transportation services to the public. However,
not all employees paid on commission basis can legally be considered as regular employees. In the case
of Singer Sewing Machine Company v. Drilon,[7] it was held that while certain individuals were hired to work as
collectors or collecting agents of the company, nevertheless, per a certain written agreement they were
considered as independent contractors and not employees of the company.
As its principal contention, petitioner ascribes grave abuse of discretion on the part of public respondent
NLRC in affirming the decision of the Labor Arbiter for being violative of due process and in not ordering the
latter to conduct a formal hearing of the case.
Petitioner argues that it did not receive any notice for the hearing scheduled on April 14, 1992. It stressed
that the registered mail supposedly containing the notice for the aforesaid hearing was returned unclaimed
and that no registry notice from the post office was ever delivered to it so that it could claim the same. Petitioner

likewise contends that public respondent NLRC disregarded the pronouncement of this Court in the case
of Johnson & Johnson (Phils.) Inc. v. Court of Appeals,[8] where we held that:
The general rule is that service by registered mail is complete upon actual receipt thereof by the addressee. The
exception is where the addressee does not claim his mail within 5 days from the date of the first notice of the
postmaster, in which case the service takes effect upon the expiration of such period.
Inasmuch as the exception refers to only constructive and not actual service, such exception must be applied
only upon conclusive proof that a first notice was duly sent by the postmaster to the addressee. The presumption
that official duty has been regularly performed is not applicable where there is evidence to the contrary, as in the
case at bar.
A certification from the postmaster would be the best evidence to prove that the notice has been validly sent. The
mailman may also testify that the notice was actually delivered, as we held in Aldecoa vs. Hon. Arellano and
Siquenza. The postmaster should certify not only that the notice was issued or sent but also as to how, when and
to whom the delivery thereof was made.
In the light of the record and the evidence adduced in these two (2) related cases, petitioners argument
appears to be without basis. Hence, the petition must be dismissed.
Sections 4 and 5 of the Revised Rules of Procedure of the NLRC, provides the rule for the service of
summons and notices in NLRC cases, to wit:
Sec. 4. Service of notices and resolutions. a) Notices or summons and copies of orders, resolutions or decisions
shall be served personally by the bailiff or the duly authorized public officer or by registered mail on the parties
to the case within five (5) days from receipt thereof by the serving officer; Provided, that where a party is
represented by counsel or authorized representative, service shall be made on the latter.
xxx xxx xxx
Sec. 5. Proof and completeness of service. The return is prima facie proof of the facts indicated therein. Service
by registered mail is complete upon receipt by the addressee or his agent.[9]
Considering the above-quoted provisions of the Revised Rules of Procedure of the NLRC, service by
registered mail is complete after five (5) days from the date of first notice of the postmaster in the event that the
addressee fails to claim his registered mail from the post office. In the instant cases, petitioner merely stressed
that the registered mail containing the notice for the aforesaid scheduled hearing was returned unclaimed and
that it did not allegedly receive any registry notice from the post office. However, it is a fundamental rule that
unless the contrary is proven, official duty is presumed to have been performed regularly and judicial
proceedings regularly conducted. This presumption of the regularity of the quasi-judicial proceedings before
DOLE includes the presumption of regularity of service of summons and other notices. It was therefore
incumbent upon herein petitioner to rebut that legal presumption with competent and proper evidence, for the
return of the registered mail as unclaimed is prima facie proof of the facts indicated therein.[10] But petitioner
failed to do so.
A thorough review of the record of this case discloses the following facts and circumstances, to wit:
1. Petitioner was notified of the hearing on March 12, 1992, at 10:30 oclock in the morning, with the
following warning:

Failure to appear and submit position paper with affidavit of witness or witnesses and other
documentary evidence, if any, will be construed as a waiver of the opportunity to be heard and
case will be heard ex-parte.
2. Since there was no proof of service to petitioner of this scheduled hearing, another hearing was set
on March 26, 1992 at 1:30 oclock in the afternoon.
3. However, on March 16, 1992, petitioner through its liason officer, Mr. Napoleon Pandes, filed a
Manifestation and Motion to Reset Schedule Hearing, stating, among other things, that the hearing
be reset to April 9, 1992 at 9:30 oclock in the morning or at a later date and time convenient to this
Honorable Commission.
4. Thus another hearing was set on April 14, 1992 at 10:00 oclock in the morning again with the same
warning as above quoted.
5. In the April 14, 1992 hearing, private respondents appeared as scheduled and waited up to 11:05
a.m., but petitioner failed to appear and submit the required position paper, hence, upon motion of
private respondents the case was submitted for decision.
As clearly gleaned from the foregoing facts, petitioner was afforded more than an adequate opportunity to
present its evidence. In fact, on March 16, 1992, petitioner through its Liason Officer, Mr. Napoleon Pandes,
even filed a Manifestation and Motion, praying that the hearing set on March 26, 1992 be reset to April 9, 1992
or at a later date and time convenient to the Commission. But on the re-scheduled hearing on April 14, 1992,
petitioner again failed to appear nor did it file its position paper. If petitioner were really concerned with the
outcome of the instant cases, petitioner should have verified, at the very least whether its Manifestation and
Motion was acted upon. As correctly stated by the NLRC in its Resolution:
Obviously, respondents were not so inclined as they must have found the same as an excuse to delay the
proceedings in the instant cases. For how else can one explain respondents failure to show up or follow up on
their motions requesting for resetting, and their filing of a position paper five (5) long months after filing their
motions and only after a Decision not to their liking was rendered by the Labor Arbiter.
Likewise, notwithstanding petitioners allegation that it has not received the notices of the Labor Arbiter, it,
however, admittedly received a copy of the decision of the Labor Arbiter, and then seasonably pleaded its case
by way of appeal before the NLRC. In the interest of justice, the NLRC considered petitioners position paper,
even if it was filed late.
As to the question whether the Labor Arbiter should have conducted a formal hearing, Section 4 of Rule V
of the New Rules of Procedure of the NLRC, clearly provides that:
Determination of Necessity of Hearing. Immediately after the submission by the parties of their position
papers/memorandum, the Labor Arbiter shall motu proprio determine whether there is need for a formal trial or
hearing. At this stage, he may, at his discretion and for the purpose of making such determination, ask
clarificatory questions to further elicit facts or information, including but not limited to the subpoena of relevant
documentary evidence, if any from any party or witness.
It is clear from the above-quoted procedural rule that the Labor Arbiter has the authority to determine whether or
not there is a necessity for conducting formal hearings in cases brought before him for adjudication. In other
words, the holding of a formal hearing or trial is discretionary with the Labor Arbiter and is something that the
parties cannot demand as a matter of right.[11] It is entirely within the authority of the Labor Arbiter to decide a

labor case before him, based on the position papers and supporting documents of the parties, without a trial or
formal hearing. The requirement of due process in labor cases before a Labor Arbiter is satisfied when the parties
are given the opportunity to submit their position papers to which they are supposed to attach all the supporting
documents or documentary evidence that would prove their respective claims, in the event the Labor Arbiter
determines that no formal hearing would be conducted or that such hearing was not necessary.[12]
Equally without merit is petitioners contention that public respondent NLRC committed grave abuse of
discretion amounting to lack of jurisdiction in holding that private respondents were illegally dismissed.
Petitioners contention that the Labor Arbiter ruled in favor of private respondents not because of the evidence
submitted by the private respondents but because of petitioners failure to appear in the scheduled hearing on
April 14, 1992 is without factual basis as shown by the record.
The NLRC, in arriving at its decision regarding the illegal dismissal of private respondents, considered the
position papers of the parties and the evidence on record.The NLRC in its decision agreed with the Labor
Arbiters findings and conclusions and found nothing substantial in petitioners position paper to warrant a
reversal thereof, thus:
At any rate, and in the interest of justice, We have considered respondents Position Paper, although filed
belatedly, and We find that the allegations therein and the evidence introduced in support thereof (See annexes A
to D-12 of respondents Position Paper; pp. 62-73 of the Records) do not suffice to support respondents claim that
complainants were not dismissed from their employment.
We, therefore, find that the Labor Arbiter did not commit any error in holding that:
Complainants claim that due to their union activities, as they were the ones instrumental in the formation of the
union in the respondents premises, enlisted employees to be members of the local union, coupled with the fact
that a petition for certification of an election was filed before the Department of Labor and Employment, in view
of which they were not given any bus assignments, which is tantamount to their dismissal from the service,
appears to be credible and with basis. As above stated, respondents miserably failed to controvert this fact, thus,
complainants should be reinstated to their former positions, Roman Domasig as driver, and Zenaida Domasig as
conductress, with full backwages and other benefits and without loss of seniority rights.
Well-settled is the jurisprudential rule that factual findings of quasi-judicial agencies, such as the NLRC,
which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded
not only respect but even finality. They are binding upon this Court which is not a trier of facts. Only upon clear
showing of grave abuse of discretion, or that such factual findings were arrived at arbitrarily or in disregard of
the evidence on record will this Court step in and proceed to make its own independent evaluation of the facts.
[13] No cogent reason exists in the instant cases to deviate from this settled rule.
In termination cases, like the ones before us, the burden of proving that the dismissal of the employees was
for a valid and authorized cause rests on the employer. It was incumbent upon petitioner Columbus Philippines
Bus Corporation to show by substantial evidence that the termination of the employment of private respondents
was validly made and failure to discharge that duty would mean that the dismissal is not justified and therefore
illegal.[14] On the other hand, abandonment as a just and valid ground for dismissal requires the deliberate,
unjustified refusal of the employee to resume his employment. Mere absence or failure to report for work, after
notice to return, is not enough to amount to such abandonment.
For a valid finding of abandonment, two (2) factors must be present, viz: (a) the failure to report for work or
absence without valid or justifiable reason; and (b) a clear intention to sever employer-employee relationship,

with the second element as the more determinative factor being manifested by some overt acts. [15] The herein
petitioner failed to present evidence to justify the dismissal of the private respondents. The position paper of
petitioner merely contains bare allegations that the hiring of private respondents was purely on commission
basis; that they have no working hours; that they are not required to work everyday and that they work only
when they wish to earn.It also alleged that private respondents were not dismissed nor suspended, but that they
allegedly abandoned their jobs by simply failing to work.
From the factual findings of the Labor Arbiter, the absence of private respondents from work was not
without valid or justifiable reason. First, on January 21 and 22, 1992, private respondents were asked to
relinquish their assigned buses and from that date forward, they were not given bus assignments. Thus, under the
circumstances, we find private respondents absences supported with valid reason. Second, it appeared that
private respondents never intended to sever their working relationship with petitioner. Two weeks after private
respondents were not given bus assignments, they filed their subject complaint for illegal dismissal with the
DOLE. An employee who forthwith takes steps to protest his layoff cannot be said to have abandoned his work.
It is our view and we hold that the finding and conclusion of the Labor Arbiter and the respondent NLRC
that private respondents were illegally dismissed are correct and not arbitrary. We find no cogent reason to
reverse the same.
However, the amount of backwages must be properly computed inasmuch as in their respective complaints,
private respondents Roman and Zenaida Domasig alleged that they received a daily income ranging from Three
Hundred Fifty Pesos (P350.00) to Six Hundred Fifty Pesos (P650.00), and Two Hundred Fifty Pesos (P250.00)
to Five Hundred Pesos (P500.00) respectively. The pronouncement of this Court in the case of Icawat v. NLRC,
[16] is relevant and instructive, to wit:
x x x, the dismissal of private respondent being illegal, he is entitled to the payment of backwages. We do not,
however, agree with the amount awarded to herein private respondent in the absence of any factual basis thereof.
Private respondent has not presented any evidence to warrant such award. The statement in his complaint that he
is earning P800.00 to P1,000.00 when he is driving petitioners' jeepney on a "straight" basis, or P500.00 when
driving on "half shift" basis, is purely self-serving and speculative.
WHEREFORE, the petition is hereby DISMISSED, and the challenged Resolution of public respondent
NLRC is AFFIRMED. The computation of the amount of backwages to which private respondents Roman
Domasig and Zenaida Domasig are entitled is hereby REMANDED to the Labor Arbiter for appropriate action.
SO ORDERED.
Wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww

singer sewing machine company vs drilon

SINGER SEWING MACHINE COMPANY, petitioner
vs.
HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B. CHAGUILE, JR., and SINGER MACHINE
COLLECTORS UNION-BAGUIO (SIMACUB), respondents.

Misa, Castro, Villanueva, Oposa, Narvasa & Pesigan for petitioner.

Domogan, Lockey, Orate & Dao-ayan Law Office for private respondent.

GUTIERREZ, JR., J.:

This is a petition for certiorari assailing the order of Med-Arbiter Designate Felix B. Chaguile, Jr., the resolution
of then Labor Secretary Franklin M. Drilon affirming said order on appeal and the order denying the motion for
reconsideration in the case entitled "In Re: Petition for Direct Certification as the Sole and Exclusive Collective
Bargaining Agent of Collectors of Singer Sewing Machine Company-Singer Machine Collectors Union-Baguio
(SIMACUB)" docketed as OS-MA-A-7-119-89 (IRD Case No. 02-89 MED).
On February 15, 1989, the respondent union filed a petition for direct certification as the sole and exclusive
bargaining agent of all collectors of the Singer Sewing Machine Company, Baguio City branch (hereinafter
referred to as "the Company").
The Company opposed the petition mainly on the ground that the union members are actually not employees but
are independent contractors as evidenced by the collection agency agreement which they signed.
The respondent Med-Arbiter, finding that there exists an employer-employee relationship between the union
members and the Company, granted the petition for certification election. On appeal, Secretary of Labor Franklin
M. Drilon affirmed it. The motion for reconsideration of the Secretary's resolution was denied. Hence, this
petition in which the Company alleges that public respondents acted in excess of jurisdiction and/or committed
grave abuse of discretion in that:
a) the Department of Labor and Employment (DOLE) has no jurisdiction over the case since the
existence of employer-employee relationship is at issue;
b) the right of petitioner to due process was denied when the evidence of the union members' being
commission agents was disregarded by the Labor Secretary;
c) the public respondents patently erred in finding that there exists an employer-employee relationship;
d) the public respondents whimsically disregarded the well-settled rule that commission agents are not
employees but are independent contractors.
The respondents, on the other hand, insist that the provisions of the Collection Agency Agreement belie the
Company's position that the union members are independent contractors. To prove that union members are
employees, it is asserted that they "perform the most desirable and necessary activities for the continuous and
effective operations of the business of the petitioner Company" (citing Article 280 of the Labor Code). They add
that the termination of the agreement by the petitioner pending the resolution of the case before the DOLE "only
shows the weakness of petitioner's stand" and was "for the purpose of frustrating the constitutionally mandated
rights of the members of private respondent union to self-organization and collective organization." They also
contend that under Section 8, Rule 8, Book No. III of the Omnibus Rules Implementing the Labor Code, which
defines job-contracting, they cannot legally qualify as independent contractors who must be free from control of
the alleged employer, who carry independent businesses and who have substantial capital or investment in the
form of equipment, tools, and the like necessary in the conduct of the business.
The present case mainly calls for the application of the control test, which if not satisfied, would lead us to
conclude that no employer-employee relationship exists. Hence, if the union members are not employees, no

right to organize for purposes of bargaining, nor to be certified as such bargaining agent can ever be recognized.
The following elements are generally considered in the determination of the employer-employee relationship;
"(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and
(4) the power to control the employee's conduct although the latter is the most important element" (Mafinco
Trading Corporation v. Ople, 70 SCRA 139 [1976]; Development Bank of the Philippines v. National Labor
Relations Commission, 175 SCRA 537 [1989]; Rosario Brothers, Inc. v. Ople, 131 SCRA 72 [1984]; Broadway
Motors Inc. v. NLRC, 156 SCRA 522 [1987]; Brotherhood Labor Unity Movement in the Philippines v. Zamora,
147 SCRA 49 [1986]).
The Collection Agency Agreement defines the relationship between the Company and each of the union
members who signed a contract. The petitioner relies on the following stipulations in the agreements: (a) a
collector is designated as a collecting agent" who is to be considered at all times as an independent contractor
and not employee of the Company; (b) collection of all payments on installment accounts are to be made
monthly or oftener; (c) an agent is paid his compensation for service in the form of a commission of 6% of all
collections made and turned over plus a bonus on said collections; (d) an agent is required to post a cash bond of
three thousand pesos (P3,000.00) to assure the faithful performance and observance of the terms and conditions
under the agreement; (e) he is subject to all the terms and conditions in the agreement; (f) the agreement is
effective for one year from the date of its execution and renewable on a yearly basis; and (g) his services shall be
terminated in case of failure to satisfy the minimum monthly collection performance required, failure to post a
cash bond, or cancellation of the agreement at the instance of either party unless the agent has a pending
obligation or indebtedness in favor of the Company.
Meanwhile, the respondents rely on other features to strengthen their position that the collectors are employees.
They quote paragraph 2 which states that an agent shall utilize only receipt forms authorized and issued by the
Company. They also note paragraph 3 which states that an agent has to submit and deliver at least once a week
or as often as required a report of all collections made using report forms furnished by the Company. Paragraph 4
on the monthly collection quota required by the Company is deemed by respondents as a control measure over
the means by which an agent is to perform his services.
The nature of the relationship between a company and its collecting agents depends on the circumstances of each
particular relationship. Not all collecting agents are employees and neither are all collecting agents independent
contractors. The collectors could fall under either category depending on the facts of each case.
The Agreement confirms the status of the collecting agent in this case as an independent contractor not only
because he is explicitly described as such but also because the provisions permit him to perform collection
services for the company without being subject to the control of the latter except only as to the result of his
work. After a careful analysis of the contents of the agreement, we rule in favor of the petitioner.
The requirement that collection agents utilize only receipt forms and report forms issued by the Company and
that reports shall be submitted at least once a week is not necessarily an indication of control over the means by
which the job of collection is to be performed. The agreement itself specifically explains that receipt forms shall
be used for the purpose of avoiding a co-mingling of personal funds of the agent with the money collected on
behalf of the Company. Likewise, the use of standard report forms as well as the regular time within which to
submit a report of collection are intended to facilitate order in office procedures. Even if the report requirements
are to be called control measures, any control is only with respect to the end result of the collection since the
requirements regulate the things to be done after the performance of the collection job or the rendition of the
service.

The monthly collection quota is a normal requirement found in similar contractual agreements and is so
stipulated to encourage a collecting agent to report at least the minimum amount of proceeds. In fact, paragraph
5, section b gives a bonus, aside from the regular commission every time the quota is reached. As a requirement
for the fulfillment of the contract, it is subject to agreement by both parties. Hence, if the other contracting party
does not accede to it, he can choose not to sign it. From the records, it is clear that the Company and each
collecting agent intended that the former take control only over the amount of collection, which is a result of the
job performed.
The respondents' contention that the union members are employees of the Company is based on selected
provisions of the Agreement but ignores the following circumstances which respondents never refuted either in
the trial proceedings before the labor officials nor in its pleadings filed before this Court.
1. The collection agents are not required to observe office hours or report to Singer's office everyday
except, naturally and necessarily, for the purpose of remitting their collections.
2. The collection agents do not have to devote their time exclusively for SINGER. There is no
prohibition on the part of the collection agents from working elsewhere. Nor are these agents required to
account for their time and submit a record of their activity.
3. The manner and method of effecting collections are left solely to the discretion of the collection
agents without any interference on the part of Singer.
4. The collection agents shoulder their transportation expenses incurred in the collections of the accounts
assigned to them.
5. The collection agents are paid strictly on commission basis. The amounts paid to them are based
solely on the amounts of collection each of them make. They do not receive any commission if they do
not effect any collection even if they put a lot of effort in collecting. They are paid commission on the
basis of actual collections.
6. The commissions earned by the collection agents are directly deducted by them from the amount of
collections they are able to effect. The net amount is what is then remitted to Singer." (Rollo, pp. 7-8)
If indeed the union members are controlled as to the manner by which they are supposed to perform their
collections, they should have explicitly said so in detail by specifically denying each of the facts asserted by the
petitioner. As there seems to be no objections on the part of the respondents, the Court finds that they miserably
failed to defend their position.
A thorough examination of the facts of the case leads us to the conclusion that the existence of an employeremployee relationship between the Company and the collection agents cannot be sustained.
The plain language of the agreement reveals that the designation as collection agent does not create an
employment relationship and that the applicant is to be considered at all times as an independent contractor. This
is consistent with the first rule of interpretation that the literal meaning of the stipulations in the contract controls
(Article 1370, Civil Code; La Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor, Relations, 123
SCRA 679 [1983]). No such words as "to hire and employ" are present. Moreover, the agreement did not fix an
amount for wages nor the required working hours. Compensation is earned only on the basis of the tangible
results produced, i.e., total collections made (Sarra v. Agarrado, 166 SCRA 625 [1988]). In Investment Planning
Corp. of the Philippines v. Social Security System, 21 SCRA 924 [1967] which involved commission agents, this
Court had the occasion to rule, thus:

We are convinced from the facts that the work of petitioner's agents or registered representatives more
nearly approximates that of an independent contractor than that of an employee. The latter is paid for the
labor he performs, that is, for the acts of which such labor consists the former is paid for the result
thereof . . . .
xxx

xxx

xxx

Even if an agent of petitioner should devote all of his time and effort trying to sell its investment plans he
would not necessarily be entitled to compensation therefor. His right to compensation depends upon and
is measured by the tangible results he produces."
Moreover, the collection agent does his work "more or less at his own pleasure" without a regular daily time
frame imposed on him (Investment Planning Corporation of the Philippines v. Social Security
System, supra; See also Social Security System v. Court of Appeals, 30 SCRA 210 [1969]).
The grounds specified in the contract for termination of the relationship do not support the view that control
exists "for the causes of termination thus specified have no relation to the means and methods of work that are
ordinarily required of or imposed upon employees." (Investment Planning Corp. of the Phil. v. Social Security
System, supra)
The last and most important element of the control test is not satisfied by the terms and conditions of the
contracts. There is nothing in the agreement which implies control by the Company not only over the end to be
achieved but also over the means and methods in achieving the end (LVN Pictures, Inc. v. Philippine Musicians
Guild, 1 SCRA 132 [1961]).
The Court finds the contention of the respondents that the union members are employees under Article 280 of
the Labor Code to have no basis. The definition that regular employees are those who perform activities which
are desirable and necessary for the business of the employer is not determinative in this case. Any agreement
may provide that one party shall render services for and in behalf of another for a consideration (no matter how
necessary for the latter's business) even without being hired as an employee. This is precisely true in the case of
an independent contractorship as well as in an agency agreement. The Court agrees with the petitioner's
argument that Article 280 is not the yardstick for determining the existence of an employment relationship
because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees,
for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of
tenure. Article 280 does not apply where the existence of an employment relationship is in dispute.
Even Section 8, Rule 8, Book III of the Omnibus Rules Implementing the Labor Code does not apply to this
case.1wphi1 Respondents assert that the said provision on job contracting requires that for one to be considered
an independent contractor, he must have "substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of his business." There is no
showing that a collection agent needs tools and machineries. Moreover, the provision must be viewed in relation
to Article 106 of the Labor Code which provides:
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another
person for the performance of the former's work, the employees of the contractor and of the latter's
subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to

such employees to the extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
xxx

xxx

xxx

There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such persons are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him." (p. 20)
It can readily be seen that Section 8, Rule 8, Book Ill and Article 106 are relevant in determining whether the
employer is solidarily liable to the employees of an alleged contractor and/or sub-contractor for unpaid wages
in case it is proven that there is a job-contracting situation.
The assumption of jurisdiction by the DOLE over the case is justified as the case was brought on appeal by the
petitioner itself which prayed for the reversal of the Order of the Med-Arbiter on the ground that the union
members are not its employees. Hence, the petitioner submitted itself as well as the issue of existence of an
employment relationship to the jurisdiction of the DOLE which was faced with a dispute on an application for
certification election.
The Court finds that since private respondents are not employees of the Company, they are not entitled to the
constitutional right to join or form a labor organization for purposes of collective bargaining. Accordingly, there
is no constitutional and legal basis for their "union" to be granted their petition for direct certification. This Court
made this pronouncement in La Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor Relations,
supra:
. . . The question of whether employer-employee relationship exists is a primordial consideration before
extending labor benefits under the workmen's compensation, social security, medicare, termination pay
and labor relations law. It is important in the determination of who shall be included in a proposed
bargaining unit because, it is thesine qua non, the fundamental and essential condition that a bargaining
unit be composed of employees. Failure to establish this juridical relationship between the union
members and the employer affects the legality of the union itself. It means the ineligibility of the union
members to present a petition for certification election as well as to vote therein . . . . (At p. 689)
WHEREFORE, the Order dated June 14,1989 of Med-Arbiter Designate Felix B. Chaguile, Jr., the Resolution
and Order of Secretary Franklin M. Drilon dated November 2, 1989 and December 14, 1989, respectively are
hereby REVERSED and SET ASIDE. The petition for certification election is ordered dismissed and the
temporary restraining order issued by the Court on December 21, 1989 is made permanent.
SO ORDERED.
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zonsa vs abs cbn broadcasting cor as against dumpit murillo vs ca

THELMA DUMPIT-MURILLO,
Petitioner,
- versus -

G.R. No. 164652

Present:
QUISUMBING, J.,* Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
COURT OF APPEALS, ASSOCIATEDPromulgated:
BROADCASTING COMPANY, JOSE JAVIERJune 8, 2007
AND EDWARD TAN,
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
QUISUMBING, J.:

This petition seeks to reverse and set aside both the Decision[1] dated January 30, 2004 of the Court of Appeals
in CA-G.R. SP No. 63125 and its Resolution[2] dated June 23, 2004 denying the motion for reconsideration. The
Court of Appeals had overturned the Resolution[3] datedAugust 30, 2000 of the National Labor Relations
Commission (NLRC) ruling that petitioner was illegally dismissed.
The facts of the case are as follows:
On October 2, 1995, under Talent Contract No. NT95-1805,[4] private respondent Associated Broadcasting
Company (ABC) hired petitioner Thelma Dumpit-Murillo as a newscaster and co-anchor for Balitang-Balita, an
early evening news program. The contract was for a period of three months. It was renewed under Talent
Contracts Nos. NT95-1915, NT96-3002, NT98-4984 and NT99-5649.[5] In addition, petitioners services were
engaged for the program Live on Five. On September 30, 1999, after four years of repeated renewals, petitioners
talent contract expired. Two weeks after the expiration of the last contract, petitioner sent a letter to Mr. Jose
Javier, Vice President for News and Public Affairs of ABC, informing the latter that she was still interested in
renewing her contract subject to a salary increase. Thereafter, petitioner stopped reporting for
work. On November 5, 1999, she wrote Mr. Javier another letter,[6] which we quote verbatim:
xxxx
Dear Mr. Javier:
On , I wrote you a letter in answer to your query by way of a marginal note what terms and
conditions in response to my first letter dated. To date, or for more than fifteen (15) days since
then, I have not received any formal written reply. xxx

