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ALILING VS FELICIANO
ARMANDO ALILING,
Petitioner,
- versus JOSE B. FELICIANO, MANUEL BERSAMIN, JJ.
F. SAN MATEO III, JOSEPH R.
LARIOSA, and WIDE WIDE Promulgated:
WORLD EXPRESS CORPORATION,
Respondents.
G.R. No. 185829
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 assails and seeks to set aside the July 3, 2008
Decision[1] and December 15, 2008 Resolution[2] of the Court of Appeals (CA), in CA-G.R. SP No.
101309, entitled Armando Aliling v. National Labor Relations Commission, Wide Wide World Express
Corporation, Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa. The assailed
issuances modified the Resolutions dated May 31, 2007[3] and August 31, 2007[4] rendered by the
National Labor Relations Commission (NLRC) in NLRC NCR Case No. 00-10-11166-2004, affirming
the Decision dated April 25, 2006[5] of the Labor Arbiter.
The Facts
Via a letter dated June 2, 2004,[6] respondent Wide Wide World Express Corporation (WWWEC)
offered to employ petitioner Armando Aliling (Aliling) as Account Executive (Seafreight Sales), with the
following compensation package: a monthly salary of PhP 13,000, transportation allowance of PhP
3,000, clothing allowance of PhP 800, cost of living allowance of PhP 500, each payable on a per
month basis and a 14th month pay depending on the profitability and availability of financial resources
of the company. The offer came with a six (6)-month probation period condition with this express
caveat: Performance during [sic] probationary period shall be made as basis for confirmation to
Regular or Permanent Status.
On June 11, 2004, Aliling and WWWEC inked an Employment Contract[7] under the following terms,
among others:
Conversion to regular status shall be determined on the basis of work performance; and
Employment services may, at any time, be terminated for just cause or in accordance with the
standards defined at the time of engagement.[8]
Training then started. However, instead of a Seafreight Sale assignment, WWWEC asked Aliling to
handle Ground Express (GX), a new company product launched on June 18, 2004 involving domestic
cargo forwarding service for Luzon. Marketing this product and finding daily contracts for it formed the
core of Alilings new assignment.

Barely a month after, Manuel F. San Mateo III (San Mateo), WWWEC Sales and Marketing Director,
emailed Aliling[9] to express dissatisfaction with the latters performance, thus:
Armand,
My expectations is [sic] that GX Shuttles should be 80% full by the 3rd week (August 5) after launch
(July 15). Pls. make that happen. It has been more than a month since you came in. I am expecting
sales to be pumping in by now. Thanks.
Nonong
Thereafter, in a letter of September 25, 2004,[10] Joseph R. Lariosa (Lariosa), Human Resources
Manager of WWWEC, asked Aliling to report to the Human Resources Department to explain his
absence taken without leave from September 20, 2004.
Aliling responded two days later. He denied being absent on the days in question, attaching to his
reply-letter[11] a copy of his timesheet[12] which showed that he worked from September 20 to 24,
2004. Alilings explanation came with a query regarding the withholding of his salary corresponding to
September 11 to 25, 2004.
In a separate letter dated September 27, 2004,[13] Aliling wrote San Mateo stating: Pursuant to your
instruction on September 20, 2004, I hereby tender my resignation effective October 15, 2004. While
WWWEC took no action on his tender, Aliling nonetheless demanded reinstatement and a written
apology, claiming in a subsequent letter dated October 1, 2004[14] to management that San Mateo
had forced him to resign.
Lariosas response-letter of October 1, 2004,[15] informed Aliling that his case was still in the process
of being evaluated. On October 6, 2004,[16] Lariosa again wrote, this time to advise Aliling of the
termination of his services effective as of that date owing to his non-satisfactory performance during
his probationary period. Records show that Aliling, for the period indicated, was paid his outstanding
salary which consisted of:
PhP 4,988.18 (salary for the September 25, 2004 payroll)
1,987.28 (salary for 4 days in October 2004)
------------PhP 6,975.46 Total
Earlier, however, or on October 4, 2004, Aliling filed a Complaint[17] for illegal dismissal due to forced
resignation, nonpayment of salaries as well as damages with the NLRC against WWWEC. Appended
to the complaint was Alilings Affidavit dated November 12, 2004,[18] in which he stated: 5. At the time
of my engagement, respondents did not make known to me the standards under which I will qualify
as a regular employee.
Refuting Alilings basic posture, WWWEC stated in its Position Paper dated November 22, 2004[19]
that, in addition to the letter-offer and employment contract adverted to, WWWEC and Aliling have
signed a letter of appointment[20] on June 11, 2004 containing the following terms of engagement:
Additionally, upon the effectivity of your probation, you and your immediate superior are required to
jointly define your objectives compared with the job requirements of the position. Based on the preagreed objectives, your performance shall be reviewed on the 3rd month to assess your competence
and work attitude. The 5th month Performance Appraisal shall be the basis in elevating or confirming
your employment status from Probationary to Regular.

Failure to meet the job requirements during the probation stage means that your services may be
terminated without prior notice and without recourse to separation pay.
WWWEC also attached to its Position Paper a memo dated September 20, 2004[21] in which San
Mateo asked Aliling to explain why he should not be terminated for failure to meet the expected job
performance, considering that the load factor for the GX Shuttles for the period July to September
was only 0.18% as opposed to the allegedly agreed upon load of 80% targeted for August 5, 2004.
According to WWWEC, Aliling, instead of explaining himself, simply submitted a resignation letter.
In a Reply-Affidavit dated December 13, 2004,[22] Aliling denied having received a copy of San
Mateos September 20, 2004 letter.
Issues having been joined, the Labor Arbiter issued on April 25, 2006[23] a Decision declaring Alilings
termination as unjustified. In its pertinent parts, the decision reads:
The grounds upon which complainants dismissal was based did not conform not only the standard
but also the compliance required under Article 281 of the Labor Code, Necessarily, complainants
termination is not justified for failure to comply with the mandate the law requires. Respondents
should be ordered to pay salaries corresponding to the unexpired portion of the contract of
employment and all other benefits amounting to a total of THIRTY FIVE THOUSAND EIGHT
HUNDRED ELEVEN PESOS (P35,811.00) covering the period from October 6 to December 7, 2004,
computed as follows:
Unexpired Portion of the Contract:
Basic Salary P13,000.00
Transportation 3,000.00
Clothing Allowance 800.00
ECOLA 500.00
-------------P17,300.00
10/06/04 12/07/04
P17,300.00 x 2.7 mos. = P35,811.00
Complainants 13th month pay proportionately for 2004 was not shown to have been paid to
complainant, respondent be made liable to him therefore computed at SIX THOUSAND FIVE
HUNDRED THIRTY TWO PESOS AND 50/100 (P6,532.50).
For engaging the services of counsel to protect his interest, complainant is likewise entitled to a 10%
attorneys fees of the judgment amount. Such other claims for lack of basis sufficient to support for
their grant are unwarranted.
WHEREFORE, judgment is hereby rendered ordering respondent company to pay complainant
Armando Aliling the sum of THIRTY FIVE THOUSAND EIGHT HUNDRED ELEVEN PESOS
(P35,811.00) representing his salaries and other benefits as discussed above.
Respondent company is likewise ordered to pay said complainant the amount of TEN THOUSAND
SEVEN HUNDRED SIXTY SIX PESOS AND 85/100 ONLY (10.766.85) representing his proportionate
13th month pay for 2004 plus 10% of the total judgment as and by way of attorneys fees.

Other claims are hereby denied for lack of merit. (Emphasis supplied.)
The labor arbiter gave credence to Alilings allegation about not receiving and, therefore, not bound
by, San Mateos purported September 20, 2004 memo. The memo, to reiterate, supposedly apprised
Aliling of the sales quota he was, but failed, to meet. Pushing the point, the labor arbiter explained
that Aliling cannot be validly terminated for non-compliance with the quota threshold absent a prior
advisory of the reasonable standards upon which his performance would be evaluated.
Both parties appealed the above decision to the NLRC, which affirmed the Decision in toto in its
Resolution dated May 31, 2007. The separate motions for reconsideration were also denied by the
NLRC in its Resolution dated August 31, 2007.
Therefrom, Aliling went on certiorari to the CA, which eventually rendered the assailed Decision, the
dispositive portion of which reads:
WHEREFORE, the petition is PARTLY GRANTED. The assailed Resolutions of respondent (Third
Division) National Labor Relations Commission are AFFIRMED, with the following
MODIFICATION/CLARIFICATION: Respondents Wide Wide World Express Corp. and its officers,
Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa, are jointly and severally liable to
pay petitioner Armando Aliling: (A) the sum of Forty Two Thousand Three Hundred Thirty Three &
50/100 (P42,333.50) as the total money judgment, (B) the sum of Four Thousand Two Hundred Thirty
Three & 35/100 (P4,233.35) as attorneys fees, and (C) the additional sum equivalent to one-half (1/2)
month of petitioners salary as separation pay.
SO ORDERED.[24] (Emphasis supplied.)
The CA anchored its assailed action on the strength of the following premises: (a) respondents failed
to prove that Alilings dismal performance constituted gross and habitual neglect necessary to justify
his dismissal; (b) not having been informed at the time of his engagement of the reasonable
standards under which he will qualify as a regular employee, Aliling was deemed to have been hired
from day one as a regular employee; and (c) the strained relationship existing between the parties
argues against the propriety of reinstatement.
Alilings motion for reconsideration was rejected by the CA through the assailed Resolution dated
December 15, 2008.
Hence, the instant petition.
The Issues
Aliling raises the following issues for consideration:
A. The failure of the Court of Appeals to order reinstatement (despite its finding that petitioner was
illegally dismissed from employment) is contrary to law and applicable jurisprudence.
B. The failure of the Court of Appeals to award backwages (even if it did not order reinstatement) is
contrary to law and applicable jurisprudence.
C. The failure of the Court of Appeals to award moral and exemplary damages (despite its finding that
petitioner was dismissed to prevent the acquisition of his regular status) is contrary to law and
applicable jurisprudence.[25]
In their Comment,[26] respondents reiterated their position that WWWEC hired petitioner on a
probationary basis and fired him before he became a regular employee.

The Courts Ruling


The petition is partly meritorious.
Petitioner is a regular employee
On a procedural matter, petitioner Aliling argues that WWWEC, not having appealed from the
judgment of CA which declared Aliling as a regular employee from the time he signed the employment
contract, is now precluded from questioning the appellate courts determination as to the nature of his
employment.
Petitioner errs. The Court has, when a case is on appeal, the authority to review matters not
specifically raised or assigned as error if their consideration is necessary in reaching a just conclusion
of the case. We said as much in Sociedad Europea de Financiacion, SA v. Court of Appeals,[27] It is
axiomatic that an appeal, once accepted by this Court, throws the entire case open to review, and
that this Court has the authority to review matters not specifically raised or assigned as error by the
parties, if their consideration is necessary in arriving at a just resolution of the case.
The issue of whether or not petitioner was, during the period material, a probationary or regular
employee is of pivotal import. Its resolution is doubtless necessary at arriving at a fair and just
disposition of the controversy.
The Labor Arbiter cryptically held in his decision dated April 25, 2006 that:
Be that as it may, there appears no showing that indeed the said September 20, 2004 Memorandum
addressed to complainant was received by him. Moreover, complainants tasked where he was
assigned was a new developed service. In this regard, it is noted:
Due process dictates that an employee be apprised beforehand of the conditions of his employment
and of the terms of advancement therein. Precisely, implicit in Article 281 of the Labor Code is the
requirement that reasonable standards be previously made known by the employer to the employee
at the time of his engagement (Ibid, citing Sameer Overseas Placement Agency, Inc. vs. NLRC, G.R.
No. 132564, October 20, 1999).[28]
From our review, it appears that the labor arbiter, and later the NLRC, considered Aliling a
probationary employee despite finding that he was not informed of the reasonable standards by which
his probationary employment was to be judged.
The CA, on the other hand, citing Cielo v. National Labor Relations Commission,[29] ruled that
petitioner was a regular employee from the outset inasmuch as he was not informed of the standards
by which his probationary employment would be measured. The CA wrote:
Petitioner was regularized from the time of the execution of the employment contract on June 11,
2004, although respondent company had arbitrarily shortened his tenure. As pointed out, respondent
company did not make known the reasonable standards under which he will qualify as a regular
employee at the time of his engagement. Hence, he was deemed to have been hired from day one as
a regular employee.[30] (Emphasis supplied.)
WWWEC, however, excepts on the argument that it put Aliling on notice that he would be evaluated
on the 3rd and 5th months of his probationary employment. To WWWEC, its efforts translate to
sufficient compliance with the requirement that a probationary worker be apprised of the reasonable

standards for his regularization. WWWEC invokes the ensuing holding in Alcira v. National Labor
Relations Commission[31] to support its case:
Conversely, an employer is deemed to substantially comply with the rule on notification of standards if
he apprises the employee that he will be subjected to a performance evaluation on a particular date
after his hiring. We agree with the labor arbiter when he ruled that:
In the instant case, petitioner cannot successfully say that he was never informed by private
respondent of the standards that he must satisfy in order to be converted into regular status. This
rans (sic) counter to the agreement between the parties that after five months of service the
petitioners performance would be evaluated. It is only but natural that the evaluation should be made
vis--vis the performance standards for the job. Private respondent Trifona Mamaradlo speaks of such
standard in her affidavit referring to the fact that petitioner did not perform well in his assigned work
and his attitude was below par compared to the companys standard required of him. (Emphasis
supplied.)
WWWECs contention is untenable.
Alcira is cast under a different factual setting. There, the labor arbiter, the NLRC, the CA, and even
finally this Court were one in their findings that the employee concerned knew, having been duly
informed during his engagement, of the standards for becoming a regular employee. This is in stark
contrast to the instant case where the element of being informed of the regularizing standards does
not obtain. As such, Alcira cannot be made to apply to the instant case.
To note, the June 2, 2004 letter-offer itself states that the regularization standards or the performance
norms to be used are still to be agreed upon by Aliling and his supervisor. WWWEC has failed to
prove that an agreement as regards thereto has been reached. Clearly then, there were actually no
performance standards to speak of. And lest it be overlooked, Aliling was assigned to GX trucking
sales, an activity entirely different to the Seafreight Sales he was originally hired and trained for. Thus,
at the time of his engagement, the standards relative to his assignment with GX sales could not have
plausibly been communicated to him as he was under Seafreight Sales. Even for this reason alone,
the conclusion reached in Alcira is of little relevant to the instant case.
Based on the facts established in this case in light of extant jurisprudence, the CAs holding as to the
kind of employment petitioner enjoyed is correct. So was the NLRC ruling, affirmatory of that of the
labor arbiter. In the final analysis, one common thread runs through the holding of the labor arbiter,
the NLRC and the CA, i.e., petitioner Aliling, albeit hired from managements standpoint as a
probationary employee, was deemed a regular employee by force of the following self-explanatory
provisions:
Article 281 of the Labor Code
ART. 281. Probationary employment. - Probationary employment shall not exceed six (6) months from
the date the employee started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has been engaged on a probationary
basis may be terminated for a just cause or when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the employee at the time of
his engagement. An employee who is allowed to work after a probationary period shall be considered
a regular employee. (Emphasis supplied.)
Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code

Sec. 6. Probationary employment. There is probationary employment where the employee, upon his
engagement, is made to undergo a trial period where the employee determines his fitness to qualify
for regular employment, based on reasonable standards made known to him at the time of
engagement.
Probationary employment shall be governed by the following rules:
xxxx
(d) In all cases of probationary employment, the employer shall make known to the employee the
standards under which he will qualify as a regular employee at the time of his engagement. Where no
standards are made known to the employee at that time, he shall be deemed a regular employee.
(Emphasis supplied.)
To repeat, the labor arbiter, NLRC and the CA are agreed, on the basis of documentary evidence
adduced, that respondent WWWEC did not inform petitioner Aliling of the reasonable standards by
which his probation would be measured against at the time of his engagement. The Court is loathed
to interfere with this factual determination. As We have held:
Settled is the rule that the findings of the Labor Arbiter, when affirmed by the NLRC and the Court of
Appeals, are binding on the Supreme Court, unless patently erroneous. It is not the function of the
Supreme Court to analyze or weigh all over again the evidence already considered in the
proceedings below. The jurisdiction of this Court in a petition for review on certiorari is limited to
reviewing only errors of law, not of fact, unless the factual findings being assailed are not supported
by evidence on record or the impugned judgment is based on a misapprehension of facts.[32]
The more recent Peafrancia Tours and Travel Transport, Inc., v. Sarmiento[33] has reaffirmed the
above ruling, to wit:
Finally, the CA affirmed the ruling of the NLRC and adopted as its own the latter's factual findings.
Long-established is the doctrine that findings of fact of quasi-judicial bodies x x x are accorded
respect, even finality, if supported by substantial evidence. When passed upon and upheld by the CA,
they are binding and conclusive upon this Court and will not normally be disturbed. Though this
doctrine is not without exceptions, the Court finds that none are applicable to the present case.
WWWEC also cannot validly argue that the factual findings being assailed are not supported by
evidence on record or the impugned judgment is based on a misapprehension of facts. Its very own
letter-offer of employment argues against its above posture. Excerpts of the letter-offer:
Additionally, upon the effectivity of your probation, you and your immediate superior are required to
jointly define your objectives compared with the job requirements of the position. Based on the preagreed objectives, your performance shall be reviewed on the 3rd month to assess your competence
and work attitude. The 5th month Performance Appraisal shall be the basis in elevating or confirming
your employment status from Probationary to Regular.
Failure to meet the job requirements during the probation stage means that your services may be
terminated without prior notice and without recourse to separation pay. (Emphasis supplied.)
Respondents further allege that San Mateos email dated July 16, 2004 shows that the standards for
his regularization were made known to petitioner Aliling at the time of his engagement. To recall, in
that email message, San Mateo reminded Aliling of the sales quota he ought to meet as a condition
for his continued employment, i.e., that the GX trucks should already be 80% full by August 5, 2004.

Contrary to respondents contention, San Mateos email cannot support their allegation on Aliling being
informed of the standards for his continued employment, such as the sales quota, at the time of his
engagement. As it were, the email message was sent to Aliling more than a month after he signed his
employment contract with WWWEC. The aforequoted Section 6 of the Implementing Rules of Book
VI, Rule VIII-A of the Code specifically requires the employer to inform the probationary employee of
such reasonable standards at the time of his engagement, not at any time later; else, the latter shall
be considered a regular employee. Thus, pursuant to the explicit provision of Article 281 of the Labor
Code, Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled
jurisprudence, petitioner Aliling is deemed a regular employee as of June 11, 2004, the date of his
employment contract.

Petitioner was illegally dismissed


To justify fully the dismissal of an employee, the employer must, as a rule, prove that the dismissal
was for a just cause and that the employee was afforded due process prior to dismissal. As a
complementary principle, the employer has the onus of proving with clear, accurate, consistent, and
convincing evidence the validity of the dismissal.[34]
WWWEC had failed to discharge its twin burden in the instant case.
First off, the attendant circumstances in the instant case aptly show that the issue of petitioners
alleged failure to achieve his quota, as a ground for terminating employment, strikes the Court as a
mere afterthought on the part of WWWEC. Consider: Lariosas letter of September 25, 2004 already
betrayed managements intention to dismiss the petitioner for alleged unauthorized absences. Aliling
was in fact made to explain and he did so satisfactorily. But, lo and behold, WWWEC nonetheless
proceeded with its plan to dismiss the petitioner for non-satisfactory performance, although the
corresponding termination letter dated October 6, 2004 did not even specifically state Alilings nonsatisfactory performance, or that Alilings termination was by reason of his failure to achieve his set
quota.
What WWWEC considered as the evidence purportedly showing it gave Aliling the chance to explain
his inability to reach his quota was a purported September 20, 2004 memo of San Mateo addressed
to the latter. However, Aliling denies having received such letter and WWWEC has failed to refute his
contention of non-receipt. In net effect, WWWEC was at a loss to explain the exact just reason for
dismissing Aliling.
At any event, assuming for argument that the petitioner indeed failed to achieve his sales quota, his
termination from employment on that ground would still be unjustified.
Article 282 of the Labor Code considers any of the following acts or omission on the part of the
employee as just cause or ground for terminating employment:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing. (Emphasis supplied)
In Lim v. National Labor Relations Commission,[35] the Court considered inefficiency as an
analogous just cause for termination of employment under Article 282 of the Labor Code:
We cannot but agree with PEPSI that gross inefficiency falls within the purview of other causes
analogous to the foregoing, this constitutes, therefore, just cause to terminate an employee under
Article 282 of the Labor Code. One is analogous to another if it is susceptible of comparison with the
latter either in general or in some specific detail; or has a close relationship with the latter. Gross
inefficiency is closely related to gross neglect, for both involve specific acts of omission on the part of
the employee resulting in damage to the employer or to his business. In Buiser vs. Leogardo, this
Court ruled that failure to observed prescribed standards to inefficiency may constitute just cause for
dismissal. (Emphasis supplied.)
It did so anew in Leonardo v. National Labor Relations Commission[36] on the following rationale:
An employer is entitled to impose productivity standards for its workers, and in fact, non-compliance
may be visited with a penalty even more severe than demotion. Thus,
[t]he practice of a company in laying off workers because they failed to make the work quota has
been recognized in this jurisdiction. (Philippine American Embroideries vs. Embroidery and Garment
Workers, 26 SCRA 634, 639). In the case at bar, the petitioners' failure to meet the sales quota
assigned to each of them constitute a just cause of their dismissal, regardless of the permanent or
probationary status of their employment. Failure to observe prescribed standards of work, or to fulfill
reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to
complete the same within the allotted reasonable period, or by producing unsatisfactory results. This
management prerogative of requiring standards may be availed of so long as they are exercised in
good faith for the advancement of the employer's interest. (Emphasis supplied.)
In fine, an employees failure to meet sales or work quotas falls under the concept of gross
inefficiency, which in turn is analogous to gross neglect of duty that is a just cause for dismissal under
Article 282 of the Code. However, in order for the quota imposed to be considered a valid productivity
standard and thereby validate a dismissal, managements prerogative of fixing the quota must be
exercised in good faith for the advancement of its interest. The duty to prove good faith, however,
rests with WWWEC as part of its burden to show that the dismissal was for a just cause. WWWEC
must show that such quota was imposed in good faith. This WWWEC failed to do, perceptibly
because it could not. The fact of the matter is that the alleged imposition of the quota was a
desperate attempt to lend a semblance of validity to Alilings illegal dismissal. It must be stressed that
even WWWECs sales manager, Eve Amador (Amador), in an internal e-mail to San Mateo, hedged
on whether petitioner performed below or above expectation:
Could not quantify level of performance as he as was tasked to handle a new product (GX). Revenue
report is not yet administered by IT on a month-to-month basis. Moreover, this in a way is an
experimental activity. Practically you have a close monitoring with Armand with regards to his
performance. Your assessment of him would be more accurate.
Being an experimental activity and having been launched for the first time, the sales of GX services
could not be reasonably quantified. This would explain why Amador implied in her email that other
bases besides sales figures will be used to determine Alilings performance. And yet, despite such a

neutral observation, Aliling was still dismissed for his dismal sales of GX services. In any event,
WWWEC failed to demonstrate the reasonableness and the bona fides on the quota imposition.
Employees must be reminded that while probationary employees do not enjoy permanent status, they
enjoy the constitutional protection of security of tenure. They can only be terminated for cause or
when they otherwise fail to meet the reasonable standards made known to them by the employer at
the time of their engagement.[37] Respondent WWWEC miserably failed to prove the termination of
petitioner was for a just cause nor was there substantial evidence to demonstrate the standards were
made known to the latter at the time of his engagement. Hence, petitioners right to security of tenure
was breached.
Alilings right to procedural due process was violated
As earlier stated, to effect a legal dismissal, the employer must show not only a valid ground therefor,
but also that procedural due process has properly been observed. When the Labor Code speaks of
procedural due process, the reference is usually to the two (2)-written notice rule envisaged in
Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, which
provides:
Section 2. Standard of due process: requirements of notice. In all cases of termination of
employment, the following standards of due process shall be substantially observed.
I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if
the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut
the evidence presented against him; and
(c) A written notice [of] termination served on the employee indicating that upon due consideration of
all the circumstance, grounds have been established to justify his termination.
In case of termination, the foregoing notices shall be served on the employees last known address.
MGG Marine Services, Inc. v. NLRC[38] tersely described the mechanics of what may be considered
a two-part due process requirement which includes the two-notice rule, x x x one, of the intention to
dismiss, indicating therein his acts or omissions complained against, and two, notice of the decision
to dismiss; and an opportunity to answer and rebut the charges against him, in between such notices.
King of Kings Transport, Inc. v. Mamac[39] expounded on this procedural requirement in this manner:
(1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. Reasonable opportunity under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a period of at least
five calendar days from receipt of the notice xxxx Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention which company

rules, if any, are violated and/or which among the grounds under Art. 288 [of the Labor Code] is being
charged against the employees
(2) After serving the first notice, the employees should schedule and conduct a hearing or conference
wherein the employees will be given the opportunity to (1) explain and clarify their defenses to the
charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence
presented against them by the management. During the hearing or conference, the employees are
given the chance to defend themselves personally, with the assistance of a representative or counsel
of their choice x x x.
(3) After determining that termination is justified, the employer shall serve the employees a written
notice of termination indicating that: (1) all the circumstances involving the charge against the
employees have been considered; and (2) grounds have been established to justify the severance of
their employment. (Emphasis in the original.)
Here, the first and second notice requirements have not been properly observed, thus tainting
petitioners dismissal with illegality.
The adverted memo dated September 20, 2004 of WWWEC supposedly informing Aliling of the
likelihood of his termination and directing him to account for his failure to meet the expected job
performance would have had constituted the charge sheet, sufficient to answer for the first notice
requirement, but for the fact that there is no proof such letter had been sent to and received by him. In
fact, in his December 13, 2004 Complainants Reply Affidavit, Aliling goes on to tag such
letter/memorandum as fabrication. WWWEC did not adduce proof to show that a copy of the letter
was duly served upon Aliling. Clearly enough, WWWEC did not comply with the first notice
requirement.
Neither was there compliance with the imperatives of a hearing or conference. The Court need not
dwell at length on this particular breach of the due procedural requirement. Suffice it to point out that
the record is devoid of any showing of a hearing or conference having been conducted. On the
contrary, in its October 1, 2004 letter to Aliling, or barely five (5) days after it served the notice of
termination, WWWEC acknowledged that it was still evaluating his case. And the written notice of
termination itself did not indicate all the circumstances involving the charge to justify severance of
employment.
Aliling is entitled to backwages
and separation pay in lieu of reinstatement
As may be noted, the CA found Alilings dismissal as having been illegally effected, but nonetheless
concluded that his employment ceased at the end of the probationary period. Thus, the appellate
court merely affirmed the monetary award made by the NLRC, which consisted of the payment of that
amount corresponding to the unserved portion of the contract of employment.
The case disposition on the award is erroneous.
As earlier explained, Aliling cannot be rightfully considered as a mere probationary employee.
Accordingly, the probationary period set in the contract of employment dated June 11, 2004 was of no
moment. In net effect, as of that date June 11, 2004, Aliling became part of the WWWEC organization
as a regular employee of the company without a fixed term of employment. Thus, he is entitled to
backwages reckoned from the time he was illegally dismissed on October 6, 2004, with a PhP
17,300.00 monthly salary, until the finality of this Decision. This disposition hews with the Courts
ensuing holding in Javellana v. Belen:[40]

Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715 instructs:
Art. 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement. (Emphasis supplied)
Clearly, the law intends the award of backwages and similar benefits to accumulate past the date of
the Labor Arbiters decision until the dismissed employee is actually reinstated. But if, as in this case,
reinstatement is no longer possible, this Court has consistently ruled that backwages shall be
computed from the time of illegal dismissal until the date the decision becomes final. (Emphasis
supplied.)
Additionally, Aliling is entitled to separation pay in lieu of reinstatement on the ground of strained
relationship.
In Golden Ace Builders v. Talde,[41] the Court ruled:
The basis for the payment of backwages is different from that for the award of separation pay.
Separation pay is granted where reinstatement is no longer advisable because of strained relations
between the employee and the employer. Backwages represent compensation that should have been
earned but were not collected because of the unjust dismissal. The basis for computing backwages is
usually the length of the employee's service while that for separation pay is the actual period when
the employee was unlawfully prevented from working.
As to how both awards should be computed, Macasero v. Southern Industrial Gases Philippines
instructs:
[T]he award of separation pay is inconsistent with a finding that there was no illegal dismissal, for
under Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed
without just cause and without due process is entitled to backwages and reinstatement or payment of
separation pay in lieu thereof:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The
two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the employer, separation pay is granted. In
effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was withheld up to
the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation
pay equivalent to one (1) month salary for every year of service should be awarded as an alternative.
The payment of separation pay is in addition to payment of backwages. x x x
Velasco v. National Labor Relations Commission emphasizes:
The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no
longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may
likewise be awarded if the employee decides not to be reinstated. (emphasis in the original; italics
supplied)