In view hereof, should I not receive any formal response from you until , I will deem it as a
constructive dismissal of my services.
xxxx

A month later, petitioner sent a demand letter[7] to ABC, demanding: (a) reinstatement to her former position;
(b) payment of unpaid wages for services rendered from September 1 to October 20, 1999 and full backwages;
(c) payment of 13th month pay, vacation/sick/service incentive leaves and other monetary benefits due to a
regular employee starting March 31, 1996. ABC replied that a check covering petitioners talent fees for
September 16 to October 20, 1999 had been processed and prepared, but that the other claims of petitioner had
no basis in fact or in law.
On December 20, 1999, petitioner filed a complaint[8] against ABC, Mr. Javier and Mr. Edward Tan, for illegal
constructive dismissal, nonpayment of salaries, overtime pay, premium pay, separation pay, holiday pay, service
incentive leave pay, vacation/sick leaves and 13th month pay in NLRC-NCR Case No. 30-12-00985-99. She
likewise demanded payment for moral, exemplary and actual damages, as well as for attorneys fees.
The parties agreed to submit the case for resolution after settlement failed during the mandatory
conference/conciliation. On March 29, 2000, the Labor Arbiter dismissed the complaint.[9]
On appeal, the NLRC reversed the Labor Arbiter in a Resolution dated August 30, 2000. The NLRC held that an
employer-employee relationship existed between petitioner and ABC; that the subject talent contract was void; that
the petitioner was a regular employee illegally dismissed; and that she was entitled to reinstatement and backwages or
separation pay, aside from 13th month pay and service incentive leave pay, moral and exemplary damages and
attorneys fees. It held as follows:
WHEREFORE, the Decision of the Arbiter dated is hereby REVERSED/SET ASIDE and
a NEW ONE promulgated:
1)
declaring respondents to have illegally dismissed complainant from her regular work
therein and thus, ordering them to reinstate her in her former position without loss of seniority
right[s] and other privileges and to pay her full backwages, inclusive of allowances and other
benefits, including 13th month pay based on her said latest rate of P28,000.00/mo. from the date
of her illegal dismissal on 21 October 1999 up to finality hereof, or at complainants option, to
pay her separation pay of one (1) month pay per year of service based on said latest monthly
rate, reckoned from date of hire on 30 September 1995 until finality hereof;
2)

to pay complainants accrued SILP [Service Incentive Leave Pay] of 5 days pay per year
and 13th month pay for the years 1999, 1998 and 1997 ofP19,236.00 and P84,000.00,

respectively and her accrued salary from 16 September 1999 to 20 October 1999 of P32,760.00
plus legal interest at 12% from date of judicial demand on 20 December 1999 until finality
hereof;
3)
to pay complainant moral damages of P500,000.00, exemplary damages of P350,000.00
and 10% of the total of the adjudged monetary awards as attorneys fees.
Other monetary claims of complainant are dismissed for lack of merit.
SO ORDERED.[10]

After its motion for reconsideration was denied, ABC elevated the case to the Court of Appeals in a petition for
certiorari under Rule 65. The petition was first dismissed for failure to attach particular documents,[11] but was
reinstated on grounds of the higher interest of justice.[12]
Thereafter, the appellate court ruled that the NLRC committed grave abuse of discretion, and reversed the
decision of the NLRC.[13] The appellate court reasoned that petitioner should not be allowed to renege from the
stipulations she had voluntarily and knowingly executed by invoking the security of tenure under the Labor
Code. According to the appellate court, petitioner was a fixed-term employee and not a regular employee within
the ambit of Article 280[14] of the Labor Code because her job, as anticipated and agreed upon, was only for a
specified time.[15]
Aggrieved, petitioner now comes to this Court on a petition for review, raising issues as follows:
I.
THIS HONORABLE COURT CAN REVIEW THE FINDINGS OF THE HONORABLE
COURT OF APPEALS, THE DECISION OF WHICH IS NOT IN ACCORD WITH LAW OR
WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT[;]
II.
THE PRO-FORMA TALENT CONTRACTS, AS CORRECTLY FOUND BY THE NLRC
FIRST DIVISION, ARE ANTI-REGULARIZATION DEVICESWHICH MUST BE STRUCK
DOWN FOR REASONS OF PUBLIC POLICY[;]

III.
BY REASON OF THE CONTINUOUS AND SUCCESSIVE RENEWALS OF THE THREEMONTH TALENT CONTRACTS, AN EMPLOYER-EMPLOYEE RELATIONSHIP WAS
CREATED AS PROVIDED FOR UNDER ARTICLE 280 OF THE LABOR CODE[;]
IV.
BY THE CONSTRUCTIVE DISMISSAL OF HEREIN PETITIONER, AS A REGULAR
EMPLOYEE, THERE WAS A DENIAL OF PETITIONERS RIGHT TO DUE PROCESS
THUS ENTITLING HER TO THE MONEY CLAIMS AS STATED IN THE COMPLAINT[.]
[16]

The issues for our disposition are: (1) whether or not this Court can review the findings of the Court of Appeals;
and (2) whether or not under Rule 45 of the Rules of Court the Court of Appeals committed a reversible error in
its Decision.
On the first issue, private respondents contend that the issues raised in the instant petition are mainly factual and
that there is no showing that the said issues have been resolved arbitrarily and without basis. They add that the
findings of the Court of Appeals are supported by overwhelming wealth of evidence on record as well as
prevailing jurisprudence on the matter.[17]
Petitioner however contends that this Court can review the findings of the Court of Appeals, since the appellate
court erred in deciding a question of substance in a way which is not in accord with law or with applicable
decisions of this Court.[18]
We agree with petitioner. Decisions, final orders or resolutions of the Court of Appeals in any case regardless of
the nature of the action or proceeding involved may be appealed to this Court through a petition for review. This
remedy is a continuation of the appellate process over the original case,[19] and considering there is no
congruence in the findings of the NLRC and the Court of Appeals regarding the status of employment of
petitioner, an exception to the general rule that this Court is bound by the findings of facts of the appellate court,
[20] we can review such findings.
On the second issue, private respondents contend that the Court of Appeals did not err when it upheld the
validity of the talent contracts voluntarily entered into by petitioner. It further stated that prevailing jurisprudence
has recognized and sustained the absence of employer-employee relationship between a talent and the media

entity which engaged the talents services on a per talent contract basis, citing the case ofSonza v. ABS-CBN
Broadcasting Corporation.[21]
Petitioner avers however that an employer-employee relationship was created when the private respondents
started to merely renew the contracts repeatedly fifteen times or for four consecutive years.[22]
Again, we agree with petitioner. The Court of Appeals committed reversible error when it held that petitioner was a
fixed-term employee. Petitioner was a regular employee under contemplation of law. The practice of having fixedterm contracts in the industry does not automatically make all talent contracts valid and compliant with labor law.
The assertion that a talent contract exists does not necessarily prevent a regular employment status.[23]
Further, the Sonza case is not applicable. In Sonza, the television station did not instruct Sonza how to perform
his job. How Sonza delivered his lines, appeared on television, and sounded on radio were outside the television
stations control. Sonza had a free hand on what to say or discuss in his shows provided he did not attack the
television station or its interests. Clearly, the television station did not exercise control over the means and
methods of the performance of Sonzas work.[24] In the case at bar, ABC had control over the performance of
petitioners work. Noteworthy too, is the comparatively low P28,000 monthly pay of
petitioner[25] vis the P300,000 a month salary of Sonza,[26] that all the more bolsters the conclusion that
petitioner was not in the same situation as Sonza.
The contract of employment of petitioner with ABC had the following stipulations:
xxxx
1. SCOPE OF SERVICES TALENT agrees to devote his/her talent, time, attention and best efforts
in the performance of his/her duties and responsibilities as Anchor/Program Host/Newscaster of
the Program, in accordance with the direction of ABC and/or its authorized representatives.
1.1. DUTIES AND RESPONSIBILITIES TALENT shall:
a.
Render his/her services as a newscaster on the Program;
b.
Be involved in news-gathering operations by conducting interviews on- and
off-the-air;
c.
Participate in live remote coverages when called upon;
d.
Be available for any other news assignment, such as writing, research or
camera work;
e.
Attend production meetings;
f.
On assigned days, be at the studios at least one (1) hour before the live
telecasts;
g.
Be present promptly at the studios and/or other place of assignment at the
time designated by ABC;

h.
Keep abreast of the news;
i.
Give his/her full cooperation to ABC and its duly authorized representatives
in the production and promotion of the Program; and
j.
Perform such other functions as may be assigned to him/her from time to
time.
xxxx
1.3 COMPLIANCE WITH STANDARDS, INSTRUCTIONS AND OTHER RULES
AND REGULATIONS TALENT agrees that he/she will promptly and faithfully comply
with the requests and instructions, as well as the program standards, policies, rules and
regulations of ABC, the KBP and the government or any of its agencies and
instrumentalities.[27]
xxxx

In Manila Water Company, Inc. v. Pena,[28] we said that the elements to determine the existence of an employment
relationship are: (a) the selection and engagement of the employee, (b) the payment of wages, (c) the power of
dismissal, and (d) the employers power to control. The most important element is the employers control of the
employees conduct, not only as to the result of the work to be done, but also as to the means and methods to
accomplish it.[29]
The duties of petitioner as enumerated in her employment contract indicate that ABC had control over the work
of petitioner. Aside from control, ABC also dictated the work assignments and payment of petitioners
wages. ABC also had power to dismiss her. All these being present, clearly, there existed an employment
relationship between petitioner and ABC.
Concerning regular employment, the law provides for two kinds of employees, namely: (1) those who are
engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with
respect to the activity in which they are employed.[30] In other words, regular status arises from either the nature
of work of the employee or the duration of his employment.[31] In Benares v. Pancho,[32] we very succinctly
said:
[T]he primary standard for determining regular employment is the reasonable connection
between the particular activity performed by the employee vis--visthe usual trade or business of
the employer. This connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its entirety. If the
employee has been performing the job for at least a year, even if the performance is not
continuous and merely intermittent, the law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability of that activity to the

business. Hence, the employment is considered regular, but only with respect to such activity
and while such activity exists.[33]

In our view, the requisites for regularity of employment have been met in the instant case. Gleaned from the
description of the scope of services aforementioned, petitioners work was necessary or desirable in the usual
business or trade of the employer which includes, as a pre-condition for its enfranchisement, its participation in
the governments news and public information dissemination. In addition, her work was continuous for a period
of four years. This repeated engagement under contract of hire is indicative of the necessity and desirability of
the petitioners work in private respondent ABCs business.[34]
The contention of the appellate court that the contract was characterized by a valid fixed-period employment is
untenable. For such contract to be valid, it should be shown that the fixed period was knowingly and voluntarily
agreed upon by the parties. There should have been no force, duress or improper pressure brought to bear upon the
employee; neither should there be any other circumstance that vitiates the employees consent.[35] It should
satisfactorily appear that the employer and the employee dealt with each other on more or less equal terms with no
moral dominance being exercised by the employer over the employee.[36] Moreover, fixed-term employment will not
be considered valid where, from the circumstances, it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee.[37]
In the case at bar, it does not appear that the employer and employee dealt with each other on equal
terms. Understandably, the petitioner could not object to the terms of her employment contract because she did not want
to lose the job that she loved and the workplace that she had grown accustomed to,[38] which is exactly what happened
when she finally manifested her intention to negotiate. Being one of the numerous newscasters/broadcasters of ABC and
desiring to keep her job as a broadcasting practitioner, petitioner was left with no choice but to affix her signature of
conformity on each renewal of her contract as already prepared by private respondents; otherwise, private respondents
would have simply refused to renew her contract. Patently, the petitioner occupied a position of weakness vis--vis the
employer. Moreover, private respondents practice of repeatedly extending petitioners 3-month contract for four years is a
circumvention of the acquisition of regular status. Hence, there was no valid fixed-term employment between petitioner
and private respondents.
While this Court has recognized the validity of fixed-term employment contracts in a number of cases, 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.[39]

As a regular employee, petitioner is entitled to security of tenure and can be dismissed only for just cause and after due
compliance with procedural due process. Since private respondents did not observe due process in constructively
dismissing the petitioner, we hold that there was an illegal dismissal.
WHEREFORE, the challenged Decision dated January 30, 2004 and Resolution dated June 23, 2004 of the
Court of Appeals in CA-G.R. SP No. 63125, which held that the petitioner was a fixed-term employee,
are REVERSED and SET ASIDE. The NLRC decision is AFFIRMED.
Costs against private respondents.
SO ORDERED.
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abs cbn broadcasting corp v marquez
Sirs/Mesdames:
Quoted hereunder, for your information, is a resolution of this Court dated JUN 22 2005.
G.R. No. 167638 (ABS-CBN Broadcasting Corporation vs. Henrie Marquez, et al.)
Before us is this petition for review on certiorari assailing the December 20, 2004 decision [1]cralaw of the Court
of Appeals in CA-G.R. SP No. 81750, reversing and setting aside an earlier decision [2]cralaw of National Labor
Relations Commission (NLRC), 4th Division, Cebu City in Case No. V-000967-00 which, in turn, reversed the
decision[3]cralaw of the Labor Arbiter in a complaint for illegal dismissal commenced by the herein respondents
against petitioner ABS-CBN Broadcasting Corporation.
Petitioner hired the services of respondents on various dates starting December, 1994 to undertake the
production in the Cebuano dialect of television serial programs for petitioner's week-day afternoon time slots in
Cebu. Respondents were assigned among three (3) production groups, each with its own set of directors, writers,
videographers, lightsmen, editors, actors and utility personnel. Each production group was given a weekly
budget, initially at P30,000.00, which was later increased to P40,000.00 a week.
The television-series did so well that several more were subsequently produced. The production groups were
continuously engaged to film succeeding programs to replace the concluded ones.
On June 15, 1999, respondents addressed a letter to petitioner asking for a 25% increase in their weekly budget,
but the same was denied by petitioner's AVP for the Visayas Cluster, Ma. Luisa L. Ascalon. Instead, respondents
were informed of the termination of their services effective August 13, 1999.
On August 27, 1999, respondents filed with the Regional Arbitration Branch (RAB) at Region VII of the
Department of Labor and Employment their consolidated complaint for illegal dismissal; illegal deduction; nonpayment of overtime and holiday pay; premium pay for holiday, rest day and night shift differential; nonpayment of 13th month pay, service incentive leave, separation pay, backwages; and attorney's fees.

On June 15, 2000, the Executive Labor Arbiter of RAB VII rendered a decision [4]cralaw in favor of respondents
and ordered petitioner to pay to them their money claims.
However, on petitioner's appeal, the NLRC'S 4th Division at Cebu City reversed the decision of the Labor
Arbiter, thus:
WHEREFORE, premises considered, judgment is hereby rendered granting the appeal of [petitioner], reversing
and setting aside the Decision of the Executive Labor Arbiter dated 15 June 2000 and promulgating a new one
dismissing all the consolidated complaints for lack of merit.
SO ORDERED.
Respondents moved for a reconsideration but their motion was denied by the NLRC's 4 th Division in its
resolution of July 30, 2003.
From there, respondents went to the Court of Appeals via a petition for certiorari, thereat docketed as CA-G.R.
SP No. 81750, imputing grave abuse of discretion on the part of the NLRC's 4 th Division in setting aside the
Labor Arbiter's findings and in ruling that they were hired as contractual or project employees, i.e. as "talents"
engaged for specific projects, under the special work arrangements with the petitioner, and in upholding the
legality of their dismissal.
Respondents asserted that they are petitioner's regular employees and emphasized the fact of their continuous
work after each tele-series program and the very nature of their work, which is "necessary and desirable" to the
business or trade of their employer [5]cralaw. They also asseverated that the application of the "four-fold test" in
labor laws clearly shows the existence of an employer-employee relationship between the parties.
For its part, petitioner insisted that respondents were hired as program employees in the nature of contractual or
project employment; that respondents were mere "talents", i.e. they were contracted because of their expertise or
talents as program employees; and that respondents were, in effect, mere program employees under Policy
Instruction No. 40, series of 1979 whom petitioner contracted due to their expertise for particular projects, in this
case the production of the Visayan tele-series programs.
In the herein assailed decision[6]cralaw dated December 20, 2004, the Court of Appeals reversed that of the
NLRC and reinstated the earlier decision of the Labor Arbiter, to wit:
WHEREFORE, the Petition for Certiorari is GRANTED, and the assailed Decision and Resolution of the
National Labor Relation Commission (NLRC), 4th Division, Cebu City, in Case No. V-000050-02, are hereby
REVERSED and SET ASIDE. The Decision of Executive Labor Arbiter of 15 June 2000 finding an employeremployee relationship between [respondents] and [petitioner] ABS-CBN Broadcasting Corporation and ordering
the latter to pay [respondents'] money claims is REINSTATED in toto except that the computation of the
backwages thereof should be reckoned until the finality of this decision. No pronouncement as to costs.
SO ORDERED.
Applying the "four-fold test" to determine the existence of an employer-employee relationship between the
parties, the Court of Appeals viewed respondents as regular employees of petitioner and not independent
contractors.
Respondents' employment with petitioner passed the "four-fold test" on employer-employee relations, namely:
(1) the selection and engagement of the employee, or the power to hire; (2) the payment of wages; (3) the power
to dismiss; and (4) the power to control the employee [7]cralaw.

Petitioner never denied having engaged the services of respondents. Neither did it controvert the fact that
respondents received their pay from petitioner twice a month thru automated teller machines (ATM) and
respondents were issued payslips bearing petitioner's corporate name on the heading. The payment of wages
clearly rests upon petitioner. While a weekly budget is given and the directors are ostensibly given a free hand on
how to spend the same subject only to petitioner's budgetary limitation, the hard reality is that such payments
were done by the petitioner itself.
As correctly observed by the Labor Arbiter, the elements of control and supervision over the respondents were
evident. Petitioner employed production supervisors who monitored and saw to it that the filming of the series
shall be finished within a time-frame and the production output to conform to petitioner's standards. These were
bolstered by various memoranda issued by petitioner relative to production work-approval of filming and editing
schedule, new assignments of production crew and reminders to tele-series directors and editors regarding the
standard policy on editing services. Respondents have to follow company rules in the work done in company
premises. An overseer, in the person of an executive producer, is assigned by petitioner over each production
crew to make sure that the end result is acceptable to petitioner, and the executive producer can dictate the work
to be re-done. Petitioner also has control in the assignments of crew members and can thus re-assign or transfer
any of them to another production group, thereby belying petitioner's contention that the directors are the ones
that control the whole production. All these, taken together, unmistakably show petitioner's power of control
over respondents' work.
Anent the power of dismissal and suspension, it cannot be denied that petitioner exercised such. The records
clearly show that petitioner sanctioned disciplinary measures on some of the respondents for some infraction of
company rules thru disciplinary measures on erring employees. For sure, respondent Orlando Carillo was
suspended for one week by his production head on January 25, 1999 for failure to edit an episode which was to
be sent to petitioner's Zamboanga station for airing.
Additionally, the fact that petitioner itself provided the production equipment such as video cameras, lights,
microphone and TV monitors, largely discounts petitioner's claim that respondents were independent contractors.
It may be so that respondents were assigned to a particular tele-series. However, petitioner can and did
immediately reassign them to a new production upon completion of a previous one. Hence, they were
continuously employed, the tele-series being a regular feature in petitioner's network programs. Petitioner's
continuous engagement of respondents from one production after another, for more than five years, made the
latter part of petitioner's workpool who cannot be separated from the service without cause as they are
considered regular. A project employee or a member of a workpool may acquire the status of a regular employee
when the following concur: there is continuous rehiring of project employees even after the cessation of the
project;[8]cralaw and the tasks performed by the alleged "project employee" are vital, necessary, and
indispensable to the usual business or trade of his employer.[9]cralaw It cannot be denied that the services of
respondents as members of a crew in the production of a tele-series are undoubtedly connected with the business
of the petitioner. This Court has held that the primary standard in determining regular employment is the
reasonable connection between the particular activity performed by the employee in relation to the business or
trade of his employer.[10]cralaw Here, the activity performed by respondents is, without doubt, vital to petitioner's
trade or business.
We agree with the Court of Appeals when it upheld the conclusion of the Labor Arbiter that petitioner broadcasts
and produces its own television series and other programs, whether in Cebu or in Manila; and that there is no
distinction between its Cebu station and the mother station because they are one and the same, more so due to
lack of showing by the petitioner that its Cebu station is independent from its mother station. It cannot thus be
said that petitioner is primarily just involved in mere broadcasting from satellite feeds or other sources. That the
production of the television series is vital, necessary and desirable to petitioner's usual business is beyond
question.

It is a matter of record that respondents have rendered almost five (5) years of continuous service to petitioner,
doing work that is necessary and desirable to the usual business of the latter. Hence, even granting on the
extreme that respondents were not performing work that is vital, necessary and indispensable to the usual
business of petitioner, nonetheless the second paragraph of Article 280 of the Labor Code still applies. It reads:
ART. 280. REGULAR AND CASUAL EMPLOYMENT
xxx xxx

xxx

An employment shall be deemed to be casual if it is not covered by the preceding paragraph.Provided, That,
any employee who has rendered at least one year of service whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists. (Emphasis supplied).
We thus rule and so hold that respondents are petitioner's regular employees, at least with respect to the
production of petitioner's Visayan tele-series programs and until such activity exists.
Petitioner relied upon and took undue advantage of Policy Instruction No. 40, by treating herein respondents as
talents and classifying them as independent contractors and freelancers.
Policy Instruction No. 40 pertinently provides:
Program employees are those whose skills, talents or services are engaged by the station for a particular or
specific program or undertaking and who are not required to observe normal working hours such that on some
days they work for less than eight (8) hours and on other days beyond the normal work hours observed by station
employees and are allowed to enter into employment contracts with other persons, stations, advertising agencies
or sponsoring companies. Theengagement of program employees, including those hired by advertising or
sponsoring companies, shall be under a written contract specifying, among other things, the nature of the
work to be performed, rates of pay, and the programs in which they will work. The contract shall be duly
registered by the station with the Broadcast Media Council within three days from its
consummation. (Emphasis supplied)
Ironically, however, petitioner failed to adduce an iota proof that the requirements for program employment were
even complied with by it. It is basic that project or contractual employees are appraised of the project they will
work under a written contract, specifying, inter alia, the nature of work to be performed and the rates of pay and
the program in which they will work. Sadly, however, no such written contract was ever presented by the
petitioner. Petitioner is in the best of position to present these documents. And because none was presented, we
have every reason to surmise that no such written contract was ever accomplished by the parties, thereby belying
petitioner's posture.
Worse, there was no showing of compliance with the requirement that after every engagement or production of a
particular television series, the required reports were filed with the proper government agency, as provided no
less under the very Policy Instruction invoked by the petitioner, nor under the Omnibus Implementing Rules of
the Labor Code for project employees. This alone bolsters respondents' contention that they were indeed
petitioner's regular employees since their employment was not only for a particular program.
To recapitulate, respondents, due to their length of service, had already attained the status of regular employment
and are thus entitled to security of tenure provided for under our labor laws. Consequently, they may only be
validly dismissed from service upon petitioner's compliance with the legal requisites for termination, both in
their substantive and procedural aspects. In this connection, it bears emphasis that under the Labor Code and its
Omnibus Implementing Rules, not only must the dismissal be for a just or authorized cause [11]cralaw, but that the
rudimentary requirements of due process: notice and hearing, [12]cralaw must likewise be observed before a

regular employee may be dismissed. Without the concurrence of these two requisites, the termination would be,
in the eyes of the law, illegal[13]cralaw.
It is incumbent upon petitioner to prove that its dismissal of respondents was for a valid cause and that they were
afforded procedural due process before termination. As it is, petitioner failed to discharge this burden. Its only
assertion is that the dismissal was due to the expiration or completion of contract, which is not even a ground for
termination allowed by law. Worse, petitioner failed to establish that respondents were given ample opportunity
to contest the legality of their dismissal. All that petitioner did was simply to furnish them with their walking
papers. Inarguably, petitioner denied them of due process. In fine, with petitioner's failure to establish
compliance with the legal requirements on termination of employment under the Labor Code, the appellate court
was correct in declaring respondents' dismissal as tainted with illegality.
WHEREFORE, the instant petition is hereby DENIED.
SO ORDERED.
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consolidated broadcasting corp vs oberio
CONSOLIDATED BROADCASTING G.R. No. 168424
SYSTEM, INC.,
Petitioner, Present:
x ---------------------------------------------------------------------------------------- x
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for review is the July 30, 2004 Decision[1] of the Court of Appeals in CA-G.R. SP No.
77098, which affirmed the December 5, 2001 Decision[2] of the National Labor Relations Commission (NLRC)
holding that respondents were regular employees of petitioner and that they were illegally dismissed.
Respondents alleged that they were employed as drama talents by DYWB-Bombo Radyo, a radio station owned
and operated by petitioner Consolidated Broadcasting System, Inc. They reported for work daily for six days in a
week and were required to record their drama production in advance. Some of them were employed by petitioner
since 1974, while the latest one was hired in 1997.[3] Their drama programs were aired not only
in Bacolod City but also in the sister stations of DYWB in the Visayas and Mindanao areas.[4]
Sometime in August 1998, petitioner reduced the number of its drama productions from 14 to 11, but was
opposed by respondents. After the negotiations failed, the latter sought the intervention of the Department of
Labor and Employment (DOLE), which on November 12, 1998, conducted through its Regional Office, an
inspection of DWYB station. The results thereof revealed that petitioner is guilty of violation of labor standard
laws, such as underpayment of wages, 13th month pay, non-payment of service incentive leave pay, and noncoverage of respondents under the Social Security System.