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable
alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such
payment liberates the employee from what could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its
employ a worker it could no longer trust.
Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence
substantial evidence to show that the relationship between the employer and the employee is indeed
strained as a necessary consequence of the judicial controversy.
In the present case, the Labor Arbiter found that actual animosity existed between petitioner Azul and
respondent as a result of the filing of the illegal dismissal case. Such finding, especially when affirmed
by the appellate court as in the case at bar, is binding upon the Court, consistent with the prevailing
rules that this Court will not try facts anew and that findings of facts of quasi-judicial bodies are
accorded great respect, even finality. (Emphasis supplied.)
As the CA correctly observed, To reinstate petitioner [Aliling] would only create an atmosphere of
antagonism and distrust, more so that he had only a short stint with respondent company.[42] The
Court need not belabor the fact that the patent animosity that had developed between employer and
employee generated what may be considered as the arbitrary dismissal of the petitioner.
Following the pronouncements of this Court Sagales v. Rustans Commercial Corporation,[43] the
computation of separation pay in lieu of reinstatement includes the period for which backwages were
awarded:
Thus, in lieu of reinstatement, it is but proper to award petitioner separation pay computed at onemonth salary for every year of service, a fraction of at least six (6) months considered as one whole
year. In the computation of separation pay, the period where backwages are awarded must be
included. (Emphasis supplied.)
Thus, Aliling is entitled to both backwages and separation pay (in lieu of reinstatement) in the amount
of one (1) months salary for every year of service, that is, from June 11, 2004 (date of employment
contract) until the finality of this decision with a fraction of a year of at least six (6) months to be
considered as one (1) whole year. As determined by the labor arbiter, the basis for the computation of
backwages and separation pay will be Alilings monthly salary at PhP 17,300.
Finally, Aliling is entitled to an award of PhP 30,000 as nominal damages in consonance with
prevailing jurisprudence[44] for violation of due process.
Petitioner is not entitled to moral and exemplary damages
In Nazareno v. City of Dumaguete,[45] the Court expounded on the requisite elements for a litigants
entitlement to moral damages, thus:
Moral damages are awarded if the following elements exist in the case: (1) an injury clearly sustained
by the claimant; (2) a culpable act or omission factually established; (3) a wrongful act or omission by
the defendant as the proximate cause of the injury sustained by the claimant; and (4) the award of
damages predicated on any of the cases stated Article 2219 of the Civil Code. In addition, the person
claiming moral damages must prove the existence of bad faith by clear and convincing evidence for
the law always presumes good faith. It is not enough that one merely suffered sleepless nights,
mental anguish, and serious anxiety as the result of the actuations of the other party. Invariably such

action must be shown to have been willfully done in bad faith or with ill motive. Bad faith, under the
law, does not simply connote bad judgment or negligence. It imports a dishonest purpose or some
moral obliquity and conscious doing of a wrong, a breach of a known duty through some motive or
interest or ill will that partakes of the nature of fraud. (Emphasis supplied.)
In alleging that WWWEC acted in bad faith, Aliling has the burden of proof to present evidence in
support of his claim, as ruled in Culili v. Eastern Telecommunications Philippines, Inc.:[46]
According to jurisprudence, basic is the principle that good faith is presumed and he who alleges bad
faith has the duty to prove the same. By imputing bad faith to the actuations of ETPI, Culili has the
burden of proof to present substantial evidence to support the allegation of unfair labor practice. Culili
failed to discharge this burden and his bare allegations deserve no credit.
This was reiterated in United Claimants Association of NEA (UNICAN) v. National Electrification
Administration (NEA),[47] in this wise:
It must be noted that the burden of proving bad faith rests on the one alleging it. As the Court ruled in
Culili v. Eastern Telecommunications, Inc., According to jurisprudence, basic is the principle that good
faith is presumed and he who alleges bad faith has the duty to prove the same. Moreover, in Spouses
Palada v. Solidbank Corporation, the Court stated, Allegations of bad faith and fraud must be proved
by clear and convincing evidence.
Similarly, Aliling has failed to overcome such burden to prove bad faith on the part of WWWEC. Aliling
has not presented any clear and convincing evidence to show bad faith. The fact that he was illegally
dismissed is insufficient to prove bad faith. Thus, the CA correctly ruled that [t]here was no sufficient
showing of bad faith or abuse of management prerogatives in the personal action taken against
petitioner.[48] In Lambert Pawnbrokers and Jewelry Corporation v. Binamira,[49] the Court ruled:
A dismissal may be contrary to law but by itself alone, it does not establish bad faith to entitle the
dismissed employee to moral damages. The award of moral and exemplary damages cannot be
justified solely upon the premise that the employer dismissed his employee without authorized cause
and due process.
The officers of WWWEC cannot be held
jointly and severally liable with the company
The CA held the president of WWWEC, Jose B. Feliciano, San Mateo and Lariosa jointly and
severally liable for the monetary awards of Aliling on the ground that the officers are considered
employers acting in the interest of the corporation. The CA cited NYK International Knitwear
Corporation Philippines (NYK) v. National Labor Relations Commission[50] in support of its argument.
Notably, NYK in turn cited A.C. Ransom Labor Union-CCLU v. NLRC.[51]
Such ruling has been reversed by the Court in Alba v. Yupangco,[52] where the Court ruled:
By Order of September 5, 2007, the Labor Arbiter denied respondents motion to quash the 3rd alias
writ. Brushing aside respondents contention that his liability is merely joint, the Labor Arbiter ruled:
Such issue regarding the personal liability of the officers of a corporation for the payment of wages
and money claims to its employees, as in the instant case, has long been resolved by the Supreme
Court in a long list of cases [A.C. Ransom Labor Union-CLU vs. NLRC (142 SCRA 269) and
reiterated in the cases of Chua vs. NLRC (182 SCRA 353), Gudez vs. NLRC (183 SCRA 644)]. In the
aforementioned cases, the Supreme Court has expressly held that the irresponsible officer of the

corporation (e.g. President) is liable for the corporations obligations to its workers. Thus, respondent
Yupangco, being the president of the respondent YL Land and Ultra Motors Corp., is properly jointly
and severally liable with the defendant corporations for the labor claims of Complainants Alba and De
Guzman. x x x
xxxx
As reflected above, the Labor Arbiter held that respondents liability is solidary.
There is solidary liability when the obligation expressly so states, when the law so provides, or when
the nature of the obligation so requires. MAM Realty Development Corporation v. NLRC, on solidary
liability of corporate officers in labor disputes, enlightens:
x x x A corporation being a juridical entity, may act only through its directors, officers and employees.
Obligations incurred by them, acting as such corporate agents are not theirs but the direct
accountabilities of the corporation they represent. True solidary liabilities may at times be incurred but
only when exceptional circumstances warrant such as, generally, in the following cases:
1. When directors and trustees or, in appropriate cases, the officers of a corporation:
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate affairs;
xxxx
In labor cases, for instance, the Court has held corporate directors and officers solidarily liable with
the corporation for the termination of employment of employees done with malice or in bad faith.
A review of the facts of the case does not reveal ample and satisfactory proof that respondent officers
of WWEC acted in bad faith or with malice in effecting the termination of petitioner Aliling. Even
assuming arguendo that the actions of WWWEC are ill-conceived and erroneous, respondent officers
cannot be held jointly and solidarily with it. Hence, the ruling on the joint and solidary liability of
individual respondents must be recalled.
Aliling is entitled to Attorneys Fees and Legal Interest
Petitioner Aliling is also entitled to attorneys fees in the amount of ten percent (10%) of his total
monetary award, having been forced to litigate in order to seek redress of his grievances, pursuant to
Article 111 of the Labor Code and following our ruling in Exodus International Construction
Corporation v. Biscocho,[53] to wit:
In Rutaquio v. National Labor Relations Commission, this Court held that:
It is settled that in actions for recovery of wages or where an employee was forced to litigate and,
thus, incur expenses to protect his rights and interest, the award of attorneys fees is legally and
morally justifiable.
In Producers Bank of the Philippines v. Court of Appeals this Court ruled that:
Attorneys fees may be awarded when a party is compelled to litigate or to incur expenses to protect
his interest by reason of an unjustified act of the other party.
While in Lambert Pawnbrokers and Jewelry Corporation,[54] the Court specifically ruled:

However, the award of attorneys fee is warranted pursuant to Article 111 of the Labor Code. Ten
(10%) percent of the total award is usually the reasonable amount of attorneys fees awarded. It is
settled that where an employee was forced to litigate and, thus, incur expenses to protect his rights
and interest, the award of attorneys fees is legally and morally justifiable.
Finally, legal interest shall be imposed on the monetary awards herein granted at the rate of 6% per
annum from October 6, 2004 (date of termination) until fully paid.
WHEREFORE, the petition is PARTIALLY GRANTED. The July 3, 2008 Decision of the Court of
Appeals in CA-G.R. SP No. 101309 is hereby MODIFIED to read:
WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Resolutions of respondent (Third
Division) National Labor Relations Commission are AFFIRMED, with the following
MODIFICATION/CLARIFICATION: Respondent Wide Wide World Express Corp. is liable to pay
Armando Aliling the following: (a) backwages reckoned from October 6, 2004 up to the finality of this
Decision based on a salary of PhP 17,300 a month, with interest at 6% per annum on the principal
amount from October 6, 2004 until fully paid; (b) the additional sum equivalent to one (1) month salary
for every year of service, with a fraction of at least six (6) months considered as one whole year
based on the period from June 11, 2004 (date of employment contract) until the finality of this
Decision, as separation pay; (c) PhP 30,000 as nominal damages; and (d) Attorneys Fees equivalent
to 10% of the total award.
SO ORDERED
2. A.M ORETA VS NLRC
G.R. No. 74004. August 10, 1989
A.M. ORETA & CO., INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and SIXTO GRULLA JR., respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner

MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking annulment of the resolution
of the respondents National Labor Relations Commission dated January 17, 1986 (p. 24, rollo) in
BES Case no. 8-1371 entitled , "SIXTO GRULLA, JR., Complainant, versus A.M. ORETA &
COMPANY INC. and/or ENGINEERING CONSTRUCTION & INDUSTRIAL DEVELOPMENT CO.
(ENDECO), Respondents", affirming the decision of the Philippine Overseas Employment
Administration (POEA) awarding to private respondents herein Sixto Grulla the salaries
corresponding to the unexpired portion of his employment contract.
The antecedent facts are as follows:

Private respondent Grulla was engaged by Engineering Construction and Industrial Development
Company (ENDECO) through A.M. Oreta and Co., Inc., as a carpenter in its projects in Jeddah, Saudi
Arabia. The contract of employment, which was entered into June 11, 1980 was for a period of twelve
(12) months. Respondent Grulla left the Philippines for Jeddah, Saudi Arabia on August 5, 1980.
On August 15, 1980, Grulla met an accident which fractured his lumbar vertebra while working at the
jobsite. He was rushed to the New Jeddah Clinic and was confined there for twelve (12) days. On
August 27, 1980, Grulla was discharged from the hospital and was told that he could resume his
normal duties after undergoing physical therapy for two weeks.
On September 18, 1980, respondent Grulla reported back to his Project Manager and presented to
the latter a medical certificate declaring the former already fit for work. Since then, he started working
again until he received a notice of termination of his employment on October 9, 1980.
In December, 1981, respondent Grulla filed a complaint for illegal dismissal, recovery of medical
benefits, unpaid wages for the unexpired ten (10) months of his contract and the sum of P1,000.00 as
reimbursement of medical expenses against A.M. Oreta and Company, Inc., and Engineering
Construction and Industrial Development Co. (ENDECO) with the Philippine Overseas Employment
Administration (POEA).lwph1.t
The petitioner A.M. Oreta and Company, Inc and ENDECO filed their answer and alleged that the
contract of employment entered into between petitioners and Grulla provides, as one of the grounds
for termination, violations of the rules and regulations promulgated by the contractor; and that Grulla
was dismissed because he has not performed his duties satisfactorally within the probationary period
of three months.
On August 8, 1985, the POEA rendered a decision (pp. 97-107, Rollo) the dispositive portion of which
states, inter alia:
In view of the foregoing, this Office finds and so holds that complainants dismissal was
illegal and warrants the award of his wages for the unexpired portion of the contract.
2. Anent the complainant's claim for medical expenses, this Office finds the same welltaken. Respondent did not deny either specifically or generally said claim. Hence, it is
deemed admitted.
Wherefore, judgment is hereby rendered ordering repondents A.M. Oreta and Company,
Inc , and its foreign principal Engineering Construction and Industrial Development
Company (ENDECO) jointly and severally to pay the complainant within ten (10) days
from receipt of this Order the sum of THREE THOUSAND SEVEN HUNDRED U.S.
DOLLARS (U.S.$ 3,700.00) or its equivalent at the time of payment representing
complainant's salaries for the unexpired portion of his contract for ten (10) months and
the sum of ONE THOUSAND PESOS ( P1,00.00 ) representing reimbursement of
medical expenses.

Respondent is likewise ordered to pay attorney's fees equivalent to ten (10%) percent of
total award
SO ORDERED.
Petitioner appealed from the adverse decision to respondent Commission. On January 17, 1986,
respondent Commission dismissed the appeal for lack of merit and affirmed in toto the decision of the
POEA.
On April 1, 1986, the instant petition was filed on the ground that the respondent Commission
commited grave abuse of discretion in affirming the decision of the POEA. A temporary restraining
order was issued by this court on April 23, 1986, enjoining the respondents from enforcing the
questioned resolution of the respondent Commission.
The issue to be resolved in the instant case are whether or not the employment of respondent Grulla
was illegaly terminated by the petitioner; and whether or not the respondent Grulla is entitled to
salaries corresponding to the unexpired portion of his employment contract.
Petitioner contends that the respondent Grulla was validly dismissed because the latter was still a
probationary employee; and that his dismissal was justified on the basis of his unsatisfactory
performance of his job during the probationary period. This contention has no merit.
Article 280 (formerly Article 281) of the Labor Code, as amended, provides:
Article 280. Regular and Casual Employment The provisions of written agreement to
the contrary not withstanding 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 desireable in the usual business or
trade of employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
engagement of the employment or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, that any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such actually exists.
It may be well to cite at this point Policy Instructions No. 12 of the then Minister of Labor (Now
Secretary of Labor and Employment) which provides:
PD 850 has defined the concept of regular and casual employment. What determines
regularity or casualness is not employment contract, written or otherwise, but the nature
of the job. If the job is usually necessary or desireable to the main business of the
employer, the employment is regular. . .

Petitioner admitted that respondent Grulla was employed in the company as carpenter for a period of
twelve (12) months before he was dismissed on October 9, 1980. A perusal of the employment
contract reveals that although the period of employment of respondent Grulla is twelve (12) months,
the contract is renewable subject to future agreements of the parties. It is clear from the employment
contract that the respondent Grulla was hired by the company as a regular employee and not just
mere probationary employee.
On the matter of probationary employment, the law in point is Article 281 (formerly 282) of the Labor
Code which provides in part:
Art. 281 Probationary Employment . . .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 engagement. An employee who is allowed
to work after a probationary period shall be considered a regular employee. (Italics
supplied)
The law is clear to the effect that in all cases involving employees engaged on probationary period
basis, the employer shall make known to the employee at the time he is hired, the standards by which
he will qualify as a regular employee. Nowhere in the employment contract executed between
petitioner company and respondent Grulla is there a stipulation that the latter shall undergo a
probationary period for three months before he can qualify as a regular employee. There is also no
evidence on record showing that the respondent Grulla has been appraised of his probationary status
and the requirements which he should comply in order to be a regular employee. In the absence of
this requisites, there is justification in concluding that respondent Grulla was a regular employee at
the time he was dismissed by petitioner. As such, he is entitled to security of tenure during his period
of employment and his services cannot be terminated except for just and authorized causes
enumerated under the Labor Code and under the employment contract.
Granting, in gratia argumenti, that respondent is a probationary employee, he cannot, likewise, be
removed except for cause during the period of probation. Although a probationary or temporary
employee has limited tenure, he still enjoys security of tenure. During his tenure of employment or
before his contract expires, he cannot be removed except for cause as provided by law (Euro-Linea
Phils., Inc. v. NLRC, No. L-75782, December 1, 1987, 156 SCRA 78; Manila Hotel Corporation v.
NLRC, No. L-53453, January 22, 1986, 141 SCRA 169).lwph1.t
Article 282 of the Labor Code sets forth the following just causes for which an employer may
terminate an employment, namely:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representative;
and
(e) other cause analogous to the foregoing
The alleged ground of unsatisfactory performance relied upon by petitioner for dismissing respondent
Grulla is not one of the just causes for dismissal provided in the Labor Code. Neither is it included
among the grounds for termination of employment under Article VII of the contract of employment
executed by petitioner company and respondent Grulla (p. 18, Rollo). Moreover, petitioner has failed
to show proof of the particular acts or omissions constituting the unsatisfactory performance of Grulla
of his duties, which was allegedly due to his poor physical state after the accident. Contrary to
petitioner's claims, records show that the medical certificate issued by the hospital where respondent
Grulla was confined as a result of the accident, clearly and positively stated that Grulla was already
physically fit for work after he was released from the hospital (p. 102, Rollo).lwph1.t
Anent the respondent Commission's finding of lack of due process in the dismissal of Grulla, the
petitioner claims that notice and hearing are important only if the employee is not aware of the
problems affecting his employment; that the same is not true in the instant case where respondent
Grulla knew all along that he could no longer effectively perform his job due to his physical condition.
We find that this contention has no legal basis.
The twin requirements of notice and hearing constitute essential elements of due process in cases of
employee dismissal: the requirement of notice is intended to inform the employee concerned of the
employer's intent to dismiss and the reason for the proposed dismissal, while the requirement of
hearing affords the employee an opportunity to answer his employer's charges against him and
accordingly to defend himself therefrom before dismissal is effected. Neither of these requirements
can be dispensed with without running afoul of the due process requirement of the Constitution
(Century Textile Mills, Inc., et al. v. NLRC, et al., G.R. No. 77859, May 25,1988).
In the case at bar, respondent Grulla was not, in any manner, notified of the charges against him
before he was outrightly dismissed. Neither was any hearing or investigation conducted by the
company to give the respondent a chance to be heard concerning the alleged unsatisfactory
performance of his work.
In view of the foregoing, the dismissal of respondent Grulla violated the security of tenure under the
contract of employment which specifically provides that the contract term shall be for a period of
twelve (12) calendar months. Consequently the respondent Grulla should be paid his salary for the
unexpired portion of his contract of employment which is ten (10) months (See Cuales v. NLRC, et al.,
No. L-57379 April 28, 1983, 121 SCRA 812).
The findings of the POEA and the respondent Commission that the respondent Grulla is entitled to
salaries in the amount of US$ 3,700.00 or its equivalent in Philippine currency for the unexpired
portion of his contract and the sum of P1,000.00 as reimbursement of medical expenses bear great
weight. Well-established is the principle that findings of administrative agencies which have acquired
expertise because their jurisdiction is confined to specific matters are generally accorded not only

respect but even finality. Judicial review by this Court on labor cases does not go so far as to evaluate
the sufficiency of the evidence upon which the labor officer or office based his or its determination but
are limited to issues of jurisdiction or grave abuse of discretion (Special Events and Central Shipping
Office Workers Union v. San Miguel Corporation, Nos. L-51002-06, May 30, 1983, 122 SCRA 557). In
the instant case, the assailed Resolution of the respondent Commission is not tainted with
arbitrariness that would amount to grave abuse of discretion or lack of jurisdiction and therefore, We
find no reason to disturb the same.
ACCORDINGLY, premises considered, the instant petition is dismissed for lack of merit and the
resolution of the respondent Commission dated January 17, 1986 is hereby AFFIRMED. The
temporary restraining order issued on April 23, 1986 is lifted.
SO ORDERED.

3. AURORA LAND PROJ CORP VS NLRC.

AURORA LAND PROJECTS CORP. Doing business under the name "AURORA PLAZA" and
TERESITA T. QUAZON, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION
and HONORIO DAGUI, respondents.
DECISION
HERMOSISIMA, JR., J.:
The question as to whether an employer-employee relationship exists in a certain situation
continues to bedevil the courts. Some businessmen try to avoid the bringing about of an employeremployee relationship in their enterprises because that judicial relation spawns obligations connected
with workmen's compensation, social security, medicare, minimum wage, termination pay, and
unionism.[1] In light of this observation, it behooves this Court to be ever vigilant in checking the
unscrupulous efforts of some of our entrepreneurs, primarily aimed at maximizing their return on
investments at the expense of the lowly workingman.
This petition for certiorari seeks the reversal of the Resolution [2] of public respondent National
Labor Relations Commission dated March 16, 1994 affirming with modification the decision of the
Labor Arbiter, dated May 25, 1992, finding petitioners liable to pay private respondent the total
amount of P195,624.00 as separation pay and attorney's fees.
The relevant antecedents:
Private respondent Honorio Dagui was hired by Doa Aurora Suntay Tanjangco in 1953 to take charge
of the maintenance and repair of the Tanjangco apartments and residential buildings. He was to
perform carpentry, plumbing, electrical and masonry work. Upon the death of Doa Aurora Tanjangco

in 1982, her daughter, petitioner Teresita Tanjangco Quazon, took over the administration of all the
Tanjangco properties. On June 8, 1991, private respondent Dagui received the shock of his life when
Mrs. Quazon suddenly told him: "Wala ka nang trabaho mula ngayon," [3] on the alleged ground that
his work was unsatisfactory. On August 29, 1991, private respondent, who was then already sixty-two
(62) years old, filed a complaint for illegal dismissal with the Labor Arbiter.
On May 25, 1992, Labor Arbiter Ricardo C. Nora rendered judgment, the decretal portion of which
reads:
"IN VIEW OF ALL THE FOREGOING, respondents Aurora Plaza and/or Teresita Tanjangco Quazon
are hereby ordered to pay the complainant the total amount of ONE HUNDRED NINETY FIVE
THOUSAND SIX HUNDRED TWENTY FOUR PESOS (P195,624.00) representing complainant's
separation pay and the ten (10%) percent attorney's fees within ten (10) days from receipt of this
Decision.
All other issues are dismissed for lack of merit." [4]
Aggrieved, petitioners Aurora Land Projects Corporation and Teresita T. Quazon appealed to the
National Labor Relations Commission. The Commission affirmed, with modification, the Labor
Arbiter's decision in a Resolution promulgated on March 16, 1994, in the following manner:
"WHEREFORE, in view of the above considerations, let the appealed decision be as it is hereby
AFFIRMED with (the) MODIFICATION that complainant must be paid separation pay in the amount of
P88,920.00 instead of P177,840.00. The award of attorney's fees is hereby deleted." [5]
As a last recourse, petitioners filed the instant petition based on grounds not otherwise succinctly
and distinctly ascribed, viz:
I
"RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION IN AFFIRMING THE LABOR ARBITER'S DECISION SOLELY ON
THE BASIS OF ITS STATEMENT THAT WE FAIL TO FIND ANY REASON OR JUSTIFICATION TO
DISAGREE WITH THE LABOR ARBITER IN HIS FINDING THAT HONORIO DAGUI WAS
DISMISSED BY THE RESPONDENT' (p. 7, RESOLUTION), DESPITE AND WITHOUT EVEN
BOTHERING TO CONSIDER THE GROUNDS STATED IN PETITIONERS' APPEAL
MEMORANDUM WHICH ARE PLAINLY MERITORIOUS.
II
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION IN FINDING THAT COMPLAINANT WAS EMPLOYED BY THE
RESPONDENTS MORE SO 'FROM 1953 TO 1991' (p. 3, RESOLUTION).
III

RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK


OR EXCESS OF JURISDICTION IN AWARDING SEPARATION PAY IN FAVOR OF PRIVATE
RESPONDENT MORE SO FOR THE EQUIVALENT OF 38 YEARS OF ALLEGED SERVICE.
IV
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION IN HOLDING BOTH PETITIONERS LIABLE FOR SEPARATION
PAY." [6]
It is our impression that the crux of this petition rests on two elemental issues: (1) Whether or not
private respondent Honorio Dagui was an employee of petitioners; and (2) If he were, whether or not
he was illegally dismissed.
Petitioners insist that private respondent had never been their employee. Since the establishment
of Aurora Plaza, Dagui served therein only as a job contractor. Dagui had control and supervision of
whoever he would take to perform a contracted job. On occasion, Dagui was hired only as a "tubero"
or plumber as the need arises in order to unclog sewerage pipes. Every time his services were
needed, he was paid accordingly. It was understood that his job was limited to the specific
undertaking of unclogging the pipes. In effect, petitioners would like us to believe that private
respondent Dagui was an independent contractor, particularly a job contractor, and not an employee
of Aurora Plaza.
We are not persuaded.
Section 8, Rule VIII, Book III of the Implementing Rules and Regulations of the Labor Code
provides in part:
"There is job contracting permissible under the Code if the following conditions are met:
xxx xxx xxx
(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries,
work premises, and other materials which are necessary in the conduct of his business."
Honorio Dagui earns a measly sum of P180.00 a day (latest salary).[7] Ostensibly, and by no
stretch of the imagination can Dagui qualify as a job contractor. No proof was adduced by the
petitioners to show that Dagui was merely a job contractor, and it is absurd to expect that private
respondent, with such humble resources, would have substantial capital or investment in the form of
tools, equipment, and machineries, with which to conduct the business of supplying Aurora Plaza with
manpower and services for the exclusive purpose of maintaining the apartment houses owned by the
petitioners herein.
The bare allegation of petitioners, without more, that private respondent Dagui is a job contractor
has been disbelieved by the Labor Arbiter and the public respondent NLRC. Dagui, by the findings of
both tribunals, was an employee of the petitioners. We are not inclined to set aside these findings.

The issue whether or not an employer-employee relationship exists in a given case is essentially a
question of fact. [8]As a rule, repetitious though it has become to state, this Court does not review
supposed errors in the decision of the NLRC which raise factual issues, because factual findings of
agencies exercising quasi-judicial functions [like public respondent NLRC] are accorded not only
respect but even finality, aside from the consideration that this Court is essentially not a trier of facts. [9]
However, we deem it wise to discuss this issue full-length if only to bolster the conclusions
reached by the labor tribunals, to which we fully concur.
Jurisprudence is firmly settled that whenever the existence of an employment relationship is in
dispute, four elements constitute the reliable yardstick: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to
control the employee's conduct.[10] It is the so-called "control test," and that is, whether the employer
controls or has reserved the right to control the employee not only as to the result of the work to be
done but also as to the means and methods by which the same is to be accomplished, [11] which
constitute the most important index of the existence of the employer-employee relationship. Stated
otherwise, an employer-employee relationship exists where the person for whom the services are
performed reserves the right to control not only the end to be achieved but also the means to be used
in reaching such end. [12]
All these elements are present in the case at bar. Private respondent was hired in 1953 by Doa
Aurora Suntay Tanjangco (mother of Teresita Tanjangco-Quazon), who was then the one in charge of
the administration of the Tanjangco's various apartments and other properties. He was employed as a
stay-in worker performing carpentry, plumbing, electrical and necessary work (sic) needed in the
repairs of Tanjangco's properties.[13] Upon the demise of Doa Aurora in 1982 petitioner Teresita
Tanjangco-Quazon took over the administration of these properties and continued to employ the
private respondent, until his unceremonious dismissal o0n June 8, 1991. [14]
Dagui was not compensated in terms of profits for his labor or services like an independent
contractor. Rather, he was paid on a daily wage basis at the rate of P180.00. [15] Employees are those
who are compensated for their labor or services by wages rather than by profits. [16] Clearly, Dagui fits
under this classification.
Doa Aurora and later her daughter petitioner Teresita Quazon evidently had the power of
dismissal for cause over the private respondent. [17]
Finally, the records unmistakably show that the most important requisite of control is likewise
extant in this case. It should be borne in mind that the power of control refers merely to the existence
of the power and not to the actual exercise thereof. It is not essential for the employer to actually
supervise the performance of duties of the employee; it is enough that the former has a right to wield
the power.[18] The establishment of petitioners is engaged in the leasing of residential and apartment
buildings. Naturally, private respondent's work therein as a maintenance man had to be performed
within the premises of herein petitioners. In fact, petitioners do not dispute the fact that Dagui reports
for work from 7:00 o'clock in the morning until 4:00 o'clock in the afternoon. It is not far-fetched to
expect, therefore, that Dagui had to observe the instructions and specifications given by then Doa
Aurora and later by Mrs. Teresita Quazon as to how his work had to be performed. Parenthetically,

since the job of a maintenance crew is necessarily done within company premises, it can be inferred
that both Doa Aurora and Mrs. Quazon could easily exercise control on private respondent whenever
they please.
The employment relationship established, the next question would have to be: What kind of an
employee is the private respondent regular, casual or probationary?
We find private respondent to be a regular employee, for Article 280 of the Labor Code provides:
"Regular and Casual employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed
to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season..
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which he
is employed and his employment shall continue while such actually exists."
As can be gleaned from this provision, there are two kinds of regular employees, namely: (1)
those who are engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; and (2) those who have rendered at least one year of service,
whether continuous or broken, with respect to the activity in which they are employed. [19]
Whichever standard is applied, private respondent qualifies as a regular employee. As aptly ruled
by the Labor Arbiter:
"xxx As owner of many residential and apartment buildings in Metro Manila, the necessity of
maintaining and employing a permanent stay-in worker to perform carpentry, plumbing, electrical and
necessary work needed in the repairs of Tanjangco's properties is readily apparent and is in fact
needed. So much so that upon the demise of Doa Aurora Tanjangco, respondent's daughter Teresita
Tanjangco-Quazon apparently took over the administration of the properties and continued to employ
complainant until his outright dismissal on June 8, 1991 xxx xxx. [20]
The jobs assigned to private respondent as maintenance man, carpenter, plumber, electrician and
mason were directly related to the business of petitioners as lessors of residential and apartment
buildings. Moreover, such a continuing need for his services by herein petitioners is sufficient
evidence of the necessity and indispensability of his services to petitioners' business or trade.
Private respondent Dagui should likewise be considered a regular employee by the mere fact that
he rendered service for the Tanjangcos for more than one year, that is, beginning 1953 until 1982,
under Doa Aurora; and then from 1982 up to June 8, 1991 under the petitioners, for a total of twentynine (29) and nine (9) years respectively. Owing to private respondent's length of service, he became

a regular employee, by operation of law, one year after he was employed in 1953 and subsequently in
1982. In Baguio Country Club Corp. v. NLRC,[21] we decided that it is more in consonance with the
intent and spirit of the law to rule that the status of regular employment attaches to the casual
employee on the day immediately after the end of his first year of service. To rule otherwise is to
impose a burden on the employee which is not sanctioned by law. Thus, the law does not provide the
qualification that the employee must first be issued a regular appointment or must first be formally
declared as such before he can acquire a regular status.
Petitioners argue, however, that even assuming arguendo that private respondent can be
considered an employee, he cannot be classified as a regular employee. He was merely a project
employee whose services were hired only with respect to a specific job and only while the same
exists,[22] thus falling under the exception of Article 280, paragraph 1 of the Labor Code. Hence, it is
claimed that he is not entitled to the benefits prayed for and subsequently awarded by the Labor
Arbiter as modified by public respondent NLRC.
The circumstances of this case in light of settled case law do not, at all, support this averment.
Consonant with a string of cases beginning with Ochoco v. NLRC,[23] followed by Philippine National
Construction Corporation v. NLRC,[24] Magante v. NLRC,[25] and Capitol Industrial Construction
Corporation v. NLRC,[26] if truly, private respondent was employed as a "project employee, "
petitioners should have submitted a report of termination to the nearest public employment office
everytime his employment is terminated due to completion of each project, as required by Policy
Instruction No. 20, which provides:
"Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the number
of project in which they have been employed by a particular construction company. Moreover, the
company is not required to obtain a clearance from the Secretary of Labor in connection with such
termination. What is required of the company is a report to the nearest Public Employment Office for
statistical purposes."
Throughout the duration of private respondent's employment as maintenance man, there should
have been filed as many reports of termination as there were projects actually finished, if it were true
that private respondent was only a project worker. Failure of the petitioners to comply with this simple,
but nonetheless compulsory, requirement is proof that Dagui is not a project employee. [27]
Coming now to the second issue as to whether or not private respondent Dagui was illegally
dismissed, we rule in the affirmative.
Jurisprudence abound as to the rule that the twin requirements of due process, substantive and
procedural, must be complied with, before a valid dismissal exists. [28] Without which the dismissal
becomes void.[29]
The twin requirements of notice and hearing constitute the essential elements of due process.
This simply means that the employer shall afford the worker ample opportunity to be heard and to
defend himself with the assistance of his representative, if he so desires. [30] As held in the case of
Pepsi Cola Bottling Co. v. NLRC:[31]

"The law requires that the employer must furnish the worker sought to be dismissed with two written
notices before termination of employee can be legally effected: (1) notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent
notice which informs the employee of the employer's decision to dismiss him (Section 13, BP 130;
Sections 2-6, Rule XIV, Book V Rules and Regulations Implementing the Labor Code as amended).
Failure to comply with the requirements taints the dismissal with illegality. This procedure is
mandatory; in the absence of which, any judgment reached by management is void and inexistent.
(Tingson, Jr. v. NLRC, 185 SCRA 498 [1990]; National Service Corporation v. NLRC, 168 SCRA 122
[1988]; Ruffy v. NLRC, 182 SCRA 365 [1990]."
These mandatory requirements were undeniably absent in the case at bar. Petitioner Quazon
dismissed private respondent on June 8, 1991, without giving him any written notice informing the
worker herein of the cause for his termination. Neither was there any hearing conducted in order to
give Dagui the opportunity to be heard and defend himself. He was simply told: "Wala ka nang
trabaho mula ngayon," allegedly because of poor workmanship on a previous job. [32] The undignified
manner by which private respondent's services were terminated smacks of absolute denial of the
employee's right to due process and betrays petitioner Quazon's utter lack of respect for labor. Such
an attitude indeed deserves condemnation.
The Court, however, is bewildered why only an award for separation pay in lieu of reinstatement
was made by both the Labor Arbiter and the NLRC. No backwages were awarded. It must be
remembered that backwages and reinstatement are two reliefs that should be given to an illegally
dismissed employee. They are separate and distinct from each other. In the event that reinstatement
is no longer possible, as in this case, [33] separation pay is awarded to the employee. The award of
separation pay is in lieu of reinstatement and not of backwages. In other words, an illegally dismissed
employee is entitled to (1) either reinstatement, if viable, or separation pay if reinstatement is no
longer viable, and (2) backwages.[34] Payment of backwages is specifically designed to restore an
employee's income that was lost because of his unjust dismissal. [35] On the other hand, payment of
separation pay is intended to provide the employee money during the period in which he will be
looking for another employment. [36]
Considering, however, that the termination of private respondent Dagui was made on June 8,
1991 or after the effectivity of the amendatory provision of Republic Act No. 6715 on March 21, 1989,
private respondent's backwages should be computed on the basis of said law.
It is true that private respondent did not appeal the award of the Labor Arbiter awarding
separation pay sans backwages. While as a general rule a party who has not appealed is not entitled
to affirmative relief other than the ones granted in the decision of the court below, [37] law and
jurisprudence authorize a tribunal to consider errors, although unassigned, if they involve (1) errors
affecting the lower court's jurisdiction over the subject matter, (2) plain errors not specified, and (3)
clerical errors.[38] In this case, the failure of the Labor Arbiter and the public respondent NLRC to
award backwages to the private respondent, who is legally entitled thereto having been illegally
dismissed, amounts to a "plain error" which we may rectify in this petition, although private
respondent Dagui did not bring any appeal regarding the matter, in the interest of substantial justice.
The Supreme Court is clothed with ample authority to review matters, even if they are not assigned
as errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of the

case.[39] Rules of procedure are mere tools designed to facilitate the attainment of justice. Their strict
and rigid application, which would result in technicalities that tend to frustrate rather than promote
substantial justice, must always be avoided.[40] Thus, substantive rights like the award of backwages
resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules.
[41]

Petitioner Quazon argues that, granting the petitioner corporation should be held liable for the
claims of private respondent, she cannot be made jointly and severally liable with the corporation,
notwithstanding the fact that she is the highest ranking officer of the company, since Aurora Plaza has
a separate juridical personality.
We disagree.
In the cases of Maglutac v. National Labor Relations Commission, [42] Chua v. National Labor
Relations Commission,[43] and A.C Ransom Labor Union-CCLU v. National Labor Relations
Commission[44] we were consistent in holding that the highest and most ranking officer of the
corporation, which in this case is petitioner Teresita Quazon as manager of Aurora Land Projects
Corporation, can be held jointly and severally liable with the corporation for the payment of the unpaid
money claims of its employees who were illegally dismissed. In this case, not only was Teresita
Quazon the most ranking officer of Aurora Plaza at the time of the termination of the private
respondent, but worse, she had a direct hand in the private respondent's illegal dismissal. A corporate
officer is not personally liable for the money claims of discharged corporate employees unless he
acted with evident malice and bad faith in terminating their employment. [45] Here, the failure of
petitioner Quazon to observe the mandatory requirements of due process in terminating the services
of Dagui evinced malice and bad faith on her part, thus making her liable.
Finally, we must address one last point. Petitioners aver that, assuming that private respondent
can be considered an employee of Aurora Plaza, petitioners cannot be held liable for separation pay
for the duration of his employment with Doa Aurora Tanjangco from 1953 up to 1982. If petitioners
should be held liable as employers, their liability for separation pay should only be counted from the
time Dagui was rehired by the petitioners in 1982 as a maintenance man.
We agree.
Petitioners' liability for separation pay ought to be reckoned from 1982 when petitioner Teresita
Quazon, as manager of Aurora Plaza, continued to employ private respondent. From 1953 up to the
death of Doa Aurora sometime in 1982, private respondent's claim for separation pay should have
been filed in the testate or intestate proceedings of Doa Aurora. This is because the demand for
separation pay covered by the years 1953-1982 is actually a money claim against the estate of Doa
Aurora, which claim did not survive the death of the old woman. Thus, it must be filed against her
estate in accordance with Section 5, Rule 86 of the Revised Rules of Court, to wit:
"Section 5. Claims which must be filed under the notice. If not ,filed barred; exceptions. All claims for
money against the decedent, arising from contract, express or implied, whether the same be due, not
due, or contingent, all claims for funeral expenses for the last sickness of the decedent, and judgment
for money against the decedent, must be filed within the time limited in the notice; otherwise they are

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

4. BUISER VS LEOGARDO
G.R. No. L-63316 July 31, 1984
ILUMINADA VER BUISER, MA. CECILIA RILLOACUA and MA. MERCEDES P.
INTENGAN, petitioners,
vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of the Ministry of Labor &
Employment, and GENERAL TELEPHONE DIRECTORY, CO., respondents.
Jimenez, Apolo & Leynes Law Office for petitioners.
The Solicitor General for respondent Deputy Minister.
Abad, Legayada & Associates for private respondent.

GUERRERO, J.:

This is a petition for certiorari seeking to set aside the Order of the Deputy Minister of Labor and
Employment, affirming the Order of the Regional Director, National Capital Region, in Case No. NCRSTF-5-2851-81, which dismissed the petitioners' complainant for alleged illegal dismissal and unpaid
commission.
Petitioners were employed by the private respondent GENERAL TELEPHONE DIRECTORY
COMPANY as sales representatives and charged with the duty of soliciting advertisements for
inclusion in a telephone directory.
The records show that petitioners Iluminada Ver Buiser and Ma. Mercedes P. Intengan entered into
an "Employment Contract (on Probationary Status)" on May 26, 1980 with private respondent, a
corporation engaged in the business of publication and circulation of the directory of the Philippine
Long Distance Telephone Company. Petitioner Ma. Cecilia Rillo-Acuna entered into the same
employment contract on June 11, 1980 with the private respondent.
Among others, the "Employment Contract (On Probationary Status)" included the following common
provisions:
l. The company hereby employs the employee as telephone representative on a
probationary status for a period of eighteen (18) months, i.e. from May 1980 to October
1981, inclusive. It is understood that darung the probationary period of employment, the
Employee may be terminated at the pleasure of the company without the necessity of
giving notice of termination or the payment of termination pay.
The Employee recognizes the fact that the nature of the telephone sales
representative's job is such that the company would be able to determine his true
character, conduct and selling capabilities only after the publication of the directory, and
that it takes about eighteen (18) months before his worth as a telephone saw
representative can be fully evaluated inasmuch as the advertisement solicited by him for
a particular year are published in the directory only the following year.
Corollary to this, the private respondent prescribed sales quotas to be accomplished or met by the
petitioners. Failing to meet their respective sales quotas, the petitioners were dismissed from the
service by the private respondent. The records show that the private respondent terminated the
services of petitioners Iluminada Ver Buiser and Cecilia Rillo-Acuna on May 14, 1981 and petitioner
Ma. Mercedes P. Intengan on May 18, 1981 for their failure to meet their sales quotas.
Thus, on May 27, 1981, petitioners filed with the National Capital Region, Ministry of Labor and
Employment, a complaint for illegal dismissal with claims for backwages, earned commissions and
other benefits, docketed as Case No. NCR-STF-5-2851-81.
The Regional Director of said ministry, in an Order dated September 21, 1982, dismissed the
complaints of the petitioners, except the claim for allowances which private respondent was ordered
to pay. A reconsideration of the Order was sought by the petitioners in a motion filed on September
30, 1982. This motion, however, was treated as an appeal to the Minister of Labor.

On appeal, Deputy Minister Vicente Leogardo, Jr. of the Ministry of Labor issued an Order dated
January 7, 1983, affirming the Regional Director's Order dated September 21, 1982, wherein it ruled
that the petitioners have not attained permanent status since private respondent was justified in
requiring a longer period of probation, and that the termination of petitioners' services was valid since
the latter failed to meet their sales quotas.
Hence, this petition for certiorari on the alleged ground that public respondent committed grave abuse
of discretion amounting to lack of jurisdiction. Specifically, petitioners submit that:
1. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion
amounting to lack of jurisdiction in ruling that the probationary employment of petitioners herein is
eighteen (18) months instead of the mandated six (6) months under the Labor Code, and in
consequently further ruling that petitioners are not entitled to security of tenure while under said
probation for 18 months.
2. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion
amounting to lack of jurisdiction in ruling that petitioners were dismissed for a just and valid cause.
3. The Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of discretion
amounting to lack of jurisdiction in ruling that petitioners are not entitled to the commissions they have
earned and accrued during their period of employment.
Petitioners contend that under Articles 281-282 of the Labor Code, having served the respondent
company continuously for over six (6) months, they have become automatically regular employees
notwithstanding an agreement to the contrary. Articles 281-282 read thus:
Art. 282. Probationary Employment. Probationary employment shall not exceed six
(6) months from the date the employee started working, unless it iscCovered by an
apprenticeship agreement stipulating a longer period. The services of an employee who
has been engaged on a probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his engagement. An employee
who is allowed to work after a probationary period shall be considered a regular
employee. (As amended by PD 850).
Art. 281. Regular and Casual Employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreements of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceeding
paragraph. Provided, That, any employee who has rendered at least one year of

service, whether such service is continuous or broken, shall be considered a regular


employee with respect to the activity in which he is employed and his employment shall
continue while such actually exists. (As amended by PD 850).
It is petitioners' submission that probationary employment cannot exceed six (6) months, the only
exception being apprenticeship and learnership agreements as provided in the Labor Code; that the
Policy Instruction of the Minister of Labor and Employment nor any agreement of the parties could
prevail over this mandatory requirement of the law; that this six months prescription of the Labor
Code was mandated to give further efficacy to the constitutionally-guaranteed security of tenure of
workers; and that the law does not allow any discretion on the part of the Minister of Labor and
Employment to extend the probationary period for a longer period except in the aforecited instances.
Finally, petitioners maintain that since they are regular employees, they can only be removed or
dismissed for any of the just and valid causes enumerated under Article 283 of the Labor Code.
We reject petitioners' contentions. They have no basis in law.
Generally, the probationary period of employment is limited to six (6) months. The exception to this
general rule is When the parties to an employment contract may agree otherwise, such as when the
same is established by company policy or when the same is required by the nature of work to be
performed by the employee. In the latter case, there is recognition of the exercise of managerial
prerogatives in requiring a longer period of probationary employment, such as in the present case
where the probationary period was set for eighteen (18) months, i.e. from May, 1980 to October, 1981
inclusive, especially where the employee must learn a particular kind of work such as selling, or when
the job requires certain qualifications, skills, experience or training.
Policy Instruction No. 11 of the Minister of Labor and Employment has clarified any and all doubts on
the period of probationary employment. It states as follows:
Probationary Employment has been the subject of misunderstanding in some quarter.
Some people believe six (6) months is the probationary period in all cases. On the other
hand employs who have already served the probationary period are sometimes required
to serve again on probation.
Under the Labor Code, six (6) months is the general probationary period ' but the
probationary period is actually the period needed to determine fitness for the job. This
period, for lack of a better measurement is deemed to be the period needed to learn the
job.
The purpose of this policy is to protect the worker at the same time enable the employer
to make a meaningful employee selection. This purpose should be kept in mind in
enforcing this provision of the Code. This issuance shall take effect immediately.
In the case at bar, it is shown that private respondent Company needs at least eighteen (18) months
to determine the character and selling capabilities of the petitioners as sales representatives. The
Company is engaged in advertisement and publication in the Yellow Pages of the PLDT Telephone
Directories. Publication of solicited ads are only made a year after the sale has been made and only

then win the company be able to evaluate the efficiency, conduct, and selling ability of its sales
representatives, the evaluation being based on the published ads. Moreover, an eighteen month
probationary period is recognized by the Labor Union in the private respondent company, which is
Article V of the Collective Bargaining Agreement, ... thus:
Probationary Period New employees hired for regular or permanent shall undergo a
probationary or trial period of six (6) months, except in the cases of telephone or sales
representatives where the probationary period shall be eighteen (I 8) months.
And as indicated earlier, the very contracts of employment signed and acquiesced to by the
petitioners specifically indicate that "the company hereby employs the employee as telephone sales
representative on a probationary status for a period of eighteen (18) months, i.e. from May 1980 to
October 1981, inclusive. This stipulation is not contrary to law, morals and public policy.
We, therefore, hold and rule that the probationary employment of petitioners set to eighteen (18)
months is legal and valid and that the Regional Director and the Deputy Minister of Labor and
Employment committed no abuse of discretion in ruling accordingly.
On the second assignment of error that public respondent committed grave abuse of discretion in
ruling that petitioners were dismissed for a just and valid cause, this is not the first time that this issue
has been raised before this Court. Earlier, in the case of "Arthur Golez vs. The National Labor
Relations Commission and General Telephone Directory Co. "G.R. No. L-64459, July 25, 1983, the
petition for certiorari which raised the same issue against the herein private respondent was
dismissed by this Court for lack of merit.
The practice of a company in laying off workers because they failed to make the work quota has been
recognized in this jurisdiction. (Philippine American Embroideries vs. Embroidery and Garment
Workers, 26 SCRA 634, 639). In the case at bar, the petitioners' failure to meet the sales quota
assigned to each of them constitute a just cause of their dismissal, regardless of the permanent or
probationary status of their employment. Failure to observe prescribed standards of work, or to fulfill
reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to
complete the same within the alloted reasonable period, or by producing unsatisfactory results. This
management prerogative of requiring standards availed of so long as they are exercised in good faith
for the advancement of the employer's interest.
Petitioners anchor their claim for commission pay on the Collective Bargaining Agreement (CBA) of
September 1981, in support of their third assignment of error. Petitioners cannot avail of this
agreement since their services had been terminated in May, 1981, at a time when the CBA of
September, 1981 was not yet in existence.
In fine, there is nothing in the records to show any abuse or misuse of power properly vested in the
respondent Deputy Minister of Labor and Employment. For certiorari to lie, "there must be capricious,
arbitrary and whimsical exercise of power, the very antithesis of the judicial prerogative inaccordance
with centuries of both civil and common law traditions." (Panaligan vs. Adolfo, 67 SCRA 176, 180).
The "abuse of discretion must be grave and patent, and it must be shown that the discretion was

exercised arbitrarily or despotically." (Palma and Ignacio vs. Q. & S., Inc., et al., 17 SCRA 97, 100;
Philippine Virginia Tobacco Administration vs. Lucero, 125 SCRA 337, 343).
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.

5. PAEL VS UNIVERSAL ROBINA


PEDY CASERES and ANDITO G.R.NO. 159343
PAEL,
Petitioners,
Present:
YNARES-SANTIAGO, J.
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
UNIVERSAL ROBINA SUGAR
MILLING CORPORATION
(URSUMCO) and/or RESIDENT
MANAGER RENE CABATE, Promulgated:
Respondents. September 28, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
AUSTRIA-MARTINEZ, J.:

Universal Robina Sugar Milling Corporation (respondent) is a corporation engaged in the cane sugar
milling business. Pedy Caseres (petitioner Caseres) started working for respondent in 1989,
while Andito Pael (petitioner Pael) in 1993. At the start of their respective employments, they were
made to sign a Contract of Employment for Specific Project or Undertaking. Petitioners' contracts
were renewed from time to time, until May 1999 when they were informed that their contracts will not
be renewed anymore.
Petitioners filed a complaint for illegal dismissal, regularization, incentive leave pay, 13 th month pay,
damages and attorneys fees.

In a Decision[1] dated August 24, 1999, the Labor Arbiter (LA) dismissed the complaint for not being
substantiated with clear and convincing evidence.
The National Labor Relations Commission (NLRC) affirmed the LA's dismissal, [2] and the Court of
Appeals (CA)[3] dismissed the petition filed before it.[4]
Hence, herein Petition for Review on Certiorari under Rule 45 of the Rules of Court with the issues
set forth as follows:
I. WHETHER OR NOT THE PETITIONERS ARE SEASONAL/PROJECT/TERM
EMPLOYEES NOT REGULAR EMPLOYEES OF RESPONDENTS;
II. WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY DISMISSED AND ARE
ENTITLED TO BACKWAGES AND OTHER MONETARY BENEFITS PRAYED FOR IN
THE COMPLAINT.[5]
The petition is without merit.
The rule is clear that a petition for review on certiorari under Rule 45 of the Rules of Court should
raise only questions of law, subject to certain exceptions.[6] Whether or not respondents
were project employees or regular employees is a question of fact.[7]
The LA, the NLRC and the CA are one in ruling that petitioners were not illegally dismissed as they
were not regular, but contractual or project employees. Consequently, the finding of the LA, the
NLRC, and the CA that petitioners were project employees binds this Court. [8]
The Court finds no cogent reason to depart from their ruling.
Article 280 of the Labor Code provides:
ART. 280. Regular and Casual Employees. The provision of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.

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


paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment shall
continue while such actually exists.
The foregoing provision provides for three kinds of employees: (a) regular employees or those who
have been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; (b) project employees or those whose employment has been fixed
for a specific project or undertaking, the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be performed
is seasonal

in

nature

and

the

employment

is

for

the

duration

of

the

season;

and

(c) casual employees or those who are neither regular nor project employees.[9]
The principal test for determining whether an employee is a project employee or a regular employee
is whether the employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee.
[10]

A project employee is one whose employment has been fixed for a specific project or undertaking,

the completion or termination of which has been determined at the time of the engagement of
the employee or where the work or service to be performed is seasonal in nature and the employment
is for the duration of the season. [11] A true project employee should be assigned to a project which
begins and ends at determined or determinable times, and be informed thereof at the time of hiring. [12]
Petitioners contend that respondent's repeated hiring of their services qualifies them to the status of
regular employees. On this score, the LA ruled:
This is further buttress[ed] by the fact that the relationship between complainants and
the respondent URSUMCO, would clearly reveal that the very nature of the terms and
conditions of their hiring would show that complainants were required to perform phases
of special projects which are not related to the main operation of the respondent for a
definite period, after which their services are available to any farm owner.[13]

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


In the case at bar, We note that complainants never bothered to deny that they
voluntarily, knowingly and willfully executed the contracts of employment. Neither was
there any showing that respondents exercised moral dominance on the complainants,
x x x it is clear that the contracts of employment are valid and binding on the
complainants.
The execution of these contracts in the case at bar is necessitated by the peculiar
nature of the work in the sugar industry which has an off milling season. The very nature

of the terms and conditions of complainants' hiring reveals that they were required to
perform phases of special projects for a definite period after, their services are available
to other farm owners. This is so because the planting of sugar does not entail a whole
year operation, and utility works are comparatively small during the off-milling
season. x x x[14]

Finally, the CA noted:


Petitioner Pedy Caseres first applied with private respondent URSUMCO on January 9,
1989 as a worker assisting the crane operator at the transloading station. Upon
application, Caseres was interviewed and made to understand that his employment
would be co-terminus with the phase of work to which he would be then assigned, that
is until February 5, 1989 and thereafter he would be free to seek employment
elsewhere. Caseresagreed and signed the contract of employment for specific project or
undertaking. After an absence of more than five (5) months, Caseres re-applied with
respondent
as
a
seasonal
project
worker
assisting
in
the
general underchassis reconditioning to transport units on July 17, 1989. Like his first
assignment, Caseres was made to understand that his services would be co-terminus
with the work to which he would be then assigned that is from July 17, 1989 to July 20,
1989 and that thereafter he is free to seek employment elsewhere to
which Caseres agreed and readily signed the contract of employment for specific
project or undertaking issued to him. Thereafter Caseres voluntarily signed several
other employment contracts for various undertakings with a determinable period. As in
the first contract, Caseres' services were co-terminus with the work to which he was
assigned, and that thereafter, he was free to seek employment with other sugar millers
or elsewhere.
The nature and terms and conditions of employment of petitioner Andito Pael were the
same as that of his co-petitioner Caseres.
xxx
It must be noted that there were intervals in petitioners' respective employment
contracts, and that their work depended on the availability of such contracts or
projects. Consequently, the employment of URSUMCO'swork force was not permanent
but co-terminous with the projects to which the employees were assigned and from
whose payrolls they were paid (Palomares vs. NLRC, 277 SCRA 439).
Petitioners' repeated and successive re-employment on the basis of a contract of
employment for more than one year cannot and does not make them regular
employees. Length of service is not the controlling determinant of the employment
tenure of a project employee (Rada vs. NLRC, 205 SCRA 69). x x x[15]

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

x x x by entering into such contract, an employee is deemed to understand that his


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

The fact that petitioners were constantly re-hired does not ipso facto establish that they became
regular employees. Their respective contracts with respondent show that there were intervals in their
employment. In petitioner Caseres's case, while his employment lasted from August 1989 to May
1999, the duration of his employment ranged from one day to several months at a time, and such
successive employments were not continuous. With regard to petitioner Pael, his employment never
lasted for more than a month at a time. These support the conclusion that they were indeed project
employees, and since their work depended on the availability of such contracts or projects,
necessarily the employment of respondents work force was not permanent but co-terminous with the
projects to which they were assigned and from whose payrolls they were paid. As ruled
in Palomares v. National Labor Relations Commission,[18] it would be extremely burdensome for their
employer to retain them as permanent employees and pay them wages even if there were no projects
to work on.
Moreover, even if petitioners were repeatedly and successively re-hired, still it did not qualify them as
regular employees, as length of service is not the controlling determinant of the employment tenure of
a project employee,[19] but whether the employment has been fixed for a specific project or
undertaking, its completion has been determined at the time of the engagement of the employee.
[20]

Further, the proviso in Article 280, stating that an employee who has rendered service for at least

one (1) year shall be considered a regular employee, pertains to casual employees and not
to project employees.[21]

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

6. COCOMANGAS VS VISCA
COCOMANGAS HOTEL BEACH RESORT and/or SUSAN MUNRO, Petitioners, v. FEDERICO F.
VISCA, JOHNNY G. BAREDO, RONALD Q. TIBUS, RICHARD G. VISCA and RAFFIE G.
VISCA, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing
the Decision1 dated July 30, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 78620 which
reversed and set aside the Resolution dated February 27, 2003 of the National Labor Relations
Commission (NLRC) in NLRC Case No. V-000714-2000; and the CA Resolution 2 dated February 2,
2005 which denied petitioners' Motion for Reconsideration.
The present controversy stemmed from five individual complaints 3 for illegal
dismissal filed on June 15, 1999 by Federico F. Visca (Visca), Johnny G. Barredo, Ronald Q. Tibus,
Richard G. Visca and Raffie G. Visca (respondents) against Cocomangas Hotel Beach Resort and/or
its owner-manager, Susan Munro (petitioners) before Sub-Regional Arbitration Branch No. VI of the
National Labor Relations Commission (NLRC) in Kalibo, Aklan.
In their consolidated Position Paper,4 respondents alleged that they were regular employees of
petitioners, with designations and dates of employment as follows:

Name

Designation

Date Employed

Federico F. Visca

Foreman

October 1, 1987

Johnny G. Barredo

Carpenter

April 23, 1993

Ronald Q. Tibus

Mason

November 9, 1996

Richard G. Visca

Carpenter

April 1988

Raffie G. Visca

Mason/Carpenter

March 27, 1993

tasked with the maintenance and repair of the resort facilities; on May 8, 1999, Maria Nida IigoTaala, the Front Desk Officer/Sales Manager, informed them not to report for work since the
ongoing constructions and repairs would be temporarily suspended because they caused irritation
and annoyance to the resort's guests; as instructed, they did not report for work the succeeding days;
John Munro, husband of petitioner Susan Munro, subsequently visited respondent foreman Visca and
informed him that the work suspension was due to budgetary constraints; when respondent Visca
later discovered that four new workers were hired to do respondents' tasks, he confronted petitioner
Munro who explained that respondents' resumption of work was not possible due to budgetary
constraints; when not less than ten workers were subsequently hired by petitioners to do repairs in
two cottages of the resort and two workers were retained after the completion without respondents
being allowed to resume work, they filed their individual complaints for illegal dismissal. In addition to
reinstatement with payment of full backwages, respondents prayed for payment of premium pay for
rest day, service incentive leave pay, 13th month pay, and cost-of-living allowance, plus moral and
exemplary damages and attorney's fees.
In their Position Paper,5 petitioners denied any employer-employee relationship with respondents and
countered that respondent Visca was an independent contractor who was called upon from time to
time when some repairs in the resort facilities were needed and the other respondents were selected
and hired by him.
On June 30, 2000, the Labor Arbiter (LA) rendered a Decision 6 dismissing the complaint, holding that
respondent Visca was an independent contractor and the other respondents were hired by him to
help him with his contracted works at the resort; that there was no illegal dismissal but completion of
projects; that respondents were project workers, not regular employees.
On August 9, 2000, respondents filed a Memorandum of Appeal 7 with the NLRC. No comment
thereon was filed by the petitioners.
On August 29, 2002, the NLRC rendered a Decision, 8 setting aside the Decision of the LA and
ordering the payment to respondents of backwages computed from May 8, 1999 to July 31, 2002,
13th month pay and service incentive leave pay for three years, in addition to 10% attorney's fees. The
dispositive portion of the NLRC Decision reads:
WHEREFORE, the decision dated June 30, 2000 of the Labor Arbiter is VACATED and SET ASIDE
and a new decision rendered declaring the Illegal Dismissal of the complainant (sic) and ordering
respondent Susan Munro to pay the complainants the following:

1. Federico F. Visca

P 288,816.53

2. Johnny G. Barredo

P 211,058.47

3. Ronald Q. Tibus

P 175,774.00

4. Richard C. Visca

P 200,977.85

5. Raffie C. Visca

P 211,058.47

P1,087,685.32

6. Attorney's fees (10%)

Total Award

P 108,768.53

P1,196,453.859

Petitioners failed to convince the NLRC that respondent Visca was not an independent contractor and
the other respondents were selected and hired by him. The NLRC held that respondents were regular
employees of petitioners since all the factors determinative of employer-employee relationship were
present and the work done by respondents was clearly related to petitioners' resort business. It took
into account the following: (a) respondent Visca was reported by petitioners as an employee in the
Quarterly Social Security System (SSS) report; (b) all of the respondents were certified to by
petitioner Munro as workers and even commended for their satisfactory performance; (c) respondents
were paid their holiday and overtime pay; and (d) respondents had been continuously in petitioners'
employ from three to twelve years and were all paid by daily wage given weekly.
On November 18, 2002, petitioners filed a Motion for Reconsideration, arguing that respondents were
project employees.10 Petitioners also filed a Supplemental to their Motion for Reconsideration. 11 No
opposition or answer to petitioners' motion for reconsideration and supplement was filed by
respondents despite due notice.12
On February 27, 2003, the NLRC made a complete turnabout from its original decision and issued a
Resolution13 dismissing the complaint, holding that respondents were not regular employees but
project employees, hired for a short period of time to do some repair jobs in petitioners' resort
business. Nonetheless, it ordered payment of P10,000.00 to each complainant as financial
assistance.

Respondents then filed a Petition for Certiorari14 with the CA raising three issues for resolution: (a)
whether or not the respondents were project employees of petitioners; (b) whether or not the
respondents' dismissal from work was based on valid grounds; (c) whether or not the NLRC had
sufficient basis to overturn its own decision despite its overwhelming findings that respondents were
illegally dismissed.
On July 30, 2004, the CA rendered its assailed Decision, 15 the dispositve portion of which reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered by us REVERSING and
SETTING ASIDE the NLRC Resolution dated February 28, 2003, REINSTATING the NLRC Decision
dated August 29, 2000 [sic], and ORDERING the private respondents to pay damages in the amount
of P50,000.00. The instant case is hereby REMANDED to the 4 thDivision NLRC, Cebu City for the
purpose of UPDATING the award promulgated in its Decision dated August 29, 2000 [sic].
SO ORDERED.16
The CA held respondents were regular employees, not project workers, since in the years that
petitioners repeatedly hired respondents' services, the former failed to set, even once, specific
periods when the employment relationship would be terminated; that the repeated hiring of
respondents established that the services rendered by them were necessary and desirable to
petitioners' resort business; at the least, respondents were regular seasonal employees, hired
depending on the tourist season and when the need arose in maintaining petitioners' resort for the
benefit of guests.
In addition to the amounts granted by the NLRC in its August 29, 2002 Decision, the CA awarded
respondents P50,000.00 as damages, since their termination was attended by bad faith, in that
petitioners not only gave respondents the run-around but also blatantly hired others to take
respondents' place despite their claim that the so-called temporary stoppage of work was due to
budgetary constraints.
On August 18, 2004, petitioners filed a Motion for Reconsideration, 17 but it was denied by the CA in a
Resolution18 dated February 2, 2005.
Petitioners then filed the present petition 19 on the following grounds:
I
THE HONORABLE COURT OF APPEALS ERRED IN GIVING DUE COURSE TO THE SPECIAL
CIVIL ACTION UNDER RULE 65 NOTWITHSTANDING THE FACT THAT RESPONDENTS HAVE
FAILED TO PROVE THE GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS
OF JURISDICTION THAT WOULD ALLOW THE NULLIFICATION OF THE ASSAILED RESOLUTION
OF THE NATIONAL LABOR RELATIONS COMMISSION.
II
THE HONORABLE COURT OF APPEALS ERRED IN REVERSING AND SETTING ASIDE THE
RESOLUTION DATED FEBRUARY 27, 2003 AND REINSTATING THE DECISION DATED AUGUST
29, 2002 RENDERED BY THE NATIONAL LABOR RELATIONS COMMISSION. 20
Petitioners argue that the CA erred in giving due course to respondents' petition, since respondents
failed to recite specifically how the NLRC abused its discretion, an allegation essentially required in a
Petition for Certiorariunder Rule 45 of the Rules of Court; the three issues raised by respondents in

their petition before the CA required appreciation of the evidence presented below and are therefore
errors of judgment, not of jurisdiction; that the factual findings of the LA and the NLRC on the lack of
employer-employee relationship between petitioners and respondents should be accorded not only
respect but finality.
On the other hand, respondents contend that the issues raised by the petitioners call for reevaluation
of the evidence presented by the parties, which is not proper in petitions for review under Rule 45 of
the Rules of Court; in any case, they argue that they have amply established that they are regular
employees of petitioners, since their jobs as carpenters, which include the repairs of furniture, motor
boats, cottages and windbreakers, are not at all foreign to the business of maintaining a beach resort.
The petition is bereft of merit.
The extent of judicial review by certiorari of decisions or resolutions of the NLRC, as exercised
previously by this Court and now by the CA, is described in Zarate, Jr. v. Olegario,21 thus:
The rule is settled that the original and exclusive jurisdiction of this Court to review a decision of
respondent NLRC (or Executive Labor Arbiter as in this case) in a petition for certiorari under Rule 65
does not normally include an inquiry into the correctness of its evaluation of the evidence. Errors of
judgment, as distinguished from errors of jurisdiction, are not within the province of a special civil
action for certiorari, which is merely confined to issues of jurisdiction or grave abuse of discretion. It is
thus incumbent upon petitioner to satisfactorily establish that respondent Commission or
executive labor arbiter acted capriciously and whimsically in total disregard of evidence
material to or even decisive of the controversy, in order that the extraordinary writ
of certiorari will lie. By grave abuse of discretion is meant such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, and it must be shown that the discretion was
exercised arbitrarily or despotically. For certiorari to lie, there must be capricious, arbitrary and
whimsical exercise of power, the very antithesis of the judicial prerogative in accordance with
centuries of both civil law and common law traditions. 22 (Emphasis supplied)cralawlibrary
The CA, therefore, can take cognizance of a Petition for Certiorari if it finds that the NLRC, in its
assailed decision or resolution, committed grave abuse of discretion by capriciously, whimsically, or
arbitrarily disregarding evidence which is material to or decisive of the controversy. The CA cannot
make this determination without looking into the evidence presented by the parties. The appellate
court needs to evaluate the materiality or significance of the evidence, which is alleged to have been
capriciously, whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence on
record.23
In Garcia v. National Labor Relations Commission,24 the Court elucidated on when certiorari can be
properly resorted to, thus:
[I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual findings
complained of are not supported by the evidence on record. Earlier, in Gutib v. Court of Appeals,
we emphasized thus:
[I]t has been said that a wide breadth of discretion is granted a court of justice
in certiorari proceedings. The cases in which certiorari will issue cannot be defined, because to do so
would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the court that
authority is not wanting to show that certiorari is more discretionary than either prohibition
or mandamus . In the exercise of our superintending control over inferior courts, we are to be guided
by all the circumstances of each particular case "as the ends of justice may require." So it is that

the writ will be granted where necessary to prevent a substantial wrong or to do substantial
justice.
And in another case of recent vintage, we further held:
In the review of an NLRC decision through a special civil action for certiorari, resolution is confined
only to issues of jurisdiction and grave abuse of discretion on the part of the labor tribunal. Hence, the
Court refrains from reviewing factual assessments of lower courts and agencies exercising
adjudicative functions, such as the NLRC. Occasionally, however, the Court is constrained to
delve into factual matters where, as in the instant case, the findings of the NLRC contradict
those of the Labor Arbiter.
In this instance, the Court in the exercise of its equity jurisdiction may look into the records of the
case and re-examine the questioned findings. As a corollary, this Court is clothed with ample authority
to review matters, even if they are not assigned as errors in their appeal, if it finds that their
consideration is necessary to arrive at a just decision of the case. The same principles are now
necessarily adhered to and are applied by the Court of Appeals in its expanded jurisdiction
over labor cases elevated through a Petition for Certiorari; thus, we see no error on its part when
it made anew a factual determination of the matters and on that basis reversed the ruling of the
NLRC.25 (Emphasis supplied)cralawlibrary
Thus, pursuant to Garcia, the appellate court can grant a petition for certiorari when the factual
findings complained of are not supported by the evidence on record; when it is necessary to prevent a
substantial wrong or to do substantial justice; when the findings of the NLRC contradict those of the
LA; and when necessary to arrive at a just decision of the case. 26
In the present case, respondents alleged in its petition with the CA that the NLRC's conclusions had
no basis in fact and in law, in that "it totally disregarded the evidence of the [respondents] and gave
credence to the [petitioners'] asseverations which were in themselves insufficient to overturn duly
established facts and conclusions."27 Consequently, the CA was correct in giving due course to the
Petition for Certiorari, since respondents drew attention to the absence of substantial evidence to
support the NLRC's complete turnabout from its original Decision dated August 29, 2002 finding that
respondents were regular employees, to its subsequent Resolution dated February 27, 2003
classifying respondents as project employees.
The next issue before the Court is whether the CA committed an error in reversing the NLRC
Resolution dated February 27, 2003. The resolution of this issue principally hinges on the
determination of the question whether respondents are regular or project employees.
Generally, the existence of an employer-employee relationship is a factual matter that will not be
delved into by this Court, since only questions of law may be raised in petitions for review.28 However,
the Court is constrained to resolve the issue of whether respondents are regular or permanent
employees due to the conflicting findings of fact of the LA, the NLRC and the CA, thus, necessitating
a review of the evidence on record.29
The petitioners were ambivalent in categorizing respondents. In their Position Paper 30 filed before the
LA, petitioners classified respondent Visca as an independent contractor and the other respondents
as his employees; while in their Motion for Reconsideration 31 before the NLRC, petitioners treated
respondents as project employees.
Further, petitioners' position in their Motion for Reconsideration before the NLRC runs contrary to their
earlier submission in their Position Paper before the LA. While initially advancing the absence of an

employer-employee relationship, petitioners on appeal, sang a different tune, so to speak, essentially


invoking the termination of the period of their employer-employee relationship.
The NLRC should not have considered the new theory offered by the petitioners in their Motion for
Reconsideration. As the object of the pleadings is to draw the lines of battle, so to speak, between the
litigants and to indicate fairly the nature of the claims or defenses of both parties, a party cannot
subsequently take a position contrary to, or inconsistent, with his pleadings. 32 It is a matter of law that
when a party adopts a particular theory and the case is tried and decided upon that theory in the court
below, he will not be permitted to change his theory on appeal. The case will be reviewed and
decided on that theory and not approached and resolved from a different point of view. To permit a
party to change his theory on appeal will be unfair to the adverse party.33
At any rate, after a careful examination of the records, the Court finds that the CA did not err in finding
that respondents were regular employees, not project employees. A project employee is one whose
"employment has been fixed for a specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of the
season."34 Before an employee hired on a per-project basis can be dismissed, a report must be made
to the nearest employment office, of the termination of the services of the workers every time
completes a project, pursuant to Policy Instruction No. 20. 35
In the present case, respondents cannot be classified as project employees, since they worked
continuously for petitioners from three to twelve years without any mention of a "project" to which they
were specifically assigned. While they had designations as "foreman," "carpenter" and "mason," they
performed work other than carpentry or masonry. They were tasked with the maintenance and repair
of the furniture, motor boats, cottages, and windbreakers and other resort facilities. There is likewise
no evidence of the project employment contracts covering respondents' alleged periods of
employment. More importantly, there is no evidence that petitioners reported the termination of
respondents' supposed project employment to the DOLE as project employees. Department Order
No. 19, as well as the old Policy Instructions No. 20, requires employers to submit a report of an
employee's termination to the nearest public employment office every time his employment is
terminated due to a completion of a project. Petitioners' failure to file termination reports is an
indication that the respondents were not project employees but regular employees. 36
This Court has held that an employment ceases to be coterminous with specific projects when the
employee is continuously rehired due to the demands of employer's business and re-engaged for
many more projects without interruption.37
The Court is not persuaded by petitioners' submission that respondents' services are not necessary
or desirable to the usual trade or business of the resort. The repeated and continuing need for their
services is sufficient evidence of the necessity, if not indispensability, of their services to petitioners'
resort business.38
In Maraguinot, Jr. v. National Labor Relations Commission,39 the Court ruled that "once a project or
work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same
employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the employer, then the employee must be deemed a
regular employee, pursuant to Article 280 of the Labor Code and jurisprudence." 40
That respondents were regular employees is further bolstered by the following evidence: (a) the SSS
Quarterly Summary of Contribution Payments 41 listing respondents as employees of petitioners; (b)
the Service Record Certificates stating that respondents were employees of petitioners for periods

ranging from three to twelve years and all have given "very satisfactory performance"; 42 (c) petty cash
vouchers43 showing payment of respondents' salaries and holiday and overtime pays.
Thus, substantial evidence supported the CA finding that respondents were regular employees. Being
regular employees, they were entitled to security of tenure, and their services may not be terminated
except for causes provided by law.
Article 27944 of the Labor Code, as amended, provides that an illegally dismissed employee shall be
entitled to reinstatement, full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement.
The Court notes that the NLRC, in its earlier Decision dated August 29, 2002 which was affirmed by
the CA, computed the award for backwages from May 8, 1999 to July 31, 2002 only. It is evident that
respondents' backwages should not be limited to said period. The backwages due respondents must
be computed from the time they were unjustly dismissed until actual reinstatement to their former
positions. Thus, until petitioners implement the reinstatement aspect, its obligation to respondents,
insofar as accrued backwages and other benefits are concerned, continues to accumulate.
The fact that the CA failed to consider this when it affirmed the August 29, 2002 decision of the NLRC
or that respondents themselves did not appeal the CA Decision on this matter, does not bar this Court
from ordering its modification. While as a general rule, a party who has not appealed is not entitled to
affirmative relief other than the ones granted in the decision of the court below, this Court is imbued
with sufficient authority and discretion to review matters, not otherwise assigned as errors on appeal,
if it finds that their consideration is necessary in arriving at a complete and just resolution of the case
or to serve the interests of justice or to avoid dispensing piecemeal justice. 45
Besides, substantive rights like the award of backwages resulting from illegal dismissal must not be
prejudiced by a rigid and technical application of the rules. 46 The computation of the award for
backwages from the time compensation was withheld up to the time of actual reinstatement is a mere
legal consequence of the finding that respondents were illegally dismissed by petitioners.
WHEREFORE, the petition is DENIED. The assailed Decision dated July 30, 2004 and Resolution
dated February 2, 2005 of the Court of Appeals in CA-G.R. SP No. 78620
are AFFIRMED with MODIFICATIONthat the award for backwages should be computed from the
time compensation was withheld up to the time of actual reinstatement.
Double costs against petitioners.
SO ORDERED.
7. DMCI VS JAMIN
G.R. No. 192514