Petitioner contended that respondents are not its employees and refused to submit the payroll and daily time
records despite the subpoena duces tecum issued by the DOLE Regional Director. Petitioner further argued that
the case should be referred to the NLRC because the Regional Director has no jurisdiction over the
determination of the existence of employer-employee relationship which involves evidentiary matters that are
not verifiable in the normal course of inspection.
Vexed by the respondents complaint, petitioner allegedly pressured and intimidated respondents. Respondents
Oberio and Delta were suspended for minor lapses and the payment of their salaries were purportedly
delayed. Eventually, on February 3, 1999, pending the outcome of the inspection case with the Regional
Director, respondents were barred by petitioner from reporting for work; thus, the former claimed constructive
dismissal.[5]
On April 8, 1999, the DOLE Regional Director issued an order
directing petitioner to pay respondents a total of P318,986.74 representing non-payment/underpayment of the
salary and benefits due them.[6] However, on July 8, 1999, the Regional Director reconsidered the April 8,
1999order and certified the records of the case to the NLRC, Regional Arbitration Branch VI, for determination
of employer-employee relationship.[7]Respondents appealed said order to the Secretary of Labor.
On October 12, 1999, respondents filed a case for illegal dismissal, underpayment/non-payment of wages and
benefits plus damages against petitioner. On April 10, 2000, the Labor Arbiter dismissed the case without
prejudice while waiting for the decision of the Secretary of Labor on the same issue of the existence of an
employer-employee relationship between petitioner and respondents.
On appeal to the NLRC, respondents raised the issue of employer-employee relationship and submitted the
following to prove the existence of such relationship, to wit: time cards, identification cards, payroll, a show
cause order of the station manager to respondent Danny Oberio and memoranda either noted or issued by said
manager. Petitioner, on the other hand, did not present any documentary evidence in its behalf and merely denied
the allegations of respondents. It claimed that the radio station pays for the drama recorded by piece and that it
has no control over the conduct of respondents.
On December 5, 2001, the NLRC rendered a decision holding that respondents were regular employees of
petitioner who were illegally dismissed by the latter. It further held that respondents complied with the
requirements of the rule on forum shopping. The decretal portion thereof, provides:
WHEREFORE, premises considered, the decision of Labor Arbiter Ray Alan T. Drilon dated is
SET ASIDE and VACATED and a new one entered.
Ordering respondent Consolidated Broadcasting System, Inc. (Bombo Radyo Philippines),
DYWB to reinstate the complainants without loss of seniority rights wi[th] full back wages
computed from February 1999 up to the time of actual reinstatement.
SO ORDERED.[8]

Hence, petitioner filed the instant recourse.

The issues for resolution are as follows: (1) Did respondents violate the rule on forum shopping; (2) whether the
NLRC correctly ruled on the merits of the case instead of remanding the case to the Labor Arbiter; (3) whether
respondents were employees of petitioner; and (4) whether their dismissal was illegal.
Respondents complaint in the inspection case before the DOLE Regional Director alleged that they were under
the employ of petitioner at the time of the filing of said complaint. Pending the resolution thereof, they claimed
to have been dismissed; hence, the filing of the present illegal dismissal case before the Labor Arbiter. The
causes of action in these two complaints are different, i.e., one for violation of labor standard laws, and the other,
for illegal dismissal, but the entitlement of respondents to the reliefs prayed for hinges on the same issue of the
existence of an employer-employee relationship. While the decision on the said issue by one tribunal may
operate as res judicata on the other, dismissal of the present illegal dismissal case on the ground of forum
shopping, would work injustice to respondents because it is the law itself which provides for two separate
remedies for their distinct causes of action.
Under Article 217[9] of the Labor Code, termination cases fall under the jurisdiction of Labor Arbiters. Whereas,
Article 128[10] of the same Code vests the Secretary of Labor or his duly authorized representatives with the
power to inspect the employers records to determine and compel compliance with labor standard laws. The
exercise of the said power by the Secretary or his duly authorized representatives is exclusive to cases where
employer-employee relationship still exists. Thus, in cases where the complaint for violation of labor standard
laws preceded the termination of the employee and the filing of the illegal dismissal case, it would not be in
consonance with justice to charge the complainants with engaging in forum shopping when the remedy available
to them at the time their causes of action arose was to file separate cases before differentfora. Besides, in the
instant case, respondent Danny Oberio disclosed in the verification the pendency of the case regarding wage
differential.[11]In addition, said case was discussed in detail in the position paper,[12] evincing the absence of
any intention on the part of respondents to mislead the Labor Arbiter.
Similarly, in Benguet Management Corporation v. Court of Appeals,[13] petitioner filed separate actions to
enjoin the foreclosure of real estate mortgages before the Regional Trial Courts of San Pablo City and Zambales
which has jurisdiction over the place where the properties were located. In both cases, petitioner contended,
among others, that the loan secured by said mortgages imposed unauthorized penalties, interest and charges. The
Court did not find the mortgagors guilty of forum shopping considering that since injunction is enforceable only
within the territorial limits of the trial court, the mortgagor is left without remedy as to the properties located
outside the jurisdiction of the issuing court, unless an application for injunction is made with another court
which has jurisdiction over the latter properties.

By parity of reasoning, it would be unfair to hold respondents in the instant case guilty of forum shopping
because the recourse available to them after their termination, but pending resolution of the inspection case
before the DOLE, was to file a case for illegal dismissal before the Labor Arbiter who has jurisdiction over
termination disputes.
More importantly, substantial justice dictates that this case be resolved on the merits considering that the NLRC
and the Court of Appeals correctly found that there existed an employer-employee relationship between
petitioner and respondents and that the latters dismissal was illegal, as will be discussed hereunder.
In the same vein, the NLRC correctly ruled on the merits instead of remanding the case to the Labor
Arbiter. Respondents specifically raised the issue of the existence of employer-employee relationship but
petitioner refused to submit evidence to disprove such relationship on the erroneous contention that to do so
would constitute a waiver of the right to question the jurisdiction of the NLRC to resolve the case on the merits.
[14] This is rather odd because it was the stand of petitioner in the inspection case before the DOLE that the case
should be certified to the NLRC for the resolution of the issue of employer-employee relationship. But when the
same issue was proffered before the NLRC, it refused to present evidence and instead sought the dismissal of the
case invoking the pendency of the inspection case before the DOLE. Petitioner refused to meet head on the
substantial aspect of this controversy and resorted to technicalities to delay its disposition. It must be stressed
that labor tribunals are not bound by technical rules and the Court would sustain the expedient disposition of
cases so long as the parties are not denied due process.[15] The rule is that, due process is not violated where a
person is given the opportunity to be heard, but chooses not to give his or her side of the case.[16] Significantly,
petitioner never claimed that it was denied due process. Indeed, no such denial exists because it had all the
opportunities to present evidence before the labor tribunals below, the Court of Appeals, and even before this
Court, but chose not to do so for reasons which will not warrant the sacrifice of substantial justice over
technicalities.
On the third issue, respondents employment with petitioner passed the four-fold test on employer-employee
relations, namely: (1) the selection and engagement of the employee, or the power to hire; (2) the payment of
wages; (3) the power to dismiss; and (4) the power to control the employee.
Petitioner failed to controvert with substantial evidence the allegation of respondents that they were hired by the
former on various dates from 1974 to 1997. If petitioner did not hire respondents and if it was the director alone
who chose the talents, petitioner could have easily shown, being in possession of the records, a contract to such
effect. However, petitioner merely relied on its contention that respondents were piece rate contractors who were
paid by results.[17] Note that under Policy Instruction No. 40, petitioner is obliged to execute the necessary
contract specifying the nature of the work to be performed, rates of pay, and the programs in which they will

work. Moreover, project or contractual employees are required to be apprised of the project they will undertake
under a written contract. This was not complied with by the petitioner, justifying the reasonable conclusion that
no such contracts exist and that respondents were in fact regular employees.
In ABS-CBN v. Marquez,[18] the Court held that the failure of the employer to produce the contract mandated by
Policy Instruction No. 40 is indicative that the so called talents or project workers are in reality, regular
employees. Thus
Policy Instruction No. 40 pertinently provides:
Program employees are those whose skills, talents or services are engaged by
the station for a particular or specific program or undertaking and who are not
required to observe normal working hours such that on some days they work for
less than eight (8) hours and on other days beyond the normal work hours
observed by station employees and are allowed to enter into employment
contracts with other persons, stations, advertising agencies or sponsoring
companies. The engagement of program employees, including those hired by
advertising or sponsoring companies, shall be under a written contract
specifying, among other things, the nature of the work to be performed, rates
of pay, and the programs in which they will work. The contract shall be
duly registered by the station with the Broadcast Media Council within
three days from its consummation. (Emphasis supplied)
Ironically, however, petitioner failed to adduce an iota proof that the requirements for program
employment were even complied with by it. It is basic that project or contractual employees are
appraised of the project they will work under a written contract, specifying, inter alia, the nature
of work to be performed and the rates of pay and the program in which they will work. Sadly,
however, no such written contract was ever presented by the petitioner. Petitioner is in the best
of position to present these documents. And because none was presented, we have every reason
to surmise that no such written contract was ever accomplished by the parties, thereby belying
petitioners posture.
Worse, there was no showing of compliance with the requirement that after every engagement or
production of a particular television series, the required reports were filed with the proper
government agency, as provided no less under the very Policy Instruction invoked by the
petitioner, nor under the Omnibus Implementing Rules of the Labor Code for project employees.
This alone bolsters respondents contention that they were indeed petitioners regular employees
since their employment was not only for a particular program.
Moreover, the engagement of respondents for a period ranging from 2 to 25 years and the fact that their drama
programs were aired not only in Bacolod City but also in the sister stations of DYWB in the Visayas and
Mindanao areas, undoubtedly show that their work is necessary and indispensable to the usual business or trade
of petitioner. The test to determine whether employment is regular or not is the reasonable connection between
the particular activity performed by the employee in relation to the usual business or trade of the employer.
Also, if the employee has been performing the job for at least one year, even if the performance is not continuous

or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence
of the necessity, if not indispensability of that activity to the business. Thus, even assuming that respondents
were initially hired as project/contractual employees who were paid per drama or per project/contract, the
engagement of their services for 2 to 25 years justify their classification as regular employees, their services
being deemed indispensable to the business of petitioner.[19]
As to the payment of wages, it was petitioner who paid the same as shown by the payroll bearing the name of
petitioner company in the heading with the respective salaries of respondents opposite their names. Anent the
power of control, dismissal, and imposition of disciplinary measures, which are indicative of an employeremployee relationship,[20] the same were duly proven by the following: (1) memorandum[21] duly noted by
Wilfredo Alejaga, petitioners station manager, calling the attention of the Drama Department to the late
submission of scripts by writers and the tardiness and absences of directors and talents, as well as the imposable
fines of P100 to P200 for future infractions; (2) the memorandum[22] of the station manager directing
respondent Oberio to explain why no disciplinary action should be taken against him for punching the time card
of a certain Mrs. Fe Oberio who was not physically present in their office; and (3) the station managers
memorandum[23]suspending respondent Oberio for six days for the said infraction which constituted violation
of petitioners network policy. All these, taken together, unmistakably show the existence of an employeremployee relationship. Not only did petitioner possess the power of control over their work but also the power to
discipline them through the imposition of fines and suspension for violation of company rules and policies.
Finally, we find that respondents were illegally dismissed. In labor cases, the employer has the burden of proving
that the dismissal was for a just cause; failure to show this would necessarily mean that the dismissal was
unjustified and, therefore, illegal. To allow an employer to dismiss an employee based on mere allegations and
generalities would place the employee at the mercy of his employer; and the right to security of tenure, which
this Court is bound to protect, would be unduly emasculated.[24] In this case, petitioner merely contended that it
was respondents who ceased to report to work, and never presented any substantial evidence to support said
allegation. Petitioner therefore failed to discharge its burden, hence, respondents were correctly declared to have
been illegally dismissed.
Furthermore, if doubts exist between the evidence presented by the employer and the employee, the scales of
justice must be tilted in favor of the latter the employer must affirmatively show rationally adequate evidence
that the dismissal was for a justifiable cause. It is a time-honored rule that in controversies between a laborer and
his master, doubts reasonably arising from the evidence should be resolved in the formers favor.The policy is to
extend the doctrine to a greater number of employees who can avail of the benefits under the law, which is in
consonance with the avowed policy of the State to give maximum aid and protection of labor.[25]

When a person is illegally dismissed, he is entitled to reinstatement without loss of seniority rights and other
privileges and to his fullbackwages. In the event, however, that reinstatement is no longer feasible, or if the
employee decides not to be reinstated, the employer shall payhim separation pay in lieu of reinstatement. Such a
rule is likewise observed in the case of a strained employer-employee relationship or when the work or position
formerly held by the dismissed employee no longer exists. In sum, an illegally dismissed employee is entitled to:
(1) eitherreinstatement if viable or separation pay if reinstatement is no longer viable, and (2) backwages. In the
instant controversy, reinstatement is no longer viable considering the strained relations between petitioner and
respondents. As admitted by the latter, the complaint filed before the DOLE strained their relations with
petitioner who eventually dismissed them from service. Payment of separation pay instead of reinstatement
would thus better promote the interest of both parties.
Respondents separation pay should be computed based on their respective one (1) month pay, or one-half (1/2)
month pay for every year of service, whichever is higher, reckoned from their first day of employment up to
finality of this decision. Full backwages, on the other hand, should be computed from the date of their dismissal
until the finality of this decision.[26]
WHEREFORE, the petition is DENIED. The July 30, 2004 Decision of the Court of Appeals in CA-G.R. SP
No. 77098, finding respondents to be regular employees of petitioner and holding them to be illegally dismissed
and directing petitioner to pay full backwages, is AFFIRMED with the MODIFICATION that petitioner is
ordered to pay respondents their separation pay instead of effecting their reinstatement.
SO ORDERED.

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orazco v the fifth division of the honorable cpourt of appeals
WILHELMINA S. OROZCO, petitioner,
vs.
THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS, PHILIPPINE DAILY
INQUIRER, and LETICIA JIMENEZ MAGSANOC, respondents.
DECISION
NACHURA, J.:
The case before this Court raises a novel question never before decided in our jurisdiction whether a
newspaper columnist is an employee of the newspaper which publishes the column.
In this Petition for Review under Rule 45 of the Revised Rules on Civil Procedure, petitioner Wilhelmina S.
Orozco assails the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 50970 dated June 11, 2002 and its

Resolution2 dated September 11, 2002 denying her Motion for Reconsideration. The CA reversed and set aside
the Decision3 of the National Labor Relations Commission (NLRC), which in turn had affirmed the
Decision4 of the Labor Arbiter finding that Orozco was an employee of private respondent Philippine Daily
Inquirer (PDI) and was illegally dismissed as columnist of said newspaper.
In March 1990, PDI engaged the services of petitioner to write a weekly column for its Lifestyle section. She
religiously submitted her articles every week, except for a six-month stint in New York City when she,
nonetheless, sent several articles through mail. She received compensation of P250.00 later increased
toP300.00 for every column published.5
On November 7, 1992, petitioners column appeared in the PDI for the last time. Petitioner claims that her then
editor, Ms. Lita T. Logarta,6 told her that respondent Leticia Jimenez Magsanoc, PDI Editor in Chief, wanted to
stop publishing her column for no reason at all and advised petitioner to talk to Magsanoc herself. Petitioner
narrates that when she talked to Magsanoc, the latter informed her that it was PDI Chairperson Eugenia Apostol
who had asked to stop publication of her column, but that in a telephone conversation with Apostol, the latter
said that Magsanoc informed her (Apostol) that the Lifestyle section already had many columnists. 7
On the other hand, PDI claims that in June 1991, Magsanoc met with the Lifestyle section editor to discuss how
to improve said section. They agreed to cut down the number of columnists by keeping only those whose
columns were well-written, with regular feedback and following. In their judgment, petitioners column failed to
improve, continued to be superficially and poorly written, and failed to meet the high standards of the
newspaper. Hence, they decided to terminate petitioners column. 8
Aggrieved by the newspapers action, petitioner filed a complaint for illegal dismissal, backwages, moral and
exemplary damages, and other money claims before the NLRC.
On October 29, 1993, Labor Arbiter Arthur Amansec rendered a Decision in favor of petitioner, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered, finding complainant to be an employee of respondent
company; ordering respondent company to reinstate her to her former or equivalent position, with
backwages.
Respondent company is also ordered to pay her 13th month pay and service incentive leave pay.
Other claims are hereby dismissed for lack of merit.
SO ORDERED.9
The Labor Arbiter found that:
[R]espondent company exercised full and complete control over the means and method by which
complainants work that of a regular columnist had to be accomplished. This control might not be
found in an instruction, verbal or oral, given to complainant defining the means and method she should
write her column. Rather, this control is manifested and certained (sic) in respondents admitted
prerogative to reject any article submitted by complainant for publication.

By virtue of this power, complainant was helplessly constrained to adopt her subjects and style of
writing to suit the editorial taste of her editor. Otherwise, off to the trash can went her articles.
Moreover, this control is already manifested in column title, "Feminist Reflection" allotted complainant.
Under this title, complainants writing was controlled and limited to a womans perspective on matters of
feminine interests. That respondent had no control over the subject matter written by complainant is
strongly belied by this observation. Even the length of complainants articles were set by respondents.
Inevitably, respondents would have no control over when or where complainant wrote her articles as she
was a columnist who could produce an article in thirty (3) (sic) months or three (3) days, depending on
her mood or the amount of research required for an article but her actions were controlled by her
obligation to produce an article a week. If complainant did not have to report for work eight (8) hours a
day, six (6) days a week, it is because her task was mainly mental. Lastly, the fact that her articles were
(sic) published weekly for three (3) years show that she was respondents regular employee, not a oncein-a-blue-moon contributor who was not under any pressure or obligation to produce regular articles and
who wrote at his own whim and leisure.10
PDI appealed the Decision to the NLRC. In a Decision dated August 23, 1994, the NLRC Second Division
dismissed the appeal thereby affirming the Labor Arbiters Decision. The NLRC initially noted that PDI failed to
perfect its appeal, under Article 223 of the Labor Code, due to non-filing of a cash or surety bond. The NLRC
said that the reason proffered by PDI for not filing the bond that it was difficult or impossible to determine the
amount of the bond since the Labor Arbiter did not specify the amount of the judgment award was not
persuasive. It said that all PDI had to do was compute based on the amount it was paying petitioner, counting the
number of weeks from November 7, 1992 up to promulgation of the Labor Arbiters decision. 11
The NLRC also resolved the appeal on its merits. It found no error in the Labor Arbiters findings of fact and
law. It sustained the Labor Arbiters reasoning that respondent PDI exercised control over petitioners work.
PDI then filed a Petition for Review 12 before this Court seeking the reversal of the NLRC Decision. However,
in a Resolution13 dated December 2, 1998, this Court referred the case to the Court of Appeals, pursuant to our
ruling in St. Martin Funeral Homes v. National Labor Relations Commission.14
The CA rendered its assailed Decision on June 11, 2002. It set aside the NLRC Decision and dismissed
petitioners Complaint. It held that the NLRC misappreciated the facts and rendered a ruling wanting in
substantial evidence. The CA said:
The Court does not agree with public respondent NLRCs conclusion. First, private respondent admitted
that she was and [had] never been considered by petitioner PDI as its employee. Second, it is not
disputed that private respondent had no employment contract with petitioner PDI. In fact, her
engagement to contribute articles for publication was based on a verbal agreement between her and the
petitioners Lifestyle Section Editor. Moreover, it was evident that private respondent was not required to
report to the office eight (8) hours a day. Further, it is not disputed that she stayed in New York for six
(6) months without petitioners permission as to her leave of absence nor was she given any disciplinary
action for the same. These undisputed facts negate private respondents claim that she is an employee of
petitioner.

Moreover, with regards (sic) to the control test, the public respondent NLRCs ruling that the guidelines
given by petitioner PDI for private respondent to follow, e.g. in terms of space allocation and length of
article, is not the form of control envisioned by the guidelines set by the Supreme Court. The length of
the article is obviously limited so that all the articles to be featured in the paper can be accommodated.
As to the topic of the article to be published, it is but logical that private respondent should not write
morbid topics such as death because she is contributing to the lifestyle section. Other than said given
limitations, if the same could be considered limitations, the topics of the articles submitted by private
respondent were all her choices. Thus, the petitioner PDI in deciding to publish private respondents
articles only controls the result of the work and not the means by which said articles were written.
As such, the above facts failed to measure up to the control test necessary for an employer-employee
relationship to exist.15
Petitioners Motion for Reconsideration was denied in a Resolution dated September 11, 2002. She then filed the
present Petition for Review.
In a Resolution dated April 29, 2005, the Court, without giving due course to the petition, ordered the Labor
Arbiter to clarify the amount of the award due petitioner and, thereafter, ordered PDI to post the requisite bond.
Upon compliance therewith, the petition would be given due course. Labor Arbiter Amansec clarified that the
award under the Decision amounted to P15,350.00. Thus, PDI posted the requisite bond on January 25, 2007.16
We shall initially dispose of the procedural issue raised in the Petition.
Petitioner argues that the CA erred in not dismissing outright PDIs Petition forCertiorari for PDIs failure to
post a cash or surety bond in violation of Article 223 of the Labor Code.
This issue was settled by this Court in its Resolution dated April 29, 2005. 17There, the Court held:
But while the posting of a cash or surety bond is jurisdictional and is a condition sine qua non to the
perfection of an appeal, there is a plethora of jurisprudence recognizing exceptional instances wherein
the Court relaxed the bond requirement as a condition for posting the appeal.
xxxx
In the case of Taberrah v. NLRC, the Court made note of the fact that the assailed decision of the Labor
Arbiter concerned did not contain a computation of the monetary award due the employees, a
circumstance which is likewise present in this case. In said case, the Court stated,
As a rule, compliance with the requirements for the perfection of an appeal within the
reglamentary (sic) period is mandatory and jurisdictional. However, in National Federation of
Labor Unions v. Ladrido as well as in several other cases, this Court relaxed the requirement of
the posting of an appeal bond within the reglementary period as a condition for perfecting the
appeal. This is in line with the principle that substantial justice is better served by allowing the
appeal to be resolved on the merits rather than dismissing it based on a technicality.
The judgment of the Labor Arbiter in this case merely stated that petitioner was entitled to backwages,
13th month pay and service incentive leave pay without however including a computation of the alleged
amounts.
xxxx

In the case of NFLU v. Ladrido III, this Court postulated that "private respondents cannot be expected to
post such appeal bond equivalent to the amount of the monetary award when the amount thereof was not
included in the decision of the labor arbiter." The computation of the amount awarded to petitioner not
having been clearly stated in the decision of the labor arbiter, private respondents had no basis for
determining the amount of the bond to be posted.
Thus, while the requirements for perfecting an appeal must be strictly followed as they are considered
indispensable interdictions against needless delays and for orderly discharge of judicial business, the law
does admit of exceptions when warranted by the circumstances. Technicality should not be allowed to
stand in the way of equitably and completely resolving the rights and obligations of the parties. But
while this Court may relax the observance of reglementary periods and technical rules to achieve
substantial justice, it is not prepared to give due course to this petition and make a pronouncement on the
weighty issue obtaining in this case until the law has been duly complied with and the requisite appeal
bond duly paid by private respondents.18
Records show that PDI has complied with the Courts directive for the posting of the bond; 19 thus, that issue has
been laid to rest.
We now proceed to rule on the merits of this case.
The main issue we must resolve is whether petitioner is an employee of PDI, and if the answer be in the
affirmative, whether she was illegally dismissed.
We rule for the respondents.
The existence of an employer-employee relationship is essentially a question of fact. 20 Factual findings of quasijudicial agencies like the NLRC are generally accorded respect and finality if supported by substantial
evidence.21
Considering, however, that the CAs findings are in direct conflict with those of the Labor Arbiter and NLRC,
this Court must now make its own examination and evaluation of the facts of this case.
It is true that petitioner herself admitted that she "was not, and [had] never been considered respondents
employee because the terms of works were arbitrarily decided upon by the respondent." 22 However, the
employment status of a person is defined and prescribed by law and not by what the parties say it should be. 23
This Court has constantly adhered to the "four-fold test" to determine whether there exists an employeremployee relationship between parties.24 The four elements of an employment relationship are: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employees conduct.25
Of these four elements, it is the power of control which is the most crucial 26 and most determinative factor,27 so
important, in fact, that the other elements may even be disregarded. 28 As this Court has previously held:
the significant factor in determining the relationship of the parties is the presence or absence of
supervisory authority to control the method and the details of performance of the service being rendered,
and the degree to which the principal may intervene to exercise such control. 29

In other words, the test is whether the employer controls or has reserved the right to control the employee, not
only as to the work done, but also as to the means and methods by which the same is accomplished. 30
Petitioner argues that several factors exist to prove that respondents exercised control over her and her work,
namely:
a. As to the Contents of her Column The PETITIONER had to insure that the contents of her column
hewed closely to the objectives of its Lifestyle Section and the over-all principles that the newspaper
projects itself to stand for. As admitted, she wanted to write about death in relation to All Souls Day but
was advised not to.
b. As to Time Control The PETITIONER, as a columnist, had to observe the deadlines of the
newspaper for her articles to be published. These deadlines were usually that time period when the
Section Editor has to "close the pages" of the Lifestyle Section where the column in located. "To close
the pages" means to prepare them for printing and publication.
As a columnist, the PETITIONERs writings had a definite day on which it was going to appear. So she
submitted her articles two days before the designated day on which the column would come out.
This is the usual routine of newspaper work. Deadlines are set to fulfill the newspapers obligations to
the readers with regard to timeliness and freshness of ideas.
c. As to Control of Space The PETITIONER was told to submit only two or three pages of article for
the column, (sic) "Feminist Reflections" per week. To go beyond that, the Lifestyle editor would already
chop off the article and publish the rest for the next week. This shows that PRIVATE RESPONDENTS
had control over the space that the PETITIONER was assigned to fill.
d. As to Discipline Over time, the newspaper readers eyes are trained or habituated to look for and
read the works of their favorite regular writers and columnists. They are conditioned, based on their
daily purchase of the newspaper, to look for specific spaces in the newspapers for their favorite writeups/or opinions on matters relevant and significant issues aside from not being late or amiss in the
responsibility of timely submission of their articles.
The PETITIONER was disciplined to submit her articles on highly relevant and significant issues on
time by the PRIVATE RESPONDENTS who have a say on whether the topics belong to those
considered as highly relevant and significant, through the Lifestyle Section Editor. The PETITIONER
had to discuss the topics first and submit the articles two days before publication date to keep her column
in the newspaper space regularly as expected or without miss by its readers. 31
Given this discussion by petitioner, we then ask the question: Is this the form of control that our labor laws
contemplate such as to establish an employer-employee relationship between petitioner and respondent PDI?
It is not.
Petitioner has misconstrued the "control test," as did the Labor Arbiter and the NLRC.
Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former.
Rules which serve as general guidelines towards the achievement of the mutually desired result are not
indicative of the power of control.32 Thus, this Court has explained:

It should, however, be obvious that not every form of control that the hiring party reserves to himself
over the conduct of the party hired in relation to the services rendered may be accorded the effect of
establishing an employer-employee relationship between them in the legal or technical sense of the term.
A line must be drawn somewhere, if the recognized distinction between an employee and an individual
contractor is not to vanish altogether. Realistically, it would be a rare contract of service that gives
untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of
the engagement.
Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of
such means. The first, which aim only to promote the result, create no employer-employee relationship
unlike the second, which address both the result and the means used to achieve it. x x x. 33
The main determinant therefore is whether the rules set by the employer are meant to control not just the results
of the work but also the means and method to be used by the hired party in order to achieve such results. Thus, in
this case, we are to examine the factors enumerated by petitioner to see if these are merely guidelines or if they
indeed fulfill the requirements of the control test.
Petitioner believes that respondents acts are meant to control how she executes her work. We do not agree. A
careful examination reveals that the factors enumerated by the petitioner are inherent conditions in running a
newspaper. In other words, the so-called control as to time, space, and discipline are dictated by the very nature
of the newspaper business itself.
We agree with the observations of the Office of the Solicitor General that:
The Inquirer is the publisher of a newspaper of general circulation which is widely read throughout the
country. As such, public interest dictates that every article appearing in the newspaper should subscribe
to the standards set by the Inquirer, with its thousands of readers in mind. It is not, therefore, unusual for
the Inquirer to control what would be published in the newspaper. What is important is the fact that such
control pertains only to the end result, i.e., the submitted articles. The Inquirer has no control over
[petitioner] as to the means or method used by her in the preparation of her articles. The articles are done
by [petitioner] herself without any intervention from the Inquirer.34
Petitioner has not shown that PDI, acting through its editors, dictated how she was to write or produce her
articles each week. Aside from the constraints presented by the space allocation of her column, there were no
restraints on her creativity; petitioner was free to write her column in the manner and style she was accustomed
to and to use whatever research method she deemed suitable for her purpose. The apparent limitation that she
had to write only on subjects that befitted the Lifestyle section did not translate to control, but was simply a
logical consequence of the fact that her column appeared in that section and therefore had to cater to the
preference of the readers of that section.
The perceived constraint on petitioners column was dictated by her own choice of her columns perspective.
The column title "Feminist Reflections" was of her own choosing, as she herself admitted, since she had been
known as a feminist writer.35 Thus, respondent PDI, as well as her readers, could reasonably expect her columns
to speak from such perspective.