April 18, 2012

D.M. CONSUNJI, INC. and/or DAVID M. CONSUNJI, Petitioners,


vs.
ESTELITO L. JAMIN, Respondent.
DECISION
BRION, J.:

We resolve the present appeal1 from the decision2 dated February 26, 2010 and the resolution 3 dated
June 3, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 100099.
The Antecedents
On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a construction company, hired
respondent Estelito L. Jamin as a laborer. Sometime in 1975, Jamin became a helper carpenter.
Since his initial hiring, Jamins employment contract had been renewed a number of times. 4 On March
20, 1999, his work at DMCI was terminated due to the completion of the SM Manila project. This
termination marked the end of his employment with DMCI as he was not rehired again.
On April 5, 1999, Jamin filed a complaint5 for illegal dismissal, with several money claims (including
attorneys fees), against DMCI and its President/General Manager, David M. Consunji. Jamin alleged
that DMCI terminated his employment without a just and authorized cause at a time when he was
already 55 years old and had no independent source of livelihood. He claimed that he rendered
service to DMCI continuously for almost 31 years. In addition to the schedule of projects (where he
was assigned) submitted by DMCI to the labor arbiter,6 he alleged that he worked for three other
DMCI projects: Twin Towers, Ritz Towers, from July 29, 1980 to June 12, 1982; New Istana Project,
B.S.B. Brunei, from June 23, 1982 to February 16, 1984; and New Istana Project, B.S.B. Brunei, from
January 24, 1986 to May 25, 1986.
DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from the start of his
engagement in 1968 until the completion of its SM Manila project on March 20, 1999 where Jamin
last worked. With the completion of the project, it terminated Jamins employment. It alleged that it
submitted a report to the Department of Labor and Employment (DOLE) everytime it terminated
Jamins services.
The Compulsory Arbitration Rulings
In a decision dated May 27, 2002,7 Labor Arbiter Francisco A. Robles dismissed the complaint for lack
of merit. He sustained DMCIs position that Jamin was a project employee whose services had been
terminated due to the completion of the project where he was assigned. The labor arbiter added that
everytime DMCI rehired Jamin, it entered into a contract of employment with him. Moreover, upon
completion of the phase of the project for which Jamin was hired or upon completion of the project
itself, the company served a notice of termination to him and a termination report to the DOLE
Regional Office. The labor arbiter also noted that Jamin had to file an application if he wanted to be
re-hired.
On appeal by Jamin, the National Labor Relations Commission (NLRC), in its decision of April 18,
2007,8dismissed the appeal and affirmed the labor arbiters finding that Jamin was a project
employee. Jamin moved for reconsideration, but the NLRC denied the motion in a resolution dated
May 30, 2007.9 Jamin sought relief from the CA through a petition for certiorari under Rule 65 of the
Rules of Court.
The CA Decision

On February 26, 2010, the CA Special Fourth Division rendered the disputed decision 10 reversing the
compulsory arbitration rulings. It held that Jamin was a regular employee. It based its conclusion on:
(1) Jamins repeated and successive rehiring in DMCIs various projects; and (2) the nature of his
work in the projects he was performing activities necessary or desirable in DMCIs construction
business. Invoking the Courts ruling in an earlier case, 11the CA declared that the pattern of Jamins
rehiring and the recurring need for his services are sufficient evidence of the necessity and
indispensability of such services to DMCIs business or trade, a key indicator of regular employment.
It opined that although Jamin started as a project employee, the circumstances of his employment
made it regular or, at the very least, has ripened into a regular employment.
The CA considered the project employment contracts Jamin entered into with DMCI for almost 31
years not definitive of his actual status in the company. It stressed that the existence of such
contracts is not always conclusive of a workers employment status as this Court explained in Liganza
v. RBL Shipyard Corporation, et al.12 It found added support from Integrated Contractor and Plumbing
Works, Inc. v. NLRC,13 where the Court said that while there were several employment contracts
between the worker and the employer, in all of them, the worker performed tasks which were usually
necessary or desirable in the usual business or trade of the employer and, a review of the workers
assignments showed that he belonged to a work pool, making his employment regular.
Contrary to DMCIs submission and the labor arbiters findings, the CA noted that DMCI failed to
submit a report to the DOLE Regional Office everytime Jamins employment was terminated, as
required by DOLE Policy Instructions No. 20. The CA opined that DMCIs failure to submit the reports
to the DOLE is an indication that Jamin was not a project employee. It further noted that DOLE
Department Order No. 19, Series of 1993, which superseded DOLE Policy Instructions No. 20,
provides that the termination report is one of the indicators of project employment. 14
Having found Jamin to be a regular employee, the CA declared his dismissal illegal as it was without
a valid cause and without due process. It found that DMCI failed to provide Jamin the required notice
before he was dismissed. Accordingly, the CA ordered Jamins immediate reinstatement with
backwages, and without loss of seniority rights and other benefits.
DMCI moved for reconsideration, but the CA denied the motion in its resolution of June 3,
2010.15 DMCI is now before the Court through a petition for review on certiorari under Rule 45 of the
Rules of Court.16
The Petition
DMCI seeks a reversal of the CA rulings on the ground that the appellate court committed a grave
error in annulling the decisions of the labor arbiter and the NLRC. It presents the following arguments:
1. The CA misapplied the phrase "usually necessary or desirable in the usual business or trade
of the employer" when it considered Jamin a regular employee. The definition of a regular
employee under Article 280 of the Labor Code does not apply to project employment or
"employment which has been fixed for a specific project," as interpreted by the Supreme Court
in Fernandez v. National Labor Relations Commission 17 and D.M. Consunji, Inc. v. NLRC.18 It

maintains the same project employment methodology in its business operations and it cannot
understand why a different ruling or treatment would be handed down in the present case.
2. There is no work pool in DMCIs roster of project employees. The CA erred in insinuating
that Jamin belonged to a work pool when it cited Integrated Contractor and Plumbing Works,
Inc. ruling.19 At any rate, Jamin presented no evidence to prove his membership in any work
pool at DMCI.
3. The CA misinterpreted the rules requiring the submission of termination of employment
reports to the DOLE. While the report is an indicator of project employment, as noted by the
CA, it is only one of several indicators under the rules. 20 In any event, the CA penalized DMCI
for a few lapses in its submission of reports to the DOLE with a "very rigid application of the
rule despite the almost unanimous proofs surrounding the circumstances of private respondent
being a project employee as shown by petitioners documentary evidence." 21
4. The CA erred in holding that Jamin was dismissed without due process for its failure to
serve him notice prior to the termination of his employment. As Jamin was not dismissed for
cause, there was no need to furnish him a written notice of the grounds for the dismissal and
neither is there a need for a hearing. When there is no more job for Jamin because of the
completion of the project, DMCI, under the law, has the right to terminate his employment
without incurring any liability. Pursuant to the rules implementing the Labor Code, 22 if the
termination is brought about by the completion of the contract or phase thereof, no prior notice
is required.
Finally, DMCI objects to the CAs reversal of the findings of the labor arbiter and the NLRC in the
absence of a showing that the labor authorities committed a grave abuse of discretion or that
evidence had been disregarded or that their rulings had been arrived at arbitrarily.
The Case for Jamin
In his Comment (to the Petition),23 Jamin prays that the petition be denied for having been filed out of
time and for lack of merit.
He claims, in support of his plea for the petitions outright dismissal, that DMCI received a copy of the
CA decision (dated February 26, 2010) on March 4, 2010, as stated by DMCI itself in its motion for
reconsideration of the decision.24 Since DMCI filed the motion with the CA on March 22, 2010, it is
obvious, Jamin stresses, that the motion was filed three days beyond the 15-day reglementary period,
the last day of which fell on March 19, 2010. He maintains that for this reason, the CAs February 26,
2010 decision had become final and executory, as he argued before the CA in his Comment and
Opposition (to DMCIs Motion for Reconsideration).25
On the merits of the case, Jamin submits that the CA committed no error in nullifying the rulings of the
labor arbiter and the NLRC. He contends that DMCI misread this Courts rulings in Fernandez v.
National Labor Relations Commission, et al.26 and D.M. Consunji, Inc. v. NLRC,27 cited to support its
position that Jamin was a project employee.

Jamin argues that in Fernandez, the Court explained that the proviso in the second paragraph of
Article 280 of the Labor Code relates only to casual employees who shall be considered regular
employees if they have rendered at least one year of service, whether such service is continuous or
broken. He further argues that in Fernandez, the Court held that inasmuch as the documentary
evidence clearly showed gaps of a month or months between the hiring of Ricardo Fernandez in the
numerous projects where he was assigned, it was the Courts conclusion that Fernandez had not
continuously worked for the company but only intermittently as he was hired solely for specific
projects.28 Also, in Fernandez, the Court affirmed its rulings in earlier cases that "the failure of the
employer to report to the [nearest] employment office the termination of workers everytime a project is
completed proves that the employees are not project employees." 29
Jamin further explains that in the D.M. Consunji, Inc. case, the company deliberately omitted portions
of the Courts ruling stating that the complainants were not claiming that they were regular
employees; rather, they were questioning the termination of their employment before the completion
of the project at the Cebu Super Block, without just cause and due process. 30
In the matter of termination reports to the DOLE, Jamin disputes DMCIs submission that it committed
only few lapses in the reportorial requirement. He maintains that even the NLRC noted that there
were no termination reports with the DOLE Regional Office after every completion of a phase of work,
although the NLRC considered that the report is required only for statistical purposes. He, therefore,
contends that the CA committed no error in holding that DMCIs failure to submit reports to the DOLE
was an indication that he was not a project employee.
Finally, Jamin argues that as a regular employee of DMCI for almost 31 years, the termination of his
employment was without just cause and due process.
The Courts Ruling
The procedural issue
Was DMCIs appeal filed out of time, as Jamin claims, and should have been dismissed outright? The
records support Jamins submission on the issue.
DMCI received its copy of the February 26, 2010 CA decision on March 4, 2010 (a Thursday), as
indicated in its motion for reconsideration of the decision itself, 31 not on March 5, 2010 (a Friday), as
stated in the present petition.32 The deadline for the filing of the motion for reconsideration was on
March 19, 2010 (15 days from receipt of copy of the decision), but it was filed only on March 22, 2010
or three days late. Clearly, the motion for reconsideration was filed out of time, thereby rendering the
CA decision final and executory.
Necessarily, DMCIs petition for review on certiorari is also late as it had only fifteen (15) days from
notice of the CA decision to file the petition or the denial of its motion for reconsideration filed in due
time.33 The reckoning date is March 4, 2010, since DMCIs motion for reconsideration was not filed in
due time. We see no point in exercising liberality and disregarding the late filing as we did in Orozco
v. Fifth Division of the Court of Appeals,34 where we ruled that "[t]echnicality should not be allowed to
stand in the way of equitably and completely resolving the rights and obligations of the parties." The

petition lacks merit for its failure to show that the CA committed any reversible error or grave abuse of
discretion when it reversed the findings of the labor arbiter and the NLRC.
As earlier mentioned, Jamin worked for DMCI for almost 31 years, initially as a laborer and, for the
most part, as a carpenter. Through all those years, DMCI treated him as a project employee, so that
he never obtained tenure. On the surface and at first glance, DMCI appears to be correct. Jamin
entered into a contract of employment (actually an appointment paper to which he signified his
conformity) with DMCI either as a field worker, a temporary worker, a casual employee, or a project
employee everytime DMCI needed his services and a termination of employment paper was served
on him upon completion of every project or phase of the project where he worked. 35 DMCI would then
submit termination of employment reports to the DOLE, containing the names of a number of
employees including Jamin.36 The NLRC and the CA would later on say, however, that DMCI failed to
submit termination reports to the DOLE.
The CA pierced the cover of Jamins project employment contract and declared him a regular
employee who had been dismissed without cause and without notice. To reiterate, the CAs findings
were based on: (1) Jamins repeated and successive engagements in DMCIs construction projects,
and (2) Jamins performance of activities necessary or desirable in DMCIs usual trade or business.
We agree with the CA. In Liganza v. RBL Shipyard Corporation, 37 the Court held that "[a]ssuming,
without granting[,] that [the] petitioner was initially hired for specific projects or undertakings, the
repeated re-hiring and continuing need for his services for over eight (8) years have undeniably made
him a regular employee." We find the Liganza ruling squarely applicable to this case, considering that
for almost 31 years, DMCI had repeatedly, continuously and successively engaged Jamins services
since he was hired on December 17, 1968 or for a total of 38 times 35 as shown by the schedule
of projects submitted by DMCI to the labor arbiter 38 and three more projects or engagements added
by Jamin, which he claimed DMCI intentionally did not include in its schedule so as to make it appear
that there were wide gaps in his engagements. One of the three projects was local, the Ritz
Towers,39 from July 29, 1980 to June 12, 1982, while the other two were overseas the New Istana
Project in Brunei, Darussalam, from June 23, 1982 to February 16, 1984; 40 and again, the New Istana
Project, from January 24, 1986 to May 25, 1986. 41
We reviewed Jamins employment contracts as the CA did and we noted that while the contracts
indeed show that Jamin had been engaged as a project employee, there was an almost unbroken
string of Jamins rehiring from December 17, 1968 up to the termination of his employment on March
20, 1999. While the history of Jamins employment (schedule of projects) 42 relied upon by DMCI
shows a gap of almost four years in his employment for the period between July 28, 1980 (the
supposed completion date of the Midtown Plaza project) and June 13, 1984 (the start of the IRRI
Dorm IV project), the gap was caused by the companys omission of the three projects above
mentioned.
For not disclosing that there had been other projects where DMCI engaged his services, Jamin
accuses the company of suppressing vital evidence that supports his contention that he rendered
service in the companys construction projects continuously and repeatedly for more than three
decades. The non-disclosure might not have constituted suppression of evidence it could just have
been overlooked by the company but the oversight is unfair to Jamin as the non-inclusion of the

three projects gives the impression that there were substantial gaps not only of several months but
years in his employment with DMCI.
Thus, as Jamin explains, the Ritz Tower Project (July 29, 1980 to June 12, 1982) and the New Istana
Project (June 23, 1982 to February 16, 1984) would explain the gap between the Midtown Plaza
project (September 3, 1979 to July 28, 1980) and the IRRI Dorm IV project (June 13, 1984 to March
12, 1985) and the other New Istana Project (January 24, 1986 to May 25, 1986) would explain the
gap between P. 516 Hanger (September 13, 1985 to January 23, 1986) and P. 516 Maint (May 26,
1986 to November 18, 1987).
To reiterate, Jamins employment history with DMCI stands out for his continuous, repeated and
successive rehiring in the companys construction projects. In all the 38 projects where DMCI
engaged Jamins services, the tasks he performed as a carpenter were indisputably necessary and
desirable in DMCIs construction business. He might not have been a member of a work pool as
DMCI insisted that it does not maintain a work pool, but his continuous rehiring and the nature of his
work unmistakably made him a regular employee. In Maraguinot, Jr. v. NLRC, 43 the Court held that
once a project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired
by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary
and indispensable to the usual business or trade of the employer, then the employee must be
deemed a regular employee.
Further, as we stressed in Liganza,44 "[r]espondent capitalizes on our ruling in D.M. Consunji, Inc. v.
NLRC which reiterates the rule that the length of service of a project employee is not the controlling
test of employment tenure but whether or not the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the
engagement of the employee."
"Surely, length of time is not the controlling test for project employment. Nevertheless, it is vital in
determining if the employee was hired for a specific undertaking or tasked to perform functions vital,
necessary and indispensable to the usual business or trade of the employer. Here, [private]
respondent had been a project employee several times over. His employment ceased to be
coterminous with specific projects when he was repeatedly re-hired due to the demands of
petitioners business."45 Without doubt, Jamins case fits squarely into the employment situation just
quoted.
The termination reports
With our ruling that Jamin had been a regular employee, the issue of whether DMCI submitted
termination of employment reports, pursuant to Policy Instructions No. 20 (Undated 46), as superseded
by DOLE Department Order No. 19 (series of 1993), has become academic. DOLE Policy
Instructions No. 20 provides in part:
Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the number
of projects in which they have been employed by a particular construction company. Moreover, the
company is not required to obtain a clearance from the Secretary of Labor in connection with such

termination. What is required of the company is a report to the nearest Public Employment Office for
statistical purposes.47
To set the records straight, DMCI indeed submitted reports to the DOLE but as pointed out by Jamin,
the submissions started only in 1992.48 DMCI explained that it submitted the earlier reports (1982),
but it lost and never recovered the reports. It reconstituted the lost reports and submitted them to the
DOLE in October 1992; thus, the dates appearing in the reports. 49
Is David M. Consunji, DMCIs
President/General Manager, liable
for Jamins dismissal?
While there is no question that the company is liable for Jamins dismissal, we note that the CA made
no pronouncement on whether DMCIs President/General Manager, a co-petitioner with the company,
is also liable.50Neither had the parties brought the matter up to the CA nor with this Court. As there is
no express finding of Mr. Consunjis involvement in Jamins dismissal, we deem it proper to absolve
him of liability in this case.
As a final point, it is well to reiterate a cautionary statement we made in Maraguinot, 51 thus:
At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a
duty to re-hire a project employee even after completion of the project for which he was hired. The
import of this decision is not to impose a positive and sweeping obligation upon the employer to rehire project employees. What this decision merely accomplishes is a judicial recognition of the
employment status of a project or work pool employee in accordance with what is fait accompli, i.e.,
the continuous re-hiring by the employer of project or work pool employees who perform tasks
necessary or desirable to the employers usual business or trade.
In sum, we deny the present appeal for having been filed late and for lack of any reversible
error.1wphi1 We see no point in extending any liberality by disregarding the late filing as the petition
lacks merit.
WHEREFORE, premises considered, the petition is hereby DENIED for late filing and for lack of
merit. The decision dated February 26, 2010 and the resolution dated June 3, 2010 of the Court of
Appeals are AFFIRMED. Petitioner David M. Consunji is absolved of liability in this case.
SO ORDERED.
8. HACIENDA FATIMA VS NATIONAL FEDERATION OF SUGARCANE WORKERS
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 re-employed. [14]
The CA did not err when it ruled that Mercado v. NLRC[15] was not applicable to the case at bar. In
the earlier case, the workers were required to perform phases of agricultural work for a definite period
of time, after which their services would be available to any other farm owner. They were not hired
regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase
thereof. On the other hand, herein respondents, having performed the same tasks for petitioners
every season for several years, are considered the 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.

9. HANJIN VS IBANEZ
HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD., HAK KON KIM and/or JHUNIE
ADAJAR,petitioners,
vs.
FELICITO IBAEZ, ALIGWAS CAROLINO, ELMER GACULA, ENRIQUE DAGOTDOT AND RUEL
CALDA,respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
Decision,1 dated 28 July 2005, rendered by the Court of Appeals, reversing the
Decision,2 promulgated by the National Labor Relations Commission (NLRC) on 7 May 2004. The
Court of Appeals, in its assailed Decision, declared that respondents are regular employees who were
illegally dismissed by petitioner Hanjin Heavy Industries and & Construction Company, Limited
(HANJIN).
Petitioner HANJIN is a foreign company duly registered with the Securities and Exchange
Commission to engage in the construction business in the Philippines. Petitioners Hak Kon Kim and
Jhunie Adajar were employed as Project Director and Supervisor, respectively, by HANJIN.
On 11 April 2002, respondents Felicito Ibaez, Aligwas Carolino, Elmer Gacula, Enrique Dagotdot,
Ruel Calda, and four other co-workers filed a complaint before the NLRC, docketed as NLRC Case
No. RAB-IV-04-15515-02-RI, for illegal dismissal with prayer for reinstatement and full backwages
against petitioners. In their Position Paper dated 29 July 2002, respondents alleged that HANJIN
hired them for various positions on different dates, hereunder specified:
Position

Felicito Ibaez

Tireman

Elmer Gacula

Crane Operator

Date of
Employment
7 March 2000
1992

Enrique Dagotdot

Welder

1995

Aligwas Carolino

Welder

September 1994

Ruel Calda

Warehouseman

26 January
19963

Respondents stated that their tasks were usual and necessary or desirable in the usual business or
trade of HANJIN. Respondents additionally averred that they were employed as members of a work
pool from which HANJIN draws the workers to be dispatched to its various construction projects; with
the exception of Ruel Calda, who as a warehouseman was required to work in HANJIN's main
office.4 Among the various construction projects to which they were supposedly assigned,
respondents named the North Harbor project in 1992-1994; Manila International Port in 1994-1996;
Batangas Port in 1996-1998; the Batangas Pier, and La Mesa Dam. 5
On 15 April 2002, Hanjin dismissed respondents from employment. Respondents claimed that at the
time of their dismissal, HANJIN had several construction projects that were still in progress, such as
Metro Rail Transit (MRT) II and MRT III, and continued to hire employees to fill the positions vacated
by the respondents.6
Petitioners denied the respondents' allegations. They maintained that respondents were hired as
project employees for the construction of the LRT/MRT Line 2 Package 2 and 3 Project. HANJIN and
respondents purportedly executed contracts of employment, in which it was clearly stipulated that the
respondents were to be hired as project employees for a period of only three months, but that the
contracts may be renewed, to wit:
Article II
TERM OF AGREEMENT
This Agreement takes effect xxx for the duration of three (3) months and shall be considered
automatically renewed in the absence of any Notice of Termination by the EMPLOYER to the
PROJECT EMPLOYEE. This AGREEMENT automatically terminates at the completion of the
project or any particular phase thereof, depending upon the progress of the project.7
However, petitioners failed to furnish the Labor Arbiter a copy of said contracts of employment.
Petitioners asserted that respondents were duly informed of HANJIN's policies, rules and regulations,
as well as the terms of their contracts. Copies of the employees' rules and regulations were posted on
the bulletin boards of all HANJIN campsite offices. 8
Petitioners further emphasized that prior to 15 April 2002, Hak Kon Kim, HANJIN's Project Director,
notified respondents of the company's intention to reduce its manpower due to the completion of the
LRT/MRT Line 2 Package 2 and 3 Project. Respondents were among the project employees who
were thereafter laid off, as shown in the Establishment Termination Report filed by HANJIN before the
Department of Labor and Employment (DOLE) Regional Office (IV) in Cainta, Rizal on 11 April 2002. 9

Finally, petitioners insist that in accordance with the usual practice of the construction industry, a
completion bonus was paid to the respondents. 10 To support this claim, they offered as evidence
payroll records for the period 4 April 2002 to 20 April 2002, with the words "completion bonus" written
at the lower left corner of each page.11
Petitioners attached copies of the Quitclaims, 12 executed by the respondents, which uniformly stated
that the latter received all wages and benefits that were due them and released HANJIN and its
representatives from any claims in connection with their employment. These Quitclaims also
contained Clearance Certificates which confirmed that the employees concerned were cleared of all
accountabilities at the close of the working hours on 15 April 2002.
In their Reply13 dated 27 August 2002, respondents vehemently refuted having signed any written
contract stating that they were project employees.
The Labor Arbiter found merit in the respondents' complaint and declared that they were regular
employees who had been dismissed without just and valid causes and without due process. It ruled
that HANJIN's allegation that respondents were project employees was negated by its failure to
present proof thereof. It also noted that a termination report should be presented after the completion
of every project or a phase thereof and not just the completion of one of these projects. The Labor
Arbiter further construed the number of years that respondents rendered their services for HANJIN as
an indication that respondents were regular, not project, employees. 14 The Labor Arbiter ordered in its
Decision, dated 30 April 2003, that:
WHEREFORE, premises considered, judgment is hereby rendered as follows;
1) Declaring respondent HANJIN HEAVY INDUSTRIES & CONSTRUCTION CO. LTD. guilty of
illegal dismissal
>2) Ordering respondent to reinstate all the complainants to positions previously occupied by
them with full backwages from the time compensation was withheld from them up to date of
actual reinstatement in the following amount (as of date of this decision):
1. Felicito Ibaez

P 88,020.83

2. Elmer A. Gacula

88,020.83

3. Rizalino De Vera

88,020.83

4. Enrique Dagotdot

88,020.83

5. Carolino Aligwas

88,020.83

6. Ruel Calda

88,020.83

7. Roldan Lanojan

88,020.83

8. Pascual Caranguian

88,020.83

9. Carmelito Dalumangcad

88,020.83

Total

P792, 187.47

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


the following sum:
Felicito Ibaez

P 19,500.00

Elmer A. Gacula

71,500.00

Rizaliano De Vera

19,500.00

Enrique Dagotdot

52,000.00

Carolino Aligwas

58,500.00

Ruel Calda

45,500.00

Roldan Lanojan

19,500.00

Pascual Caranguian

26,000.00

Carmelito Dalumangcad

78,000.00

Total

P390,000.00

4) Ordering respondent to pay each complainant P50,000.00 for moral damages


and P30,000.00 as exemplary damages, or the total sum of P450,000.00 and P270,000.00,
respectively; and

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


All other claims are DISMISSED for lack of merit.15
Petitioners filed an appeal before the NLRC. In their Notice of Appeal/Memorandum Appeal 16 dated 5
July 2003, petitioners discarded their earlier claim that respondents signed employment contracts,
unequivocally informing them of their status as project employees. Nonetheless, they still contended
that the absence of respondents' contracts of employment does not vest the latter with regular status.
The NLRC reversed the Labor Arbiter's Decision dated 30 April 2003, and pronounced that the
respondents were project employees who were legally terminated from employment. 17 The NLRC
gave probative value to the Termination Report submitted by HANJIN to the DOLE, receipts signed by
respondents for their completion bonus upon phase completion, and the Quitclaims executed by the
respondents in favor of HANJIN. The NLRC also observed that the records were devoid of any proof
to support respondents' allegation that they were employed before 1997, the time when construction
work on the MRT started. Lastly, it overruled the Labor Arbiter's award of moral and exemplary
damages.18 The dispositive part of the Decision dated 7 May 2004 of the NLCR states that:
WHEREFORE, in view of the foregoing, the decision subject of appeal is hereby REVERSED
and SET ASIDE and a new one is entered DISMISSING complainants' complaint for lack of
merit.19
On appeal, the Court of Appeals reversed the NLRC Decision, dated 7 May 2004. The appellate court
looked with disfavor at the change in HANJIN's initial position before the Labor Arbiter-from its initial
argument that respondents executed employment contracts; to its modified argument during its
appeal before the NLRC-that respondents could still be categorized as project workers despite the
absence of contracts of employment. Additionally, it adjudged the Termination Report as inconclusive
proof that respondents were project employees. Emphasizing that the employer had the burden of
proving the legality of the dismissal, the appellate court ruled that respondents were regular
employees and upheld the Labor Arbiter's finding that they were illegally dismissed. The Court of
Appeals, however, adopted the NLRC's deletion of the award of damages. 20 The decretal portion of
the Decision of the Court of Appeals reads:
UPON THE VIEW WE TAKE OF THIS CASE, THUS, the challenged decision and resolution
of the NLRC must be, as they hereby are, REVERSED and SET ASIDE. The decision of the
Labor Arbiter is hereby REINSTATED relative to the award to petitioners of full backwages,
separation pay in lieu of reinstatement, and litigation expenses, but not with respect to the
awards for moral damages or for exemplary damages, both of which are hereby DELETED.
Without costs in this instance.21
Hence, the present Petition, in which the following issues are raised:
I
WHETHER OR NOT THE FINDINGS OF THE HONORABLE COURT OF APPEALS ARE
MERE CONCLUSIONS WITHOUT DELVING INTO THE RECORDS OF THE CASE AND
EXAMINE (sic) FOR ITSELF THE QUESTIONED FINDINGS OF THE LABOR ARBITER AND
THE NATIONAL LABOR RELATIONS COMMISSION CONTRARY TO THE RULING IN THE
CASE OF AGABON VS. NLRC, ET. AL. 442 SCRA 573.
II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS MANIFESTLY


OVERLOOKED CERTAIN RELEVANT FACTS WHICH, IF PROPERLY CONSIDERED,
WOULD RESULT IN A DIFFERENT CONCLUSION.
III
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING
THE PERTINENT PROVISIONS OF POLICY INSTRUCTIONS NO. 20, AS AMENDED BY
DEPARTMENT ORDER NO. 19 SERIES OF 1993 IN RELATION TO ARTICLE 280 OF THE
LABOR CODE IN CONSIDERING WHETHER OR NOT RESPONDENTS ARE PROJECT
EMPLOYEES.
IV
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS WERE
ILLEGALLY DISMISSED.22
The Petition is without merit.
As a general rule, the factual findings of the Court of Appeals are binding upon the Supreme Court.
One exception to this rule is when the factual findings of the former are contrary to those of the trial
court or the lower administrative body, as the case may be. The main question that needs to be
settled-whether respondents were regular or project employees-is factual in nature. Nevertheless, this
Court is obliged to resolve it due to the incongruent findings of the NLRC and those of the Labor
Arbiter and the Court of Appeals. 23
Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee" thus:
Article 280. Regular and Casual Employment-The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the engagement of
the employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists.
(Emphasis supplied.)
From the foregoing provision, the principal test for determining whether particular employees are
properly characterized as "project employees" as distinguished from "regular employees" is whether
or not the project employees were assigned to carry out a "specific project or undertaking," the
duration and scope of which were specified at the time the employees were engaged for that
project.24
In a number of cases, 25 the Court has held that the length of service or the re-hiring of construction
workers on a project-to-project basis does not confer upon them regular employment status, since
their re-hiring is only a natural consequence of the fact that experienced construction workers are

preferred. Employees who are hired for carrying out a separate job, distinct from the other
undertakings of the company, the scope and duration of which has been determined and made
known to the employees at the time of the employment, are properly treated as project employees
and their services may be lawfully terminated upon the completion of a project. 26 Should the terms of
their employment fail to comply with this standard, they cannot be considered project employees.
In Abesco Construction and Development Corporation v. Ramirez,27 which also involved a
construction company and its workers, this Court considered it crucial that the employees were
informed of their status as project employees:
The principal test for determining whether employees are "project employees" or "regular
employees" is whether they are assigned to carry out a specific project or undertaking, the
duration and scope of which are specified at the time they are engaged for that project. Such
duration, as well as the particular work/service to be performed, is defined in an employment
agreement and is made clear to the employees at the time of hiring.
In this case, petitioners did not have that kind of agreement with respondents. Neither did they
inform respondents of the nature of the latters' work at the time of hiring. Hence, for failure of
petitioners to substantiate their claim that respondents were project employees, we are
constrained to declare them as regular employees.
In Caramol v. National Labor Relations Commission,28 and later reiterated in Salinas, Jr. v. National
Labor Relations Commission,29 the Court markedly stressed the importance of the
employees' knowing consent to being engaged as project employees when it clarified that "there is no
question that stipulation on employment contract providing for a fixed period of employment such as
`project-to-project' contract is valid provided the period was agreed upon knowingly and
voluntarily by the parties, without any force, duress or improper pressure being brought to
bear upon the employee and absent any other circumstances vitiating his consent x x x."
During the proceedings before the Labor Arbiter, the petitioners' failure to produce respondents'
contracts of employment was already noted, especially after they alleged in their pleadings the
existence of such contracts stipulating that respondents' employment would only be for the duration
of three months, automatically renewed in the absence of notice, and terminated at the completion of
the project. Respondents denied having executed such contracts with HANJIN. In their appeal before
the NLRC until the present, petitioners now claim that due to a lapse in management procedure, no
such employment contracts were executed; nonetheless, the absence of a written contract does not
remove respondents from the ambit of being project employees. 30
While the absence of a written contract does not automatically confer regular status, it has been
construed by this Court as a red flag in cases involving the question of whether the workers
concerned are regular or project employees. In Grandspan Development Corporation v.
Bernardo31 and Audion Electric Co., Inc. v. National Labor Relations Commission,32 this Court took
note of the fact that the employer was unable to present employment contracts signed by the
workers, which stated the duration of the project. In another case, Raycor v. Aircontrol Systems, Inc.
v. National Labor Relations Commission,33 this Court refused to give any weight to the employment
contracts offered by the employers as evidence, which contained the signature of the president and
general manager, but not the signatures of the employees. In cases where this Court ruled that
construction workers repeatedly rehired retained their status as project employees, the employers
were able to produce employment contracts clearly stipulating that the workers' employment was
coterminous with the project to support their claims that the employees were notified of the scope and
duration of the project.34

Hence, even though the absence of a written contract does not by itself grant regular status to
respondents, such a contract is evidence that respondents were informed of the duration and scope
of their work and their status as project employees. In this case, where no other evidence was
offered, the absence of an employment contract puts into serious question whether the employees
were properly informed at the onset of their employment status as project employees. It is doctrinally
entrenched that in illegal dismissal cases, the employer has the burden of proving with clear,
accurate, consistent and convincing evidence that a dismissal was valid. 35 Absent any other proof that
the project employees were informed of their status as such, it will be presumed that they are regular
employees in accordance with Clause 3.3(a) of Department Order No. 19, Series of 1993, which
states that:
a) Project employees whose aggregate period of continuous employment in a
construction company is at least one year shall be considered regular employees, in the
absence of a "day certain" agreed upon by the parties for the termination of their
relationship. Project employees who have become regular shall be entitled to separation pay.
A "day" as used herein, is understood to be that which must necessarily come, although it may
not be known exactly when. This means that where the final completion of a project or phase
thereof is in fact determinable and the expected completion is made known to the employee,
such project employee may not be considered regular, notwithstanding the one-year duration
of employment in the project or phase thereof or the one-year duration of two or more
employments in the same project or phase of the project. (Emphasis provided.)
Petitioners call attention to the fact that they complied with two of the indicators of project
employment, as prescribed under Section 2.2(e) and (f) of Department Order No. 19, Series of 1993,
entitled Guidelines Governing the Employment of Workers in the Construction Industry, issued by the
DOLE:
2.2 Indicators of project employment. - Either one or more of the following circumstances,
among others, may be considered as indicators that an employee is a project employee.
(a) The duration of the specific/identified undertaking for which the worker is engaged is
reasonably determinable.
(b) Such duration, as well as the specific work/service to be performed, is defined in an
employment agreement and is made clear to the employee at the time of hiring.
(c) The work/service performed by the employee is in connection with the particular
project/undertaking for which he is engaged.
(d) The employee, while not employed and awaiting engagement, is free to offer his services to
any other employer.
(e) The termination of his employment in the particular project/undertaking is reported
to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction
over the workplace within 30 days following the date of his separation from work, using
the prescribed form on employees' terminations/dismissals/suspensions.
(f) An undertaking in the employment contract by the employer to pay completion bonus
to the project employee as practiced by most construction companies. (Emphasis
provided.)

Petitioners argue that the Termination Report filed before the DOLE Regional Office (IV) in Cainta,
Rizal on 11 April 2002 signifies that respondents' services were engaged merely for the LRT/MRT
Line 2 Package 2 and 3 Project.
Given the particular facts established in this case, petitioners' argument fails to persuade this Court.
Petitioners were not able to offer evidence to refute or controvert the respondents' claim that they
were assigned to various construction projects, particularly the North Harbor Project in 1992-1994;
Manila International Port in 1994-1996; Batangas Port in 1996-1998; the Batangas Pier; and La Mesa
Dam.36 Had respondents' allegations been false, petitioners could simply present as evidence
documents and records in their custody to disprove the same, i.e., payroll for such projects or
termination reports, which do not bear respondents' names. Petitioners, instead, chose to remain
vague as to the circumstances surrounding the hiring of the respondents. This Court finds it unusual
that petitioners cannot even categorically state the exact year when HANJIN employed respondents.
It also bears to note that petitioners did not present other Termination Reports apart from that filed on
11 April 2002. The failure of an employer to file a Termination Report with the DOLE every time a
project or a phase thereof is completed indicates that respondents were not project
employees.37 Employers cannot mislead their employees, whose work is necessary and desirable in
the former's line of business, by treating them as though they are part of a work pool from which
workers could be continually drawn and then assigned to various projects and thereafter denied
regular status at any time by the expedient act of filing a Termination Report. This would constitute a
practice in which an employee is unjustly precluded from acquiring security of tenure, contrary to
public policy, morals, good customs and public order.38
In this case, only the last and final termination of petitioners was reported to the DOLE. If respondents
were actually project employees, petitioners should have filed as many Termination Reports as there
were construction projects actually finished and for which respondents were employed. Thus, a lone
Termination Report filed by petitioners only upon the termination of the respondents' final project, and
after their previous continuous employment for other projects, is not only unconvincing, but even
suspicious.
Petitioners insist that the payment to the respondents of a completion bonus indicates that
respondents were project employees. To support their claim, petitioners presented payroll records for
the period 4 April 2002 to 20 April 2002, with the words "completion bonus" written at the lower left
corner of each page.39 The amount paid to each employee was equivalent to his fifteen-day salary.
Respondents, however, deny receiving any such amount.
Assuming that petitioners actually paid respondents a completion bonus, petitioners failed to present
evidence showing that they undertook to pay respondents such a bonus upon the completion of the
project, as provided under Section 2.2(f) of Department Order No. 19, Series of 1993. 40 Petitioners
did not even allege how the "completion bonus" was to be computed or the conditions that must be
fulfilled before it was to be given. A completion bonus, if paid as a mere afterthought, cannot be used
to determine whether or not the employment was regular or merely for a project. Otherwise, an
employer may defeat the workers' security of tenure by paying them a completion bonus at any time it
is inclined to unjustly dismiss them.
Department Order No. 19, Series of 1993, provides that in the absence of an undertaking that the
completion bonus will be paid to the employee, as in this case, the employee may be considered a
non-project employee, to wit:
3.4 Completion of the project. Project employees who are separated from work as a result of
the completion of the project or any phase thereof in which they are employed are entitled to

the pro-rata completion bonus if there is an undertaking by for the grant of such
bonus. An undertaking by the employer to pay a completion bonus shall be an indicator
that an employee is a project employee. Where there is no such undertaking, the
employee may be considered a non-project employee. The pro-rata completion bonus may
be based on the industry practice which is at least the employee's one-half (1/2) month salary
for every 12 months of service and may be put into effect for any project bid (in case of bid
projects) or tender submitted (in case of negotiated projects) thirty (30) days from the date of
issuances of these Guidelines. (Emphasis supplied.)
Furthermore, after examining the payroll documents submitted by petitioners, this Court finds that the
payments termed as "completion bonus" are not the completion bonus paid in connection with the
termination of the project. First of all, the period from 4 April 2002 to 20 April 2002, as stated in the
payrolls, bears no relevance to a completion bonus. A completion bonus is paid in connection with the
completion of the project, and is not based on a fifteen-day period. Secondly, the amount paid to each
employee as his completion bonus was uniformly equivalent to his fifteen-day wages, without
consideration of the number of years of service rendered. Section 3.4 of Department Order No. 19,
Series of 1993, provides that based on industry practice, the completion bonus is at least the
employee's one-half month salary for every twelve months of service.
Finally, the Quitclaims which the respondents signed cannot bar them from demanding what is legally
due them as regular employees. As a rule, quitclaims and waivers or releases are looked upon with
disfavor and frowned upon as contrary to public policy. They are thus ineffective to bar claims for the
full measure of a worker's legal rights, particularly when the following conditions are applicable: 1)
where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2)
where the terms of settlement are unconscionable on their face. 41To determine whether the
Quitclaims signed by respondents are valid, one important factor that must be taken into account is
the consideration accepted by respondents; the amount must constitute a reasonable settlement
equivalent to the full measure of their legal rights. 42 In this case, the Quitclaims signed by the
respondents do not appear to have been made for valuable consideration. Respondents, who are
regular employees, are entitled to backwages and separation pay and, therefore, the Quitclaims
which they signed cannot prevent them from seeking claims to which they are entitled. 43
Due to petitioners' failure to adduce any evidence showing that petitioners were project employees
who had been informed of the duration and scope of their employment, they were unable to discharge
the burden of proof required to establish that respondents' dismissal was legal and valid.
Furthermore, it is a well-settled doctrine that if doubts exist between the evidence presented by the
employer and that by the employee, the scales of justice must be tilted in favor of the latter.44 For
these reasons, respondents are to be considered regular employees of HANJIN.
Finally, in the instant case, records failed to show that HANJIN afforded respondents, as regular
employees, due process prior to their dismissal, through the twin requirements of notice and hearing.
Respondents were not served notices informing them of the particular acts for which their dismissal
was sought. Nor were they required to give their side regarding the charges made against them.
Certainly, the respondents' dismissal was not carried out in accordance with law and was, therefore,
illegal.45
IN VIEW OF THE FOREGOING, the instant Petition is DENIED. This Court AFFIRMS the assailed
Decision of the Court of Appeals in CA-G.R. SP No. 87474, promulgated on 28 July 2005, declaring
that the respondents are regular employees who have been illegally dismissed by Hanjin Heavy
Industries & Construction Company, Limited, and are, therefore, entitled to full backwages, separation
pay, and litigation expenses. Costs against the petitioners.

SO ORDERED.
10. HOLIDAY INN MANILA VS NLRC
HOLIDAY INN MANILA and/or HUBERT LINER and BABY DISQUITADO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and ELENA
HONASAN, respondents.
Inocentes, De Leon, Leogardo, Atienza, Manaye & Azucena Law Office for petitioners.
Florante M. Yambot for private respondent.

CRUZ, J.:
The employer has absolute discretion in hiring his employees in accordance with his standards of
competence and probity. This is his prerogative. Once hired, however, the employees are entitled to
the protection of the law even during the probation period and more so after they have become
members of the regular force. The employer does not have the same freedom in the hiring of his
employees as in their dismissal.
Elena Honasan applied for employment with the Holiday Inn and was on April 15, 1991, accepted for
"on-the-job training" as a telephone operator for a period of three weeks. 1 For her services, she
received food and transportation allowance. 2 On May 13, 1992, after completing her training, she was
employed on a "probationary basis" for a period of six months ending November 12,
1991. 3
Her employment contract stipulated that the Hotel could terminate her probationary employment at
any time prior to the expiration of the six-month period in the event of her failure (a) to learn or
progress in her job; (b) to faithfully observe and comply with the hotel rules and the instructions and
orders of her superiors; or (c) to perform her duties according to hotel standards.
On November 8, 1991, four days before the expiration of the stipulated deadline, Holiday Inn notified
her of her dismissal, on the ground that her performance had not come up to the standards of the
Hotel. 4
Through counsel, Honasan filed a complaint for illegal dismissal, claiming that she was already a
regular employee at the time of her separation and so was entitled to full security of tenure. 5 The
complaint was dismissed on April 22, 1992 by the Labor Arbiter, 6 who held that her separation was
justified under Article 281 of the Labor Code providing as follows:
Probationary employment shall not exceed six (6) months from the date the employee
started working, unless it is covered by an apprenticeship agreement stipulating a
longer period. The services of an employee who has been engaged on a probationary
basis may be terminated for a just cause or when he fails to qualify as a regular

employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
On appeal, this decision was reversed by the NLRC, which held that Honasan had become a regular
employee and so could not be dismissed as a probationer. 7 In its own decision dated November 27,
1992, the NLRC ordered the petitioners to reinstate Honasan "to her former position without loss of
seniority rights and other privileges with backwages without deduction and qualification."
Reconsideration was denied in a resolution dated January 26, 1993. 8
The petitioners now fault the NLRC for having entertained Honasan's appeal although it was filed out
of time and for holding that Honasan was already a regular employee at the time of her dismissal,
which was made 4 days days before the expiration of the probation period.
The petition has no merit.
On the timeliness of the appeal, it is well-settled that all notices which a party is entitled to receive
must be coursed through his counsel of record. Consequently, the running of the reglementary period
is reckoned from the date of receipt of the judgment by the counsel of the appellant. 9 Notice to the
appellant himself is not sufficient notice. 10Honasan's counsel received the decision of the Labor
Arbiter on May 18, 1992. 11 Before that, however, the appeal had already been filed by Honasan
herself, on May 8, 1992. 12 The petitioners claim that she filed it on the thirteenth but this is irrelevant.
Even if the latter date was accepted, the appeal was nevertheless still filed on time, in fact even
before the start of the reglementary period.
On the issue of illegal dismissal, we find that Honasan was placed by the petitioner on probation
twice, first during her on-the-job training for three weeks, and next during another period of six
months, ostensibly in accordance with Article 281. Her probation clearly exceeded the period of six
months prescribed by this article.
Probation is the period during which the employer may determine if the employee is qualified for
possible inclusion in the regular force. In the case at bar, the period was for three weeks, during
Honasan's on-the-job training. When her services were continued after this training, the petitioners in
effect recognized that she had passed probation and was qualified to be a regular employee.
Honasan was certainly under observation during her three-week on-the-job training. If her services
proved unsatisfactory then, she could have been dropped as early as during that period. But she was
not. On the contrary, her services were continued, presumably because they were acceptable,
although she was formally placed this time on probation.
Even if it be supposed that the probation did not end with the three-week period of on-the-job training,
there is still no reason why that period should not be included in the stipulated six-month period of
probation. Honasan was accepted for on-the-job training on April 15, 1991. Assuming that her
probation could be extended beyond that date, it nevertheless could continue only up to October 15,
1991, after the end of six months from the earlier date. Under this more lenient approach, she had

become a regular employee of Holiday Inn and acquired full security of tenure as of October 15,
1991.
The consequence is that she could no longer be summarily separated on the ground invoked by the
petitioners. As a regular employee, she had acquired the protection of Article 279 of the Labor Code
stating as follows:
Art. 279. Security of Tenure In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.
The grounds for the removal of a regular employee are enumerated in Articles 282, 283 and 284 of
the Labor Code. The procedure for such removal is prescribed in Rule XIV, Book V of the Omnibus
Rules Implementing the Labor Code. These rules were not observed in the case at bar as Honasan
was simply told that her services were being terminated because they were found to be
unsatisfactory. No administrative investigation of any kind was undertaken to justify this ground. She
was not even accorded prior notice, let alone a chance to be heard.
We find in the Hotel's system of double probation a transparent scheme to circumvent the plain
mandate of the law and make it easier for it to dismiss its employees even after they shall have
already passed probation. The petitioners had ample time to summarily terminate Honasan's services
during her period of probation if they were deemed unsatisfactory. Not having done so, they may
dismiss her now only upon proof of any of the legal grounds for the separation of regular employees,
to be established according to the prescribed procedure.
The policy of the Constitution is to give the utmost protection to the working class when subjected to
such maneuvers as the one attempted by the petitioners. This Court is fully committed to that policy
and has always been quick to rise in defense of the rights of labor, as in this case.
WHEREFORE, the petition is DISMISSED, with costs against petitioners. It is so ordered.

11. MARIWASA VS LEOGARDO


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 on certiorari 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 eigthteen-month 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 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.
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 eighteenmonth 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 in Buiser 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.

12. MILLARES VS NLRC


DOUGLAS MILLARES and ROGELIO LAGDA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, TRANS-GLOBAL MARITIME AGENCY, INC. and
ESSO INTERNATIONAL SHIPPING CO., LTD., respondents.
KAPUNAN, J.:
Petitioners Douglas Millares and Rogelio Lagda seek the nullification of the decision, dated June 1,
1993, of the public respondent National Labor Relations Commission (NLRC) rendered in POEA
Case (M) Adj 89-10-961 entitled "Douglas Millares and Rogelio Lagda v. Trans-Global Maritime
Agency, Inc. and ESSO International Shipping Co., Ltd.,. et. al." dismissing for lack of merit

petitioners' appeal and motion for new trial and affirming the decision, dated July 17, 1991, rendered
by the Philippine Overseas Employment Administration (POEA).1wphi1.nt
The antecedent facts of the instant case are as follows:
Petitioner Douglas Millares was employed by private respondent ESSO International Shipping
Company Ltd. (Esso International, for brevity) through its local manning agency, private respondent
Trans-Global Maritime Agency, Inc. (Trans-Global, for brevity) on November 16, 1968 as a machinist.
In 1975, he was promoted as Chief Engineer which position he occupied until he opted to retire in
1989. He was then receiving a monthly salary of US $1,939.00. 1
On June 13, 1989, petitioner Millares applied for a leave of absence for the period July 9 to August 7,
1989. In a letter dated June 14, 1989, Michael J. Estaniel, President of private respondent TransGlobal, approved the request for leave of absence. 2 On June 21, 1989, petitioner Millares wrote G.S.
Hanly, Operations Manager of Exxon International Co., (now Esso International) through Michael J.
Estaniel, informing him of his intention to avail of the optional retirement plan under the Consecutive
Enlistment Incentive Plan (CEIP) considering that he had already rendered more than twenty (20)
years of continuous service. On July 13, 1989 respondent Esso International, through W.J. Vrints,
Employee Relations Manager, denied petitioner Millares' request for optional retirement on the
following grounds, to wit: (1) he was employed on a contractual basis; (2) his contract of enlistment
(COE) did not provide for retirement before the age of sixty (60) years; and (3) he did not comply with
the requirement for claiming benefits under the CEIP, i.e., to submit a written advice to the company
of his intention to terminate his employment within thirty (30) days from his last disembarkation date. 3
On August 9, 1989, petitioner Millares requested for an extension of his leave of absence from August
9 to 24, 1989. On August 19, 1989, Roy C. Palomar, Crewing Manager, Ship Group A, Trans-Global,
wrote petitioner Millares advising him that respondent Esso International "has corrected the deficiency
in its manpower requirements specifically in the Chief Engineer rank by promoting a First Assistant
Engineer to this position as a result of (his) previous leave of absence which expired last August 8,
1989. The adjustment in said rank was required in order to meet manpower schedules as a result of
(his) inability." 4
On September 26, 1989, respondent Esso International, through H. Regenboog, Personnel
Administrator, advised petitioner Millares that in view of his absence without leave, which is
equivalent to abandonment of his position, he had been dropped from the roster of crew members
effective September 1, 1989. 5
On the other hand, petitioner Lagda was employed by private respondent Esso International as
wiper/oiler in June 1969. He was promoted as Chief Engineer in 1980, a position he continued to
occupy until his last COE expired on April 10, 1989. He was then receiving a monthly salary of
US$1,939.00. 6
On May 16, 1989, petitioner Lagda applied for a leave of absence from June 19, 1989 up to the whole
month of August 1989. On June 14, 1989, respondent Trans-Global's President, Michael J. Estaniel,
approved petitioner Lagda's leave of absence from June 22, 1989 to July 20, 1989 7 and advised him
to report for re-assignment on July 21, 1989.

On June 26, 1989, petitioner Lagda wrote a letter to G.S. Stanley, Operations Manager of respondent
Esso International, through respondent Trans-Global's President Michael J. Estaniel, informing him of
his intention to avail of the optional early retirement plan in view of his twenty (20) years continuous
service in the company. 8
On July 13, 1989, respondent Trans-Global denied petitioner Lagda's request for availment of the
optional early retirement scheme on the same grounds upon which petitioner Millares' request was
denied. 9
On August 3, 1989, he requested for an extension of his leave of absence up to August 26, 1989 and
the same was approved. 10 However, on September 27, 1989, respondent Esso International, through
H. Regenboog, Personnel Administrator, advised petitioner Lagda that in view of his "unavailability for
contractual sea service," he had been dropped from the roster of crew members effective September
1, 1989. 11
On October 5, 1989, petitioners Millares and Lagda filed a complaint-affidavit, docketed as POEA (M)
89-10-9671, for illegal dismissal and non-payment of employee benefits against private respondents
Esso International and Trans-Global, before the POEA.
On July 17, 1991, the POEA rendered a decision dismissing the complaint for lack of merit.

12

Petitioners appealed the decision to the NLRC. On June 1, 1993, public respondent NLRC rendered
the assailed decision dismissing petitioners' appeal and denying their motion for new trial for lack of
merit. 13
Hence, the instant petition for certiorari based on the following grounds:
I. PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN RULING THAT
PETITIONERS ARE NOT REGULAR EMPLOYEES.
II. PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN RULING THAT THE
TERMINATION OF PETITIONERS WAS VALID, DESPITE THE ABSENCE OF ANY JUST OR
AUTHORIZED CAUSE FOR DISMISSAL.
III. PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN RULING THAT THE
TERMINATION OF PETITIONERS WAS VALID, DESPITE THE FACT THAT PETITIONERS
WERE NOT GIVEN AN OPPORTUNITY TO BE HEARD PRIOR TO THEIR TERMINATION.
IV. PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN RULING THAT
PETITIONERS ARE NOT ENTITLED TO ANY RETIREMENT BENEFIT UNDER THE
OPTIONAL EARLY RETIREMENT POLICY ANNOUNCED BY RESPONDENTS.
V. PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN FAILING TO RULE
THAT, EVEN IN THE ABSENCE OF AN OPTIONAL EARLY RETIREMENT POLICY
ANNOUNCED BY RESPONDENTS, PETITIONERS WERE STILL ENTITLED TO RECEIVE
100% OF THEIR TOTAL CREDITED CONTRIBUTIONS TO THE CEIP, AS EXPRESSLY

PROVIDED TN PARS. 2 (g) AND 2 (h) OF THE LETTER MEMORANDUM DATED MARCH 9,
1977 (ANNEX E OF ANNEX C-PETITION) AND PAR. III, SEC. (c) AND PAR. III, SEC. (b) OF
THE CEIP (ANNEX D-PETITION) WHICH WERE ISSUED BY RESPONDENTS.
VI. PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN FAILING TO RULE ON
THE LIABILITY FOR DAMAGES OF RESPONDENTS FOR HAVING WRONGFULLY AND
MALICIOUSLY CAUSED THE NAME OF PETITIONER MILLARES TO BE PLACED IN THE
POEA WATCHLIST AND THEREBY PREVENTING HIS TIMELY DEPARTURE.
VII. PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN FAILING TO RULE ON
THE LIABILITY OF RESPONDENTS FOR PAYMENT OF MORAL AND EXEMPLARY
DAMAGES, AS WELL AS ATTORNEY'S FEES AND COSTS OF LITIGATION. 14
Petitioners contend that public respondent NLRC gravely abused its discretion in ruling that they are
not regular employees but are merely contractual employees whose employments are terminated
every time their contracts of employment expire. Petitioners further aver that after rendering twenty
(20) consecutive years of service, performing activities which were necessary and desirable in the
trade or business of private respondents, they should be considered regular employees under Article
280 of the Labor Code. Consequently, they may only be dismissed for any of the just or authorized
causes for dismissal provided by law. Furthermore, petitioners asseverate that their dismissal was
unlawful for failure of private respondents to comply with the twin requirements of due process, i.e.,
notice and hearing. Petitioners allege that they were not given any opportunity to be heard by private
respondents prior to their termination.
Petitioners further contend that public respondent gravely abused its discretion in not giving
evidentiary weight to the affirmation of eleven (11) former employees, as well as three (3) other
witnesses as to the existence of the optional early retirement policy. Said witnesses were allegedly
present when Captain Estaniel announced the optional early retirement policy under the CEIP. On the
other hand, while the 11 former employees were not actually present at the announcement thereof,
they attested to the fact that they were informed of said policy by the officers of private respondents.
Petitioners point out that these former employees did not stand to benefit from the policy; thus, in the
absence of any vested interest on their part, their affidavits should have been given more weight than
the self-serving denials of private respondents' officers.
Petitioners also invoke the principle of estoppel. According to petitioners, estoppel bars a party who
has, by his own declaration, act or omission, led another to believe a particular thing to be true, and to
act upon such belief, from denying his own acts and representations to the prejudice of the other
party who relied upon them. In the instant case, petitioners allege that since they relied in good faith
and acted on the basis of the representations of private respondents that an optional early retirement
plan indeed existed, the principle of estoppel in pais is clearly applicable to them.
Petitioners, likewise, maintain that public respondent NLRC seriously erred in invoking the parol
evidence rule against them as there is no written agreement to speak of on optional retirement so as
to make this rule applicable. Petitioners declare that "nowhere in the contract (of enlistment) is there
any mention of the specific terms of the CEIP, particularly the provisions on the extent of benefits to
be received by the seamen" but rather, the "specific details are contained in a separate document

which is in the nature of an inter-office memorandum that is unilaterally issued by private


respondents."
Petitioners further claim that public respondent NLRC abused its discretion in failing to consider that
even in the absence of the optional early retirement policy, petitioners are still entitled to receive
100% of their total credited contributions to the CEIP either under Sec. III, par. (c) of the CEIP, or par.
2 (h) of the Letter-Memorandum dated March 9, 1977. Said memorandum which was signed by the
then President/Chairman of Trans-Global, Inocencio P. Estaniel (now deceased), itemized the
benefits that may be availed of by eligible employees. Paragraph 2 (h) thereof allegedly guarantees
that an employee who is terminated for any reason, other than misconduct on his part, will be given
100% of the Total Credited CEIP Contributions for sixty (60) months of credited service.
On the other hand, Section III, paragraph (c) of the Consecutive Enlistment Incentive Plan provides:
III. Distribution of Benefits.
xxx

xxx

xxx

C. Other Terminations
When the employment of an employee is terminated by the Company for a reason other than
one in A, without any misconduct on his part, a percentage of the total amount credited to his
account will be distributed to him in accordance with the following.
Credited Service Percentage
36 months 50%
48 month 75%
60 months 100%
When the employment of an employee is terminated due to his poor performance, misconduct,
unavailability, etc., or if employee is not offered re-engagement for similar reasons, no
distribution of any portion of employee's account will ever be made to him (or his eligible
survivor/s). A determination of poor performance, misconduct and unavailability shall be made
by the Company.
Misconduct shall include acts and offenses as defined in the Contract of Enlistment and
Company Manuals.
xxx

xxx

x x x 15

Petitioners claim that since both of them had rendered at least twenty (20) years, or 240 months, of
faithful service to private respondents, they are entitled to receive 100% of the total credited
contributions, pursuant to the aforesaid provisions. Contrary to the findings of public respondent,
petitioners argue that they were not guilty of "poor performance" for petitioner Millares, in fact,

qualified for the Merit Pay Program 16 of private respondents at least 5 times in the years 1977, 1984,
1985, 1986 and 1987 in recognition of his above-average performance as ship officer. On the other
hand, petitioner Lagda qualified for the Merit Pay Program for 3 consecutive years, i.e., in 1986, 1987
and 1988, likewise, in view of his above-average performance.
Petitioner Millares further contends that public respondent NLRC committed grave abuse of discretion
amounting to lack of jurisdiction when it failed to rule that private respondents should pay actual
damages in the amount of P770,000.00 for having wrongfully caused his name to be placed in the
POEA watchlist. 17 Such wrongful act allegedly prevented petitioner Millares' from leaving the
Philippines to report on time to his new employer, NAESS Shipping Corporation. Anent petitioner,
public respondent failed to consider the evidence presented by petitioner Millares on this issue.
Finally, petitioners aver that public respondent erred in not granting them moral and exemplary
damages, as well as attorney's fees and costs of litigation.
At this juncture, it is worthy to note that the Solicitor General, in his Manifestation and Motion in Lieu
of Comment, manifested that he is not opposing the instant petition and that he, in fact, finds the
contentions of petitioners meritorious in part.
Art. 280 of the Labor Code, as amended, defines regular employment 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.
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.
The primary standard to determine 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. 18
The connection can be determined by considering the nature of the work performed and its relation to
the scheme of the particular business or trade in its entirety. Also, if the employee has been
performing the job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance as sufficient
evidence of the necessity if not indispensability of that activity to the business. Hence, the

employment is also considered regular, but only with respect to such activity and while such activity
exists. 19
In the case at bar, it is undisputed that petitioners were employees of private respondents until their
services were terminated on September 1, 1989. They served in their capacity as Chief Engineers,
performing activities which were necessary and desirable in the business of private respondents Esso
International, a shipping company; and Trans-Global, its local manning agency which supplies the
manpower and crew requirements of Esso International's vessels.
It is, likewise, clear that petitioners had been in the employ of private respondents for 20 years. The
records reveal that petitioners were repeatedly re-hired by private respondents even after the
expiration of their respective eight-month contracts. Such repeated re-hiring which continued for 20
years, cannot but be appreciated as sufficient evidence of the necessity and indispensability of
petitioner's service to the private respondents' business or trade.
Verily, as petitioners had rendered 20 years of service, performing activities which, were necessary
and desirable in the business or trade of private respondents, they are, by express provision of Article
280 of the Labor Code, considered regular employees.
Being regular employees, petitioners may not be dismissed except for a valid or just cause under
Article 282 of the Labor Code. 20 In the instant case, clearly, there was no valid cause for the
termination of petitioners. It will be recalled, that petitioner Millares was dismissed for allegedly having
"abandoned" his post; and petitioner Lagda, for his alleged "unavailability for contractual sea service."
However, that petitioners did not abandon their jobs such as to justify the unlawful termination of their
employment is borne out by the records.
To constitute abandonment, two elements must concur: (1) the failure to report for work or absence
without valid or justifiable reason; and (2) a clear intention to sever the employer-employee
relationship, with the second element as the more determinative factor and being manifested by some
overt acts. Mere absence is not sufficient. It is the employer who has the burden of proof to show a
deliberate and unjustified refusal of the employee to resume his employment without any intention of
returning. 21
In this case, private respondents failed to discharge this burden. They did not adduce any proof of
some overt act of the petitioners that clearly and unequivocally show their intention to abandon their
posts. On the contrary, the petitioners lost no time in filing the case for illegal dismissal against private
respondents, taking them only about a month from the time their termination became effective on
September 1, 1989 to the filing of their complaint on October 5, 1989. They cannot, by any reasoning,
be said to have abandoned their work, for as we have also previously ruled, the filing by an employee
of a complaint for illegal dismissal is proof enough of his desire to return to work, thus negating the
employer's charge of abandonment. 22
Furthermore, the absence of petitioners was justified by the fact that they secured the approval of
private respondents to take a leave of absence after the termination of their last contracts of
enlistment. Subsequently, petitioners sought for extensions of their respective leaves of absence.
Granting arguendo that their subsequent requests for extensions were not approved, it cannot be said