Contrary to petitioners protestations, it does not appear that there was any actual restraint or limitation on the
subject matter within the Lifestyle section that she could write about. Respondent PDI did not dictate how
she wrote or what she wrote in her column. Neither did PDIs guidelines dictate the kind of research, time, and
effort she put into each column. In fact, petitioner herself said that she received "no comments on her articles
except for her to shorten them to fit into the box allotted to her column." Therefore, the control that PDI
exercised over petitioner was only as to the finished product of her efforts, i.e., the column itself, by way of
either shortening or outright rejection of the column.
The newspapers power to approve or reject publication of any specific article she wrote for her column cannot
be the control contemplated in the "control test," as it is but logical that one who commissions another to do a
piece of work should have the right to accept or reject the product. The important factor to consider in the
"control test" is still the element of control over how the work itself is done, not just the end result thereof.
In contrast, a regular reporter is not as independent in doing his or her work for the newspaper. We note the
common practice in the newspaper business of assigning its regular reporters to cover specific subjects,
geographical locations, government agencies, or areas of concern, more commonly referred to as "beats." A
reporter must produce stories within his or her particular beat and cannot switch to another beat without
permission from the editor. In most newspapers also, a reporter must inform the editor about the story that he or
she is working on for the day. The story or article must also be submitted to the editor at a specified time.
Moreover, the editor can easily pull out a reporter from one beat and ask him or her to cover another beat, if the
need arises.
This is not the case for petitioner. Although petitioner had a weekly deadline to meet, she was not precluded
from submitting her column ahead of time or from submitting columns to be published at a later time. More
importantly, respondents did not dictate upon petitioner the subject matter of her columns, but only imposed the
general guideline that the article should conform to the standards of the newspaper and the general tone of the
particular section.
Where a person who works for another performs his job more or less at his own pleasure, in the manner he sees
fit, not subject to definite hours or conditions of work, and is compensated according to the result of his efforts
and not the amount thereof, no employer-employee relationship exists. 36
Aside from the control test, this Court has also used the economic reality test. The economic realities prevailing
within the activity or between the parties are examined, taking into consideration the totality of circumstances
surrounding the true nature of the relationship between the parties. 37 This is especially appropriate when, as in
this case, there is no written agreement or contract on which to base the relationship. In our jurisdiction, the
benchmark of economic reality in analyzing possible employment relationships for purposes of applying the
Labor Code ought to be the economic dependence of the worker on his employer. 38
Petitioners main occupation is not as a columnist for respondent but as a womens rights advocate working in
various womens organizations.39 Likewise, she herself admits that she also contributes articles to other
publications.40Thus, it cannot be said that petitioner was dependent on respondent PDI for her continued
employment in respondents line of business.41
The inevitable conclusion is that petitioner was not respondent PDIs employee but an independent contractor,
engaged to do independent work.

There is no inflexible rule to determine if a person is an employee or an independent contractor; thus, the
characterization of the relationship must be made based on the particular circumstances of each case. 42 There
are several factors43 that may be considered by the courts, but as we already said, the right to control is the
dominant factor in determining whether one is an employee or an independent contractor.44
In our jurisdiction, the Court has held that an independent contractor is one who carries on a distinct and
independent business and undertakes to perform the job, work, or service on ones own account and under ones
own responsibility according to ones own manner and method, free from the control and direction of the
principal in all matters connected with the performance of the work except as to the results thereof. 45
On this point, Sonza v. ABS-CBN Broadcasting Corporation46 is enlightening. In that case, the Court found,
using the four-fold test, that petitioner, Jose Y. Sonza, was not an employee of ABS-CBN, but an independent
contractor. Sonza was hired by ABS-CBN due to his "unique skills, talent and celebrity status not possessed by
ordinary employees," a circumstance that, the Court said, was indicative, though not conclusive, of an
independent contractual relationship. Independent contractors often present themselves to possess unique skills,
expertise or talent to distinguish them from ordinary employees. 47 The Court also found that, as to payment of
wages, Sonzas talent fees were the result of negotiations between him and ABS-CBN. 48 As to the power of
dismissal, the Court found that the terms of Sonzas engagement were dictated by the contract he entered into
with ABS-CBN, and the same contract provided that either party may terminate the contract in case of breach by
the other of the terms thereof. 49 However, the Court held that the foregoing are not determinative of an
employer-employee relationship. Instead, it is still the power of control that is most important.
On the power of control, the Court found that in performing his work, Sonza only needed his skills and talent
how he delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs
control.50 Thus:
We find that ABS-CBN was not involved in the actual performance that produced the finished product of
SONZAs work. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved
the right to modify the program format and airtime schedule "for more effective programming." ABSCBNs sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN
did not exercise control over the means and methods of performance of SONZAs work.
SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power over the
means and methods of the performance of his work. Although ABS-CBN did have the option not to
broadcast SONZAs show, ABS-CBN was still obligated to pay SONZAs talent fees... Thus, even if
ABS-CBN was completely dissatisfied with the means and methods of SONZAs performance of his
work, or even with the quality or product of his work, ABS-CBN could not dismiss or even discipline
SONZA. All that ABS-CBN could do is not to broadcast SONZAs show but ABS-CBN must still pay
his talent fees in full.
Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the obligation to
continue paying in full SONZAs talent fees, did not amount to control over the means and methods of
the performance of SONZAs work. ABS-CBN could not terminate or discipline SONZA even if the
means and methods of performance of his work - how he delivered his lines and appeared on television did not meet ABS-CBNs approval. This proves that ABS-CBNs control was limited only to the result

of SONZAs work, whether to broadcast the final product or not. In either case, ABS-CBN must still pay
SONZAs talent fees in full until the expiry of the Agreement.
In Vaughan, et al. v. Warner, et al., the United States Circuit Court of Appeals ruled that vaudeville
performers were independent contractors although the management reserved the right to delete
objectionable features in their shows. Since the management did not have control over the manner of
performance of the skills of the artists, it could only control the result of the work by deleting
objectionable features.
SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and
crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the "Mel &
Jay" programs. However, the equipment, crew and airtime are not the "tools and instrumentalities"
SONZA needed to perform his job. What SONZA principally needed were his talent or skills and the
costumes necessary for his appearance. Even though ABS-CBN provided SONZA with the place of
work and the necessary equipment, SONZA was still an independent contractor since ABS-CBN did not
supervise and control his work. ABS-CBNs sole concern was for SONZA to display his talent during
the airing of the programs.
A radio broadcast specialist who works under minimal supervision is an independent contractor.
SONZAs work as television and radio program host required special skills and talent, which SONZA
admittedly possesses. The records do not show that ABS-CBN exercised any supervision and control
over how SONZA utilized his skills and talent in his shows. 51
The instant case presents a parallel to Sonza. Petitioner was engaged as a columnist for her talent, skill,
experience, and her unique viewpoint as a feminist advocate. How she utilized all these in writing her column
was not subject to dictation by respondent. As in Sonza, respondent PDI was not involved in the actual
performance that produced the finished product. It only reserved the right to shorten petitioners articles based
on the newspapers capacity to accommodate the same. This fact, we note, was not unique to petitioners
column. It is a reality in the newspaper business that space constraints often dictate the length of articles and
columns, even those that regularly appear therein.
Furthermore, respondent PDI did not supply petitioner with the tools and instrumentalities she needed to perform
her work. Petitioner only needed her talent and skill to come up with a column every week. As such, she had all
the tools she needed to perform her work.
Considering that respondent PDI was not petitioners employer, it cannot be held guilty of illegal dismissal.
WHEREFORE, the foregoing premises considered, the Petition is DISMISSED. The Decision and Resolution
of the Court of Appeals in CA-G.R. SP No. 50970 are hereby AFFIRMED.
SO ORDERED.
Wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww
audion electric v nlrc
GONZAGA_REYES, J.:

In this special civil action for certiorari, petitioner seeks the annulment of the resolution[1] dated March 24,
1992, of the National Labor Relations Commission in NLRC NCR-CA No. 001034-90 and the Order[2] dated
July 31, 1992, denying petitioners motion for reconsideration dated April 22, 1992.
The facts of the case as summarized by Labor Arbiter Cresencio R. Iniego in his decision rendered on
November 15, 1990 in NLRC-NCR Case No. -00-08-03906-89, and which are quoted in the questioned
Resolution dated March 24, 1992 of the public respondent are as follows:
From the position paper and affidavit corroborated by oral testimony, it appears that complainant was employed
by respondent Audion Electric Company on June 30, 1976 as fabricator and continuously rendered service
assigned in different offices or projects as helper electrician, stockman and timekeeper. He has rendered thirteen
(13) years of continuous, loyal and dedicated service with a clean record. On August 3, complainant was
surprised to receive a letter informing him that he will be considered terminated after the turnover of materials,
including respondents tools and equipments not later than August 15, 1989.
Complainant claims that he was dismissed without justifiable cause and due process and that his dismissal was
done in bad faith which renders the dismissal illegal. For this reason, he claims that he is entitled to
reinstatement with full backwages. He also claims that he is entitled to moral and exemplary damages. He
includes payment of his overtime pay, project allowance, minimum wage increase adjustment, proportionate
13th month pay and attorneys fees.
On its part, respondent merely relied on its unverified letter-communication signed by its project manager, dated
September 25, 1989, the contents of which are as follows:
Your Honor:
Apropos to the complaints filed by NICOLAS MADOLID with your honorable office are as stated and
corresponding allegations as our defense to said complaints.
A. ILLEGAL DISMISSAL- There is no course (sic) to complain since employment contract signed by
complainant with respondent is co-terminus with the project. xxx
B. UNPAID WAGES- Admitting that salary payment was delayed due to late remittance of collection
from respondents Japanese prime contractor but nonetheless settled with complainant as evidenced
by signed Payroll Slips by complainant. xxx
C. NON-PAYMENT OF 13th MONTH PAY- As earlier admitted, there was a relative delay in the
remittance of collection payment from our Japanese prime contractor but respondent knowing the
economic predecament (sic) of complainant has seen to it that respondent be satisfied without
awaiting for remittance of 13th month from its Japanese contractor. attached is a xxx
In full satisfaction of the enumerated complaints made by complainant NICOLAS MADOLID against
respondent THE AUDION ELECTRIC CO., INC., we pray that charges against respondent be withdrawn and
dropped.[3]
On November 15, 1990, Labor Arbiter Cresencio R. Iniego rendered a decision, the dispositive portion
states:
WHEREFORE, judgment is hereby rendered ordering respondent Audion Electric Co., Inc. and/or Robert S.
Coran, Manager:

1. to reinstate complainant Nicolas Madolid to his former position with full backwages from the date
of his dismissal on August 15, 1989 up to the signing of this decision without loss of seniority
rights in the amount of P34,710.00;
2. to pay complainant his overtime pay for the period March 16 to April 3, 1989 in the amount
of P 765.63;
3. to pay complainant his project allowances as follows:
April 16, 1989 to April 30, 1989 P30.00
May 1 to May 15, 1989 P45.00
May 16 to May 31, 1989 P30.00
June 1 to June 15, 1989 P45.00
June 16 to June 30, 1989 P30.00
July 1 to July 15, 1989 P30.00
July 16 to July 31, 1989 P45.00
4. to pay complainant the minimum wage increase adjustment from August 1 to 14, 1989 in the amount
of P256.50;
5. to pay complainant his proportionate 13th month pay from January to May 1988 in the amount
of P700.00;
6. to pay complainant moral and exemplary damages in the amount of P20,000.00; and
7. to pay attorneys fees equivalent to 10% of the total award of complainant.[4]
Petitioner appealed to the National Labor Relations Commission which rendered the questioned Resolution
dated March 24, 1992 dismissing the appeal.
The motion for reconsideration filed by petitioner was denied by the NLRC in its Order dated July 31,
1992.
Petitioner is now before us raising the following issues:
I
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION IN AFFIRMING
THE DECISION OF THE LABOR ARBITER DIRECTING THE REINSTATEMENT OF THE PRIVATE
RESPONDENT TO HIS FORMER POSITION WITHOUT LOSS OF SENIORITY RIGHTS AND WITH
BACKWAGES AMOUNTING TO P34,710.00 NOTWITHSTANDING THE FACT THAT THE PRIVATE
RESPONDENT WAS MERELY A PROJECT EMPLOYEE.
II
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT
AWARDED THE CLAIM FOR OVERTIME PAY TO PRIVATE RESPONDENT WHEN NO OVERTIME
WORK WAS RENDERED.

III
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT
AWARDED THE CLAIMS OF PRIVATE RESPONDENT FOR PROJECT ALLOWANCES, MINIMUM
WAGE INCREASE ADJUSTMENT AND PROPORTIONATE 13TH MONTH PAY WITHOUT ANY
EVIDENCE TO PROVE THE SAME.
IV
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT DENIED
PETITIONERS CLAIM THAT IT WAS DENIED DUE PROCESS.
V
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT DID NOT
TOUCH UPON MUCH LESS DISCUSS THE PETITIONERS ASSIGNMENTS OF ERRORS IN ITS
APPEAL.
VI
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION IN AWARDING
MORAL AND EXEMPLARY DAMAGES IN THE AMOUNT OF P20,000 AS WELL AS ATTORNEYS FEES
CONSIDERING THAT THE SAME ARE WITHOUT FACTUAL AND LEGAL BASIS.[5]
The core issues presented before us are (a) whether the respondent NLRC committed grave abuse of
discretion amounting to lack or excess of jurisdiction when it ruled that private respondent was a regular
employee and not a project employee, (b) whether petitioner was denied due process when all the money claims
of private respondent, i.e. overtime pay, project allowances, salary differential, proportionate 13th month pay,
moral and exemplary damages as well as attorneys fees, were granted.
Petitioner contends that as an electrical contractor, its business depends on contracts it may obtain from
private and government establishments, hence the duration of the employment of its work force is not permanent
but co-terminous with the project to which they are assigned; that the conclusion reached by the Labor Arbiter
and affirmed by the respondent court that private respondent was a regular employee of petitioner was merely
based on mere allegations of private respondent since the Labor Arbiter did not consider the lettercommunication filed by petitioner through its project manager for the reason that it was not under oath; that
although private respondents employment records showed that he was hired by petitioner as fabricator,
helper/electrician, stockman and timekeeper in its various projects from 1976 to August 14, 1989, the same
employment record showed a gap in his employment service by reason of completion of a particular project,
hence, private respondent would be re-assigned to other on-going projects of the petitioner or be laid off if there
is no available project; that private respondent is a project worker whose employment is co-terminous with the
completion of project, regardless of the number of projects in which he had worked as provided under Policy
Instruction No. 20 of the Labor Department defining project employees as those employed in connection with a
particular construction project. Petitioner relies on the rulings laid down in Sandoval Shipyard Inc. vs.
NLRC[6]and Cartagenas vs. Romago Electric Co., Inc[7] where this court declared the employment of project
employees as co-terminous with the completion of the project for which they were hired.
Well-settled is the rule that the findings of the NLRC, except when there is grave abuse of discretion, are
practically conclusive on this Court. It is only when the NLRCs findings are bereft of any substantial support

from the records that the Court may step in and proceed to make its own independent evaluation of the facts.
[8] We see no reason to deviate from the rule.
In finding that private respondent was a regular employee of petitioner and not a mere project employee, the
respondent Commission held:
"Firstly, respondents assigning complainant to its various projects did not make complainant a project worker. As
found by the Labor Arbiter, it appears that complainant was employed by respondent xxx as fabricator and or
projects as helper electrician, stockman and timekeeper. Simply put, complainant was a regular non-project
worker."[9]
Private respondents employment status was established by the Certification of Employment dated April 10,
1989 issued by petitioner which certified that private respondent is a bonafide employee of the petitioner from
June 30, 1976 up to the time the certification was issued on April 10, 1989. The same certificate of employment
showed that private respondents exposure to their field of operation was as fabricator, helper/electrician,
stockman/timekeeper. This proves that private respondent was regularly and continuously employed by
petitioner in various job assignments from 1976 to 1989, for a total of 13 years. The alleged gap in employment
service cited by petitioner does not defeat private respondents regular status as he was rehired for many more
projects without interruption and performed functions which are vital, necessary and indispensable to the usual
business of petitioner.
We have held that where the employment of project employees is extended long after the supposed project
has been finished, the employees are removed from the scope of project employees and considered regular
employees.[10] Private respondent had presented substantial evidence to support his position, while petitioner
merely presented an unverified position paper merely stating therein that private respondent has no cause to
complain since the employment contract signed by private respondent with petitioner was co-terminous with the
project. Notably, petitioner failed to present such employment contract for a specific project signed by private
respondent that would show that his employment with the petitioner was for the duration of a particular
project. Moreover, notwithstanding petitioners claim in its reply that in taking interest in the welfare of its
workers, petitioner would strive to provide them with more continuous work by successively employing its
workers, in this case, private respondent, petitioner failed to present any report of termination. Petitioner should
have submitted or filed as many reports of termination as there were construction projects actually finished,
considering that private respondent had been hired since 1976. The failure of petitioner to submit reports of
termination supports the claim ofprivate respondent that he was indeed a regular employee.
Policy Instruction No. 20 of the Department of Labor is explicit that employers of project employees are
exempted from the clearance requirement but not from the submission of termination report. This court has
consistently held that failure of the employer to file termination reports after every project completion with the
nearest public employment office is an indication that private respondent was not and is not a project employee.
[11] Department Order No. 19 superseding Policy Instruction No. 20 expressly provides that the report of
termination is one of the indications of project employment.[12]
As stated earlier, the rule in our jurisdiction is that findings of facts of the NLRC affirming those of the
Labor Arbiter are entitled to great weight and will not be disturbed if they are supported by substantial evidence.
[13] Substantial evidence is an amount of relevant evidence which a reasonable mind might accept as adequate
to justify a conclusion.[14] We find no grave abuse of discretion committed by NLRC in finding that private
respondent was not a project employee.

Our ruling in the case of Sandoval Shipyard vs. NLRC, supra, is not in point. In the said case, the hiring of
construction workers was not continuous for the reason that the shipyard merely accepts contracts for
shipbuilding or for repair of vessels from third parties and, it is only on occasions when it has work contracts of
this nature that it hires workers for the job which lasts only for less than a year or longer. With respect to
Cartagenas vs. Romago Electric Co. also relied upon by the petitioner, the complainants were considered project
employees because they were issued appointments from project to project, which were co-terminous with the
phase or item of work assigned to them in said project, a situation which is not obtaining in the instant case.
Petitioner further claims that respondent Commission erred in sustaining the awards for overtime pay,
project allowances, minimum wage increase adjustment and proportionate 13th month pay to private respondent
in the absence of any substantial evidence supporting the same; that private respondent failed to present any
documentary evidence other than his self-serving allegation that he actually rendered overtime work and that he
failed to specify in his position paper the actual number of overtime work alleged to have been rendered; that in
petitioners letter-communication filed with the labor arbiter, it showed that claims for allowances and salary
differential and 13th month pay were already satisfied although petitioner admitted that there was a delay in the
payment which was not rebutted by private respondent.
We find no merit in petitioners contention.
Private respondent clearly specified in his affidavit the specific dates in which he was not paid overtime
pay, that is, from the period March 16, 1989 to April 3, 1989 amounting to P765.63, project allowance from
April 16, 1989 to July 31, 1989 in the total amount of P255.00, wage adjustment for the period from August 1,
1989 to August 14, 1989 in the amount of P256.50 and the proportionate 13th month pay for the period covering
January to May 1988, November-December 1988, and from January to August 1989. This same affidavit was
confirmed by private respondent in one of the scheduled hearings where he moved that he be allowed to present
his evidence ex-parte for failure of petitioner or any of his representative to appear thereat. On the other hand,
petitioner submitted its unverified Comment to private respondents complaint stating that he had already
satisfied the unpaid wages and 13th month pay claimed by private respondent, but this was not considered by the
Labor Arbiter for being unverified. As a rule, one who pleads payment has the burden of proving it. Even where
the plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove non-payment.[15] The debtor has the burden of showing with legal
certainty that the obligation has been discharged by payment.[16] Petitioner failed to rebut the claims of private
respondent. It failed to show proof by means of payroll or other evidence to disprove the claim of private
respondent. Petitioner was given the opportunity to cross-examine private respondent yet petitioner forfeited
such chance when it did not attend the hearing, and failed to rebut the claims of private respondent.
Petitioners contention that it was denied due process when it was not given the chance to cross-examine the
adverse party and his witnesses, is devoid of merit. The essence of due process is simply an opportunity to be
heard[17] or as applied to administrative proceedings, an opportunity to explain ones side or an opportunity to
seek a reconsideration of the action or ruling complained of.[18] What the law prohibits is absolute absence of
the opportunity to be heard; hence, a party cannot feign denial of due process where he had been afforded the
opportunity to present his side.[19] Petitioner was not denied due process. As the respondent commission
observed:
The case was initially set for hearing on September 12, 1989 wherein complainant himself appeared.
Respondents representative appeared late. For this reason, the case was reset to September 26, 1989 at 9:30 a.m.
wherein both parties appeared. Complainant filed his position paper and respondents through its project manager

filed a one-page unverified communication stating therein its defense. The case was then reset to October 9 and
10, 1990 both at 3:00 p.m. warning the parties that no further postponement will be allowed. On October 9, 1989
complainant and his counsel appeared but respondents and representative failed to appear despite due notice and
warning. A reply to respondents position paper was filed by complainant through counsel during the hearing. To
give a chance to respondents to appear, hearing was reset the next day, October 10, 1989. However, respondents
or representative again failed to appear which constrained counsel for complainant to move that he be allowed to
present evidence ex-parte which motion was granted. Complainant was presented as witness, confirmed his
affidavit, testified on additional direct examination and identified the annexes attached to his position paper.
To allow the respondents to cross examine the complainant, hearing was again reset to October 31, 1989 at 9:30
a.m. with the warning that if respondents again fail to appear, presentation of evidence will be deemed waived
and the case will be considered submitted for decision. On October 31, 1989, despite due notice and warning,
counsel for respondents failed to appear although a representative appeared requesting for a resetting alleging
that counsel for respondents is busy with the Office of the Commission of Immigration. Said motion was denied
and the motion of counsel for complainant to submit the case for decision was granted.[20]
Clearly, petitioner had ample opportunity to present its side of the controversy not only before the Labor Arbiter
but also with the NLRC on appeal, where petitioner submitted a memorandum as well as a motion for
reconsideration, which were all considered by the NLRC in the course of resolving the case.[21] It cannot
thereafter interpose lack of due process since it was given the chance to be heard and present his case.
[22] Consequently, the alleged defect in the proceedings before the Labor Arbiter, if there be any, should
be deemed cured.
Petitioners contention that the respondent Commission did not touch upon each one of the errors
enumerated in petitioners appeal in its resolution of March 24, 1992 is untenable. In affirming the decision of the
Labor Arbiter, the respondent NLRC found the evidence supporting the labor arbiters factual findings to be
substantial, and for this reason found it unnecessary to make a separate discussion.
However, the award of moral and exemplary damages must be deleted for being devoid of legal
basis. Moral and exemplary damages are recoverable only where the dismissal of an employee was attended by
bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good
customs or public policy.[23] The person claiming moral damages must prove the existence of bad faith by clear
and convincing evidence for the law always presumes good faith.[24] It is not enough that one merely suffered
sleepless nights, mental anguish, serious anxiety as the result of the actuations of the other party. Invariably, such
action must be shown to have been willfully done in bad faith or with ill motive, and bad faith or ill motive
under the law cannot be presumed but must be established with clear and convincing evidence.[25] Private
respondent predicated his claim for such damages on his own allegations of sleepless nights and mental anguish,
without establishing bad faith, fraud or ill motive as legal basis therefor.
Private respondent not being entitled to award of moral damages, an award of exemplary damages is
likewise baseless.[26] Where the award of moral and exemplary damages is eliminated, so must the award for
attorneys fees be deleted.[27] Private respondent has not shown that he is entitled thereto pursuant to Art. 2208
of the Civil Code.
WHEREFORE, the challenged resolutions of the respondent NLRC are hereby AFFIRMED with the
MODIFICATION that the awards of moral and exemplary damages and attorneys fees are DELETED.
SO ORDERED.

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universal robina corp vs catapang

DECISION

CALLEJO, SR., J.:

Petitioner Universal Robina Corporation is a corporation duly organized and existing under the Philippine laws,
while petitioner Randy Gregorio is the manager of the petitioner companys duck farm in Calauan, Laguna.[1]
The individual respondents were hired by the petitioner company on various dates from 1991 to 1993 to
work at its duck farm in BarangaySto. Tomas, Calauan, Laguna. The respondents were hired under an
employment contract which provided for a five-month period. After the expiration of the said employment
contracts, the petitioner company would renew them and re-employ the respondents. This practice continued
until sometime in 1996, when the petitioners informed the respondents that they were no longer renewing their
employment contracts.[2]
In October 1996, the respondents filed separate complaints for illegal dismissal, reinstatement, backwages,
damages and attorneys fees against the petitioners. The complaints were later consolidated.
On March 30, 1999, after due proceedings, the Labor Arbiter rendered a decision in favor of the respondents:
WHEREFORE, premises considered, judgment is hereby rendered declaring that
complainants have indeed been illegally dismissed from their employment.
Accordingly, respondents are hereby ordered to reinstate individual complainants to
their former positions without loss of seniority rights and to pay them their backwages as
follows:

1.
2.
3.
4.
5.
6.

Complainants Amount
Reynaldo Ararao P113,703.20
Carlos Ararao P100,372.48
Resty Alcoran P100,372.48
Richard Coronado P113,703.20
Quirino Platero P113,703.20
Benito Catapang P113,703.20

7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.

Jose Loria, Jr. P100,372.48

Elpidio Villanueva P113,703.20
Jonathan Villanueva P113,703.20
Baltazar Villanueva P113,703.20
Victoriano Loria P144,881.10
Roderick Pangao P100,372.48
Lito Cabrera P113,703.20
Elmer Hiling P113,703.20
Jaime Villegas P113,703.20
Angelito Conchada P119,192.20
Juan Aristado P113,703.20
Joel Villanueva P113,703.20
Ben Cervas P113,703.20
Ruel Marikit P113,703.20
Ireneo Comendador P113,703.20
Total ------------------------ P2,339,933.44

Respondents are likewise ordered to pay fifteen percent (15%) of the total amount due,
or P 350,990.01, as and by way of attorneys fees.
SO ORDERED.[3]

On May 17, 1999, the petitioners filed an Appeal Memorandum with the National Labor Relations Commission
(NLRC) on the ground that the Labor Arbiter erred in ruling that the respondents are the petitioner companys
regular employees.
Meanwhile, on May 18, 1999, the respondents filed a Motion for Enforcement of Reinstatement Order
with the Labor Arbiter. On June 3, 1999, the latter issued an Order, which reads in full:

Finding the Motion for Enforcement of Reinstatement Order dated 18 May 1999, filed
by the complainants to be in order, respondents are hereby directed to immediately comply in
good faith to the reinstatement aspect of the Decision of this Office dated 30 March 1999.
Furthermore, it appearing from the records that several individuals in this case were
inadvertently omitted as party-complainants in the aforesaid Decision, clarification is hereby
made that the complainants hereinbelow set forth are to be deemed included in the coverage of
the said decision with the corresponding right(s) to their backwages, to wit:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Alvin Alcantara - P129,126.40

Onofre Casano - P106,917.20
Joseph Chuidian - P104,165.10
Ramon Joyosa - P128,029.20
Pablito Redondo - P105,409.20
Ramil Roxas - P109,330.00
Resty Salazar - P105,296.10
Noel Trinidad - P108,312.10
Felicisimo Varela - P119,358.20
TOTAL - P1,015,943.50

SO ORDERED.[4]

On June 21, 1999, the Labor Arbiter issued a Writ of Execution enforcing the immediate reinstatement of the
respondents as mandated in the March 30, 1999 Decision.
On July 13, 1999, the petitioners manifested to the Labor Arbiter that they can reinstate only 17 of the 30
employees in view of the phase out of the petitioner companys Agricultural Section as early as 1996. They
averred that there were no other available positions substantially similar to the positions previously occupied by
the other 13 respondents, but that 10 of them could be accommodated at the farms Duck Dressing Section which
operates at an average of three days a week only.[5]

On August 2, 1999, the Sheriff filed a Report stating that the petitioners had not yet reinstated the respondents.
[6] The respondents then urged the Labor Arbiter to order their physical or payroll reinstatement and to cite the
petitioners in contempt. On November 26, 1999, the Labor Arbiter issued an Order[7] directing the petitioners,
under pain of contempt, to comply with the March 30, 1999 Decision.
On December 16, 1999, 17 employees were reinstated to their former positions. Thereafter, the respondents
moved for the immediate reinstatement of the remaining 13 respondents. In the meantime, the petitioners
manifested to the Labor Arbiter about the closure of the duck farm effective March 15, 2000.[8]

On February 9, 2000, the Labor Arbiter issued an Order[9] directing the petitioners to immediately effect the
actual or payroll reinstatement of the remaining 13 respondents. In the said Order, the petitioners were likewise
directed to settle whatever financial accountabilities they may have with the said respondents due to the delay in
complying with the reinstatement aspect of the March 30, 1999 Decision.

On February 16, 2000, the respondents manifested that the petitioners still failed and refused to comply with the
February 9, 2000 Order. That same day, the Labor Arbiter issued an Alias Writ of Execution commanding the
Sheriff to cause the immediate reinstatement of the 13 respondents and to collect their withheld salaries.[10]
On February 21, 2000, the respondents moved for the issuance of a notice of garnishment to collect the
accumulated withheld wages of the 17 respondents who were reinstated on December 16, 1999 amounting
to P649,400.00. The Labor Arbiter granted the motion and issued a Second Alias Writ of Execution directing the
Sheriff to proceed to collect the said amount plus execution fees.[11]

Thereafter, the petitioners filed an urgent motion to reconsider the February 9, 2000 Order and to quash the Alias
Writ of Execution. They reiterated their previous contention that they are unable to comply with the order either

because the section to which the 13 respondents were previously assigned had been phased out or the positions
previously held by them have already been filled up.[12]

On March 1, 2000, the Labor Arbiter issued an Order[13] denying the petitioners motion to quash insofar as the
reinstatement aspect is concerned as well as the motion to reconsider and set aside the February 9, 2000 Order.
In case of failure to comply with the reinstatement of the 13 respondents, the Labor Arbiter directed the
petitioner company to pay them separation pay instead.[14]

On March 13, 2000, the petitioners filed a Memorandum and Notice of Appeal with Prayer for the Issuance of a
Temporary Restraining Order[15]with the NLRC, assailing the February 9, 2000 and March 1, 2000 Orders and
the two Alias Writs of Execution issued by the Labor Arbiter.

On November 22, 2000, the NLRC affirmed the decision of the Labor Arbiter with the modification that the
award of attorneys fees was reduced to 10% of the total monetary award.[16]

Aggrieved, the petitioners filed a petition for certiorari with the Court of Appeals (CA). On August 21, 2003, the
CA denied the petition for lack of merit.[17] The CA held that after rendering more than one year of continuous
service, the respondents became regular employees of the petitioners by operation of law. Moreover, the
petitioners used the five-month contract of employment as a convenient subterfuge to prevent the respondents
from becoming regular employees and such contractual arrangement should be struck down or disregarded as
contrary to public policy or morals. The petitioners act of repeatedly and continuously hiring the respondents in a
span of three to five years to do the same kind of work negates their assertion that the respondents were hired for
a specific project or undertaking only. As to the issue of the failure to reinstate the 13 respondents pending
appeal, the CA opined that the petitioners should have at least reinstated them in the payroll if there were indeed
no longer any available positions for which they could be accommodated.[18] Finally, the CA did not believe

that the petitioners counsel was not furnished with copies of the assailed orders and the alias writs of execution
considering that, after the issuance of the said orders, the petitioners were able to file several pleadings
questioning the same.[19]
On September 23, 2003, the petitioners filed a Manifestation and Motion for Additional Time to File a Motion
for Reconsideration of the CA Decision.[20] They alleged therein that they received a copy of the decision on
September 8, 2003 and had until September 23, 2003 to file a motion for reconsideration. They then prayed for
an extension of 10 days, or until October 3, 2003, to submit a motion for reconsideration.

Realizing their error, the petitioners filed their Motion for Reconsideration two days later. In a
Resolution[21] dated September 30, 2003, the CA denied the petitioners earlier motion for extension of time for
being a prohibited pleading. Subsequently, the petitioners filed their Urgent Motion to Admit Petitioners Motion
for Reconsideration, but the CA merely noted the petitioners motion for reconsideration in its April 15, 2004
Resolution. This prompted the petitioners to file a Motion to Resolve Petitioners Motion for Reconsideration.
[22] Finding no cogent reason to depart from its previous resolution denying the motion for extension of time to
file a motion for reconsideration, the CA denied the said motion for lack of merit on July 19, 2004.[23]

Hence, this petition for review wherein the petitioners raise the following grounds:
I.
THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT RULED THAT THE
RESPONDENTS ATTAINED THE STATUS OF REGULAR EMPLOYMENT AFTER THE
LAPSE OF ONE YEAR FROM THE DATE OF THEIR EMPLOYMENT.
II.
THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT RULED THAT DESPITE THE
UNAVAILABILITY
OF
POSITIONS
WHERE
THE
THIRTEEN
(13)
RESPONDENTS ARE TO BE REINSTATED THEY SHOULD STILL BE REINSTATED
THROUGH PAYROLL.
III.
THE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO RESOLVE THE ISSUE
OF WHETHER OR NOT THE PETITIONERS SHOULD BE HELD LIABLE FOR THE

PAYMENT OF THE ALLEGED WITHHELD SALARIES OF THE RESPONDENTS FROM

THE DATE OF ISSUANCE OF THE WRIT DESPITE THAT RESPONDENTS BELATED OR
NON-REINSTATEMENT CANNOT BE ATTRIBUTED TO THE PETITIONERS.
IV.
THE COURT OF APPEALS SHOULD HAVE RESOLVED PETITIONERS MOTION FOR
RECONSIDERATION CONSIDERING THAT THE DELAY WAS ONLY FOR TWO (2)
DAYS AND WAS THE RESULT OF AN HONEST MISTAKE.[24]

The petitioners submit that the respondents are not regular employees. They aver that it is of no moment that the
respondents have rendered service for more than a year since they were covered by the five-month individual
contracts to which they duly acquiesced. The petitioners contend that they were free to terminate the services of
the respondents at the expiration of

their individual contracts. The petitioners maintain that, in doing so, they merely implemented the terms of the
contracts.[25]

The petitioners assert that the respondents contracts of employment were not intended to circumvent security of
tenure. They point out that the respondents knowingly and voluntarily agreed to sign the contracts without the
petitioners having exercised any undue advantage over them. Moreover, there is no evidence showing that the
petitioners exerted moral dominance on the respondents.[26]

The petitioners further assert that they cannot be compelled to actually reinstate, or merely reinstate in the
payroll the 13 respondents considering there are no longer any available positions in the company. They submit
that reinstatement presupposes that the previous positions from which the respondents had been removed still
exist or that there are unfilled positions, more or less, of similar nature as the ones previously occupied by the
said employees. Consequently, they cannot be made to pay the salaries of these employees from the time the writ
of execution was issued.[27]

Finally, the petitioners aver that their motion for reconsideration of the CA Decision should have been admitted
by the CA considering that the delay was only for two days and such delay was due to an honest mistake. They
maintain that the ends of substantial justice would have been better served if the motion for reconsideration was
resolved since it raised critical issues previously raised in the petition but not resolved by the CA.[28]

For their part, the respondents aver that the instant petition should be dismissed outright because the CA
Decision has already become final since the petitioners filed their motion for reconsideration beyond the
reglementary 15-day period. They also aver that the motion for extension of time to file a motion for
reconsideration, a prohibited pleading, did not suspend the running of the period to file a motion for
reconsideration, which is also the period for filing an appeal with this Court. Hence, at the time the present
petition was filed with this Court, the period for filing the appeal had already lapsed.[29] The respondents further
aver that the petition should likewise be dismissed for lack of a verified statement of material dates. They assert
that the Rules of Court requires a separate verified statement of material dates and its incorporation in the body
of the petition is not substantial compliance of such requirement.[30]

The respondents aver that they acquired the status as regular employees after rendering one year of service to the
petitioner company. They contend that the contracts providing for a fixed period of employment should be struck
down as contrary to public policy, morals, good customs or public order as it was designed to preclude the
acquisition of tenurial security.[31]

The respondents contend that the order directing their payroll reinstatement was proper considering that the
petitioners have failed to actually reinstate them.[32] They assert that the delay in the reinstatement of the 13
respondents could only be attributed to the petitioners; hence, they are liable for withheld salaries to these
employees.[33]

It appears that the present petition has, indeed, been filed beyond the reglementary period for filing a petition for
review under Rule 45 of the Rules of Court. This period is set forth in Section 2, Rule 45, which provides as
follows:
SEC. 2. Time for filing; extension. The petition shall be filed within fifteen (15) days from notice
of the judgment or final order or resolution appealed from, or of the denial of the petitioners
motion for new trial or reconsideration filed in due time after notice of judgment. (Emphasis
supplied.)

In conjunction with the said provision, Section 1, Rule 52 of the same Rules provides:
SEC. 1. Period for filing. A party may file a motion for reconsideration of a judgment or final
resolution within fifteen (15) days from notice threof, with proof of service on the adverse party.

Clearly, the period for filing a motion for reconsideration and a petition for review with this Court are the same,
that is, 15 days from notice of the judgment. When an aggrieved party files a motion for reconsideration within
the said period, the period for filing an appeal is suspended. If the motion is denied, the aggrieved party is given
another 15-day period from notice of such denial within which to file a petition for review under Rule 45. It must
be stressed that the aggrieved party will be given a fresh 15-day period only when he has filed his motion for
reconsideration in due time on or before the expiration of the original 15-day period. Otherwise, if the motion for
reconsideration is filed out of time and no appeal has been filed, the subject decision becomes final and

executory.[34] As such, it becomes immutable and can no longer be attacked by any of the parties or be
modified, directly or indirectly, even by the highest court of the land.[35]

The petitioners received the CA Decision on September 8, 2003; hence, they had until September 23, 2003
within which to file a motion for reconsideration, or an appeal, through a petition for review, with this Court.
Instead, the petitioners filed a motion for extension of time to file a motion for reconsideration on September 23,
2003, which is a prohibited pleading.[36] Thus, it did not suspend the running of the period for filing an appeal.
Consequently, the period to file a petition for review with this Court also expired on September 23, 2003. Instead
of going straight to this Court to attempt to file a petition for review (which had already expired), the petitioners
pursued recourse in the CA by filing their motion for reconsideration two days later, or on September 25, 2003.
The CA merely noted the same. Dissatisfied, the petitioners subsequently filed a motion to resolve their motion
for reconsideration. The CA acted on this motion only on July 19, 2004 and denied the same for lack of merit.In
filing their petition for review with this Court, the petitioners counted the 15-day period from their receipt of the
July 19, 2004 CA Resolution on August 4, 2004. Hence, according to their Motion for Extension of Time to File
Petition for Review which they filed on August 19, 2004, they had until that day within which to file a petition
for review. They then asked the Court that they be granted an extension of 30 days, or until September 21, 2004
within which to file their petition. The Court granted the motion on the belief that the petitioners motion for
reconsideration before the CA was duly filed and that the assailed July 19, 2004 CA Resolution had denied the
said motion. Thereafter, the petitioners filed their petition for review on September 20, 2004.

It is, therefore, evident from the foregoing that the present petition was filed way beyond the reglementary
period. Hence, its outright dismissal would be proper. The perfection of an appeal in the manner and within the
period prescribed by law is not only mandatory but jurisdictional, and failure to perfect an appeal has the effect
of rendering the judgment final and executory.[37] Just as a losing party has the privilege to file an appeal within
the prescribed period, so does the winner also have the correlative right to enjoy the finality of the decision.[38]

Anyone seeking exemption from the application of the reglementary period for filing an appeal has the burden of
proving the existence of exceptionally meritorious instances warranting such deviation.[39] In this case, the
petitioners failed to prove the existence of any fact which would warrant the relaxation of the rules. In fact, they
have not even acknowledged that their petition was filed beyond the reglementary period.
In any case, we find that the CA, the NLRC and the Labor Arbiter correctly categorized the respondents as
regular employees of the petitioner company. In Abasolo v. National Labor Relations Commission,[40] the Court
reiterated the test in determining whether one is a regular employee:
The primary standard, therefore, of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the usual
trade or business of the employer. The test is whether the former is usually necessary or
desirable in the usual business or trade of the employer. The connection can be determined by
considering the nature of work performed and its relation to the scheme of the particular
business or trade in its entirety. Also, if the employee has been performing the job for at least a
year, even if the performance is not continuous and merely intermittent, the law deems repeated
and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is considered regular,
but only with respect to such activity and while such activity exists.[41]

Thus, we quote with approval the following excerpt from the decision of the CA:
It is obvious that the said five-month contract of employment was used by petitioners as a
convenient subterfuge to prevent private respondents from becoming regular employees. Such
contractual arrangement should be struck down or disregarded as contrary to public policy or
morals. To uphold the same would, in effect, permit petitioners to avoid hiring permanent or
regular employees by simply hiring them on a temporary or casual basis, thereby violating the
employees security of tenure in their jobs.
Petitioners act of repeatedly and continuously hiring private respondents in a span of 3 to 5
years to do the same kind of work negates their contention that private respondents were hired
for a specific project or undertaking only.[42]

Further, factual findings of labor officials who are deemed to have acquired expertise in matters within their
respective jurisdiction are generally accorded not only respect but even finality, and bind us when supported by
substantial evidence.[43]

WHEREFORE, premises considered, the petition is DENIED DUE COURSE. The Decision of the Court of
Appeals is AFFIRMED.
SO ORDERED.
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Abesco constructionand development corp. v Ramirez 487 scra
G.R. No. 174792

March 7, 2012

WILFREDO ARO, RONILO TIROL, JOSE PACALDO, PRIMITIVO CASQUEJO and MARCIAL
ABGO,Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, Fourth Division and Benthel Development
Corporation,Respondents.
DECISION
PERALTA, J.:
For resolution of this Court is the Petition for Review on Certiorari under Rule 45 of the Rules of Court, dated
October 7, 2006, of petitioners Wilfredo Aro, Ronilo Tirol, Jose Pacaldo, Primitivo Casquejo and Marcial Abgo,
seeking to reverse and set aside the Decision1 dated March 7, 2006, and Resolution2 dated July 27, 2006, of the
Court of Appeals (CA) in CA-G.R. CEB-SP No. 01012 which reversed the Decision and Resolution dated June
25, 2004 and June 30, 2005, respectively, of the National Labor Relations Commission (NLRC).
The facts, as culled from the records, are the following:
Several employees of private respondent Benthel Development Corporation, including the petitioners, filed a
Complaint for illegal dismissal with various money claims and prayer for damages against the latter, in the
NLRC Arbitration Branch No. VII in Cebu City and docketed as RAB Case No. 07-09-1222-97/12-1609-97.
Thereafter, Labor Arbiter Ernesto F. Carreon rendered a decision finding private respondent guilty of illegal
dismissal and ordering it to pay its thirty-six (36) employees P446,940.00 as separation pay.
The employees, including the petitioners herein, appealed from the said decision. The NLRC, in NLRC Case No.
V-000399-98, affirmed the decision of Labor Arbiter Carreon in its Decision dated January 12, 1999, with the
modification that private respondent pay backwages computed from the respective dates of dismissal until
finality of the decision.
Private respondent, unsatisfied with the modification made by the NLRC, filed a motion for reconsideration with
the contention that, since it has been found by the Labor Arbiter and affirmed in the assailed decision that the

employees were project employees, the computation of backwages should be limited to the date of the completion
of the project and not to the finality of the decision. The NLRC, however, denied the motion ruling that private
respondent failed to establish the date of the completion of the project.
Aggrieved, private respondent filed a Petition for Certiorari with the CA, docketed as CA-G.R. SP No. UDK
3092 assailing the January 12, 1999 decision of the NLRC and the denial of its motion for reconsideration which
was dismissed for non-payment of docket fees and insufficiency of form. It filed a motion for reconsideration,
but the latter was also denied.
Thus, private respondent filed with this Court, docketed as G.R. No. 144433 a Petition for Review on Certiorari.
In a Resolution dated September 20, 2000, this Court denied the petition for having been filed out of time and
for non-payment of docket and other lawful fees.
The employees, including the petitioners, upon the finality of this Court's resolution, filed a Motion for
Execution before the Labor Arbiter of the January 12, 1999 decision. Thereafter, the Labor Arbiter ordered for
the issuance of a writ of execution directing the computation of the awards.
Afterwards, private respondent filed an appeal from the said Order with an urgent prayer for the issuance of a
temporary restraining order and/or preliminary injunction with public respondent NLRC. The said appeal was
denied. The NLRC held that the appeal was premature, there having been no computation yet made by the Labor
Arbiter as to the exact amount to be paid to the employees. Public respondent remanded the case to the
arbitration branch for appropriate action.
Labor Arbiter Carreon inhibited himself from further proceedings in the case upon motion of private respondent.
In the meantime, fifteen (15) employees have executed Affidavits of Full Settlement after having settled
amicably with the private respondent. Labor Arbiter Violeta Ortiz-Bantug issued an Order dated July 31, 2003
for the issuance of a writ of execution only for the payment of the claims of the twenty-one (21) remaining
employees in the total amount of P4,383,225.00, which included attorney's fees equivalent to ten (10%) percent
of the sum received as settlement by the fifteen (15) employees who had earlier settled with the private
respondent.
Private respondent appealed to public respondent NLRC contending that the computation for backwages must be
only until the completion of the project and not until the finality of the decision. Public respondent, in its
Decision dated June 25, 2004, affirmed the Order of Labor Arbiter Bantug, but reduced the total amount
to P4,073,858.00, inclusive of attorney's fees. Thereafter, private respondent filed a motion for reconsideration of
the June 25, 2004 decision which was denied by the public respondent, but not before the admittance of the
affidavits of withdrawal, release/waiver and quitclaim executed by another group of fourteen (14) employees,
leaving unresolved only the claims of the petitioners herein. Thus, in the resolution of the private respondent's
motion for reconsideration, the award was reduced to the sum of P1,374,339.00, inclusive of attorney's fees.
As a recourse, private respondent filed a petition for certiorari with the CA, alleging that public respondent
committed grave abuse of discretion in promulgating its assailed decision and denying its motion for
reconsideration. The CA granted the petition, therefore, annulling and setting aside the decision and resolution of
the NLRC as to the award for backwages and remanded the case to the same public respondent for the proper
computation of the backwages due to each of the petitioners herein. The dispositive portion of the decision reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us GRANTING the petition
filed in this case. The assailed Decision and Resolution dated June 04, 2004 (sic) and June 30, 2005,
respectively, issued by the public respondent in NLRC Case No. V-000586-2003 are hereby ANNULLED and
SET ASIDE as to the award for backwages granted to the seven private respondents named in the petition at
bench.

The case is hereby remanded to the public respondent for the proper computation of the backwages due to each
of the said seven private respondents, computed until March 18, 1997.
SO ORDERED.3
Hence, the present petition.
Petitioners assigned the following errors:
GROUND/ASSIGNMENT OF ERRORS
THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT
OVERTURNED ITS OWN DECISION AND THAT OF THE SUPREME COURT.
THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION IN DECLARING
THAT PETITIONERS ARE PROJECT EMPLOYEES, CONSIDERING THAT THE NLRC 4TH
DIVISION HAD LONG RULED THAT SAID EMPLOYEES ARE IN FACT REGULAR
EMPLOYEES AND WHICH RULING WAS LONG CONFIRMED AND AFFIRMED NOT ONLY BY
THE COURT OF APPEALS BUT BY THE SUPREME COURT ITSELF.
THE RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT
REFUSED TO RULE ON THE INVALIDITY OF THE RELEASE AND QUITCLAIMS EXECUTED
BY SOME OF THE EMPLOYEES WITHOUT THE ASSISTANCE OF COUNSEL.4
In its Comment5 dated January 24, 2007, private respondent stated the following counter-arguments:
1. The issues presented in CA-G.R. SP No. UDK 3092 and SC G.R. No. 144433 are not the same issues
recently raised in the Petition for Certiorari before the Court of Appeals.
2. There is no final and executory ruling that herein petitioners were regular employees and not just
project employees.6
First of all, this Court has to address the nature of the petition filed by petitioners. As pointed out by private
respondent, and not disputed by petitioners, the present petition was filed out of time. Petitioners received, on
August 4, 2006, a copy of the CA Resolution dated July 27, 2006. The period within which to file a petition for
review under Rule 45 is within fifteen (15) days from notice of the judgment or final order or resolution
appealed from, or from the denial of the petitioners' motion for new trial or reconsideration filed in due time
after notice of the judgment, or in this case, not later than August 19, 2006. Under Rule 65, a petition
for certiorari may be filed not later than sixty (60) days from notice of the judgment, order or resolution, or in
this case, not later than October 3, 2006. However, the present petition is dated October 7, 2006 and as it appears
on the records, this Court received the said petition on October 17, 2006. Thus, on its face and in reality, the
present petition was filed out of time, whether it be under Rule 45 or Rule 65 of the Rules of Court.
Nevertheless, this Court did not dismiss the present petition and required private respondent to file its Comment.
Consequently, a Reply from petitioners and eventually, both parties' respective memorandum were filed. In view
of that premise and in the interest of justice, this Court shall forego the technicalities and is constrained to
resolve the present petition as a petition forcertiorari under Rule 65, since the main issue raised by petitioners is
whether or not the CA committed grave abuse of discretion which amounted to lack or excess of its jurisdiction.
Petitioners argue that the CA should have dismissed private respondent's petition, since there was already a
finality of the judgment of the NLRC. It is not disputed that on January 31, 2000, the CA, through its 17th
Division, issued a Resolution dismissing private respondent's petition for certiorari (docketed as CA-G.R. SP
No. UDK 3092. Subsequently, the same private respondent filed a motion for reconsideration, which was denied

by the CA in its Resolution dated June 8, 2000. Not contented, private respondent filed a petition with this Court,
which the latter denied, through its Second Division (G.R. No. 144433), in its Resolution dated September 20,
2000. Still aggrieved, private respondent filed a second motion for reconsideration, which was dismissed by this
Court. Thus, according to petitioners, there was already a finality of judgment.
On the other hand, private respondent insists that the inequitable, nay illegal, in a decision cannot lapse into
finality, referring to the computation of the backwages which is not commensurate to the factual findings of the
Labor Arbiter and the NLRC. Basically, according to private respondent, the CA merely sought to correct the
NLRC's and the Labor Arbiter's one-sided and blind adherence to and/or misguided application of strict technical
rules, and their overzealous partiality in favor of labor. Private respondent further claims that the issues
presented in their earlier petitions with the CA and this Court (CA-G.R. SP No. UDK 3092 and SC G.R. No.
144433, respectively) are not the same issues raised in the petition for certiorari later filed with the CA and the
decision of which is now the subject of herein petition. Private respondent clarifies that there is no final and
executory ruling that petitioners were regular and not just project employees, hence, there was a need to file a
petition with the CA.
The issue as to whether petitioners were project employees or regular employees is factual in nature. It is wellsettled 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. 7 Section 5, Rule 133 of the Rules of
Court, 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.8 We [this Court] 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.9 In the present case, the NLRC and the CA have opposing views.
According to the CA, petitioners are project employees as found by Labor Arbiter Ernesto Carreon in his
Decision dated May 28, 1998, because they were hired for the construction of the Cordova Reef Village Resort
in Cordova, Cebu, which was later on affirmed by the NLRC in its January 12, 1999 decision. The only
discrepancy is the Order of the NLRC that petitioners are entitled to backwages up to the finality of its decision,
when as project employees, private respondents are only entitled to payment of backwages until the date of the
completion of the project. In a later resolution on private respondent's motion for reconsideration of its January
12, 1999 decision, the NLRC changed its findings by ruling that petitioners herein were regular employees and,
therefore, entitled to full backwages, until finality of the decision, citing that petitioners repeated rehiring over a
long span of time made them regular employees.
Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee," thus:
Article 280. Regular and Casual Employment The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement of the
employee or where the work or 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 service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall
continue while such activity exists.