that petitioners were unavailable or had abandoned their work when they failed to report back for
assignment as they were still questioning the denial of private respondents of their desire to avail of
the optional early retirement policy, which they believed in good faith to exist.
Clearly; petitioners' termination is illegal. Thus, under Article 279 23 of the Labor Code, petitioners are
entitled to reinstatement without loss of seniority rights and other privileges and to their full
backwages, inclusive of allowances, and to their other benefits or the monetary equivalent thereof
computed from the time their compensation was withheld from them up to the time of their actual
reinstatement. Should reinstatement not be possible, private respondents are ordered to pay
petitioners separation pay as provided by law.
Anent petitioners' contention that they are entitled to retirement benefits under the optional retirement
policy, we are constrained to uphold the findings of public respondent NLRC. A perusal of the records
will reveal that the NLRC did not err in denying petitioners' claim under the optional retirement policy
allegedly announced by Captain Inocencio Estaniel at the General Assembly held at the Army and
Navy Club sometime in 1977. The evidence of petitioners regarding the supposed announcement by
Captain Estaniel of the controverted optional retirement plan which consisted merely of the affidavits
of petitioners and their witnesses was successfully rebutted by the evidence adduced by private
respondents. Furthermore, nowhere in the CEIP 24 is there a reference to the alleged optional
retirement plan, nor is there a provision for retirement upon service of 20 years in the company.
Having failed to substantiate their allegation that indeed Captain Estaniel announced this company
policy on early retirement in 1977, petitioners cannot, thus, successfully invoke the doctrine of
estoppel against private respondents.
Regarding petitioners' allegation that public respondent NLRC seriously erred in invoking the parol
evidence rule against petitioners as there is no written agreement on optional retirement so as to
make this rule applicable, we find the same to be without merit. Contrary to the allegations of
petitioners, provisions on retirement benefits are specifically embodied in the CEIP which was part
and parcel of the contract of enlistment signed by the petitioners. Moreover, we note that petitioners
are in fact anchoring their claim for retirement benefits, in the alternative, under Section III, paragraph
(c) of this same CEIP. Hence, they cannot validly deny the existence of the provisions on retirement
benefits, and rely merely on the alleged unilateral issuance of private respondents.
The above notwithstanding, petitioners can nevertheless properly claim 100% of the total amount
credited to their account under Section III of the CEIP, 25 as well as paragraph 2 (h) of the
Memorandum dated March 9, 1977. 26The Consecutive Enlistment Incentive Plan or CEIP provides,
among others: (a) that when the employment of an employee terminates because of his retirement
[with sixty (60) years being the mandatory retirement age], death or permanent and total disability,
100% of the total amount credited to his account will be distributed to him (or his eligible survivor/s);
(b) that when an employee voluntarily terminates his employment (regardless of the reason) no
distribution of any portion of the employee's account will ever be made to him (or to his eligible
survivor/s); and, (c) that when the termination is for a reason other than retirement, death or
permanent and total disability, without any misconduct on his part, he shall be entitled to 50% (for 36
months credited service), 75% (48 months) and 100% (60 months) of the total amount credited to his
account. The CEIP, further, provides that when the employment is terminated due to his poor

performance, misconduct, unavailability, etc., or if the employee is not offered re-engagement for
similar reasons, no distribution of any portion of the employee's account will ever be made to him.
As discussed above, petitioners did not voluntarily terminate their employment with private
respondents. They merely expressed their desire to avail of the optional early retirement plan in the
mistaken belief that such plan existed and that they would still receive the benefits due them under
the CEIP. Neither were they dismissed for any of the causes, i.e., poor performance, misconduct,
unavailability, etc., which would result in forfeiture of the aforesaid retirement benefits. Rather, their
dismissal was without just cause and, therefore, deemed illegal under the law. Hence, having been in
the employ of private respondents for a good 20 years or 240 months, petitioners are entitled to the
retirement benefits under Section III, paragraph (c) of the CEIP. 27
Anent petitioner Millares' contention that he is entitled to an award of actual damages in the amount
of P770,000.00, we find the same to be bereft of merit. Actual or compensatory damages is the term
used for compensation for pecuniary loss in trade, business, property, profession, job or
occupation. The same must be proved, otherwise, if the proof is flimsy and unsubstantiated, no
damages will be given. 28
Petitioner Millares failed to substantiate his claim that the placing of his name on the POEA watchlist
cost him his new job with NAESS Shipping Corporation and that he incurred losses in the sum of
P770,000.00. On the contrary, private respondents, despite their admission that the placing of
petitioners Millares' name on the watchlist was a mistake, were able to prove that he was able to
leave the Philippines notwithstanding such mistake.
Finally, on the issue of whether or not private respondents are liable to pay moral and exemplary
damages, attorney's fees and cost, the Court rules in the negative. The records reveal that petitioners
failed to establish that they suffered diverse injuries such as mental anguish, besmirched reputation,
wounded feelings and social humiliation on account of private respondent's wrongful act or omission
such as to entitle them to an award of moral damages under the Civil Code. The award of moral
damages cannot be justified solely upon the premise that the employer fired his employee without just
cause or due process. Likewise, petitioners failed to establish that their dismissal was effected in a
wanton, oppressive or malevolent manner to justify an award of exemplary damages. Hence, no
moral or exemplary damages may be awarded to the petitioners. Consequently, neither can they
claim attorney's fees or costs of litigation.1wphi1
WHEREFORE, premises considered, the assailed Decision, dated June 1, 1993, of the National
Labor Relations Commission is hereby REVERSED and SET ASIDE and a new judgment is hereby
rendered ordering the private respondents to:
(1) Reinstate petitioners Millares and Lagda to their former positions without loss of seniority
rights, and to pay full backwages computed from the time of illegal dismissal to the time of
actual reinstatement;
(2) Alternatively, if reinstatement is not possible, pay petitioners Millares and Lagda separation
pay equivalent to one month's salary for every year of service; and,

(3) Jointly and severally pay petitioners One Hundred Percent (100%) of their total credited
contributions as provided under the Consecutive Enlistment Incentive Plan.
SO ORDERED.
13. CARVAJAL VS LUZON DEVELOPMENT BANK
MYLENE CARVAJAL, Petitioner,
vs.
LUZON DEVELOPMENT BANK AND/OR OSCAR Z. RAMIREZ, Respondents.
DECISION
PEREZ, J.:
In this Petition for Review on Certiorari, petitioner Mylene Carvajal assails the Decision 1 of the Court
of Appeals, Second Division, dated 20 August 2008 which dismissed her complaint for illegal
dismissal. The Court or Appeals reversed and set aside the Resolution 2 of the National Labor
Relations Commission (NLRC) affirming with modification the Labor Arbiters Decision 3 finding
petitioners dismissal as illegal and ordering reinstatement or payment of backwages and attorneys
fees.
The facts are as follows:
Petitioner Mylene Carvajal was employed as a trainee-teller by respondent Luzon Development Bank
(Bank) on 28 October 2003 under a six-month probationary employment contract, with a monthly
salary of P5,175.00. Respondent Oscar Ramirez is the President and Chief Executive Officer of the
Bank.
On 10 December 2003, the Bank sent petitioner a Memorandum 4 directing her to explain in writing
why she should not be subjected to disciplinary action for "chronic tardiness" on November 3, 5, 6,
14, 18, 20, 21 and 28 2003 or for a total of eight (8) times. Petitioner apologized in writing and
explained that she was in the process of making adjustments regarding her work and house
chores.5 She was thus reprimanded in writing and reminded of her status as a probationary
employee.6 Still, on 6 January 2004, a second Memorandum was sent to petitioner directing her to
explain why she should not be suspended for "chronic tardiness" on 13 occasions or on December 2,
3, 4, 5, 8, 10, 11, 12, 15, 16, 18, 22, and 23 2003. On 7 January 2004, petitioner submitted her written
explanation and manifested her acceptance of the consequences of her actions. 7 On 12 January
2004, petitioner was informed, through a Memorandum, 8 of her suspension for three (3) working days
without pay effective 21 January 2004. Finally, in a Memorandum dated 22 January 2004, petitioners
suspension was lifted but in the same breath, her employment was terminated effective 23 January
2004.9
Hence, petitioners filing of the Complaint for illegal dismissal before the Labor Arbiter. Petitioner
alleged, in her position paper, that the following were the reasons for her termination: 1) she is not an

effective frontliner; 2) she has mistakenly cleared a check; 3) tardiness; 4) absenteeism; and 5)
shortage.10
In their position paper, respondents averred that petitioner was terminated as a probationary
employee on three grounds, namely: 1) chronic tardiness; 2) unauthorized absence; and 3) failure to
perform satisfactorily as a probationary employee. Respondents explained that petitioner was a
chronic violator of the banks rules and regulations on tardiness and absenteeism. Aside from her
numerous tardiness, petitioner was absent without leave for 2 days. She also cleared a check which
later turned out to be a bounced check. Finally, petitioner garnered only a rating of 2.17, with 4 being
the highest and 1 the lowest, in her performance evaluation.
On 9 June 2005, the Labor Arbiter ruled that petitioner was illegally dismissed. Respondents were
held solidarily liable for payment of money claims. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is rendered declaring that complainant as
probationary employee was illegally dismissed. Respondents are ordered to immediately reinstate
complainant to her former position, without loss of any seniority rights and other monetary benefits.
However, if reinstatement is no longer feasible due to strained relationship between the parties,
respondents are further ordered to pay complainant, jointly and severally the amount of P20,070.38,
representing full backwages of complainant from the time of her illegal dismissal up to the end of her
probationary contract of employment with respondent bank. Plus, 10% of the monetary award as
attorneys fee.11
The Labor Arbiter found that petitioner was dismissed without due process because "she was not
afforded the notice in writing informing her of what respondent (the Bank) would like to bring out to
her for the latter to answer in writing." The Labor Arbiter also did not consider "unsatisfactory
performance" as a valid ground to shorten the six-month contract of petitioner with the Bank. 12
The decision of the Labor Arbiter was partially appealed to the NLRC by petitioner. Petitioner
contended that she should be considered a regular employee and that the computation by the Labor
Arbiter of backwages up to the end of her probationary contract is without basis. In its Comment,
respondent argued against the illegality of petitioners dismissal and their joint and solidary liability to
pay complainants monetary claims. On 31 May 2006, the NLRC affirmed with modification the Labor
Arbiters Decision and ordered for petitioners reinstatement, to wit:
WHEREFORE, premises considered, the assailed decision is hereby affirmed with MODIFICATION
ordering the respondents to reinstate the complainant to her former position, without loss of any
seniority rights and other monetary benefits and to pay her full backwages from the date of her
dismissal to the date of her reinstatement, actual or in payroll.
All other aspects of the assailed decision stands. 13
Respondents filed a motion for reconsideration but the NLRC denied the same in a
Resolution14 dated 20 July 2006.

In a petition for certiorari filed by respondents, the Court of Appeals rendered the 20 August 2008
Decision reversing the NLRC ruling, thus:
IN VIEW OF ALL THE FOREGOING, the instant petition is GRANTED. The assailed NLRC
Resolution in NLRC CA No. 046866-05 dated May 31, 2006 which affirmed with modification the
Decision of the Labor Arbiter in NLRC Case No. RAB IV-2-18910-04-L dated June 9, 2005 is hereby
REVERSED and SET ASIDE. All monetary liabilities decreed in the Labor Arbiters Decision against
petitioners are hereby SET ASIDE. The Complaint for illegal dismissal, money claims and damages is
ORDERED DISMISSED.15
The Court of Appeals found that petitioner is not entitled to backwages because she was rightfully
dismissed for failure to meet the employment standards.
The motion for reconsideration filed by petitioner was likewise dismissed.
Petitioner elevated the case to this Court via petition for review on certiorari, raising the following
errors allegedly committed by the Court of Appeals:
THE HON. COURT OF APPEALS COMMITTED ERRORS IN LAW IN DECIDING THE ISSUE ON
PETITIONERS VALIDITY OF DISMISSAL DESPITE SUCH ISSUE HAD LONG BECOME FINAL
AND EXECUTORY FOR FAILURE OF PRIVATE RESPONDENT LUZON DEVELOPMENT BANK TO
APPEAL THE DECISION OF THE LABOR ARBITER FINDING PETITIONERS DISMISSAL
ILLEGAL.
THE HON. COURT OF APPEALS COMMITTED ERROR IN LAW IN DECIDING ISSUES WHICH
WERE NOT RAISED BEFORE THE NLRC ON APPEAL.16
Petitioner harps on the finality of the Labor Arbiters ruling on illegal dismissal and questions the
judgment of the Court of Appeals in discussing and upholding the validity of her dismissal.
Indeed, respondents did not assail the ruling of the Labor Arbiter. It was in fact petitioner who partially
appealed the Labor Arbiters computation of backwages. Provided with the opportunity, respondents
assailed the Labor Arbiters Decision in their Comment to the Partial
Appeal. Upon affirmance of the Labor Arbiters Decision by the NLRC, respondent filed a petition for
certiorari with the Court of Appeals insisting on the validity of the dismissal.
Petitioner seeks to limit the issues to her employment status and backwages, her basis being that the
illegality of her dismissal has already been finally determined by the Labor Arbiter.
We disagree. As We noted, the facts show that the illegality of petitioners dismissal was an issue that
was squarely before the NLRC. When the NLRC decision was reversed by the Court of Appeals, from
which the issue was elevated to us, we had a situation where "the findings of facts are conflicting."
Thus, we find applicable the rule that while generally, only questions of law can be raised in a petition
for review on certiorari under Rule 45 of the Rules of Court, the rule admits of certain exceptions,
namely: (1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2)

when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is a grave
abuse of discretion; (4) when the judgment is based on misappreciation of facts; (5) when the findings
of fact are conflicting; (6) when in making its findings, the same are contrary to the admissions of both
appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the
findings are conclusions without citation of specific evidence on which they are based; (9) when the
facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the
respondent; and (10) when the findings of fact are premised on the supposed absence of evidence
and contradicted by the evidence on record.17
The petition comes within the purview of exception (5) and by analogy, exception (7). Hence, the
Court resolves to scour the records of this case.
Truly, it is axiomatic that an appeal, once accepted by this Court, throws the entire case open to
review, and that this Court has the authority to review matters not specifically raised or assigned as
error by the parties, if their consideration is necessary in arriving at a just resolution of the case. 18
Petitioner premised her appeal on Article 279 of the Labor Code which provides:
Art. 279. Security of Tenure In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or other
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement.
Petitioner maintained that she became a regular employee by virtue of Book VI, Rule 1, Section 6(d)
of the Implementing Rules of the Labor Code which states:
(d) In all cases of probationary employment, the employer shall make known to the employee the
standards under which he will qualify as a regular employee at the time of his engagement. Where no
standards are made known to the employee at that time, he shall be deemed a regular employee.
It is beyond dispute that petitioner was hired as a probationary employee. Whether her employment
status ripened into a regular one is the point of contention.
Under the very provision cited by petitioner, we cannot, by any hermeneutics, see petitioners
employment status as regular. At the time of her engagement and as mandated by law, petitioner was
informed in writing of the standards necessary to qualify her as a regular employee. Her appointment
letter19 reads:
Dear Ms. Carvajal:
We are pleased to confirm your appointment as follows:
Position
Assignment

: Trainee- Teller
: Main Branch

Status
: Probationary (6 months)
Effectivity
: October 28, 2003
Remuneration : P5,175.00 (262)
Possible extension of this contract will depend on the job requirements of the Bank and your
overall performance. Performance review will be conducted before possible renewal can take
effect.
The Bank reserves the right to immediately terminate this contract in the event of a below
satisfactory performance, serious disregard of company rules and policies and other reasons
critical to its interests.
Kindly sign below if the above conditions are acceptable. We look forward to a performance
commensurate to your presented capabilities.
Very truly yours,
[sgd]
Oscar S. Ramirez
Vice President
CONFORME:
[sgd]
Mylene T. Carvajal [Emphasis Supplied]
Petitioner knew, at the time of her engagement, that she must comply with the standards set forth by
respondent and perform satisfactorily in order to attain regular status. She was apprised of her
functions and duties as a trainee-teller. Respondent released to petitioner its evaluation 20 of her
performance. Petitioner was found wanting. Even the NLRC upheld petitioners probationary status,
thus:
During the time that the complainant was dismissed by respondents, she was holding the position of
a trainee-teller on probationary status. Thus, with the Labor Arbiters finding of illegal dismissal, which
the respondent left unchallenged, the complainant is entitled to be reinstated to resume the functions
of a trainee-teller, no more no less. Reinstatement is not synonymous with regularization. The
determination of whether the complainant can qualify to become one of respondent banks regular
employees is still within the well recognized managements prerogative. 21 [Emphasis Supplied]
A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of
probationary employment, aside from just or authorized causes of termination, an additional ground is
provided under Article 281 of the Labor Code, i.e., the probationary employee may also be terminated
for failure to qualify as a regular employee in accordance with reasonable standards made known by
the employer to the employee at the time of the engagement. Thus, the services of an employee who
has been engaged on probationary basis may be terminated for any of the following: (1) a just or (2)

an authorized cause and (3) when he fails to qualify as a regular employee in accordance with
reasonable standards prescribed by the employer.22
It is evident that the primary cause of respondents dismissal from her probationary employment was
her "chronic tardiness." At the very start of her employment, petitioner already exhibited poor working
habits. Even during her first month on the job, she already incurred eight (8) tardiness. In a
Memorandum dated 11 December 2003, petitioner was warned that her tardiness might affect her
opportunity to become a permanent or regular employee. And petitioner did not provide a satisfactory
explanation for the cause of her tardiness.
Punctuality is a reasonable standard imposed on every employee, whether in government or private
sector. As a matter of fact, habitual tardiness is a serious offense that may very well constitute gross
or habitual neglect of duty, a just cause to dismiss a regular employee. Assuming that petitioner was
not apprised of the standards concomitant to her job, it is but common sense that she must abide by
the work hours imposed by the bank. As we have aptly stated in Aberdeen Court, Inc. v. Agustin,
Jr.,23 the rule on reasonable standards made known to the employee prior to engagement should not
be used to exculpate a probationary employee who acts in a manner contrary to basic knowledge and
common sense, in regard to which there is no need to spell out a policy or standard to be met.
Respondent also cited other infractions such as unauthorized leaves of absence, mistake in clearing
of a check, and underperformance. All of these infractions were not refuted by petitioner. The Labor
Arbiter failed to discuss the veracity of these grounds. It focused on unsatisfactory performance and
concluded that such is not a sufficient ground to terminate the probationary employment. The Labor
Arbiter relied on its own misappreciation of facts for a finding that, resultingly, is contradicted by the
evidence on record.
More importantly, satisfactory performance is and should be one of the basic standards for
regularization. Naturally, before an employer hires an employee, the former can require the
employee, upon his engagement, to undergo a trial period during which the employer determines his
fitness to qualify for regular employment based on reasonable standards made known to him at the
time of engagement. This is the concept of probationary employment which is intended to afford the
employer an opportunity to observe the fitness of a probationary employee while at work, and to
ascertain whether he will become an efficient and productive employee. While the employer observes
the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent
employment, the probationer, on the other hand, seeks to prove to the satisfaction of the employer
that he has the qualifications to meet the reasonable standards for permanent employment. 24
Moreover, in the letter of appointment, respondents reserved the right to "immediately terminate this
contract in the event of a below satisfactory performance, serious disregard of company rules and
policies and other reasons critical to its interests."
In finding for illegal dismissal, the Labor Arbiter held that the dismissal was without due process. We
hold otherwise.1wphi1 As elucidated by this Court in Philippine Daily Inquirer, Inc. v. Magtibay, Jr.: 25
Unlike under the first ground for the valid termination of probationary employment which is for just
cause, the second ground failure to qualify in accordance with the standards prescribed by employer

does not require notice and hearing. Due process of law for this second ground consists of making
the reasonable standards expected of the employee during his probationary period known to him at
the time of his probationary employment. By the very nature of a probationary employment, the
employee knows from the very start that he will be under close observation and his performance of
his assigned duties and functions would be under continuous scrutiny by his superiors. It is in
apprising him of the standards against which his performance shall be continuously assessed where
due process regarding the second ground lies, and not in notice and hearing as in the case of the first
ground.26
As we have underscored, respondent complied with the basic requirements of due process as
defined in Magtibay, Jr. Petitioner had more than sufficient knowledge of the standards her job entails.
Respondent had not been remiss in reminding petitioner, through memoranda, of the standards that
should be observed in aspiring for regularization.
Petitioner was even notified in two (2) memoranda regarding the banks displeasure over her chronic
tardiness. Every memorandum directed petitioner to explain in writing why she should not be
subjected to disciplinary action. Each time, petitioner acknowledged her fault and assured the bank
that she would, in her daily schedules, make adjustments to make amends. This certainly is
compliance with due process. Taken together with her low performance rating and other infractions,
petitioner was called by the head of Human Resources who discussed with her the reasons for the
discontinuance of her probationary appointment before she was formally served the termination letter
on that very same day. There was, in this case, full accordance to petitioner of the opportunity to be
heard.
In sum, petitioner was validly dismissed from probationary employment before the expiration of her 6montb probationary employment contract. If the termination is for cause, it may be done anytime
during the probation; the employer docs not have to wait until the probation period is over. 27
With a valid reason for petitioner's dismissal coupled with the proper observance of due process, the
claim for back wages must necessarily fail.
In view of the foregoing, we find no reason to disturb the findings and conclusions of the Court of
Appeals.
WHEREFORE, the petition is DENIED.
SO ORDERED.

14. PANGILINAN VS GENERAL MILLING CORPORATION

ROSITA PANGILINAN, YOLANDA LAYOLA, SALLY GOLDE, AIDA QUITE, FERDINAND CALE,
RAUL ARUITA, MANUEL ERIFUL, ARNEL PAULO, ROSEMARIE GEOTINA, SAMUELA KUMAR,
REBECCA PEREZ, EDGAR BELLO, JOSEPH SORIANO, DANILO AMPULLER, TOLENTINO
CALLAO, MANOLITA MANALANG, TORIBIO LETIM, NANCY BELGICA, ALFREDO ARELLANO,
JOSEFA CEBUJANO, JUN DEL ROSARIO, AVELINO AGUILAR, MILAROSA TIAMSON, EDNA
DICHOSO, JASMIN BOLISAY, JULIETA DIDAL, GERARDO BARISO, ANGELITO PEAFLOR,
NERISSA LETIM, ALEXANDER BARBOSA, ELIZABETH SAENS, NYMPHA LUGTU, MYRNA
MORALES, LIZA CRUZ, ELENA FANG, EDNA CRUZA, GORGONIO PALMA, JOSE VERGARA,
ALDRIN REMORQUE, RUDY BLANCO, MARIO BUENVIAJE, MA. CRISTY CEA, REYNALDO
GUELAS VILLASENOR, RHOY TADO, LYDIA SALIPOT, ANGELITO PEREZ VERGARA,
RODOLFO GACHO, JESSIE SAN PEDRO, MARINAO ORCA, JR., PEBELITO LERONA, PEPE
CONGRESO, NIMFA NAPAO, WILHELMINA BAGUISA, OLIVIA CAINCAY, JERRY MANUEL
NICOLAS, CARLOS ABRATIQUE, JESUS LIM, JR., AND GERRY ROXAS,petitioners,
vs.
GENERAL MILLING CORPORATION, respondent.
DECISION
CALLEJO, SR., J.:
Before this Court is a petition for review on certiorari of the Decision 1 of the Court of Appeals in CAG.R. SP No. 51678 and its Resolution denying the motion for reconsideration thereon.
The Antecedents
The respondent General Milling Corporation is a domestic corporation engaged in the production and
sale of livestock and poultry.2 It is, likewise, the distributor of dressed chicken to various restaurants
and establishments nationwide.3 As such, it employs hundreds of employees, some on a regular
basis and others on a casual basis, as "emergency workers."
The petitioners4 were employed by the respondent on different dates as emergency workers at its
poultry plant in Cainta, Rizal, under separate "temporary/casual contracts of employment" for a
period of five months.5 Most of them worked as chicken dressers, while the others served as
packers or helpers.6 Upon the expiration of their respective contracts, their services were terminated.
They later filed separate complaints for illegal dismissal and non-payment of holiday pay, 13 th month
pay, night-shift differential and service incentive leave pay against the respondent before the
Arbitration Branch of the National Labor Relations Commission, docketed as NLRC Case No. RABIV-9-4519-92-RI; NLRC Case No. RAB-IV-9-4520-92-RI; NLRC Case No. RAB-IV-9-4521-92-RI;
NLRC Case No. RAB-IV-9-4541-92-RI; NLRC Case No. RAB-IV-10-4552-92-RI; NLRC Case No.
RAB-IV-10-4595-92-RI and NLRC Case No. RAB-IV-11-4599-92-RI. 7
The petitioners alleged that their work as chicken dressers was necessary and desirable in the usual
business of the respondent, and added that although they worked from 10:00 p.m. to 6:00 a.m., they
were not paid night-shift differential. 8 They stressed that based on the nature of their work, they were
regular employees of the respondent; hence, could not be dismissed from their employment unless
for just cause and after due notice. In support thereof, the petitioners cited the decision of the
Honorable Labor Arbiter Perlita B. Velasco in NLRC Case No. NCR-6-2168-86, entitled Estelita
Jayme, et al. vs. General Milling Corporation; and NLRC Case No. NCR-9-3726-86, entitled Marilou
Carino, et al. vs. General Milling Corporation.9 They asserted that the respondent GMC terminated

their contract of employment without just cause and due notice. They further argued that the
respondent could not rely on the nomenclature of their employment as "temporary or casual."
On August 18, 1997, Labor Arbiter (LA) Voltaire A. Balitaan rendered a decision in favor of the
petitioners declaring that they were regular employees. Finding that the termination of their
employment was not based on any of the just causes provided for in the Labor Code, the LA declared
that they were allegedly illegally dismissed. The decretal portion of the decision reads:
WHEREFORE, judgment is hereby rendered in these cases, as follows:
1. Declaring respondent corporation guilty of illegally dismissing complainants, except Rosalina
Basan and Filomena Lanting whose complaints are hereby dismissed on ground of
prescription, and as a consequence therefor ordering the said respondent corporation to
reinstate them to their former positions without loss of seniority rights and other privileges and
with full backwages from the time they were illegally dismissed in the aggregate amount
of P15,328,594.04;
2. Ordering respondent corporation to pay the said complainants their 13th month pay, holiday
pay and service incentive leave pay in the aggregate amount of P1,979,148.23;
3. Ordering respondent corporation to pay said complainants the amount of P1,730,744.22 by
way of attorney's fees, representing ten (10%) percentum of the total judgment awards.
The case against individual respondent Medardo Quiambao is hereby dismissed. 10
A copy of the decision was sent by registered mail to the respondent on October 23, 1997 under
Registered Mail No. 004567 addressed to Atty. Emmanuel O. Pacsi, counsel for GMC, 6 th Floor,
Corinthian Plaza Bldg., 121 Paseo de Roxas, Makati City.11 However, Beth Cacal, a clerk of the
respondent GMC received the said decision on October 28, 1997. 12 Contending that a copy thereof
was received only on November 3, 1997, the respondent filed an appeal on November 12, 1997,
before the National Labor Relations Commission (NLRC), docketed as NLRC NCR CA No. 01446298. The petitioners filed a Motion to Dismiss Respondents' Notice of Appeal/Appeal Memorandum on
the ground that the appeal was filed five days late, considering that the August 18, 1997 Decision was
received by the respondent through its employee, Beth Cacal, on October 28, 1997. 13
The respondent opposed the motion, contending that Cacal was a mere clerk, and was not a member
of the staff of its Legal Department. It further contended that the Legal Department was located at the
sixth (6th) floor of Corinthian Plaza and had its own staff, including the legal secretary who served as
the Legal Department's receiving clerk.14 Invoking Section 10, Rule 13 of the Rules of Court, in
relation to Section 2 thereof, the respondent alleged that Cacal's receipt of the mail and/or decision
was not equivalent to receipt by its counsel. In support thereof, the respondent cited the cases
of Adamson University v. Adamson University Faculty and Employees Association,15 and PLDT vs.
NLRC.16
On May 25, 1998, the NLRC rendered a decision reversing that of the Labor Arbiter, the dispositive
portion of which is herein quoted:
WHEREFORE, except for its award of "13th month pay, holiday pay and service incentive leave
pay in the aggregate amount of P1,979,148.23" which is hereby affirmed, the appealed
decision is set aside for being contrary to settled jurisprudence. 17

The NLRC ruled that the respondent GMC filed its appeal within the reglementary period. Citing the
case of Caete v. NLRC18 which, in turn, cited Adamson v. Adamson19 and United Placement
International v. NLRC,20 the NLRC held that service by registered mail is completed only "upon actual
receipt thereof by the addressee." Since the addressee of the mail is the respondent's counsel and
the person who received it was a non-member of the Legal Staff, the decision cannot be said to have
been validly served on the respondent's counsel on October 28, 1997.
The NLRC also held that the petitioners, who were temporary or contractual employees of the
respondent, were legally terminated upon the expiration of their respective contracts. Citing the case
of Brent School, Inc. vs. Zamora,21 the NLRC explained that while the petitioners' work was necessary
and desirable in the usual business of GMC, they cannot be considered as regular employees since
they agreed to a fixed term.
The petitioners' motion for reconsideration of the decision having been denied by the NLRC on
October 12, 1998,22 they filed a petition for certiorari before the Court of Appeals and assigned the
following errors:
I
THE RESPONDENT COMMISSION SERIOUSLY ERRED AND ACTED WITH GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK AND/OR IN EXCESS OF ITS JURISDICTION IN
ENTERTAINING AND GIVING DUE COURSE TO RESPONDENT COMPANY'S APPEAL
WHICH WAS UNDENIABLY FILED OUT OF TIME AND CONSEQUENTLY SETTING ASIDE
THE FINAL DECISION OF THE LABOR ARBITER.
II
THE RESPONDENT COMMISSION SERIOUSLY ERRED AND ACTED WITH GRAVE ABUSE
OF DISCRETION IN HOLDING THAT PETITIONERS' DISMISSAL WAS LEGAL ON THE
GROUND OF EXPIRATION OF EMPLOYMENT CONTRACT WHICH IS NOT A STATUTORY
CAUSE UNDER THE LABOR CODE.
III
THE RESPONDENT COMMISSION [S]ERIOUSLY ERRED AND ACTED WITH GRAVE
ABUSE OF DISCRETION IN NOT FINDING THAT PETITIONERS, AS REGULAR
EMPLOYEES, CANNOT BE DISMISSED WITHOUT JUST CAUSE AND THE REQUIRED
DUE PROCESS.23
On September 29, 2000, the CA rendered a decision affirming with modification the decision of the
NLRC, the decretal portion of which reads:
WHEREFORE, the appealed decision of the NLRC is hereby AFFIRMED, with the
MODIFICATION that the award of 13th month pay, holiday pay, and service incentive leave pay
shall cover only the year or years when petitioners were actually employed with herein
respondent General Milling Corporation. 24
The CA ruled that no grave abuse of discretion could be imputed to the NLRC, considering that the
ten-day period to appeal began to run only from the date the decision of the LA was validly served on
the respondent's counsel. The appellate court also ruled that even assuming arguendo that the
respondent GMC's appeal was filed late, in view of the substantial amount involved, giving due
course to the appeal did not amount to grave abuse of discretion.