In Hanjin Heavy Industries and Construction Co. Ltd. v. Ibaez,10 this Court extensively discussed the above
distinction, thus:
x x x [T]he 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.11
In a number of cases,12 the Court has held that the length of service or the re-hiring of construction workers on a
project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a
natural consequence of the fact that experienced construction workers are preferred. Employees who are hired
for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of
which has been determined and made known to the employees at the time of the employment , are properly
treated as project employees and their services may be lawfully terminated upon the completion of a
project.13Should the terms of their employment fail to comply with this standard, they cannot be considered
project employees.
In Abesco Construction and Development Corporation v. Ramirez,14 which also involved a construction company
and its workers, this Court considered it crucial that the employees were informed of their status as project
employees:
The principal test for determining whether employees are "project employees" or "regular employees" is whether
they are assigned to carry out a specific project or undertaking, the duration and scope of which are specified at
the time they are engaged for that project. Such duration, as well as the particular work/service to be performed,
is defined in an employment agreement and is made clear to the employees at the time of hiring.
In this case, petitioners did not have that kind of agreement with respondents. Neither did they inform
respondents of the nature of the latters work at the time of hiring. Hence, for failure of petitioners to substantiate
their claim that respondents were project employees, we are constrained to declare them as regular employees.
In Caramol v. National Labor Relations Commission,15 and later reiterated in Salinas, Jr. v. National Labor
Relations Commission,16 the Court markedly stressed the importance of the employees' knowing consent to being
engaged as project employees when it clarified that "there is no question that stipulation on employment contract
providing for a fixed period of employment such as "project-to-project" contract is valid provided the period was
agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent x x x."
Applying the above disquisition, this Court agrees with the findings of the CA that petitioners were project
employees. It is not disputed that petitioners were hired for the construction of the Cordova Reef Village Resort
in Cordova, Cebu. By the nature of the contract alone, it is clear that petitioners' employment was to carry out a
specific project. Hence, the CA did not commit grave abuse of discretion when it affirmed the findings of the
Labor Arbiter. The CA correctly ruled:
A review of the facts and the evidence in this case readily shows that a finding had been made by Labor Arbiter
Ernesto Carreon, in his decision dated May 28, 1998, that complainants, including private respondents, are
project employees. They were hired for the construction of the Cordova Reef Village Resort in Cordova, Cebu.
We note that no appeal had been made by the complainants, including herein private respondents, from the said
finding. Thus, that private respondents are project employees has already been effectively established.
Likewise, a review of the public respondent's January 12, 1999 decision shows that it affirmed the labor arbiter's
finding of the private respondents' being project employees.

We therefore cannot fathom how the public respondent could have ordered backwages up to the finality of its
decision when, as project employees, private respondents are only entitled to payment of the same until the date
of the completion of the project. It is settled that, without a valid cause, the employment of project employees
cannot be terminated prior to expiration. Otherwise, they shall be entitled to reinstatement with full backwages.
However, if the project or work is completed during the pendency of the ensuing suit for illegal dismissal, the
employees shall be entitled only to full backwages from the date of the termination of their employment until the
actual completion of the work.
While it may be true that in the proceedings below the date of completion of the project for which the private
respondents were hired had not been clearly established, it constitutes grave abuse of discretion on the part of the
public respondent for not determining for itself the date of said completion instead of merely ordering payment
of backwages until finality of its decision.
xxxx
The decision of the labor arbiter, as affirmed by the public respondent in its January 12, 1999 decision, clearly
established that private respondents were project employees. Because there was no showing then that the project
for which their services were engaged had already been completed, the public respondent likewise found that
private respondents were illegally dismissed and thus entitled to backwages.
However, in utter disregard of the law and prevailing jurisprudence, the public respondents capriciously and
arbitrarily ordered that the said backwages be computed until the finality of its decision instead of only until the
date of the project completion. In grave abuse of its discretion, the public respondent refused to consider the
evidence presented before it as to the date of completion of the Cordova Reef Village Resort project. The records
show that affidavits have been executed by the petitioner's manager, corporate architect and project engineer as
to the fact of the completion of the project in October 1996. As these evidences [sic] were already a matter of
record, the public respondent should not have closed its eyes and should have endeavored to render a correct and
just judgment.
xxxx
Furthermore, as earlier noted, private respondents did not appeal from the Labor Arbiter's findings that they were
indubitably project employees. However, they were entitled to the payment of separation pay only for the reason
that the date of the completion of the project for which they were hired had not been clearly established. Thus, in
affirming the labor arbiter's decision, the public respondent in effect sustained the finding that private
respondents are project employees. The statement, therefore, contained in the resolution of the petitioner's
motion for reconsideration of its January 12, 1999 decision that repeated rehiring makes the worker a regular
employee, is at best an obiter, especially considering that such conclusion had not been shown to apply to the
circumstances then obtaining with the private respondents' employment with the petitioner.17
Therefore, being project employees, petitioners are only entitled to full backwages, computed from the date of
the termination of their employment until the actual completion of the work. Illegally dismissed workers are
entitled to the payment of their salaries corresponding to the unexpired portion of their employment where the
employment is for a definite period.18 In this case, as found by the CA, the Cordova Reef Village Resort project
had been completed in October 1996 and private respondent herein had signified its willingness, by way of
concession to petitioners, to set the date of completion of the project as March 18, 1997; hence, the latter date
should be considered as the date of completion of the project for purposes of computing the full backwages of
petitioners.1wphi1
As to the issue that the CA committed grave abuse of discretion in refusing to rule on the invalidity of the release
and quitclaims executed by some of the employees other than the petitioners, such is inconsequential as those
employees are not parties in the present case.

WHEREFORE, the Petition for Review dated October 7, 2006, of petitioners Wilfredo Aro, Ronilo Tirol, Jose
Pacaldo, Primitivo Casquejo and Marcial Abgo is hereby DENIED. Consequently, the Decision dated March 7,
2006 and Resolution dated July 27, 2006 of the Court of Appeals are hereby AFFIRMED in toto.
SO ORDERED.
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Philippine federation of credit coop inc v NLRC
PHIL. FEDERATION OF CREDIT COOPERATIVES, INC. (PECCI) and FR. BENEDICTO
JAYOMA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (First Division) and
VICTORIA ABRIL, respondents.
DECISION
ROMERO, J.:
It is an elementary rule in the law on labor relations that a probationary employee who is engaged to work
beyond the probationary period of six months, as provided under Art. 281 of the Labor Code, as amended, or for
any length of time set forth by the employer, shall be considered a regular employee.
Sometime in September 1982, private respondent Victoria Abril was employed by petitioner Philippine
Federation of Credit Cooperatives, Inc. (PFCCI), a corporation engaged in organizing services to credit and
cooperative entities, as Junior Auditor/Field Examiner and thereafter held positions in different capacities, to wit:
as office secretary in 1985 and as cashier-designate for four (4) months ending in April 1988. Respondent,
shortly after resuming her position as office secretary, subsequently went on leave until she gave birth to a baby
girl. Upon her return sometime in November 1989, however, she discovered that a certain Vangie Santos had
been permanently appointed to her former position. She, nevertheless, accepted the position of Regional Field
Officer as evidenced by a contract which stipulated, among other things, that respondents employment status
shall be probationary for a period of six (6) months. Said period having elapsed, respondent was allowed to work
until PFCCI presented to her another employment contract for a period of one year commencing on January 2,
1991 until December 31, 1991, after which period, her employment was terminated.
In a complaint for illegal dismissal filed by respondent against PFCCI on April 1, 1992, Labor Arbiter
Cornelio L. Linsangan rendered a decision on March 10, 1993 dismissing the same for lack of merit but ordered
PFCCI to reimburse her the amount of P2,500.00 which had been deducted from her salary.
On appeal, however, the said decision was reversed by the National Labor Relations Commission (NLRC),
the dispositive portion of which reads:
WHEREFORE, the appealed decision is hereby set aside. The respondents are hereby directed to reinstate
complainant to her position last held, which is that of a Regional Field Officer, or to an equivalent position if
such is no longer feasible, with full backwages computed from January 1, 1992 until she is actually reinstated.
SO ORDERED.
We find no merit in the petition.
Article 281 of the Labor Code, as amended, allows the employer to secure the services of an employee on a
probationary basis which allows him to terminate the latter for just cause or upon failure to qualify in accordance
with reasonable standards set forth by the employer at the time of his engagement. As defined in the case of
International Catholic Migration v. NLRC, [1] a probationary employee is one who is on trial by an employer
during which the employer determines whether or not he is qualified for permanent employment. A probationary
employment is made to afford the employer an opportunity to observe the fitness of a probationer while at work,
and to ascertain whether he will become a proper and efficient employee.

Probationary employees, notwithstanding their limited tenure, are also entitled to security of tenure. Thus,
except for just cause as provided by law,[2] or under the employment contract, a probationary employee cannot be
terminated.[3]
In the instant case, petitioner refutes the findings of the NLRC arguing that, after respondent had allegedly
abandoned her secretarial position for eight (8) months, she applied for the position of Regional Field Officer for
Region IV, which appointment, as petitioner would aptly put it, had been fixed for a specific project or
undertaking the completion or termination of which had been determined at the time of the engagement of said
private respondent and therefore considered as a casual or contractual employment under Article 280 of the
Labor Code.[4]
The contention that respondent could either be classified as a casual or contractual employee is utterly
misplaced; thus, it is imperative for the Court to elucidate on the kinds of employment recognized in this
jurisdiction. The pertinent provision of the Labor Code, as amended, states:
Art. 280. Regular and casual employment. - The provisions of written agreement to the contrary notwithstanding
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the
employee has been engaged to perform activities which are usually necessary or desirable in the usual business
or trade of the employer, except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee or where
the work or services to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall
continue while such activity exists.
This provision of law comprehends three kinds of employees: (a) regular employees or those whose work is
necessary or desirable to the usual business of the employer; (b) project employees or those whose employment
has been fixed for a specific project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season; and (c) casual employees or those who are neither
regular nor project employees. With regard to contractual employees, the Court in the leading case of Brent
School, Inc. v. Zamora, [5] laid down the guidelines before a contract of employment may be held as valid, to wit:
stipulations in employment contracts providing for term employment or fixed period employment are valid when
the period were agreed upon knowingly and voluntarily by the parties without force, duress or improper pressure
being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it
satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter.
Having expounded on the various types of employees, the Court is constrained to review the contract of
employment entered into between the party-litigants. The said contract reads:
That the employer hires the employee on contractual basis to the position of Regional Field Officer of Region 4
under PFCCI/WOCCU/Aid Project No. 8175 and to do the function as stipulated in the job description assigned
to him (her): on probationary status effective February 17/90 for a period not to exceed six (6) months from said
effectivity, subject to renewal of this contract should the employees performance be satisfactory.
While the initial statements of the contract show that respondents employment was for a fixed period, the
succeeding provisions thereof contradicted the same when it provided that respondent shall be under
probationary status commencing on February 17, 1990 and ending six (6) months thereafter. Petitioner
manifested that respondents employment for a period of one year, from January until December 1991, having
been fixed for a specified period, could not have converted her employment status to one of regular
employment. Conversely, it likewise insisted that respondent was employed to perform work related to a project

funded by the World Council of Credit Unions (WOCCU) and hence, her status is that of a project
employee. The Court is, thus, confronted with a situation under which the terms of the contract are so ambiguous
as to preclude a precise application of the pertinent labor laws.
Amidst the muddled assertions by petitioner, we adhere to the pronouncement stated in the recent case of
Villanueva v. NLRC,[6] where the Court ruled that where a contract of employment, being a contract of adhesion,
is ambiguous, any ambiguity therein should be construed strictly against the party who prepared it. Furthermore,
Article 1702 of the Civil Code provides that, in case of doubt, all labor contracts shall be construed in favor of
the laborer. It added:
We cannot allow the respondent company to construe otherwise what appears to be clear from the wordings of
the contract. The interpretation which the respondent company seeks to wiggle out is wholly unacceptable, as it
would result in a violation of petitioners right to security of tenure guaranteed in Section 3 of Article XIII of the
Constitution and in Articles 279 and 281 of the Labor Code.
After a careful scrutiny of the subject contract, we arrive at the conclusion that there was no grave abuse of
discretion on the part of the NLRC and, thus, affirm the finding that respondent has become a regular employee
entitled to security of tenure guaranteed under the Constitution and labor laws.
Regardless of the designation petitioner may have conferred upon respondents employment status, it is,
however, uncontroverted that the latter, having completed the probationary period and allowed to work
thereafter, became a regular employee who may be dismissed only for just or authorized causes under Articles
282, 283 and 284 of the Labor Code, as amended. Therefore, the dismissal, premised on the alleged expiration of
the contract, is illegal and entitles respondent to the reliefs prayed for.
WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED and the decision of the
National Labor Relations Commission dated November 28, 1994 is AFFIRMED. No costs.
SO ORDERED.
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Computation of the 6th month probationary period
Cals poultry supply corp v roco
CALS POULTRY SUPPLY CORPORATION and DANILO YAP, petitioners, vs. ALFREDO ROCO and
CANDELARIA ROCO, respondents.
RESOLUTION
KAPUNAN, J.:
For our resolution is the motion for reconsideration of the Courts minute Resolution dated April 1, 2002,
denying the petition for review filed by CALS Poultry Supply Corporation (hereinafter referred to as CALS) of
the Court of Appeals decision in favor of herein private respondents Alfredo Roco and Candelaria Roco. The
Court of Appeals reversed the decision of the National Labor Relations Commission affirming the Labor
Arbiters decision which dismissed private respondents complaint for illegal dismissal against CALS. Private
respondents filed a comment on the motion for reconsideration as required by the Court.
CALS Poultry Supply Corporation is engaged in the business of selling dressed chicken and other related
products and managed by Danilo Yap. [1]
On March 15, 1984, CALS hired Alfredo Roco as its driver. On the same date, CALS hired Edna Roco,
Alfredos sister, as a helper in the dressing room of CALS. [2] On May 16, 1995, it hired Candelaria Roco, another
sister, as helper,[3] also at its chicken dressing plant on a probationary basis.

On March 5, 1996, Alfredo Roco and Candelaria Roco filed a complaint for illegal dismissal against CALS
and Danilo Yap alleging that Alfredo and Candelaria were illegally dismissed on January 20, 1996 and
November 5, 1996, respectively.[4] Both also claimed that they were underpaid of their wages. [5] Edna Roco,
likewise, filed a complaint for illegal dismissal, alleging that on June 26, 1996, she was reassigned to the task of
washing dirty sacks and for this reason, in addition to her being transferred from night shift to day time duties,
which she considered as management act of harassment, she did not report for work.[6]
According to Alfredo Roco, he was dismissed on January 20, 1996 when he refused to accept P30,000.00
being offered to him by CALS lawyer, Atty. Myra Cristela A. Yngcong, in exchange for his executing a letter of
voluntary resignation. On the part of Candelaria Roco, she averred that she was terminated without cause from
her job as helper after serving more than six (6) months as probationary employee.
The Labor Arbiter on April 16, 1998, issued a decision dismissing the complaints for illegal dismissal for
lack of merit. The Labor Arbiter found that Alfredo Roco applied for and was granted a leave of absence for the
period from January 4 to 18, 1996. He did not report back for work after the expiration of his leave of absence,
prompting CALS, through its Chief Maintenance Officer to send him a letter on March 12, 1996 inquiring if he
still had intentions of resuming his work. Alfredo Roco did not respond to the letter despite receipt thereof, thus,
Alfredo was not dismissed; it was he who unilaterally severed his relation with his employer. [7]
In the case of Candelaria Roco, the Labor Arbiter upheld CALS decision not to continue with her
probationary employment having been found her unsuited for the work for which her services were engaged. She
was hired on May 16, 1995 and her services were terminated on November 15, 1995.
Edna Roco, according to the Labor Arbiter, began absenting herself on June 25, 1996. She was sent a memo
on July 1, 1996 requiring her to report for work immediately, but she did not respond. [8]
In their position papers, the complainants claimed that they were not given their overtime pay, premium pay
for holidays, premium pay for rest days, 13 th month pay, allowances. They were also not given their separation
pay after their dismissal. The Labor Arbiter, however, denied their claims, stating that they had not substantiated
the same; on the other hand, CALS presented evidence showing that complainants received the correct salaries
and related benefits.
The National Labor Relations Commission (NLRC), in a decision promulgated on January 17, 2000,
affirmed the judgment of the Labor Arbiter.
On appeal by Alfredo, Candelaria and Edna Roco to the Court of Appeals, the appellate court set aside the
NLRCs decision and ordered reinstatement of Alfredo and Candelaria Roco to their former positions without
loss of seniority of rights and benefits, with full payment of backwages. However, in the case of Edna Roco, the
Court of Appeals found that her appeal cannot be favorably considered as she actually abandoned her work
without justification.
In holding that Alfredo Roco did not abandon his employment, but was illegally dismissed, the Court of
Appeals ratiocinated:
xxx (P)etitioner Alfredo can not be said to have abandoned his employment. The failure of Alfredo to report for
work was justified under the circumstances. The positive assertion of petitioner that when he reported for work
on January 20, 1996, he was told that his services were already terminated is more convincing than the mere
denial of respondent Danilo Yap. Petitioner Alfredos failure to inquire from private respondent as to the cause of
his dismissal should not be taken against him. It should be noted that when the secretary of respondent Danilo
Yap conveyed the order of dismissal, Alfredo took steps to verify the same from the companys Chief
Maintenance Officer Rolando Sibugan who confirmed said order. The filing of the illegal dismissal case against
CALS by petitioner Alfredo negates the charge of abandonment. Private respondent failed to show that Alfredo
clearly and unequivocably performed overt acts to sever the employer-employee relationship.
xxx

In termination cases, the burden of proving just and valid cause for dismissing an employee from his
employment rests upon the employer, and the latters failure to do so would result in a finding that the dismissal
is unjustified. Abandonment as a just and valid ground for termination means the deliberate, unjustified refusal
of the employee to resume his employment, and the burden of proof is on the employer to show a clear,
deliberate and unequivocal intent on the part of the employee to discontinue employment without any intention
of returning. Other than its self-serving claim that petitioner Alfredo did not report for work, private respondent
failed to adduce other evidence of any overt act of Alfredo showing an intent to abandon his work. In short,
private respondent failed to discharge the burden.
Moreover, not only was there a lack of a valid cause for the dismissal of petitioner Alfredo; the record of the case
is devoid of any evidence that Alfredo was afforded his right to due process. If Alfredo was dismissed because of
his abandonment of work, CALS should have given him a written notice of termination in accordance with
Section 2, Rule XVI, Book V of the Omnibus Rules Implementing the Labor Code which provides:
Section 2. Notice of Dismissal. Any employer who seeks to dismiss a worker shall furnish him a written notice
stating the particular acts or omission constituting the grounds for his dismissal. In cases of abandonment of
work, the notice shall be served at the workers last known address.
In the instant case, private respondent failed to present as evidence such notice despite every companys standard
policy to record and file every transaction including notices of termination.
CALS contention that the letter of Rolando Sibugan inquiring from Alfredo whether he still had intention of
resuming work is a manifestation of its willingness to reinstate the latter to his former position, thereby negating
any intention on its part to dismiss Alfredo, is not well-taken. The fact that the employer later made an offer to
re-employ Alfredo did not cure the vice of his earlier arbitrary dismissal. The wrong had been committed and the
harm done. Notably, it was only after the complaint had been filed that CALS, in a belated gesture of good will,
sought to invite Alfredo back to work. CALS sincerity is suspect. Its offer of reinstatement is doubtful since the
same could not have been made if Alfredo had not complained against it. Whether the offer was sincere or not,
the same could not correct the earlier illegal dismissal of Alfredo. It must be borne in mind that CALS offer to
reinstate Alfredo was obviously an attempt to escape liability from having illegally terminated the latters
services. Hence, CALS incurred liability under the Labor Code from the moment Alfredo was illegally
dismissed, and the liability was not abated as a result of CALS offer to reinstate. [9]
In ruling in favor of Candelaria Roco, the appellate court held that when her employment was terminated on
November 15, 1995 (she was hired on May 16, 1995), it was four (4) days after she ceased to be a probationary
employee and became a regular employee within the ambit of Article 281 of the Labor Code, which provides:
ART. 281. Probationary employment. - Probationary employment shall not exceed six months from the date the
employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary basis may be terminated for a just cause or
when he fails to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
Not satisfied with the decision of the Court of Appeals, CALS and Danilo Yap brought before us the
petition for review on certiorari claiming that said court erred in ruling that respondents Alfredo Roco and
Candelaria Roco were illegally dismissed and that they are entitled to any money claims.
In considering that Alfredo Roco was illegally dismissed, the Court of Appeals relied on his allegation that
on January 20, 1996 when he reported for work, following his leave of absence from January 10 to 18, 1996, he
learned from Elvie Acantelado, a secretary of Danilo Yap that he was already separated from his employment.

Yet, as observed in the decision of the NLRC, he did not even attempt to verify from Danilo Yap, the owner
and general manager of CALS, if his employment was being terminated and the cause of the termination. Elvie
Acantelado denied vehemently having told Alfredo that he was being dismissed.
Private respondents also stated in their position paper that Alfredo was told by CALS lawyer to sign a
resignation letter in consideration of P30,000.00. Strangely, apart from this bare allegation, which finds no
corroboration, there is no explanation when, where and how was the offer made. Alfredo did not advance any
theory why CALS wanted him to resign. Atty. Myra Cristela Yngcong, counsel for CALS categorically denied
having offered Alfredo Roco P30,000.00 in exchange for his resignation. She explained that, in fact, she met
Alfredo for the first time when he appeared before the Labor Arbiter on April 23, 1996.
On Alfredos assertion that CALS letter dated March 12, 1996 asking him to report for duty was just an
afterthought because it was sent after Alfredo filed his complaint for illegal dismissal on March 5, 1996. CALS
maintains that it came to know of the complaint filed by the Rocos with the Labor Arbiter only on April 4, 1996
when it received the Notification and Summons dated March 25, 1996 from the Labor Arbiter.
On the other hand, CALS imputed an ulterior motive for the complaint filed by the Rocos against it. It said
it was manipulated by their relatives Domingo Roco against whom CALS filed several criminal cases for
violation of B.P. Blg. 22 on account of Domingo Rocos failure to fund the checks he issued as payment for
CALS products he had purchase.
From the facts established, we are of the view that Alfredo Roco has not established convincingly that he
was dismissed. No notice of termination was given to him by CALS. There is no proof at all, except his selfserving assertion, that he was prevented from working after the end of his leave of absence on January 18,
1996. In fact, CALS notified him in a letter dated March 12, 1996 to resume his work. Both the Labor Arbiter
and the NLRC found that Alfredo, as well as Candelaria Roco, was not dismissed. Their findings of fact are
entitled to great weight.
In Chong Guan Trading v. NLRC, et al.,[10] we held:
After a careful examination of the events that gave rise to the present controversy as shown by the records, the
Court is convinced that private respondent was never dismissed by the petitioner. Even if it were true that
Mariano Lim ordered private respondent to go and that at that time he intended to dismiss private respondent, the
record is bereft of evidence to show that he carried out this intention. Private respondent was not even notified
that he had been dismissed. Nor was he prevented from returning to his work after the October 28 incident. The
only thing that is established from the record, and which is not disputed by the parties, is that private respondent
Chua did not return to his work after his heated argument with the Lim brothers.
xxx
In this case, private respondents failure to work was due to the misunderstanding between the petitioners
management and private respondent. As correctly observed by the Labor Arbiter, private respondent must have
construed the October 28 incident as his dismissal so that he opted not to work for many days thereafter and
instead filed a complaint for illegal dismissal. On the other hand, petitioner interpreted private respondents
failure to report for work as an intentional abandonment. However, there was no intent to dismiss private
respondent since the petitioner is willing to reinstate him. Nor was there an intent to abandon on the part of
private respondent since he immediately filed a complaint for illegal dismissal soon after the October 28
incident. It would be illogical for private respondent to abandon his work and then immediately file an action
seeking his reinstatement xxx. Under these circumstances, it is but fair that each party must bear his own loss,
thus placing the parties on equal footing.
xxx.
With respect to Candelaria Roco, there is no dispute that she was employed on probationary basis. She was
hired on May 16, 1995 and her services were terminated on November 15, 1995 due to poor work

performance. She did not measure up to the work standards on the dressing of chicken. The Labor Arbiter
sustained CALS in terminating her employment. The NLRC affirmed the Labor Arbiters ruling.
The Court of Appeals did not disagree with the NLRCs finding that Candelaria was dismissed because she
did not qualify as a regular employee in accordance with the reasonable standards made known by the company
to her at the time of her employment. [11]
The standards required by the National Meat Inspection Commission for dressing plants with Double AA
Rating to which CALS employee were brief and with regard to which Candelaria failed to comply are stated
in part in the affidavit dated March 7, 1997 of Rolly Villaeba, Cold Storage Supervisor of CALS Dressing Plant:
xxx
2. As Cold Storage Supervisor of Cals; Dressing Plant, I am responsible among others, for briefing the new
employee on the workflow in the dressing plant, the nature of their respective jobs pursuant to the said workflow,
and the work standards required of them by Cals, as well as seeing to it that Cals work standards are complied
with/followed by the employees.
xxx
4. It is the NMIC standard that the dressing of chickens and its parts must stricly (sic) observe the chronological
order of the following workflow, to wit:
1. Depinning
2. Detoing
3. Removals of entrails/cecum/liver/
Gizzard/heart/ Bile
4. Removal of Lungs
5. First Wash
6. Second Wash
7. Third Wash
8. Carcass Quality Control
a. Selection of Carcass
b. Leg Bonding
c. Weighing
d. First Chilling
e. Final Chilling
xxx
9. For the duration of Candelaria Rocos probationary employment, she failed to comply with Cals standards in
the work assigned to her. First, she frequently failed to observe the allowable inches to be cut, which must only
be 1.5 inches, in performing the surgical incision of the chicken butt, either she cuts it too long, thereby
distorting the appearance of the chickens or she cuts it too short, thereby making it difficult to remove the
chicken parts without damaging these parts; Second, she frequently mishandles the pull-out of chicken parts,
such that, she damaged said parts; Third, she frequently completes her assigned tasks in twenty (20) to even
twenty-five (25) seconds, over and above the required time limit, which is only eight (8) to ten (10)
seconds. Resultantly, the chickens/parts which passed through her hands frequently suffer from premature
decomposition/bacterial or salmonella contamination;
10. By reason of the foregoing, Cals management deemed it best to terminate her probationary employment.

xxx[12]
However, the Court of Appeals set aside the NLRC ruling on the ground that at the time Candelarias
services were terminated, she had attained the status of a regular employee as the termination on November 15,
1995 was effected four (4) days after the 6-month probationary period had expired, hence, she is entitled to
security of tenure in accordance with Article 281 of the Labor Code.
CALS argues that the Court of Appeals computation of the 6-month probationary period is erroneous as the
termination of Candelarias services on November 15, 1995 was exactly on the last day of the 6-month period.
We agree with CALS contention as upheld by both the Labor Arbiter and the NLRC that Candelarias
services was terminated within and not beyond the 6-month probationary period. In Cebu Royal v. Deputy
Minister of Labor,[13] our computation of the 6-month probationary period is reckoned from the date of
appointment up to the same calendar date of the 6th month following. Thus, we held:
The original findings were contained in a one-page order reciting simply that complainant was employed on a
probationary period of employment for six (6) months. After said period, he underwent medical examination for
qualification as regular employee but the results showed that he is suffering from PTB minimal. Consequently,
he was informed of the termination of his employment by respondent. The order then concluded that the
termination was justified. That was all.
As there is no mention of the basis of the above order, we may assume it was the temporary payroll authority
submitted by the petitioner showing that the private respondent was employed on probation on February 16,
1978. Even supposing that it is not self-serving, we find nevertheless that it is self-defeating. The six-month
period of probation started from the said date of appointment and so ended on August 17, 1978, but it is not
shown that the private respondents employment also ended then; on the contrary, he continued working as
usual. Under Article 282 of the Labor Code, an employee who is allowed to work after a probationary period
shall be considered a regular employee.' Hence, Pilones was already on permanent status when he was dismissed
on August 21, 1978, or four days after he ceased to be a probationer.
WHEREFORE, our Resolution of April 1, 2002 denying the petition is hereby SET ASIDE and another
one entered REVERSING the decision of the Court of Appeals insofar as it ruled in favor of herein respondents
and the decisions of the Labor Arbiter and the National Labor Relations Commission REINSTATED.
SO ORDERED.
Wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww
Mitsubishi motors phil corp v Chrysler phils labor union
This is a petition for review on certiorari of the Decision [1] of the Court of Appeals in CA-GR SP No. 46030 and
the Resolution denying the motion for reconsideration filed by petitioner Mitsubishi Motors Philippines
Corporation.

The Antecedents
Mitsubishi Motors Philippines Corporation (MMPC) is a domestic corporation engaged in the assembly and
distribution of Mitsubishi motor vehicles. Chrysler Philippines Labor Union (CPLU) is a legitimate labor
organization and the duly certified bargaining agent of the hourly-paid regular rank and file employees of
MMPC. Nelson Paras was a member of CPLU. His wife, Cecille Paras, was the President of the Chrysler
Philippines Salaried Employees Union (CPSU).
Nelson Paras was first employed by MMPC as a shuttle bus driver on March 19, 1976. He resigned on
June 16, 1982. He applied for and was hired as a diesel mechanic and heavy equipment operator in Saudi Arabia
from 1982 to 1993. When he returned to the Philippines, he was re-hired as a welder-fabricator at the MMPC
tooling shop from October 3, 1994 to October 31, 1994. [2] On October 29, 1994, his contract was renewed from
November 1, 1994 up to March 3, 1995.[3]
Sometime in May of 1996, Paras was re-hired on a probationary basis as a manufacturing trainee at the
Plant Engineering Maintenance Department. He and the new and re-hired employees were given an orientation
on May 15, 1996[4] by Emma P. Aninipot, respecting the companys history, corporate philosophy, organizational
structure, and company rules and regulations, including the company standards for regularization, code of
conduct and company-provided benefits.[5]
Paras started reporting for work on May 27, 1996. He was assigned at the paint ovens, air make-up and
conveyors. As part of the MMPCs policy, Paras was evaluated by his immediate supervisors Lito R.
Lacambacal[6] and Wilfredo J. Lopez[7] after six (6) months, and received an average rating. Later, Lacambacal
informed Paras that based on his performance rating, he would be regularized. [8]
However, the Department and Division Managers, A.C. Velando and H.T. Victoria, [9] including Mr.
Dante Ong,[10] reviewed the performance evaluation made on Paras. They unanimously agreed, along with Paras
immediate supervisors, that the performance of Paras was unsatisfactory. [11] As a consequence, Paras was not
considered for regularization. On November 26, 1996, he received a Notice of Termination dated November 25,
1996, informing him that his services were terminated effective the said date since he failed to meet the required
company standards for regularization.[12]
Utilizing the grievance machinery in the collective bargaining agreement, the CPLU demanded the
settlement of the dispute which arose from Paras termination. [13] The dispute was thereafter submitted for
voluntary arbitration, as the parties were unable to agree on a mutually acceptable solution. CPLU posited that
Paras was dismissed on his one hundred eighty third (183 rd) day of employment, or three (3) days after the
expiration of the probationary period of six (6) months.It was contended that Paras was already a regular
employee on the date of the termination of his probationary employment.

According to CPLU and Paras, the latters dismissal was an offshoot of the heated argument during the
CBA negotiations between MMPC Labor Relations Manager, Atty. Carlos S. Cao, on the one hand, and Cecille
Paras, the President of the Chrysler Philippines Salaried Employees Union (CPSU) and Paras wife, on the other.
On November 3, 1997, the Voluntary Arbitrator (VA) rendered a decision finding the dismissal of Paras
valid for his failure to pass the probationary standards of MMPC. The dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered finding the
termination of Mr. Paras was valid for cause his failure to pass the probationary period. [14]

The VA declared that hiring an employee on a probationary basis to determine his or her fitness for
regular employment was in accord with the MMPCs exercise of its management prerogative. The VA pointed out
that MMPC had complied with the requirement of apprising Paras of the standards of performance evaluation
and regularization at the inception of his probationary employment. The VA agreed with the MMPC that the
termination of Paras employment was effected prior to the expiration of the six-month probationary period. As to
Paras contention that he was already a regular employee before he was dismissed in 1994 considering that he
had an accumulated service of eleven (11) months, the VA ruled that Paras delay in filing a complaint for
regularization only in 1996, for services rendered in October 1994 to March 1995, militated against him. The VA
stated that Paras dismissal was based on the unsatisfactory performance rating given to him by his direct
supervisors Lito Lacambacal and Wilfredo Lopez. The VA also found that the alleged heated argument between
Atty. Carlos S. Cao, the Labor Relations Manager of MMPC, and Cecille Paras, the President of CPSU, was
irrelevant in the termination of Paras services. [15]
The Case Before the Court of Appeals
Aggrieved, Paras and CPLU filed a petition for review under Rule 43 of the Rules of Court before the
Court of Appeals, docketed as C.A.-G.R. SP No. 46030.They assigned the following errors:
I
THE VOLUNTARY ARBITRATOR COMMITTED A SERIOUS ERROR OF LAW IN
FAILING TO HOLD THAT THE NOTICE OF TERMINATION WAS SERVED UPON
PETITIONER NELSON PARAS AFTER HE HAS ALREADY BECOME A REGULAR
EMPLOYEE, HIS PERIOD FOR PROBATION HAVING EXPIRED.

II
THE VOLUNTARY ARBITRATOR SERIOUSLY ERRED AND GRAVELY ABUSED HIS
DISCRETION IN HOLDING THAT PETITIONER NELSON PARAS SUPPOSED DELAY IN
FILING THE ILLEGAL DISMISSAL CASE WORKED AGAINST HIM.
III
THE VOLUNTARY ARBITRATOR ACTED WITH GRAVE ABUSE OF DISCRETION AND
COMMITTED SERIOUS ERRORS OF FACT AND LAW IN NOT HOLDING THAT THE
PERFORMANCE OF NELSON PARAS WAS SATISFACTORY AND THAT HIS DISMISSAL
WAS POLITICALLY MOTIVATED.[16]

Therein, Paras and CPLU asserted that pursuant to Article 13 of the New Civil Code, the period of May 27, 1996
to November 26, 1996 consisted of one hundred eighty-three (183) days. They asserted that the maximum of the
probationary period is six (6) months, which is equivalent to 180 days; as such, Paras, who continued to be
employed even after the 180th day, had become a regular employee as provided for in Article 282 of the Labor
Code. They averred that as a regular employee, Paras employment could be terminated only for just or
authorized causes as provided for under the Labor Code, and after due notice. They posited that in the Letter of
Termination dated November 25, 1996, the ground for Paras termination was not among those sanctioned by the
Labor Code; hence, his dismissal was illegal.
Paras and CPLU also stressed that he had already been in the employ of MMPC from October 3, 1994 to March
3, 1995 as a welder-fabricator in the production of jigs and fixtures, a function necessary and desirable to the
usual business of MMPC. Such period, in addition to the six-month probationary period, amounted to eleven
(11) months of service, which is sufficient for him to be considered as a regular employee.
Paras and CPLU averred that the filing of an illegal dismissal complaint only after his termination in 1996 did
not make Paras claim for regularization specious, since an illegally dismissed employee, like him, has four (4)
years within which to file a complaint.[17]
They emphasized that Paras performance evaluation was changed to unsatisfactory as an off-shoot of the
arguments between the latters wife, the President of the CPSU, and Atty. Carlos S. Cao, one of MMPCs
negotiators, over the provisions in the CBA. [18]

The MMPC, for its part, averred that under Article 13 of the New Civil Code, Paras probationary employment
which commenced on May 27, 1996 would expire on November 27, 1996. Since he received the notice of
termination of his employment on November 25, 1996, the same should be considered to have been served
within the six-month probationary period.
The MMPC asserted that the VA acted correctly in not considering the five-month period of Paras
contractual employment as a welder-fabricator to qualify him for regularization. It argued that his rating showed
that his immediate supervisors, in tandem with his department head, found his performance unsatisfactory. Thus,
his failure to meet a satisfactory performance rating justified the termination of his probationary employment.
For its part, the Office of the Solicitor General (OSG), in representation of Voluntary Arbitrator Danilo
Lorredo, agreed that Paras

and CPLUs allegation, that the notice of termination was served on Paras 183 rd day, was erroneous. The
OSG opined that the six-month probationary period was to expire on November 27, 1996 and since Paras was
served such notice on November 25, 1996, his employment was deemed terminated within the six-month
probationary period. It posited that the failure of Paras to get a satisfactory performance rating justified the
termination of his probationary employment, and that the inclusion of his five-month contractual employment as
welder-fabricator did not qualify him for regular employment.
Finally, the OSG contended that the appointment of a probationary employee to a regular status is
voluntary and discretionary on the part of the employer.
In a Decision promulgated on September 13, 2000, the CA reversed the ruling of the Voluntary
Arbitrator, the dispositive portion of which is herein quoted:
WHEREFORE, the petition is GRANTED. The Decision of public respondent, dated
November 3, 1997, is REVERSED and SET ASIDE. In lieu thereof, judgment is hereby entered
declaring Mitsubishi Motors Phils. Corporations dismissal of Nelson Paras as ILLEGAL and
ORDERING the former to reinstate Paras to his former position without loss of seniority rights
and other privileges. Conformably with the latest pronouncement of the Supreme Court on
backwages, supra, Mitsubishi Motors Phils. Corporation is further ORDERED to pay Paras full
backwages (without qualifications or deductions), inclusive of allowances, and his other benefits
or their monetary equivalent computed from the time his compensation was withheld from him
up to the time of his actual reinstatement. Petitioners claims for attorneys fees, moral and
exemplary damages are, nevertheless, DENIED for lack of sufficient basis. No costs.[19]

The CA agreed with Paras and CPLUs interpretation that six (6) months is equivalent to one hundred
eighty (180 days) and that computed from May 27, 1996, such period expired on November 23, 1996. Thus,
when Paras received the letter of termination on November 26, 1996, the same was served on the 183 rd day or
after the expiration of the six-month probationary period. The CA stated that since he was allowed to work
beyond the probationary period, Paras became a regular employee. Hence, his dismissal must be based on the
just and authorized causes under the Labor Code, and in accordance with the two-notice requirement provided
for in the implementing rules. The appellate court concluded that for MMPCs failure to show that Paras was duly
notified of the cause of his dismissal, the latter was illegally dismissed; hence, his actual reinstatement without
loss of seniority rights and the payment of backwages up to the time of his reinstatement were in order.

Dissatisfied, the MMPC filed a motion for reconsideration of the decision, alleging that the CA erred in
holding that the six-month probationary period which commenced on May 27, 1996, expired on November 23,
1996.
The MMPC contended that the reinstatement of Paras to his former position had become moot and
academic because it had retrenched approximately seven hundred (700) employees as a result of its financial
losses in 1997. It posited that the payment of full backwages should only be computed up to February 1998, the
date when MMPC effected the first phase of its retrenchment program.
The CA denied the motion in a Resolution dated June 18, 2001.[20]

The Present Petition

Undaunted, the MMPC, now the petitioner, filed this instant petition, alleging as follows:
A.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE 3
NOVEMBER 1997 DECISION OF THE HONORABLE VA DANILO LORREDO, AND IN
FINDING THAT RESPONDENT PARAS (WAS) ILLEGALLY DISMISSED AND
ORDERING HIS REINSTATEMENT.
B.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN ORDERING THE
REINSTATEMENT OF PARAS WITH FULL BACKWAGES DESPITE THE CHANGE IN
THE FINANCIAL CIRCUMSTANCES OF THE COMPANY.
C.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE
SIX-MONTH PROBATIONARY PERIOD OF PARAS WHICH STARTED ON 27 MAY 1996
HAD EXPIRED 23 NOVEMBER 1996.[21]

The petitioner asserts that the CA erred in ruling that respondent Paras was already a regular employee
when he was served the notice of termination. Citing Article 13 of the New Civil Code, the petitioner argued that
the six-month probationary period should be computed as follows:
May 27-31 = 4 days
Jun(e) 1-30 = 1 month (30 days)
July 1-31 = 1 month (30 days)
Aug(.) 1-31 = 1 month (30 days)

Sept(.) 1-30 = 1 month (30 days)

Oct(.) 1-31 = 1 month (30 days)
Nov(.) 1-26 = 26 days[22]

Hence, according to the petitioner, when the termination letter was served on November 26, 1996, Paras
was

still

probationary

employee.

Considering that he did not qualify for regularization, his services were legally terminated. As such, the CA erred
in ordering his reinstatement and the payment of his backwages.
According to the petitioner, even assuming that respondent Paras was a regular employee when he was
dismissed, his reinstatement had already become moot and academic because of the retrenchment program
effected as a result of the business losses it had suffered in the year 1997. Respondent Paras, who was employed
only in May 27, 1996, would have been included in the first batch of employees retrenched in February of 1998,
in accordance with the last in first out policy embedded in the CBA. The petitioner further contends that Paras
backwages should be computed only up to February of 1998.
In their comment on the petition, the respondents argue that the CA was correct in concluding that the
termination letter was served on respondent Paras one hundred eighty third (183 rd) day of employment with the
petitioner, asserting that six (6) months is equivalent to one hundred eighty (180) days. Since respondent Paras
was employed on May 27, 1996, the 180th day fell on November 23, 1996. Thus, respondent Paras was already a
regular employee when the termination letter was served on him. Consequently, his dismissal should be based on
the just or authorized causes provided for by the Labor Code, and after proper notice.

The respondents, likewise, contend that the petitioner cannot raise new and unsubstantiated allegations
in its petition at bar.

The Issues

The issues for resolution are the following: (a) whether or not respondent Paras was already a regular
employee on November 26, 1996; (b) whether or not he was legally dismissed; (c) if so, whether or not his
reinstatement had been rendered moot and academic; and, (d) whether or not his backwages should be computed
only up to February of 1998.

The Courts Ruling

The petition is partially granted.

At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for

review on certiorari of CA decisions. [23] Questions of fact are not entertained. [24] This Court is not a trier of facts

and, in labor cases, this doctrine applies with greater force. Factual questions are for labor tribunals to resolve.

[25]

The findings of fact of quasi-judicial bodies like the National Labor Relations Commission (NLRC), are

accorded with respect, even finality, if supported by substantial evidence.

Particularly when passed upon and upheld by the Court of Appeals, such findings are binding and

conclusive upon the Supreme Court and will not normally be disturbed. [26]

However, when the findings of the NLRC and the Court of Appeals are inconsistent with each other,

there is a need to review the records to determine which of them should be preferred as more conformable to the

evidentiary facts.[27] Considering that the CAs findings of fact clash with those of the Voluntary Arbitrator, this

Court is compelled to go over the records of the case, as well as the submissions of the parties. [28]
Regularization of
Employment

Indeed, an employer, in the exercise of its management prerogative, may hire an employee on a
probationary basis in order to determine his fitness to perform work. [29] Under Article 281 of the Labor Code, the
employer must inform the employee of the standards for which his employment may be considered for
regularization. Such probationary period, unless covered by an apprenticeship agreement, shall not exceed six
(6) months from the date the employee started working. The employees services may be terminated for just
cause or for his failure to qualify as a regular employee based on reasonable standards made known to him. [30]

Respondent Paras was employed as a management trainee on a probationary basis. During the orientation
conducted on May 15, 1996, he was apprised of the standards upon which his regularization would be based. He
reported

for

work

on

May

27,

1996. As

per

the

companys

policy,

the

probationary period was from three (3) months to a maximum of six (6) months.
Applying Article 13 of the Civil Code,[31] the probationary period of six (6) months consists of one
hundred eighty (180) days. [32] This is in conformity with paragraph one, Article 13 of the Civil Code, which
provides that the months which are not designated by their names shall be understood as consisting of thirty (30)
days each. The number of months in the probationary period, six (6), should then be multiplied by the number of
days within a month, thirty (30); hence, the period of one hundred eighty (180) days.
As clearly provided for in the last paragraph of Article 13, in computing a period, the first day shall be
excluded and the last day included. Thus, the one hundred eighty (180) days commenced on May 27, 1996, and
ended on November 23, 1996. The termination letter dated November 25, 1996 was served on respondent Paras
only at 3:00 a.m. of

November 26, 1996. He was, by then, already a regular employee of the petitioner under Article 281 of the
Labor Code.
The Legality of
The Dismissal

An employee cannot be dismissed except for just or authorized cause as found in the Labor Code and after
due process.[33] The following grounds would justify the dismissal of an employee:
(a)

Serious misconduct or willful disobedience by the employee of the lawful orders of the
employer or representative in connection with his work;

(b)

Gross and habitual neglect by the employee of his duties;

(c)

Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;

(d)

Commission of a crime or offense by the employee against the person of his employer or
of any immediate member of his family or his duly authorized representative; and

(e)

Other causes analogous to the foregoing.[34]

The basis for which respondent Paras services were terminated was his alleged unsatisfactory rating
arising from poor performance. It is a settled doctrine that the employer has the burden of proving the lawfulness
of his employees dismissal. The validity of the charge must be clearly established in a manner consistent with
due process.[35]
Under Article 282 of the Labor Code, an unsatisfactory rating can be a just cause for dismissal only if it
amounts to gross and habitual neglect of duties. Gross negligence has been defined to be the want or absence of
even slight care or diligence as to amount to a reckless disregard of the safety of person or property. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid them. [36] A careful perusal of the
records of this case does not show that respondent Paras was grossly negligent in the performance of his duties.
The company policy provides the following rule in performance evaluation:
The performance rating sheet must be accomplished by the immediate supervisor, then reviewed
by the Department Head, and concurred by the Division Head. The Personnel Manager likewise
must note all submitted performance sheets.

Once the rating sheet has gone through this standard procedure, the immediate supervisor shall
discuss the results of the performance rating with the employee. The discussion/conference may
be done in the presence of the Department Head. This is to emphasize the point that the
employee is given due importance especially in matters pertaining to his development as a
person and employee. [37]

In the present case, the immediate supervisor of respondent Paras gave him an average performance rating and
found him fit for regularization.[38] Thereafter, his immediate supervisor and the department head reviewed the
said rating, which was duly noted by the personnel manager. However, in a complete turn around, the petitioner
made it appear that after the performance evaluation of respondent Paras was reviewed by the department and
division heads, it was unanimously agreed that the

respondents performance rating was unsatisfactory, making him unfit for regularization.
There is no showing that respondent Paras was informed of the basis for the volte face of the management group
tasked

to

review

his

performance rating. His immediate supervisor even told him that he had garnered a satisfactory rating and was
qualified for regularization, only to later receive a letter notifying him that his employment was being
terminated.
Considering that respondent Paras was not dismissed for a just or authorized cause, his dismissal from
employment was illegal. Furthermore, the petitioners failure to inform him of any charges against him deprived
him of due process. Clearly, the termination of his employment based on his alleged unsatisfactory performance
rating was effected merely to cover up and deodorize the illegality of his dismissal.
Reinstatement and
Backwages

The normal consequences of illegal dismissal are reinstatement without loss of seniority rights and the
payment of backwages computed from the time the employees compensation was withheld from him. [39] Since
respondent Paras dismissal from employment is illegal, he is entitled to

reinstatement and to be paid backwages from the time of his dismissal up to the time of his actual
reinstatement.
The petitioner asserts that assuming respondent Paras was illegally dismissed, his reinstatement had
become moot and academic because of its retrenchment program which was effected beginning February
1998. The petitioner posits that even if respondent Paras had become a regular employee by November 26, 1996,
he would have been included in the first phase of its retrenchment program, pursuant to the last in first out policy
embedded in the CBA. Hence, the petitioner concludes, the payment of backwages should be computed up to
February of 1998.
The respondents, for their part, aver that the petitioner is proscribed from alleging new circumstances
and allegations of fact, particularly on financial reverses, before the Court of Appeals and the Voluntary
Arbitrator.
We do not agree with the respondents.
A cursory examination of the records shows that the petitioner could not raise its retrenchment program
as an issue before the VA, because it was implemented only in February 1998, when the case was already in the
CA. However, we note that the petitioner did not raise the same in its comment to the petition. The petitioner
asserted the matter only in its October 20, 2000 motion for reconsideration of the decision of the CA, where it
alleged that the retrenchment program was effected to arrest the continuing business losses resulting from the
financial reverses it experienced in 1997.
Nevertheless, it is not denied that because of the petitioners losses, it retrenched seven hundred (700)
employees. Business reverses or losses are recognized by law as an authorized cause for termination of
employment. Still, it is an essential requirement that alleged losses in business operations must be proven
convincingly.Otherwise, such ground for termination would be susceptible to abuse by scheming employers,
who might be merely feigning business losses or reverses in their business ventures to ease out employees.
[40]

Retrenchment is an authorized cause for termination of employment which the law accords an employer who

is not making good in its operations in order to cut back on expenses for salaries and wages by laying off some
employees. The purpose of retrenchment is to save a financially ailing business establishment from eventually
collapsing.[41]
In this case, the petitioner submitted in the CA its financial statements for 1996, 1997 and 1998 [42] as
well as its application for retrenchment. In its Statements of Income and Unappropriated Retained Earning, it
was shown that in 1996, the parent company of the petitioner had a net income of P467,744,285. In 1997, it had
a net loss of P29,253,511.[43] In 1998, its net loss, after effecting retrenchment and closing several plants, was
arrested and dropped to P8,156,585.[44] This shows that even after the retrenchment, the petitioner MMPC still
suffered net losses.
In 1996, the petitioners current assets amounted to P5,381,743,576; it increased to P8,033,932,745[45] in
1997, while in 1998, it was reduced toP5,053,874,359.[46] This shows that the petitioners assets acquired in 1997
diminished in 1998. The figures for Current Liabilities are consistent with the movement of current assets for
1997 and 1998.
In

1996,

the

petitioner

incurred

current

liabilities

of P1,966,445,401

which

increased

to P5,088,990,117[47] in 1997 and decreased to P2,880,259,811[48] in 1998. To reduce its losses, the petitioner had
to dispose of some of its current assets to cover the increased liability incurred in 1997, and had to resort to
borrowings in 1998. The continuity of losses which started in 1997 is further illustrated in the figures on retained
earnings for 1996, 1997 and 1998. In 1996, retained earnings stood at P1,838,098,175,[49] which decreased
to P994,942,628[50] in 1997 and further decreased to P592,614,548[51] in 1998.
The petitioners losses in 1997 and 1998 are not insignificant. It is beyond cavil then, that the serious and
actual business reverses suffered by the petitioner justified its resort to retrenchment of seven hundred (700) of
its employees.
The records show that the petitioner informed the Department of Labor and Employment of its plight
and intention to retrench employees as a result of the shutdown of its plants. [52] The termination of the five

hundred thirty-one (531) affected employees were made effective a month from receipt of the termination letter
mailed on February 25, 1998.[53]
In accordance with the CBA between MMPC and CPLU, employees who were recently hired were the
ones retrenched. Considering that respondent Paras had just been regularized on November 24, 1996, he would
have been included among those who had been retrenched had he not been dismissed.
The unfavorable financial conditions of the petitioner may not justify reinstatement. However, it is not a
sufficient ground to deny backwages to respondent Paras who was illegally dismissed. [54] Considering that
notices of retrenchment were mailed on February 25, 1998 and made effective one month therefrom, respondent
Paras should be paid full backwages from the date of his illegal dismissal up to March 25, 1998. Pursuant to
Article 283 of the Labor Code, he should be paid separation pay equivalent to one (1) month salary, or to at least
one-half month pay for every year of service, whichever is higher, a fraction of at least six months to be
considered as one (1) year.[55]
IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The September
13, 2000 Decision of the Court of Appeals in CAGR SP No. 46030 is hereby AFFIRMED WITH
MODIFICATIONS. The petitioner is ORDERED to pay respondent Nelson Paras separation pay equivalent to
one (1) month, or to at least one-half (1/2) month pay for every year of service, whichever is higher, a fraction of
at

least

six

(6)

months

to

be

considered

as

one

year;

and

to

pay

full backwages, computed from the time of his dismissal up to March 25, 1998. That portion of the decision of
the Court of Appeals directing the reinstatement of the respondent Paras is DELETED.
No costs.
SO ORDERED.