On the merits of the petition, the CA ruled that where the duties of the employee consist of activities
usually necessary or desirable in the usual business of the employer, it does not necessarily follow
that the parties are forbidden from agreeing on a period of time for the performance of such activities,
and cited the case of St. Theresa's School of Novaliches Foundation v. NLRC.25 The CA affirmed the
entitlement of the petitioners to a proportionate thirteenth (13 th) month pay for the particular year/s the
petitioners were employed. As to the awards of holiday pay and service incentive leave pay, the CA
ruled that they should be limited to the year/s of actual service. 26
The petitioners filed a motion for reconsideration of the said decision, which was denied on July 24,
2001.27
The Present Petition
The petitioners filed the instant petition, ascribing the following errors to the appellate court:
I
THE HONORABLE COURT OF APPEALS GRAVELY ERRED AND ACTED WITHOUT
JURISDICTION WHEN IT MODIFIED THE LABOR ARBITER'S JUDGMENT THAT HAS
BECOME FINAL AND EXECUTORY FOR FAILURE OF THE RESPONDENT TO APPEAL
WITHIN THE REGLEMENTARY PERIOD.
II
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE
DECISION OF THE LABOR ARBITER WAS DEEMED SERVED NOT ON THE DATE WHEN
THE DECISION WAS DELIVERED BY THE POSTMASTER TO THE OFFICE OF THE
RESPONDENT'S LAWYER, BUT ON THE DATE WHEN THE RECEIVING CLERK GAVE THE
DECISION TO THE LAWYER.
III
THE RESPONDENT'S PRACTICE OF HIRING CHICKEN DRESSERS ON A 5-MONTH
CONTRACT AND REPLACING THEM WITH ANOTHER SET OF 5-MONTH CONTRACT
WORKERS, OBVIOUSLY TO PREVENT THEM FROM ATTAINING REGULAR STATUS, IS
VIOLATIVE OF THE CONSTITUTION AND ARTICLES 279 AND 280 OF THE LABOR
CODE.28
The issues for resolution are (a) whether or not the respondent's appeal from the Labor Arbiter's
decision was filed within the reglementary period therefor; and, (b) whether or not the petitioners were
regular employees of the respondent GMC when their employment was terminated.
In petitions for review on certiorari of the decision of the CA, only errors of law are generally
reviewed.29 Normally, the Supreme Court is not a trier of facts. 30 In the absence of any showing that
the NLRC committed grave abuse of discretion, or otherwise acted without or in excess of jurisdiction,
the Court is bound by its findings.31 Such findings are not infallible, however, particularly when there is
a showing that they were arrived at arbitrarily or in disregard of the evidence on record. In such case,
they may be re-examined by the Court.
Hence, when the factual findings of the NLRC are contrary to those of the Labor Arbiter, the
evidentiary facts may be reviewed by the appellate court. 32 Considering that the NLRC's findings
clash with those of the Labor Arbiter's, this Court is compelled to go over the records of the case as
well as the submissions of the parties.33

The Ruling of the Court


The petition is bereft of merit.
Anent the first issue, we agree with the CA that the NLRC did not act with grave abuse of discretion
when it gave due course to the appeal of the respondent. Decisions of the Labor Arbiter are final and
executory, unless appealed to the Commission, within ten (10) calendar days from receipt
thereof.34 Copies of decisions or final awards are served on both parties and their counsel by
registered mail,35 and such service by registered mail is completed upon actual receipt by the
addressee or five (5) days from receipt of the first notice of the postmaster, whichever is earlier. 36
The records show that the August 18, 1997 Decision of the Labor Arbiter was served via registered
mail, addressed to the respondent GMC's counsel, Atty. Emmanuel O. Pacsi, at the sixth (6 th) Floor,
Corinthian Plaza Bldg., 121 Paseo de Roxas, Makati City.37 It was received by Beth Cacal, a clerk of
the respondent, on October 28, 1997. The petitioners insist that Cacal is a person with authority to
receive legal and judicial correspondence for the respondent's Legal Department. They point out that
such authority to receive mail for and in behalf of the respondent's Legal Department is bolstered by
the certification from the Makati Post Office that she received the copy of their motion to dismiss the
appeal, addressed to the said department.
The respondent GMC counters that the service of the LA's decision to a person not connected to its
Legal Department is not a valid service, and that it is only when a copy of such decision is actually
given to such department that a valid service of the decision is deemed to have been made. Stressing
that factual issues are not proper in a petition for certiorari under Rule 45, the respondent no longer
discussed Cacal's authority to receive legal and judicial communications for the respondent.
A review of the records reveal that Cacal was a clerk at the respondent's office and was assigned at
the sixth floor of the Corinthian Plaza Bldg. She was not assigned at the respondent's Legal
Department, which has its own office staff, including a secretary who serves as the department's
receiving clerk.38 The Court has ruled that a service of a copy of a decision on a person who is neither
a clerk nor one in charge of the attorney's office is invalid. 39 Thus, there was no grave abuse of
discretion on the part of the NLRC in giving due course to the respondent's appeal.
On the second issue, we agree that the petitioners were employees with a fixed period, and, as such,
were not regular employees.
Article 280 of the Labor Code comprehends three kinds of employees: (a) regular employees or those
whose work is necessary or desirable to the usual business of the employer; (b) project employees or
those whose employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or where
the work or services to be performed is seasonal in nature and the employment is for the duration of
the season; and, (c) casual employees or those who are neither regular nor project employees. 40
A regular employee is one who is engaged to perform activities which are necessary and desirable in
the usual business or trade of the employer as against those which are undertaken for a specific
project or are seasonal.41There are two separate instances whereby it can be determined that an
employment is regular: (1) if the particular activity performed by the employee is necessary or
desirable in the usual business or trade of the employer; and, (2) if the employee has been
performing the job for at least a year.42
In the case of St. Theresa's School of Novaliches Foundation vs. NLRC,43 we held that Article 280 of
the Labor Code does not proscribe or prohibit an employment contract with a fixed period. We

furthered that it does not necessarily follow that where the duties of the employee consist of activities
usually necessary or desirable in the usual business of the employer, the parties are forbidden from
agreeing on a period of time for the performance of such activities. There is thus nothing essentially
contradictory between a definite period of employment and the nature of the employee's duties.
Indeed, in the leading case of Brent School Inc. v. Zamora,44 we laid down the guideline before a
contract of employment may be held as valid, to wit:
[S]tipulations in employment contracts providing for term employment or fixed period
employment are valid when the period were agreed upon knowingly and voluntarily by
the parties without force, duress or improper pressure, being brought to bear upon the
employee and absent any other circumstances vitiating his consent, or where it
satisfactorily appears that the employer and employee dealt with each other on more or
less equal terms with no moral dominance whatever being exercised by the former over
the latter.45
An examination of the contracts entered into by the petitioners showed that their employment was
limited to a fixed period, usually five or six months, and did not go beyond such period.
TEMPORARY/CASUAL CONTRACT OF EMPLOYMENT
KNOW ALL MEN BY THESE PRESENTS:
That the GENERAL MILLING CORPORATION, hereby temporarily hires ________________
as Emergency worker for a period beginning from ____________ to _____________,
inclusive, at the rate of _____________ per day, payable every 15th [day] and end of each
month.
________________ hereby binds and obligates himself/herself to perform his/her assigned
work diligently and to the best of his/her ability, and promise to obey all lawful orders of his/ her
superior and/or representatives made in connection with the work for which he/she is
employed.
IT IS CLEARLY STIPULATED THAT THE CONDITION OF THIS EMPLOYMENT SHALL BE
AS FOLLOWS:
1. This employment contract shall be on a DAY-TO-DAY BASIS and shall not extend beyond
the period specified above;
2. The employee aforementioned may be laid off or separated from the Firm, EVEN BEFORE
THE EXPIRY DATE OF THIS CONTRACT, if his/her services are no longer needed, or if such
services are found to be unsatisfactory, or if she/he has violated any of the established rules
and regulations of the Company;
3. In any case, the period of employment shall not go beyond the duration of the work or
purpose for which the aforementioned employee has been engaged;
4. That the employee hereby agrees to work in any work shift schedule that may be assigned
to him by the Firm during the period of this contract; and

This Temporary/Casual Employment contract, unless sooner terminated for any of the causes
above-cited, shall then automatically cease on its expiry date, without the necessity of any
prior notice to the employee concerned. 46
The records reveal that the stipulations in the employment contracts were knowingly and voluntarily
agreed to by the petitioners without force, duress or improper pressure, or any circumstances that
vitiated their consent. Similarly, nothing therein shows that these contracts were used as a subterfuge
by the respondent GMC to evade the provisions of Articles 279 and 280 of the Labor Code.
The petitioners were hired as "emergency workers" and assigned as chicken dressers, packers and
helpers at the Cainta Processing Plant. The respondent GMC is a domestic corporation engaged in
the production and sale of livestock and poultry, and is a distributor of dressed chicken. While the
petitioners' employment as chicken dressers is necessary and desirable in the usual business of the
respondent, they were employed on a mere temporary basis, since their employment was limited to a
fixed period. As such, they cannot be said to be regular employees, but are merely "contractual
employees." Consequently, there was no illegal dismissal when the petitioners' services were
terminated by reason of the expiration of their contracts. 47 Lack of notice of termination is of no
consequence, because when the contract specifies the period of its duration, it terminates on the
expiration of such period. A contract for employment for a definite period terminates by its own term at
the end of such period.48
In sum, we rule that the appeal was filed within the ten (10)-day reglementary period. Although the
petitioners who mainly worked as chicken dressers performed work necessary and desirable in the
usual business of the respondent, they were not regular employees therein. Consequently, the
termination of their employment upon the expiry of their respective contracts was valid.
IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED DUE COURSE. The Decision
of the Court of Appeals in CA-G.R. SP No. 51678 is AFFIRMED. No costs.
SO ORDERED.
15. PH DAILY INQUIRER VS MAGTIBAY
PHILIPPINE DAILY INQUIRER, INC., Petitioner,
vs.
LEON M. MAGTIBAY, JR. and PHILIPPINE DAILY INQUIRER EMPLOYEES UNION
(PDIEU), Respondents.
DECISION
GARCIA, J.:
By this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Philippine Daily
Inquirer, Inc. (PDI) seeks the reversal and setting aside of the decision 1 dated May 25, 2004 of the
Court of Appeals (CA) in CA G.R. SP No. 78963, affirming the resolution dated September 23, 2002
of the National Labor Relations Commission (NLRC) in NLRC Case No. 00-03-01945-96. The
affirmed NLRC resolution reversed an earlier decision dated July 29, 1996 of the Labor Arbiter in
NLRC Case No. 011800-96, which dismissed the complaint for illegal dismissal filed by the herein
respondent Leon Magtibay, Jr. against the petitioner.

The factual antecedents are undisputed:


On February 7, 1995, PDI hired Magtibay, on contractual basis, to assist, for a period of five months
from February 17, 1995, the regular phone operator. Before the expiration of Magtibays contractual
employment, he and PDI agreed to a fifteen-day contract extension, or from July 17, 1995 up to July
31, 1995, under the same conditions as the existing contract.
After the expiration of Magtibays contractual employment, as extended, PDI announced the creation
and availability of a new position for a second telephone operator who would undergo probationary
employment. Apparently, it was PDIs policy to accord regular employees preference for new
vacancies in the company. Thus, Ms. Regina M. Layague, a PDI employee and member of
respondent PDI Employees Union (PDIEU), filed her application for the new position. However, she
later withdrew her application, paving the way for outsiders or non-PDI employees, like Magtibay in
this case, to apply.
After the usual interview for the second telephone operator slot, PDI chose to hire Magtibay on a
probationary basis for a period of six (6) months. The signing of a written contract of employment
followed.
On March 13, 1996, or a week before the end the agreed 6-month probationary period, PDI officer
Benita del Rosario handed Magtibay his termination paper, grounded on his alleged failure to meet
company standards. Aggrieved, Magtibay immediately filed a complaint for illegal dismissal and
damages before the Labor Arbiter. PDIEU later joined the fray by filing a supplemental complaint for
unfair labor practice.
Magtibay anchored his case principally on the postulate that he had become a regular employee by
operation of law, considering that he had been employed by and had worked for PDI for a total period
of ten months, i.e., four months more than the maximum six-month period provided for by law on
probationary employment. He also claimed that he was not apprised at the beginning of his
employment of the performance standards of the company, hence, there was no basis for his
dismissal. Finally, he described his dismissal as tainted with bad faith and effected without due
process.
PDI, for its part, denied all the factual allegations of Magtibay, adding that his previous contractual
employment was validly terminated upon the expiration of the period stated therein. Pressing the
point, PDI alleged that the period covered by the contractual employment cannot be counted with or
tacked to the period for probation, inasmuch as there is no basis to consider Magtibay a regular
employee. PDI additionally claimed that Magtibay was dismissed for violation of company rules and
policies, such as allowing his lover to enter and linger inside the telephone operators booth and for
failure to meet prescribed company standards which were allegedly made known to him at the start
through an orientation seminar conducted by the company.
After due proceedings, the Labor Arbiter found for PDI and accordingly dismissed Magtibays
complaint for illegal dismissal. The Labor Arbiter premised his holding on the validity of the previous
contractual employment of Magtibay as an independent contract. He also declared as binding the
stipulation in the contract specifying a fixed period of employment. According to the Labor Arbiter,

upon termination of the period stated therein, the contractual employment was also effectively
terminated, implying that Magtibay was merely on a probationary status when his services were
terminated inasmuch as the reckoning period for probation should be from September 21, 1995 up to
March 31, 1996 as expressly provided in their probationary employment contract. In fine, it was the
Labor Arbiters position that Magtibays previous contractual employment, as later extended by 15
days, cannot be considered as part of his subsequent probationary employment.
Apart from the foregoing consideration, the Labor Arbiter further ruled that Magtibays dismissal from
his probationary employment was for a valid reason. Albeit the basis for termination was couched in
the abstract, i.e., "you did not meet the standards of the company," there were three specific reasons
for Magtibays termination, to wit: (1) he repeatedly violated the company rule prohibiting
unauthorized persons from entering the telephone operators room; (2) he intentionally omitted to
indicate in his application form his having a dependent child; and (3) he exhibited lack of sense of
responsibility by locking the door of the telephone operators room on March 10, 1996 without
switching the proper lines to the company guards so that incoming calls may be answered by them.
The Labor Arbiter likewise dismissed allegations of denial of due process and the commission by PDI
of unfair labor practice.
PDIEU and Magtibay appealed the decision of the Labor Arbiter to the NLRC. As stated earlier, the
NLRC reversed and set aside said decision, effectively ruling that Magtibay was illegally dismissed.
According to the NLRC, Magtibays probationary employment had ripened into a regular one.
With the NLRCs denial of its motion for reconsideration, PDI went to the CA on a petition for
certiorari. Eventually, the CA denied due course to PDIs petition on the strength of the following
observations:
We agree with the findings of respondent NLRC.
Petitioner PDI failed to prove that such rules and regulations were included in or form part of the
standards that were supposed to be made known to respondent Magtibay at the time of his
engagement as telephone operator. Particularly, as regards the first stated infraction xxx petitioner
PDI, contrary to its assertion, stated in its position paper, motion for reconsideration and in this
petition that respondent Magtibay failed to abide by the rules and regulations of the company issued
by Ms. Benita del Rosario regarding the entry of persons in the operators booth when respondent
was already working for petitioner PDI. Further, nowhere can it be found in the list of Basic
Responsibility and Specific Duties and Responsibilities (Annex D of the petition) of respondent
Magtibay that he has to abide by the duties, rules and regulations that he has allegedly violated. The
infractions considered by petitioner PDI as grounds for the dismissal of respondent Magtibay may at
most be classified as just causes for the termination of the latters employment. x x x.
xxx

xxx

xxx

Finally, the three questionable grounds also relied upon by petitioner PDI in dismissing respondent
Magtibay may be considered as just causes. However, petitioner PDI did not raise the same as an

issue in the present petition because the procedure it adopted in dismissing respondent Magtibay fell
short of the minimum requirements provided by law.
PDI filed a motion for reconsideration but to no avail.
Hence, this recourse by PDI on the following submissions:
I.
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FINDING THAT A
PROBATIONARY EMPLOYEES FAILURE TO FOLLOW AN EMPLOYERS RULES AND
REGULATIONS CANNOT BE DEEMED FAILURE BY SAID EMPLOYEE TO MEET THE
STANDARDS OF HIS EMPLOYER THUS EMASCULATING PETITIONERS RIGHT TO
CHOOSE ITS EMPLOYEES.
II.
THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN REFUSING TO FIND THAT
PROCEDURAL DUE PROCESS AS LAID DOWN IN SECTION 2, RULE XXIII OF THE
IMPLEMENTING RULES OF THE LABOR CODE HAD BEEN OBSERVED BY THE
PETITIONER.
We GRANT the petition.
This Court, to be sure, has for a reason, consistently tended to be partial in favor of workers or
employees in labor cases whenever social legislations are involved. However, in its quest to strike a
balance between the employers prerogative to choose his employees and the employees right to
security of tenure, the Court remains guided by the gem of a holding in an old but still applicable case
of Pampanga Bus, Co. v. Pambusco Employees Union, Inc. 2In it, the Court said:
The right of a laborer to sell his labor to such persons as he may choose is, in its essence, the same
as the right of an employer to purchase labor from any person whom it chooses. The employer and
the employee have thus an equality of right guaranteed by the Constitution. If the employer can
compel the employee to work against the latters will, this is servitude. If the employee can compel the
employer to give him work against the employers will, this is oppression.
Management and labor, or the employer and the employee are more often not situated on the same
level playing field, so to speak. Recognizing this reality, the State has seen fit to adopt measures
envisaged to give those who have less in life more in law. Article 279 of the Labor Code which gives
employees the security of tenure is one playing field leveling measure:
Art. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. x x x.

But hand in hand with the restraining effect of Section 279, the same Labor Code also gives the
employer a period within which to determine whether a particular employee is fit to work for him or
not. This employers prerogative is spelled out in the following provision:
Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from
the date the employee started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has been engaged on a probationary
basis may be terminated for a just cause or when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the employee at the time of
his engagement. An employee who is allowed to work after a probationary period shall be considered
a regular employee.
In International Catholic Migration Commission v. NLRC, 3 we have elucidated what probationary
employment entails:
x x x. A probationary employee, as understood under Article 282 (now Article 281) of the Labor Code,
is one who is on trial by an employer during which the employer determines whether or not he is
qualified for permanent employment. A probationary appointment is made to afford the employer an
opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will
become a proper and efficient employee. The word "probationary," as used to describe the period of
employment, implies the purpose of the term or period but not its length.
Being in the nature of a "trial period" the essence of a probationary period of employment
fundamentally lies in the purpose or objective sought to be attained by both the employer and the
employee during said period. The length of time is immaterial in determining the correlative rights of
both in dealing with each other during said period. While the employer, as stated earlier, observes the
fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent
employment, the probationer, on the other, seeks to prove to the employer, that he has the
qualifications to meet the reasonable standards for permanent employment.
It is well settled that the employer has the right or is at liberty to choose who will be hired and who will
be denied employment. In that sense, it is within the exercise of the right to select his employees that
the employer may set or fix a probationary period within which the latter may test and observe the
conduct of the former before hiring him permanently. x x x.
Within the limited legal six-month probationary period, probationary employees are still entitled to
security of tenure. It is expressly provided in the afore-quoted Article 281 that a probationary
employee may be terminated only on two grounds: (a) for just cause, or (b) when he fails to qualify as
a regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement.4
PDI invokes the second ground under the premises. In claiming that it had adequately apprised
Magtibay of the reasonable standards against which his performance will be gauged for purposes of
permanent employment, PDI cited the one-on-one seminar between Magtibay and its Personnel
Assistant, Ms. Rachel Isip-Cuzio. PDI also pointed to Magtibays direct superior, Benita del Rosario,
who diligently briefed him about his responsibilities in PDI. These factual assertions were never

denied nor controverted by Magtibay. Neither did he belie the existence of a specific rule prohibiting
unauthorized persons from entering the telephone operators booth and that he violated that
prohibition. This notwithstanding, the NLRC and the CA proceeded nonetheless to rule that the
records of the case are bereft of any evidence showing that these rules and regulations form part of
the so-called company standards.
We do not agree with the appellate court when it cleared the NLRC of commission of grave abuse of
discretion despite the latters disregard of clear and convincing evidence that there were reasonable
standards made known by PDI to Magtibay during his probationary employment. It is on record that
Magtibay committed obstinate infractions of company rules and regulations, which in turn constitute
sufficient manifestations of his inadequacy to meet reasonable employment norms. The suggestion
that Magtibay ought to have been made to understand during his briefing and orientation that he is
expected to obey and comply with company rules and regulations strains credulity for acceptance.
The CAs observation that "nowhere can it be found in the list of Basic Responsibility and Specific
Duties and Responsibilities of respondent Magtibay that he has to abide by the duties, rules and
regulations that he has allegedly violated" is a strained rationalization of an unacceptable conduct of
an employee. Common industry practice and ordinary human experience do not support the CAs
posture. All employees, be they regular or probationary, are expected to comply with companyimposed rules and regulations, else why establish them in the first place. Probationary employees
unwilling to abide by such rules have no right to expect, much less demand, permanent employment.
We, therefore find sufficient factual and legal basis, duly established by substantial evidence, for PDI
to legally terminate Magtibays probationary employment effective upon the end of the 6-month
probationary period.
It is undisputed that PDI apprised Magtibay of the ground of his termination, i.e., he failed to qualify as
a regular employee in accordance with reasonable standards made known to him at the time of
engagement, only a week before the expiration of the six-month probationary period. Given this
perspective, does this make his termination unlawful for being violative of his right to due process of
law?
It does not.
Unlike under the first ground for the valid termination of probationary employment which is for just
cause, the second ground does not require notice and hearing. Due process of law for this second
ground consists of making the reasonable standards expected of the employee during his
probationary period known to him at the time of his probationary employment. By the very nature of a
probationary employment, the employee knows from the very start that he will be under close
observation and his performance of his assigned duties and functions would be under continuous
scrutiny by his superiors. It is in apprising him of the standards against which his performance shall
be continuously assessed where due process regarding the second ground lies, and not in notice and
hearing as in the case of the first ground.
Even if perhaps he wanted to, Magtibay cannot deny as he has not denied PDIs assertion that he
was duly apprised of the employment standards expected of him at the time of his probationary
employment when he underwent a one-on-one orientation with PDIs personnel assistant, Ms. Rachel

Isip-Cuzio. Neither has he denied nor rebutted PDIs further claim that his direct superior, Benita del
Rosario, briefed him regarding his responsibilities in PDI.
Lest it be overlooked, Magtibay had previously worked for PDI as telephone operator from February
7, 1995 to July 31, 1995 as a contractual employee. Thus, the Court entertains no doubt that when
PDI took him in on September 21, 1995, Magtibay was already very much aware of the level of
competency and professionalism PDI wanted out of him for the entire duration of his probationary
employment.
PDI was only exercising its statutory hiring prerogative when it refused to hire Magtibay on a
permanent basis upon the expiration of the six-month probationary period. This was established
during the proceedings before the labor arbiter and borne out by the records and the pleadings before
the Court. When the NLRC disregarded the substantial evidence establishing the legal termination of
Magtibays probationary employment and rendered judgment grossly and directly contradicting such
clear evidence, the NLRC commits grave abuse of discretion amounting to lack or excess of
jurisdiction. It was, therefore, reversible error on the part of the appellate court not to annul and set
aside such void judgment of the NLRC.1avvphi1
WHEREFORE, the assailed decision dated May 25, 2004 of the CA in CA G.R. SP No. 78963 is
hereby REVERSED and SET ASIDE, and the earlier resolution dated September 23, 2002 of the
NLRC in NLRC Case No. 00-03-01945-96 is declared NULL and VOID. The earlier decision dated
July 29, 1996 of the Labor Arbiter in NLRC Case No. 011800-96, dismissing respondent Leon
Magtibay, Jr.s complaint for alleged illegal dismissal, is REINSTATED.
No pronouncement as to costs.
SO ORDERED.

16. PINE CITY VS NLRC


PINE CITY EDUCATIONAL CENTER and EUGENIO BALTAO, Petitioners, vs. THE NATIONAL
LABOR RELATIONS COMMISSION (THIRD DIVISION) and DANGWA BENTREZ, ROLAND
PICART, APOLLO RIBAYA, SR., RUPERTA RIBAYA, VIRGINIA BOADO, CECILIA EMOCLING,
JANE BENTREZ, LEILA DOMINGUEZ, ROSE ANN BERMUDEZ and LUCIA CHAN, Respondents.
Tenefrancia, Agranzamendez, Liceralde & Associates for petitioners.chanrobles virtual law library
Reynaldo B. Cajucom for private respondents.
NOCON, J.:
The is a petition for certiorari seeking the reversal of the resolution of public respondent National
Labor Relations Commission dated November 29, 1990, in NLRC Case No. 01-04-0056-89, which
affirmed in toto the decision of the Labor Arbiter dated February
28,1990.chanroblesvirtualawlibrary chanrobles virtual law library

The antecedent facts are, a follows:chanrobles virtual law library


Private respondents Dangwa Bentrez, Roland Picart, Apollo Ribaya, Sr., Ruperta Ribaya, Virginia
Boado, Cecilia Emocling, Jane Bentrez, Leila Dominguez, Rose Ann Bermudez and Lucia Chan were
all employed as teachers on probationary basis by petitioner Pines City Educational Center,
represented in this proceedings by its President, Eugenio Baltao. With the exception of Jane Bentrez
who was hired as a grade school teacher, the remaining private respondents were hired as college
instructors. All the private respondents, except Roland Picart and Lucia Chan, signed contracts of
employment with petitioner for a fixed duration. On March 31, 1989, due to the expiration of private
respondents' contracts and their poor performance as teachers, they were notified of petitioners'
decision not to renew their contracts anymore.chanroblesvirtualawlibrarychanrobles virtual law library
On April 10, 1989, private respondents filed a complaint for illegal dismissal before the Labor Arbiter,
alleging that their dismissals were without cause and in violation of due process. Except for private
respondent Leila Dominguez who worked with petitioners for one semester, all other private
respondents were employed for one to two years. They were never informed in writing by petitioners
regarding the standards or criteria of evaluation so as to enable them to meet the requirements for
appointment as regular employees. They were merely notified in writing by petitioners, through its
chancellor, Dra. Nimia R. Concepcion, of the termination of their respective services as on March 31,
1989, on account of their below-par performance as teachers.chanroblesvirtualawlibrarychanrobles
virtual law library
For their part, petitioners contended that private respondents' separation from employment, apart
from their poor performance, was due to the expiration of the periods stipulated in their respective
contracts. In the case of private respondent Dangwa Bentrez, the duration of his employment contract
was for one year, or beginning June, 1988 to March 1989 whereas in the case of the other private
respondents, the duration of their employment contracts was for one semester, or beginning
November, 1988 to March 1989. These stipulations were the laws that governed their relationships,
and there was nothing in said contracts which was contrary to law, morals, good customs and public
policy. They argued further that they cannot be compelled o enter into new contracts with private
respondents. they concluded that the separation of private respondents from the service was
justified.chanroblesvirtualawlibrarychanrobles virtual law library
On February 28, 1990, the Labor Arbiter rendered judgment in favor of private respondents, the
dispositive portion of which reads:
WHEREFORE, in the light of the foregoing considerations, judgment is hereby rendered ORDERING
the respondents to reinstate the complainants immediately to their former positions and to pay their
full backwages and other benefits and privileges without qualification and deduction from the time
they were dismissed up to their actual reinstatement.chanroblesvirtualawlibrarychanrobles virtual law
library
Thus respondents should pay complainants the following:
BACKWAGES

NOTE: Computation covers only the period complainants were terminated up to January 31, 1990 or
10 months and does not include backwages from January 31, 1990 up to their actual reinstatement.
1) ROLAND PICART
a) Latest salary per month P2,136.00
b) Multiplied by period covered
(March 31, 1989 to January 31, 1990) x 10 months
----c) Equals backwages due P21,360.00
2) LUCIA CHAN
a) Latest salary per month P1,600.00
b) Multiplied by period covered x 10 months
----c) Equals backwages due P16,000.00
3) LEILA DOMINGUEZ
a) Latest salary per month P1,648.24
b) Multiplied by period covered x 10 months
----c) Equals backwages due P16,482.40
4) RUPERTA RIBAYA
a) Latest salary per month P1,856.00
b) Multiplied by period covered x 10 months
----c) Equals backwages due P18,560.00
5) CECILIA EMOCLING
a) Latest salary per month P1,648.00
b) Multiplied by period covered x 10 months
----c) Equals backwages due P16,480.00
6) ROSE ANN BERMUDEZ
a) Latest salary per month P2,600.00
b) Multiplied by period covered x 10 months
----c) Equals backwages due P26,000.00
7) DANGWA BENTREZ

a) Latest salary per month P1,700.00


b) Multiplied by period covered x 10 months
----c) Equals backwages due P17,000.00
8) JANE BENTREZ
a) Latest salary per month P1,315.44
b) ultiplied by period covered x 10 months
----c) Equals backwages due P13,154.40
9) APOLLO RIBAYA
a) Latest salary per month P1,875.00
b) Multiplied by period covered x 10 months
----c) Equals backwages due P18,7500.00
10) VIRGINIA BOADO
a) Latest salary per month P1,648.24
b) Multiplied by period covered x 10 months
----c) Equals backwages due P16,482.40
S U M M AR Y
1) Roland Picart 21,360.00
2) Lucia Chan 16,000.00
3) Leila Dominguez 16,482.40
4) Ruperta Ribaya 18,560.00
5) Cecilia Emocling 16,480.00
6) Rose Ann Bermudez 26,000.00
7) Dangwa Bentrez 17,000.00
8) Jane Bentrez 13,154.40
9) Apollo Ribaya 18,750.00
10) Virginia Boado 16,482.40
----GRAND TOTAL (Backwages) P180,269.20
Complainants claims for indemnity pay, premium pay for holidays and rest days, illegal deduction,
13th month pay and underpayment are hereby DENIED for lack of
merit.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED. 1chanrobles virtual law library

In support of this decision, the Labor Arbiter rationalized that the teacher's contracts 2are vague and
do not include the specific description of duties and assignments of private respondents. They do not
categorically state that there will be no renewal because their appointments automatically terminate at
the end of the semester. Petitioners did not present any written evidence to substantiate their
allegation that the Academic Committee has evaluated private respondents' performance during their
one semester employment. On the contrary, they were hastily
dismissed.chanroblesvirtualawlibrarychanrobles virtual law library
On appeal to the National Labor Relations Commission, the decision was affirmed in toto in its
resolution dated November 29, 1990, with the additional reasoning that "the stipulation in the contract
providing for a definite period in the employment of complainant is obviously null and void, as such
stipulation directly assails the safeguards laid down in Article 280 (of the Labor Code), 3which
explicitly abhors the consideration of written or oral agreements pertaining to definite period in regular
employments. 4Hence, the present petition for certiorari with prayer for the issuance of a temporary
restraining order.chanroblesvirtualawlibrarychanrobles virtual law library
As prayed for, this Court issued a temporary restraining order on March 11, 1991, enjoining
respondents from enforcing the questioned resolution. 5chanrobles virtual law library
Petitioners raise this sole issue: "THAT THERE IS PRIMA FACIE EVIDENCE OF GRAVE ABUSE OF
DISCRETION ON THE PART OF THE LABOR ARBITER BY WANTONLY, CAPRICIOUSLY AND
MALICIOUSLY DISREGARDING PROVISIONS OF THE LAW AND JURISPRUDENCE LAID DOWN
IN DECISIONS OF THE HONORABLE SUPREME COURT." 6chanrobles virtual law library
Petitioners reiterate their previous arguments, relying heavily in the case of Brent School, Inc. et al.,
v. Zamora, et al. 7chanrobles virtual law library
It is quite easy to resolve the present controversy because the Brent case, which is a product of
extensive research, already provides the answer. We were categorical therein that:
Accordingly, and since the entire purpose behind the development of legislation culminating in the
present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent
circumvention of the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written and oral agreements conflicting with the concept
of regular employment as defined therein should be construed to refer to the substantive evil that the
Code itself has singled out: agreements entered into precisely to prevent security of tenure. It should
have no application to instances where a fixed period of employment was agreed upon knowingly
and voluntarily by the parties, without any force, duress or improper pressure brought to bear upon
the employee and absent any other circumstances vitiating his consent, or where it satisfactorily
appears that the employer or employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter. Unless thus limited in its
purview, the law would be made to apply to purposes other than those expressly stated by its
framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences. (Emphasis supplied.)