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Extension of probationary priod relaxed by SC
Mariwasa manufacturing v leogardo

G.R. No. 74246 January 26, 1989

MARIWASA MANUFACTURING, INC., and ANGEL T. DAZO, petitioners,
vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of Ministry of Labor and
Employment judgment, and JOAQUIN A. DEQUILA, respondents.
Cruz, Agabin, Atienza & Alday for petitioners.
The Solicitor General of public respondent.
Norberto M. Alensuela, Sr. for private respondent.

NARVASA, J.:
There is no dispute about the facts in this case, and the only question for the Court is whether or not, Article 282
of the Labor Code notwithstanding, probationary employment may validly be extended beyond the prescribed
six-month period by agreement of the employer and the employee.
Private respondent Joaquin A. Dequila (or Dequilla) was hired on probation by petitioner Mariwasa
Manufacturing, Inc. (hereafter, Mariwasa only) as a general utility worker on January 10, 1979. Upon the
expiration of the probationary period of six months, Dequila was informed by his employer that his work had
proved unsatisfactory and had failed to meet the required standards. To give him a chance to improve his
performance and qualify for regular employment, instead of dispensing with his service then and there, with his
written consent Mariwasa extended his probation period for another three months from July 10 to October 9,
1979. His performance, however, did not improve and on that account Mariwasa terminated his employment at
the end of the extended period. 1
Dequila thereupon filed with the Ministry of Labor against Mariwasa and its Vice-President for Administration,
Angel T. Dazo, a complaint for illegal dismissal and violation of Presidential Decrees Nos. 928 and 1389. 2 His
complaint was dismissed after hearing by Director Francisco L. Estrella, Director of the Ministry's National
Capital Region, who ruled that the termination of Dequila's employment was in the circumstances justified and
rejected his money claims for insufficiency of evidence. 3 On appeal to the Office of the Minister, however, said
disposition was reversed. Respondent Deputy Minister Vicente Leogardo, Jr. held that Dequila was already a
regular employee at the time of his dismissal, therefore, could not have been lawfully dismissed for failure to
meet company standards as a probationary worker. He was ordered reinstated to his former position without loss
of seniority and with full back wages from the date of his dismissal until actually reinstated. 4 This last order
appears later to have been amended so as to direct payment of Dequila's back wages from the date of his
dismissal to December 20, 1982 only. 5
Mariwasa and Dazo, now petitioners, thereafter be sought this Court to review Hon. Leogardo's decision
oncertiorari and prohibition, urging its reversal for having been rendered with grave abuse of discretion and/or
without or in excess of jurisdiction. 6
The petition, as well as the parties' comments subsequently submitted all underscore the fact that the threshold
issue here is, as first above stated, the legal one of whether employer and employee may by agreement extend
the probationary period of employment beyond the six months prescribed in Art. 282 of the Labor Code, which
provides that:

Art. 282. Probationary Employment. Probationary employment shall not exceed six (6)
months from the date the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after
probationary period shall be considered a regular employee.'
The Court agrees with the Solicitor General, who takes the same position as the petitioners, that such an
extension may lawfully be covenanted, notwithstanding the seemingly restrictive language of the cited
provision.Buiser vs. Leogardo, Jr . 7 recognized agreements stipulating longer probationary periods as
constituting lawful exceptions to the statutory prescription limiting such periods to six months, when it upheld as
valid an employment contract between an employer and two of its employees that provided for an eigthteenmonth probation period. This Court there held:
'It is petitioners' submission that probationary employment cannot exceed six (6) months, the
only exception being apprenticeship and learnership agreements as provided in the Labor Code;
that the Policy Instruction of the Minister of Labor and Employment nor any agreement of the
parties could prevail over this mandatory requirement of the law; that this six months
prescription of the Labor Code was mandated to give further efficacy to the constitutionallyguaranteed security of tenure of workers; and that the law does not allow any discretion on the
part of the Minister of Labor and Employment to extend the probationary period for a longer
period except in the aforecited instances. Finally, petitioners maintain that since they are regular
employees, they can only be removed or dismissed for any of the just and valid causes
enumerated under Article 283. of the Labor Code.
We reject petitioners' contentions. They have no basis in law.
Generally, the probationary period of employment is limited to six (6) months. The exception to
this general rule is when the parties to an employment contract may agree otherwise, such as
when the same is established by company policy or when the same is required by the nature of
work to be performed by the employee. In the latter case, there is recognition of the exercise of
managerial prerogatives in requiring a longer period of probationary employment, such as in the
present case where the probationary period was set for eighteen (18) months, i.e. from May,
1980 to October, 1981 inclusive, especially where the employee must learn a particular kind of
work such as selling, or when the job requires certain qualifications, skills experience or
training.
xxx
We therefore, hold and rule that the probationary employment of petitioners set to eighteen (18)
months is legal and valid and that the Regional Director and the Deputy Minister of Labor and
Employment committed no abuse of discretion in ruling accordingly.
The single difference between Buiser and the present case: that in the former involved an eighteen-month
probationary period stipulated in the original contract of employment, whereas the latter refers to an extension
agreed upon at or prior to the expiration of the statutory six-month period, is hardly such as to warrant or even
suggest a different ruling here. In both cases the parties' agreements in fact resulted in extensions of the period
prescribed by law. That in this case the inability of the probationer to make the grade became apparent only at or
about the end of the six-month period, hence an extension could not have been pre-arranged as was done
inBuiser assumes no adverse significance, given the lack, as pointed out by the Solicitor General, of any

indication that the extension to which Dequila gave his agreement was a mere stratagem of petitioners to avoid
the legal consequences of a probationary period satisfactorily completed.
For aught that appears of record, the extension of Dequila's probation was ex gratia, an act of liberality on the
part of his employer affording him a second chance to make good after having initially failed to prove his worth
as an employee. Such an act cannot now unjustly be turned against said employer's account to compel it to keep
on its payroll one who could not perform according to its work standards. The law, surely, was never meant to
produce such an inequitable result.
By voluntarily agreeing to an extension of the probationary period, Dequila in effect waived any benefit
attaching to the completion of said period if he still failed to make the grade during the period of extension. The
Court finds nothing in the law which by any fair interpretation prohibits such a waiver. And no public policy
protecting the employee and the security of his tenure is served by prescribing voluntary agreements which, by
reasonably extending the period of probation, actually improve and further a probationary employee's prospects
of demonstrating his fitness for regular employment.
Having reached the foregoing conclusions, the Court finds it unnecessary to consider and pass upon the
additional issue raised in the Supplemental Petition 8 that the back wages adjudged in favor of private respondent
Dequila were erroneously computed.
WHEREFORE, the petition is granted. The orders of the public respondent complained of are reversed and set
aside. Private respondent's complaint against petitioners for illegal dismissal and violation of Presidential
Decrees 928 and 1389 is dismissed for lack of merit, without pronouncement as to costs.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

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Repetitive proby priod
Villanueva vs nlrc
DAVIDE, JR., J.:
In this special civil action for certiorari, petitioner Juanito Villanueva seeks to annul the decision [1] of the
National Labor Relations Commission (NLRC) in NLRC Case No. 00-09-06202-95 and its resolution [2] denying
petitioners motion for reconsideration. The former reversed the decision[3] of the Labor Arbiter of 21 May 1996
finding that the petitioner was illegally dismissed from his employment.
The factual and procedural antecedents of this case are as follows:
Petitioner Juanito M. Villanueva started working with respondent Innodata Philippines, Inc.,/Innodata Processing
Corporation as an "abstractor" with a daily salary of P180.
The contract of employment [4] provided for a period of effectivity of "one year commencing on Feb. 21, 1994,
until Aug. 21, 1995." It was also stipulated that from 21 February 1994 to 21 August 1994, or for a period of six
months, petitioner's employment would be "contractual" and could be terminated at whatever date within this
period by mere service of notice to that effect.However, should his employment be continued beyond 21 August
1994, he would become a regular employee upon demonstration of sufficient skill to meet the standards set by
the respondent company. Should he fail to demonstrate the ability to master his task during the first six months,

he could be placed on probation for another six months; after which, he could be evaluated for promotion as a
regular employee.
On 21 February 1995, petitioner's services were terminated by reason of "end of contract." [5]
Three weeks thereafter, the petitioner was rehired by the respondent corporation, this time, as a data encoder
effective 13 March 1995 to 15 August 1995, with a lesser pay of P164.10 per day.[6]
On 13 August 1995, the petitioner was again separated from the respondent company also on account of "end of
contract."[7] This prompted the petitioner to file a complaint against the respondent company and its president,
Todd Solomon, for illegal dismissal with prayer for moral and exemplary damages and attorney's fees.
In his 21 May 1996 Decision, Labor Arbiter Manuel R. Caday held that as an abstractor engaged in processing,
encoding of data, precoding, editing, proofreading and scoring -- activities which were necessary and desirable
in the usual business of the respondent corporation -- the petitioner was a regular employee pursuant to Article
280 of the Labor Code, who enjoyed security of tenure. Moreover, when he was allowed to work after 21 August
1994, when his probationary employment of six months expired, he acquired a vested right to a permanent
employment and could only be dismissed for a valid cause.
Accordingly, after finding petitioner's dismissal to be illegal, the Labor Arbiter ordered the respondent
company to immediately reinstate the petitioner to his former position without loss of seniority rights, with full
back wages and benefits computed from the date of his dismissal until his actual reinstatement, less the salaries
he received under his second employment contract.
On appeal, respondent NLRC reversed the Labor Arbiter's decision and upheld the validity of petitioner's
separation from the respondent company on the ground that his employment contract was for a fixed period of
one year and six months, certain to end on 21 August 1994.
His motion for reconsideration having been denied, the petitioner filed this special civil action
for certiorari contending that respondent NLRC palpably erred and committed grave abuse of discretion in
reversing the decision of the Labor Arbiter. Section 2 of the contract of employment itself recognized the status
of the petitioner as a probationary employee. Having worked beyond 21 August 1994 and for six months
thereafter until his dismissal on 21 February 1995, he had become a regular employee "not only by operation of
law (Articles 280 and 281) but also by virtue of the contract."
In its Comment, the respondent company supports the assailed decision and maintains that the petitioner
was hired on a fixed-term basis and was never placed on probation. The termination of his services was not due
to his dismissal but the expiration of his term of employment; thus, he is not entitled to reinstatement, back
wages, and damages.
On the other hand, in its Manifestation in Lieu of Comment, the Office of the Solicitor General (OSG)
agrees with the petitioner. Hence, we required the NLRC to file its own comment. As expected, the NLRC urged
affirmance of the challenged decision.
The only question before us is whether the NLRC committed grave abuse of discretion in reversing the
decision of the Labor Arbiter, which ordered the reinstatement of the petitioner with full back wages.
We resolve the issue in the affirmative. The NLRC committed grave abuse of discretion when it reversed
the findings of fact of the Labor Arbiter by giving undue, if not unwarranted, emphasis on the dates fixed in the
contract and failing to consider the rest of the terms of the contract, as well as the attendant circumstances
surrounding petitioners employment. Section 2 of the Contract of Employment in question provided:
Section 2. This contract shall be effective for a period of one year commencing on Feb. 21, 1994 until Aug. 21,
1995, unless sooner terminated pursuant to the provision hereof.

From Feb. 21, 1994 to August 21, 1994, or for a period of six (6) months, the EMPLOYEE shall be contractual
during which the EMPLOYER can terminate the EMPLOYEE's services by serving written notice to that
effect. Such termination shall be immediate, or at whatever date within this six-month period, as the
EMPLOYER may determine. Should the EMPLOYEE continue his employment beyond Aug. 21, 1994, he shall
become a regular employee upon demonstration of sufficient skill in 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 regular employee.
We agree with the OSG that the contract cannot be strictly construed as one for a fixed term. For one, while
the first paragraph of Section 2 spoke of the contract's duration to be "one" year, it was in fact, for one year and
six months because it was to commence on 21 February 1994 and terminate on 21 August 1995. For another,
while the second paragraph specified the first six-month period of employment, 21 February to 21 August 1994,
as contractual, the third sentence of that paragraph granted the petitioner regular employment status should he
"continue his employment beyond August 21, 1994, upon demonstration of sufficient skill in terms of his ability
to meet the standards" set by the respondent company. It is clear that the first six months was in reality the
"probation period" under Article 281 of the Labor Code, [8] since petitioner would become a regular employee if
the employment would continue beyond that period upon demonstration of sufficient skill in accord with the
standards set by the respondent corporation.
Significantly, the respondent company alleges that it has never placed the petitioner on probation. [9] This
could only mean that petitioner's continuance in employment beyond 21 August 1994 was not for probation
purposes under the fourth sentence of the second paragraph of Section 2 reading as follows: "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." If the petitioner
was thus allowed to remain in employment beyond 21 August 1994, it could be for no other reason than that he
demonstrated "sufficient skill in terms of his ability to meet the standards set" by the respondent company. He,
therefore, became a regular employee by virtue of the third sentence of the second paragraph of Section 2 of the
contract.
Besides, the Labor Arbiter found that as an abstractor, the petitioner was engaged in "processing, encoding
of data, precoding, editing, proofreading and scoring, all of which activities are deemed necessary and desirable
in the usual business[10] of respondent company." The employment then was "regular" under the first paragraph
of Article 280 of the Labor Code, which reads:
ART. 280. Regular and casual employment. -- The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
The termination of petitioner's employment contract on 21 February 1995, as well as the subsequent
issuance on 13 March 1995 of a "new" contract for five months as "data encoder," was a devious, but crude,
attempt to circumvent petitioner's right to security of tenure as a regular employee guaranteed by Article 279 of
the Labor Code.[11] Hence, the so-called "end of contract" on 21 February 1995 amounted to a dismissal without
any valid cause.
Notably, the respondent company prepared the contract of employment. It was a contract of adhesion, and
petitioner had only to adhere to it by signing it. Its terms should be construed strictly against the party who
prepared it.[12] Any ambiguity therein must be resolved against the respondent company, [13] especially because
under Article 1702 of the Civil Code, in case of doubt, all labor contracts shall be construed in favor of the
laborer. We cannot allow the respondent company to construe otherwise what appears to be clear from the

wordings of the contract.The interpretation which the respondent company seeks to wiggle out is wholly
unacceptable, as it would result in a violation of petitioner's right to security of tenure guaranteed in Section 3 of
Article XIII of the Constitution and in Articles 279 and 281 of the Labor Code.
WHEREFORE, the challenged decision of 11 October 1996 and resolution of 29 November 1996 of the
National Labor Relations Commission are SET ASIDE, and the decision of the Labor Arbiter of 21 May 1996 in
NLRC-NCR-00-09-06202-95 is REINSTATED.
Costs against private respondent Innodata Philippines, Inc.
SO ORDERED.
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Stipulation in employment contract fixing the period of proby period
Innodata phils inc. v. quejada lopez

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 Review [1] under Rule 45 of the Rules of Court, seeking to reverse the September 18,
2003 Decision[2] of the Court of Appeals (CA) in CA-GR SP No. 73416, as well as its March 15, 2004
Resolution[3] denying petitioners Motion for Reconsideration. Thedecretal 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 areSET ASIDE, and the decision of the
Labor Arbiter of December 29, 1999 in NLRC NCR CASE NO. 00-03-02732-98
is REINSTATED andAFFIRMED 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 Servidadvs. 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 ofP225,070.56 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. NLRC[8] and Servidad v. NLRC[9] 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 Villanueva[12] and Servidad,[13] petitioner has
reworded its present employment contracts. A close scrutiny of the provisions, however, show that the doublebladed scheme to block the acquisition of tenurialsecurity 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 FORMATTEReffective 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. [19] Moreover,
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.

ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson, First Division
Wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww
Buiser v hon leogardo
This is a petition for certiorari seeking to set aside the Order of the Deputy Minister of Labor and Employment,
affirming the Order of the Regional Director, National Capital Region, in Case No. NCR-STF-5-2851-81, which
dismissed the petitioners' complainant for alleged illegal dismissal and unpaid commission.

Petitioners were employed by the private respondent GENERAL TELEPHONE DIRECTORY COMPANY as
sales representatives and charged with the duty of soliciting advertisements for inclusion in a telephone
directory.
The records show that petitioners Iluminada Ver Buiser and Ma. Mercedes P. Intengan entered into an
"Employment Contract (on Probationary Status)" on May 26, 1980 with private respondent, a corporation
engaged in the business of publication and circulation of the directory of the Philippine Long Distance
Telephone Company. Petitioner Ma. Cecilia Rillo-Acuna entered into the same employment contract on June 11,
1980 with the private respondent.
Among others, the "Employment Contract (On Probationary Status)" included the following common
provisions:
l. The company hereby employs the employee as telephone representative on a probationary
status for a period of eighteen (18) months, i.e. from May 1980 to October 1981, inclusive. It is
understood that darung the probationary period of employment, the Employee may be
terminated at the pleasure of the company without the necessity of giving notice of termination
or the payment of termination pay.
The Employee recognizes the fact that the nature of the telephone sales representative's job is
such that the company would be able to determine his true character, conduct and selling
capabilities only after the publication of the directory, and that it takes about eighteen (18)
months before his worth as a telephone saw representative can be fully evaluated inasmuch as
the advertisement solicited by him for a particular year are published in the directory only the
following year.
Corollary to this, the private respondent prescribed sales quotas to be accomplished or met by the petitioners.
Failing to meet their respective sales quotas, the petitioners were dismissed from the service by the private
respondent. The records show that the private respondent terminated the services of petitioners Iluminada Ver
Buiser and Cecilia Rillo-Acuna on May 14, 1981 and petitioner Ma. Mercedes P. Intengan on May 18, 1981 for
their failure to meet their sales quotas.
Thus, on May 27, 1981, petitioners filed with the National Capital Region, Ministry of Labor and Employment,
a complaint for illegal dismissal with claims for backwages, earned commissions and other benefits, docketed as
Case No. NCR-STF-5-2851-81.
The Regional Director of said ministry, in an Order dated September 21, 1982, dismissed the complaints of the
petitioners, except the claim for allowances which private respondent was ordered to pay. A reconsideration of
the Order was sought by the petitioners in a motion filed on September 30, 1982. This motion, however, was
treated as an appeal to the Minister of Labor.
On appeal, Deputy Minister Vicente Leogardo, Jr. of the Ministry of Labor issued an Order dated January 7,
1983, affirming the Regional Director's Order dated September 21, 1982, wherein it ruled that the petitioners
have not attained permanent status since private respondent was justified in requiring a longer period of
probation, and that the termination of petitioners' services was valid since the latter failed to meet their sales
quotas.Hence, this petition for certiorari on the alleged ground that public respondent committed grave abuse of
discretion amounting to lack of jurisdiction. Specifically, petitioners submit that:1. The Hon. Regional Director
and the Hon. Deputy Minister committed grave abuse of discretion amounting to lack of jurisdiction in ruling
that the probationary employment of petitioners herein is eighteen (18) months instead of the mandated six (6)
months under the Labor Code, and in consequently further ruling that petitioners are not entitled to security of
tenure while under said probation for 18 months.2. The Hon. Regional Director and the Hon. Deputy Minister

committed grave abuse of discretion amounting to lack of jurisdiction in ruling that petitioners were dismissed
for a just and valid cause.
3. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion amounting to
lack of jurisdiction in ruling that petitioners are not entitled to the commissions they have earned and accrued
during their period of employment.
Petitioners contend that under Articles 281-282 of the Labor Code, having served the respondent company
continuously for over six (6) months, they have become automatically regular employees notwithstanding an
agreement to the contrary. Articles 281-282 read thus:
Art. 282. Probationary Employment. Probationary employment shall not exceed six (6)
months from the date the employee started working, unless it iscCovered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer to themployee
at the time of his engagement. An employee who is allowed to work after a probationary period
shall be considered a regular employee. (As amended by PD 850).
Art. 281. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreements of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceeding paragraph.
Provided, That, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.
(As amended by PD 850).
It is petitioners' submission that probationary employment cannot exceed six (6) months, the only exception
being apprenticeship and learnership agreements as provided in the Labor Code; that the Policy Instruction of
the Minister of Labor and Employment nor any agreement of the parties could prevail over this mandatory
requirement of the law; that this six months prescription of the Labor Code was mandated to give further
efficacy to the constitutionally-guaranteed security of tenure of workers; and that the law does not allow any
discretion on the part of the Minister of Labor and Employment to extend the probationary period for a longer
period except in the aforecited instances. Finally, petitioners maintain that since they are regular employees, they
can only be removed or dismissed for any of the just and valid causes enumerated under Article 283 of the Labor
Code.We reject petitioners' contentions. They have no basis in law.Generally, the probationary period of
employment is limited to six (6) months. The exception to this general rule is When the parties to an
employment contract may agree otherwise, such as when the same is established by company policy or when the
same is required by the nature of work to be performed by the employee. In the latter case, there is recognition of
the exercise of managerial prerogatives in requiring a longer period of probationary employment, such as in the
present case where the probationary period was set for eighteen (18) months, i.e. from May, 1980 to October,
1981 inclusive, especially where the employee must learn a particular kind of work such as selling, or when the
job requires certain qualifications, skills, experience or training.

Policy Instruction No. 11 of the Minister of Labor and Employment has clarified any and all doubts on the
period of probationary employment. It states as follows:
Probationary Employment has been the subject of misunderstanding in some quarter. Some people believe six
(6) months is the probationary period in all cases. On the other hand employs who have already served the
probationary period are sometimes required to serve again on probation.
Under the Labor Code, six (6) months is the general probationary period ' but the probationary period is actually
the period needed to determine fitness for the job. This period, for lack of a better measurement is deemed to be
the period needed to learn the job.
The purpose of this policy is to protect the worker at the same time enable the employer to make a meaningful
employee selection. This purpose should be kept in mind in enforcing this provision of the Code. This issuance
shall take effect immediately.
In the case at bar, it is shown that private respondent Company needs at least eighteen (18) months to determine
the character and selling capabilities of the petitioners as sales representatives. The Company is engaged in
advertisement and publication in the Yellow Pages of the PLDT Telephone Directories. Publication of solicited
ads are only made a year after the sale has been made and only then win the company be able to evaluate the
efficiency, conduct, and selling ability of its sales representatives, the evaluation being based on the published
ads. Moreover, an eighteen month probationary period is recognized by the Labor Union in the private
respondent company, which is Article V of the Collective Bargaining Agreement, ... thus:
Probationary Period New employees hired for regular or permanent shall undergo a probationary or trial
period of six (6) months, except in the cases of telephone or sales representatives where the probationary period
shall be eighteen (I 8) months.And as indicated earlier, the very contracts of employment signed and acquiesced
to by the petitioners specifically indicate that "the company hereby employs the employee as telephone sales
representative on a probationary status for a period of eighteen (18) months, i.e. from May 1980 to October
1981, inclusive. This stipulation is not contrary to law, morals and public policy.We, therefore, hold and rule that
the probationary employment of petitioners set to eighteen (18) months is legal and valid and that the Regional
Director and the Deputy Minister of Labor and Employment committed no abuse of discretion in ruling
accordingly.On the second assignment of error that public respondent committed grave abuse of discretion in
ruling that petitioners were dismissed for a just and valid cause, this is not the first time that this issue has been
raised before this Court. Earlier, in the case of "Arthur Golez vs. The National Labor Relations Commission and
General Telephone Directory Co. "G.R. No. L-64459, July 25, 1983, the petition for certiorari which raised the
same issue against the herein private respondent was dismissed by this Court for lack of merit.
The practice of a company in laying off workers because they failed to make the work quota has been recognized
in this jurisdiction. (Philippine American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634,
639). In the case at bar, the petitioners' failure to meet the sales quota assigned to each of them constitute a just
cause of their dismissal, regardless of the permanent or probationary status of their employment. Failure to
observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may
constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work
quotas, either by failing to complete the same within the alloted reasonable period, or by producing
unsatisfactory results. This management prerogative of requiring standards availed of so long as they are
exercised in good faith for the advancement of the employer's interest.
Petitioners anchor their claim for commission pay on the Collective Bargaining Agreement (CBA) of September
1981, in support of their third assignment of error. Petitioners cannot avail of this agreement since their services
had been terminated in May, 1981, at a time when the CBA of September, 1981 was not yet in existence.

In fine, there is nothing in the records to show any abuse or misuse of power properly vested in the respondent
Deputy Minister of Labor and Employment. For certiorari to lie, "there must be capricious, arbitrary and
whimsical exercise of power, the very antithesis of the judicial prerogative inaccordance with centuries of both
civil and common law traditions." (Panaligan vs. Adolfo, 67 SCRA 176, 180). The "abuse of discretion must be
grave and patent, and it must be shown that the discretion was exercised arbitrarily or despotically." (Palma and
Ignacio vs. Q. & S., Inc., et al., 17 SCRA 97, 100; Philippine Virginia Tobacco Administration vs. Lucero, 125
SCRA 337, 343).
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.