The ruling was reiterated in Pakistan International Airlines Corporation v. Ople, etc., et al. 8and La
Sallete of Santiago, Inc. v. NLRC, et al. 9
In the present case, however, We have to make a distinction.chanroblesvirtualawlibrarychanrobles
virtual law library
Insofar as the private respondents who knowingly and voluntarily agreed upon fixed periods of
employment are concerned, their services were lawfully terminated by reason of the expiration of the
periods of their respective contracts. These are Dangwa Bentrez, Apollo Ribaya, Sr., Ruperta Ribaya,
Virginia Boado, Cecilia Emocling, Jose Bentrez, Leila Dominguez and Rose Ann Bermudez. Thus,
public respondent committed grave abuse of discretion in affirming the decision of the Labor Arbiter
ordering the reinstatement and payment of full backwages and other benefits and
privileges.chanroblesvirtualawlibrarychanrobles virtual law library
With respect to private respondents Roland Picart and Lucia Chan, both of whom did not sign any
contract fixing the periods of their employment nor to have knowingly and voluntarily agreed upon
fixed periods of employment, petitioners had the burden of proving that the termination of their
services was legal. As probationary employees, they are likewise protected by the security of tenure
provision of the Constitution. Consequently, they cannot be removed from their positions unless for
cause. 10On the other hand, petitioner contended that base don the evaluation of the Academic
Committee their performance as teachers was poor. The Labor Arbiter, however, was not convinced.
Thus he found as follows:
Respondents likewise aver that the Academic Committee has evaluated their performance during
their one semester employment (see Annexes "M" to "X" of complainants' position paper). However,
they did not present any written proofs or evidence to support their allegation. 11
xxx xxx xxxchanrobles virtual law library
There is absolutely nothing in the record which will show that the complainants were afforded even an
iota of chance to refute respondents' allegations that the complainants did not meet the reasonable
standards and criteria set by the school. . . . 12chanrobles virtual law library
We concur with these factual findings, there being no showing that they were resolved
arbitrarily. 13 Thus, the order for their reinstatement and payment of full backwages and other benefits
and privileges from the time they were dismissed up to their actual reinstatement is proper,
conformably with Article 279 of the Labor Code, as amended by Section 34 of Republic Act No.
6715, 14which took effect on March 21, 1989. 15It should be noted that private respondents Roland
Picart and Lucia Chan were dismissed illegally on March 31, 1989, or after the effectivity of said
amendatory law. However, in ascertaining the total amount of backwages payable to them, we go
back to the rule prior to the mercury drug rule 16that the total amount derived from employment
elsewhere by the employee from the date of dismissal up to the date of reinstatement, if any, should
be deducted therefrom. 17 We restate the underlying reason that employees should not be permitted
to enrich themselves at the expense of their employer. 18 In addition, the law abhors double
compensation. 19 to this extent, our ruling in Alex Ferrer, et al., v. NLRC, et al., G.R. No. 100898,

promulgated on July 5, 1993, is hereby modified.chanroblesvirtualawlibrarychanrobles virtual law


library
Public respondent cannot claim not knowing the ruling in the Brent case because in its questioned
resolution, it is stated that one of the cases invoked by petitioners in their appeal is said case. 20 This
notwithstanding, it disregarded Our ruling therein without any reason at all and expressed the
erroneous view that:
The agreement of the parties fixing a definite date for the termination of the employment relations is
contrary to the specific provision of Article 280. being contrary to law, the agreement cannot be
legitimized. . . . 21chanrobles virtual law library
Stare decisis et no quieta movere. Once a case ha been decided one way, then another case,
involving exactly the same point at issue, should be decided in the same manner. Public respondent
had no choice on the matter. It could not have ruled in any other way. This Tribunal having spoken in
the Brent case, its duty was to obey. 22Let it be warned that to defy its decisions is to court
contempt. 23chanrobles virtual law library
WHEREFORE, the resolution of public respondent National Labor Relations Commission dated
November 29, 1990 is hereby MODIFIED. private respondents Roland Picart and Lucia Chan are
ordered reinstated without loss of seniority rights and other privileges and their backwages paid in full
inclusive of allowances, and to their other benefits or their monetary equivalent pursuant to Article 279
of the Labor Code, as amended by Section 34 of Republic Act No. 6715, subject to deduction of
income earned elsewhere during the period of dismissal, if any, to be computed from the time they
were dismissed up to the time of their actual reinstatement. the rest of the Labor Arbiter's decision
dated February 28, 1990, as affirmed by the NLRC is set aside. The temporary restraining order
issued on March 11, 1991 is made permanent.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED.

17. PRICE VS INNODATA


G.R. No. 178505
CHERRY J. PRICE, STEPHANIE G. DOMINGO
AND LOLITA ARBILERA, Petitioners,
- versus INNODATA PHILS. INC.,/ INNODATA
CORPORATION, LEO RABANG AND JANE
NAVARETTE, Respondents.

Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
Promulgated:

September 30, 2008


x------------------------------------------------x
DECISION
CHICO-NAZARIO, J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision 1 dated
25 September 2006 and Resolution2 dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No.
72795, which affirmed the Decision dated 14 December 2001 of the National Labor Relations
Commission (NLRC) in NLRC NCR Case No. 30-03-01274-2000 finding that petitioners were not
illegally dismissed by respondents.
The factual antecedents of the case are as follows:
Respondent Innodata Philippines, Inc./Innodata Corporation (INNODATA) was a domestic corporation
engaged in the data encoding and data conversion business. It employed encoders, indexers,
formatters, programmers, quality/quantity staff, and others, to maintain its business and accomplish
the job orders of its clients. Respondent Leo Rabang was its Human Resources and Development
(HRAD) Manager, while respondent Jane Navarette was its Project Manager. INNODATA had since
ceased operations due to business losses in June 2002.
Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera were employed as formatters
by INNODATA. The parties executed an employment contract denominated as a "Contract of
Employment for a Fixed Period," stipulating that the contract shall be for a period of one year, 3 to wit:
CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD
xxxx
WITNESSETH: That
WHEREAS, the EMPLOYEE has applied for the position of FORMATTER and in the course thereof
and represented himself/herself to be fully qualified and skilled for the said position;
WHEREAS, the EMPLOYER, by reason of the aforesaid representations, is desirous of engaging that
the (sic) services of the EMPLOYEE for a fixed period;
NOW, THEREFORE, for and in consideration of the foregoing premises, the parties have mutually
agreed as follows:
TERM/DURATION
The EMPLOYER hereby employs, engages and hires the EMPLOYEE and the EMPLOYEE hereby
accepts such appointment as FORMATTER effective FEB. 16, 1999 to FEB. 16, 2000 a period of
ONE YEAR.
xxxx

TERMINATION
6.1 In the event that EMPLOYER shall discontinue operating its business, this CONTRACT shall also
ipso facto terminate on the last day of the month on which the EMPLOYER ceases operations with
the same force and effect as is such last day of the month were originally set as the termination date
of this Contract. Further should the Company have no more need for the EMPLOYEEs services on
account of completion of the project, lack of work (sic) business losses, introduction of new
production processes and techniques, which will negate the need for personnel, and/or overstaffing,
this contract maybe pre-terminated by the EMPLOYER upon giving of three (3) days notice to the
employee.
6.2 In the event period stipulated in item 1.2 occurs first vis--vis the completion of the project, this
contract shall automatically terminate.
6.3 COMPANYs Policy on monthly productivity shall also apply to the EMPLOYEE.
6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause,
by giving at least Fifteen (15) notice to that effect. Provided, that such pre-termination shall be
effective only upon issuance of the appropriate clearance in favor of the said EMPLOYEE.
6.5 Either of the parties may terminate this Contract by reason of the breach or violation of the terms
and conditions hereof by giving at least Fifteen (15) days written notice. Termination with cause under
this paragraph shall be effective without need of judicial action or approval. 4
During their employment as formatters, petitioners were assigned to handle jobs for various clients of
INNODATA, among which were CAS, Retro, Meridian, Adobe, Netlib, PSM, and Earthweb. Once they
finished the job for one client, they were immediately assigned to do a new job for another client.
On 16 February 2000, the HRAD Manager of INNODATA wrote petitioners informing them of their last
day of work. The letter reads:
RE: End of Contract
Date: February 16, 2000
Please be informed that your employment ceases effective at the end of the close of business hours
on February 16, 2000.5
According to INNODATA, petitioners employment already ceased due to the end of their contract.
On 22 May 2000, petitioners filed a Complaint6 for illegal dismissal and damages against
respondents. Petitioners claimed that they should be considered regular employees since their
positions as formatters were necessary and desirable to the usual business of INNODATA as an
encoding, conversion and data processing company. Petitioners also averred that the decisions in
Villanueva v. National Labor Relations Commission 7 and Servidad v. National Labor Relations
Commission,8 in which the Court already purportedly ruled "that the nature of employment at Innodata
Phils., Inc. is regular,"9 constituted stare decisis to the present case. Petitioners finally argued that
they could not be considered project employees considering that their employment was not
coterminous with any project or undertaking, the termination of which was predetermined.

On the other hand, respondents explained that INNODATA was engaged in the business of data
processing, typesetting, indexing, and abstracting for its foreign clients. The bulk of the work was data
processing, which involved data encoding. Data encoding, or the typing of data into the computer,
included pre-encoding, encoding 1 and 2, editing, proofreading, and scanning. Almost half of the
employees of INNODATA did data encoding work, while the other half monitored quality control. Due
to the wide range of services rendered to its clients, INNODATA was constrained to hire new
employees for a fixed period of not more than one year. Respondents asserted that petitioners were
not illegally dismissed, for their employment was terminated due to the expiration of their terms of
employment. Petitioners contracts of employment with INNODATA were for a limited period only,
commencing on 6 September 1999 and ending on 16 February 2000. 10 Respondents further argued
that petitioners were estopped from asserting a position contrary to the contracts which they had
knowingly, voluntarily, and willfully agreed to or entered into. There being no illegal dismissal,
respondents likewise maintained that petitioners were not entitled to reinstatement and backwages.
On 17 October 2000, the Labor Arbiter11 issued its Decision12 finding petitioners complaint for illegal
dismissal and damages meritorious. The Labor Arbiter held that as formatters, petitioners occupied
jobs that were necessary, desirable, and indispensable to the data processing and encoding business
of INNODATA. By the very nature of their work as formatters, petitioners should be considered regular
employees of INNODATA, who were entitled to security of tenure. Thus, their termination for no just or
authorized cause was illegal. In the end, the Labor Arbiter decreed:
FOREGOING PREMISES CONSIDERED, judgment is hereby rendered declaring complainants
dismissal illegal and ordering respondent INNODATA PHILS. INC./INNODATA CORPORATION to
reinstate them to their former or equivalent position without loss of seniority rights and benefits.
Respondent company is further ordered to pay complainants their full backwages plus ten percent
(10%) of the totality thereof as attorneys fees. The monetary awards due the complainants as of the
date of this decision are as follows:
A. Backwages
1. Cherry J. Price
2/17/2000 10/17/2000 at 223.50/day
P5,811.00/mo/ x 8 mos. P46,488.00
2. Stephanie Domingo 46,488.00
(same computation)
3. Lolita Arbilera 46,488.00
(same computation)
Total Backwages P139,464.00
B. Attorneys fees (10% of total award) 13,946.40
Total Award P153,410.40

Respondent INNODATA appealed the Labor Arbiters Decision to the NLRC. The NLRC, in its
Decision dated 14 December 2001, reversed the Labor Arbiters Decision dated 17 October 2000,
and absolved INNODATA of the charge of illegal dismissal.
The NLRC found that petitioners were not regular employees, but were fixed-term employees as
stipulated in their respective contracts of employment. The NLRC applied Brent School, Inc. v.
Zamora13 and St. Theresas School of Novaliches Foundation v. National Labor Relations
Commission,14 in which this Court upheld the validity of fixed-term contracts. The determining factor of
such contracts is not the duty of the employee but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship. The NLRC observed that the
petitioners freely and voluntarily entered into the fixed-term employment contracts with INNODATA.
Hence, INNODATA was not guilty of illegal dismissal when it terminated petitioners employment upon
the expiration of their contracts on 16 February 2000.
The dispositive portion of the NLRC Decision thus reads:
WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and SET
ASIDE and a new one entered DISMISSING the instant complaint for lack of merit. 15
The NLRC denied petitioners Motion for Reconsideration in a Resolution dated 28 June 2002. 16
In a Petition for Certiorari under Rule 65 of the Rules of Court filed before the Court of Appeals,
petitioners prayed for the annulment, reversal, modification, or setting aside of the Decision dated 14
December 2001 and Resolution dated 28 June 2002 of the NLRC.lawphil.net
On 25 September 2006, the Court of Appeals promulgated its Decision sustaining the ruling of the
NLRC that petitioners were not illegally dismissed.
The Court of Appeals ratiocinated that although this Court declared in Villanueva and Servidad that
the employees of INNODATA working as data encoders and abstractors were regular, and not
contractual, petitioners admitted entering into contracts of employment with INNODATA for a term of
only one year and for a project called Earthweb. According to the Court of Appeals, there was no
showing that petitioners entered into the fixed-term contracts unknowingly and involuntarily, or
because INNODATA applied force, duress or improper pressure on them. The appellate court also
observed that INNODATA and petitioners dealt with each other on more or less equal terms, with no
moral dominance exercised by the former on latter. Petitioners were therefore bound by the
stipulations in their contracts terminating their employment after the lapse of the fixed term.
The Court of Appeals further expounded that in fixed-term contracts, the stipulated period of
employment is governing and not the nature thereof. Consequently, even though petitioners were
performing functions that are necessary or desirable in the usual business or trade of the employer,
petitioners did not become regular employees because their employment was for a fixed term, which
began on 16 February 1999 and was predetermined to end on 16 February 2000.
The appellate court concluded that the periods in petitioners contracts of employment were not
imposed to preclude petitioners from acquiring security of tenure; and, applying the ruling of this
Court in Brent, declared that petitioners fixed-term employment contracts were valid. INNODATA did
not commit illegal dismissal for terminating petitioners employment upon the expiration of their
contracts.
The Court of Appeals adjudged:

WHEREFORE, the instant petition is hereby DENIED and the Resolution dated December 14, 2001
of the National Labor Relations Commission declaring petitioners were not illegally dismissed is
AFFIRMED.17
The petitioners filed a Motion for Reconsideration of the afore-mentioned Decision of the Court of
Appeals, which was denied by the same court in a Resolution dated 15 June 2007.
Petitioners are now before this Court via the present Petition for Review on Certiorari, based on the
following assignment of errors:
I.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND
GRAVE ABUSE OF DISCRETION WHEN IT DID NOT APPLY THE SUPREME COURT
RULING IN THE CASE OF NATIVIDAD & QUEJADA THAT THE NATURE OF EMPLOYMENT
OF RESPONDENTS IS REGULAR NOT FIXED, AND AS SO RULED IN AT LEAST TWO
OTHER CASES AGAINST INNODATA PHILS. INC.
II.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN
RULING THAT THE STIPULATION OF CONTRACT IS GOVERNING AND NOT THE NATURE
OF EMPLOYMENT AS DEFINED BY LAW.
III.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION WHEN IT DID NOT CONSIDER THE EVIDENCE
ON RECORD SHOWING THAT THERE IS CLEAR CIRCUMVENTION OF THE LAW ON
SECURITY OF TENURE THROUGH CONTRACT MANIPULATION.18
The issue of whether petitioners were illegally dismissed by respondents is ultimately dependent on
the question of whether petitioners were hired by INNODATA under valid fixed-term employment
contracts.
After a painstaking review of the arguments and evidences of the parties, the Court finds merit in the
present Petition. There were no valid fixed-term contracts and petitioners were regular employees of
the INNODATA who could not be dismissed except for just or authorized cause.
The employment status of a person is defined and prescribed by law and not by what the parties say
it should be.19 Equally important to consider is that a contract of employment is impressed with public
interest such that labor contracts must yield to the common good. 20 Thus, provisions of applicable
statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves
and their relationships from the impact of labor laws and regulations by simply contracting with each
other.21
Regular employment has been defined by Article 280 of the Labor Code, as amended, which reads:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed
to be regular where the employee has been engaged to perform activities which are usually

necessary or desirable in the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of engagement of the employee or where the work or services to be performed
is seasonal in nature and employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph.
Provided, That, any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which he
is employed and his employment shall continue while such activity exists. (Underscoring ours).
Based on the afore-quoted provision, the following employees are accorded regular status: (1) those
who are engaged to perform activities which are necessary or desirable in the usual business or trade
of the employer, regardless of the length of their employment; and (2) those who were initially hired
as casual employees, but have rendered at least one year of service, whether continuous or broken,
with respect to the activity in which they are employed.
Undoubtedly, petitioners belong to the first type of regular employees.
Under Article 280 of the Labor Code, the applicable test to determine whether an employment should
be considered regular or non-regular is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the employer.22
In the case at bar, petitioners were employed by INNODATA on 17 February 1999 as formatters. The
primary business of INNODATA is data encoding, and the formatting of the data entered into the
computers is an essential part of the process of data encoding. Formatting organizes the data
encoded, making it easier to understand for the clients and/or the intended end users thereof.
Undeniably, the work performed by petitioners was necessary or desirable in the business or trade of
INNODATA.
However, it is also true that while certain forms of employment require the performance of usual or
desirable functions and exceed one year, these do not necessarily result in regular employment under
Article 280 of the Labor Code.23 Under the Civil Code, fixed-term employment contracts are not
limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects
with predetermined dates of completion; they also include those to which the parties by free choice
have assigned a specific date of termination. 24
The decisive determinant in term employment is the day certain agreed upon by the parties for the
commencement and termination of their employment relationship, a day certain being understood to
be that which must necessarily come, although it may not be known when. Seasonal employment and
employment for a particular project are instances of employment in which a period, where not
expressly set down, is necessarily implied.25
Respondents maintain that the contracts of employment entered into by petitioners with INNDOATA
were valid fixed-term employment contracts which were automatically terminated at the expiry of the
period stipulated therein, i.e., 16 February 2000.
The Court disagrees.
While this Court has recognized the validity of fixed-term employment contracts, it has consistently
held that this is the exception rather than the general rule. More importantly, a fixed-term employment
is valid only under certain circumstances. In Brent, the very same case invoked by respondents, the

Court identified several circumstances wherein a fixed-term is an essential and natural


appurtenance, to wit:
Some familiar examples may be cited of employment contracts which may be neither for seasonal
work nor for specific projects, but to which a fixed term is an essential and natural appurtenance:
overseas employment contracts, for one, to which, whatever the nature of the engagement, the
concept of regular employment with all that it implies does not appear ever to have been applied,
Article 280 of the Labor Code notwithstanding; also appointments to the positions of dean, assistant
dean, college secretary, principal, and other administrative offices in educational institutions, which
are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity
without which no reasonable rotation would be possible. Similarly, despite the provisions of Article
280, Policy Instructions No. 8 of the Minister of Labor implicitly recognize that certain company
officials may be elected for what would amount to fixed periods, at the expiration of which they would
have to stand down, in providing that these officials, "x x may lose their jobs as president, executive
vice-president or vice president, etc. because the stockholders or the board of directors for one
reason or another did not reelect them." 26
As a matter of fact, the Court, in its oft-quoted decision in Brent, also issued a stern admonition that
where, from the circumstances, it is apparent that the period was imposed to preclude the acquisition
of tenurial security by the employee, then it should be struck down as being contrary to law, morals,
good customs, public order and public policy.27
After considering petitioners contracts in their entirety, as well as the circumstances surrounding
petitioners employment at INNODATA, the Court is convinced that the terms fixed therein were
meant only to circumvent petitioners right to security of tenure and are, therefore, invalid.
The contracts of employment submitted by respondents are highly suspect for not only being
ambiguous, but also for appearing to be tampered with.
Petitioners alleged that their employment contracts with INNODATA became effective 16 February
1999, and the first day they reported for work was on 17 February 1999. The Certificate of
Employment issued by the HRAD Manager of INNODATA also indicated that petitioners Price and
Domingo were employed by INNODATA on 17 February 1999.
However, respondents asserted before the Labor Arbiter that petitioners employment contracts were
effective only on 6 September 1999. They later on admitted in their Memorandum filed with this Court
that petitioners were originally hired on 16 February 1999 but the project for which they were
employed was completed before the expiration of one year. Petitioners were merely rehired on 6
September 1999 for a new project. While respondents submitted employment contracts with 6
September 1999 as beginning date of effectivity, it is obvious that in one of them, the original
beginning date of effectivity, 16 February 1999, was merely crossed out and replaced with 6
September 1999. The copies of the employment contracts submitted by petitioners bore similar
alterations.
The Court notes that the attempt to change the beginning date of effectivity of petitioners contracts
was very crudely done. The alterations are very obvious, and they have not been initialed by the
petitioners to indicate their assent to the same. If the contracts were truly fixed-term contracts, then a
change in the term or period agreed upon is material and would already constitute a novation of the
original contract.
Such modification and denial by respondents as to the real beginning date of petitioners employment
contracts render the said contracts ambiguous. The contracts themselves state that they would be

effective until 16 February 2000 for a period of one year. If the contracts took effect only on 6
September 1999, then its period of effectivity would obviously be less than one year, or for a period of
only about five months.
Obviously, respondents wanted to make it appear that petitioners worked for INNODATA for a period
of less than one year. The only reason the Court can discern from such a move on respondents part
is so that they can preclude petitioners from acquiring regular status based on their employment for
one year. Nonetheless, the Court emphasizes that it has already found that petitioners should be
considered regular employees of INNODATA by the nature of the work they performed as formatters,
which was necessary in the business or trade of INNODATA. Hence, the total period of their
employment becomes irrelevant.
Even assuming that petitioners length of employment is material, given respondents muddled
assertions, this Court adheres to its pronouncement in Villanueva v. National Labor Relations
Commission,28 to the effect that where a contract of employment, being a contract of adhesion, is
ambiguous, any ambiguity therein should be construed strictly against the party who prepared it. The
Court is, thus, compelled to conclude that petitioners contracts of employment became effective on
16 February 1999, and that they were already working continuously for INNODATA for a year.
Further attempting to exonerate itself from any liability for illegal dismissal, INNODATA contends that
petitioners were project employees whose employment ceased at the end of a specific project or
undertaking. This contention is specious and devoid of merit.
In Philex Mining Corp. v. National Labor Relations Commission, 29 the Court defined "project
employees" as those workers hired (1) for a specific project or undertaking, and wherein (2) the
completion or termination of such project has been determined at the time of the engagement of the
employee.
Scrutinizing petitioners employment contracts with INNODATA, however, failed to reveal any mention
therein of what specific project or undertaking petitioners were hired for. Although the contracts made
general references to a "project," such project was neither named nor described at all therein. The
conclusion by the Court of Appeals that petitioners were hired for the Earthweb project is not
supported by any evidence on record. The one-year period for which petitioners were hired was
simply fixed in the employment contracts without reference or connection to the period required for
the completion of a project. More importantly, there is also a dearth of evidence that such project or
undertaking had already been completed or terminated to justify the dismissal of petitioners. In fact,
petitioners alleged - and respondents failed to dispute that petitioners did not work on just one project,
but continuously worked for a series of projects for various clients of INNODATA.
In Magcalas v. National Labor Relations Commission,30 the Court struck down a similar claim by the
employer therein that the dismissed employees were fixed-term and project employees. The Court
here reiterates the rule that all doubts, uncertainties, ambiguities and insufficiencies should be
resolved in favor of labor. It is a well-entrenched doctrine that in illegal dismissal cases, the employer
has the burden of proof. This burden was not discharged in the present case.
As a final observation, the Court also takes note of several other provisions in petitioners
employment contracts that display utter disregard for their security of tenure. Despite fixing a period
or term of employment, i.e., one year, INNODATA reserved the right to pre-terminate petitioners
employment under the following circumstances:
6.1 x x x Further should the Company have no more need for the EMPLOYEEs services on account
of completion of the project, lack of work (sic) business losses, introduction of new production

processes and techniques, which will negate the need for personnel, and/or overstaffing, this contract
maybe pre-terminated by the EMPLOYER upon giving of three (3) days notice to the employee.
xxxx
6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause,
by giving at least Fifteen (15) [day] notice to that effect. Provided, that such pre-termination shall be
effective only upon issuance of the appropriate clearance in favor of the said EMPLOYEE. (Emphasis
ours.)
Pursuant to the afore-quoted provisions, petitioners have no right at all to expect security of tenure,
even for the supposedly one-year period of employment provided in their contracts, because they can
still be pre-terminated (1) upon the completion of an unspecified project; or (2) with or without cause,
for as long as they are given a three-day notice. Such contract provisions are repugnant to the basic
tenet in labor law that no employee may be terminated except for just or authorized cause.
Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of
security of tenure and free them from the bondage of uncertainty of tenure woven by some employers
into their contracts of employment. This was exactly the purpose of the legislators in drafting Article
280 of the Labor Code to prevent the circumvention by unscrupulous employers of the employees
right to be secure in his tenure by indiscriminately and completely ruling out all written and oral
agreements inconsistent with the concept of regular employment.
In all, respondents insistence that it can legally dismiss petitioners on the ground that their term of
employment has expired is untenable. To reiterate, petitioners, being regular employees of
INNODATA, are entitled to security of tenure. In the words of Article 279 of the Labor Code:
ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement.
By virtue of the foregoing, an illegally dismissed employee is entitled to reinstatement without loss of
seniority rights and other privileges, with full back wages computed from the time of dismissal up to
the time of actual reinstatement.
Considering that reinstatement is no longer possible on the ground that INNODATA had ceased its
operations in June 2002 due to business losses, the proper award is separation pay equivalent to one
month pay31 for every year of service, to be computed from the commencement of their employment
up to the closure of INNODATA.
The amount of back wages awarded to petitioners must be computed from the time petitioners were
illegally dismissed until the time INNODATA ceased its operations in June 2002. 32
Petitioners are further entitled to attorneys fees equivalent to 10% of the total monetary award herein,
for having been forced to litigate and incur expenses to protect their rights and interests herein.
Finally, unless they have exceeded their authority, corporate officers are, as a general rule, not
personally liable for their official acts, because a corporation, by legal fiction, has a personality
separate and distinct from its officers, stockholders and members. Although as an exception,

corporate directors and officers are solidarily held liable with the corporation, where terminations of
employment are done with malice or in bad faith, 33 in the absence of evidence that they acted with
malice or bad faith herein, the Court exempts the individual respondents, Leo Rabang and Jane
Navarette, from any personal liability for the illegal dismissal of petitioners.
WHEREFORE, the Petition for Review on Certiorari is GRANTED. The Decision dated 25 September
2006 and Resolution dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No. 72795are
hereby REVERSED and SET ASIDE. RespondentInnodata Philippines, Inc./Innodata Corporation
is ORDERED to pay petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera: (a)
separation pay, in lieu of reinstatement, equivalent to one month pay for every year of service, to be
computed from the commencement of their employment up to the date respondent Innodata
Philippines, Inc./Innodata Corporation ceased operations; (b) full backwages, computed from the time
petitioners compensation was withheld from them up to the time respondent Innodata Philippines,
Inc./Innodata Corporation ceased operations; and (3) 10% of the total monetary award as attorneys
fees. Costs against respondent Innodata Philippines, Inc./Innodata Corporation.
SO ORDERED.
17. PUREFOODS VS NLRC
PURE FOODS CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, RODOLFO CORDOVA, VIOLETA CRUSIS, ET
AL., * respondents.

DAVIDE, JR., J.:


The crux of this petition for certiorari is the issue of whether employees hired for a definite period and
whose services are necessary and desirable in the usual business or trade of the employer are
regular employees.
The private respondents (numbering 906) were hired by petitioner Pure Foods Corporation to work for
a fixed period of five months at its tuna cannery plant in Tambler, General Santos City. After the
expiration of their respective contracts of employment in June and July 1991, their services were
terminated. They forthwith executed a "Release and Quitclaim" stating that they had no claim
whatsoever against the petitioner.
On 29 July 1991, the private respondents filed before the National Labor Relations Commission
(NLRC) Sub-Regional Arbitration Branch No. XI, General Santos City, a complaint for illegal dismissal
against the petitioner and its plant manager, Marciano Aganon. 1 This case was docketed as RAB-1108-50284-91.
On 23 December 1992, Labor Arbiter Arturo P. Aponesto handed down a decision 2 dismissing the
complaint on the ground that the private respondents were mere contractual workers, and not regular
employees; hence, they could not avail of the law on security of tenure. The termination of their

services by reason of the expiration of their contracts of employment was, therefore, justified. He
pointed out that earlier he had dismissed a case entitled "Lakas ng Anak-Pawis-NOWM v. Pure Foods
Corp." (Case No. RAB-11-02-00088-88) because the complainants therein were not regular
employees of Pure Foods, as their contracts of employment were for a fixed period of five months.
Moreover, in another case involving the same contractual workers of Pure Foods (Case No. R-196ROXI-MED-UR-55-89), then Secretary of Labor Ruben Torres held, in a Resolution dated 30 April
1990, that the said contractual workers were not regular employees.
The Labor Arbiter also observed that an order for private respondents' reinstatement would result in
the reemployment of more than 10,000 former contractual employees of the petitioner. Beside, by
executing a "Release and Quitclaim," the private respondents had waived and relinquished whatever
right they might have against the petitioner.
The private respondents appealed from the decision to the National Labor Relations Commission
(NLRC), Fifth Division, in Cagayan de Oro City, which docketed the case as NLRC CA No. M-00132393.
On 28 October 1994, the NLRC affirmed the Labor Arbiter's decision. 3 However, on private
respondents' motion for reconsideration, the NLRC rendered another decision on 30 January
1995 4 vacating and setting aside its decision of 28 October 1994 and holding that the private
respondent and their co-complainants were regular employees. It declared that the contract of
employment for five months was a "clandestine scheme employed by [the petitioner] to stifle [private
respondents'] right to security of tenure" and should therefore be struck down and disregarded for
being contrary to law, public policy, and morals. Hence, their dismissal on account of the expiration of
their respective contracts was illegal.
Accordingly, the NLRC ordered the petitioner to reinstate the private respondents to their former
position without loss of seniority rights and other privileges, with full back wages; and in case their
reinstatement would no longer be feasible, the petitioner should pay them separation pay equivalent
to one-month pay or one-half-month pay for every year of service, whichever is higher, with back
wages and 10% of the monetary award as attorney's fees.
Its motion for reconsideration having been denied, 5 the petitioner came to this Court contending that
respondent NLRC committed grave abuse of discretion amounting to lack of jurisdiction in reversing
the decision of the Labor Arbiter.
The petitioner submits that the private respondents are now estopped from questioning their
separation from petitioner's employ in view of their express conformity with the five-month duration of
their employment contracts. Besides, they fell within the exception provided in Article 280 of the Labor
Code which reads: "[E]xcept where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the
engagement of the employee." Moreover, the first paragraph of the said article must be read and
interpreted in conjunction with the proviso in the second paragraph, which reads: "Provided that any
employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed . .
." In the instant case, the private respondents were employed for a period of five months only. In any

event, private respondents' prayer for reinstatement is well within the purview of the "Release and
Quitclaim" they had executed wherein they unconditionally released the petitioner from any and all
other claims which might have arisen from their past employment with the petitioner.
In its Comment, the Office of the Solicitor General (OSG) advances the argument that the private
respondents were regular employees, since they performed activities necessary and desirable in the
business or trade of the petitioner. The period of employment stipulated in the contracts of
employment was null and void for being contrary to law and public policy, as its purpose was to
circumvent the law on security of tenure. The expiration of the contract did not, therefore, justify the
termination of their employment.
The OSG further maintains that the ruling of the then Secretary of Labor and Employment in LAPNOWM v. Pure Foods Corporation is not binding on this Court; neither is that ruling controlling, as the
said case involved certification election and not the issue of the nature of private respondents'
employment. It also considers private respondents' quitclaim as ineffective to bar the enforcement for
the full measure of their legal rights.
The private respondents, on the other hand, argue that contracts with a specific period of employment
may be given legal effect provided, however, that they are not intended to circumvent the
constitutional guarantee on security of tenure. They submit that the practice of the petitioner in hiring
workers to work for a fixed duration of five months only to replace them with other workers of the
same employment duration was apparently to prevent the regularization of these so-called "casuals,"
which is a clear circumvention of the law on security of tenure.
We find the petition devoid of merit.
Article 280 of the Labor Code defines regular and casual employment as follows:
Art. 280. Regular and Casual Employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral argument of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph; Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment shall
continue while such activity exists.
Thus, the two kinds of regular employees are (1) those who are engaged to perform activities which
are necessary or desirable in the usual business or trade of the employer; and (2) those casual

employees who have rendered at least one year of service, whether continuous or broken, with
respect to the activity in which they are employed. 6
In the instant case, the private respondents' activities consisted in the receiving, skinning, loining,
packing, and casing-up of tuna fish which were then exported by the petitioner. Indisputably, they
were performing activities which were necessary and desirable in petitioner's business or trade.
Contrary to petitioner's submission, the private respondents could not be regarded as having been
hired for a specific project or undertaking. The term "specific project or undertaking" under Article 280
of the Labor Code contemplates an activity which is not commonly or habitually performed or such
type of work which is not done on a daily basis but only for a specific duration of time or until
completion; the services employed are then necessary and desirable in the employer's usual
business only for the period of time it takes to complete the project. 7
The fact that the petitioner repeatedly and continuously hired workers to do the same kind of work as
that performed by those whose contracts had expired negates petitioner's contention that those
workers were hired for a specific project or undertaking only.
Now on the validity of private respondents' five-month contracts of employment. In the leading case
of Brent School, Inc. v. Zamora, 8 which was reaffirmed in numerous subsequent cases, 9 this Court
has upheld the legality of fixed-term employment. It ruled that the decisive determinant in term
employment should not be the activities that the employee is called upon to perform but the day
certain agreed upon by the parties for the commencement and termination of their employment
relationship. But, this Court went on to say that where from the circumstances it is apparent that the
periods have been imposed to preclude acquisition of tenurial security by the employee, they should
be struck down or disregarded as contrary to public policy and morals.
Brent also laid down the criteria under which term employment cannot be said to be in circumvention
of the law on security of tenure:
1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without
any force, duress, or improper pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other on more or less
equal terms with no moral dominance exercised by the former over the latter. 10
None of these criteria had been met in the present case. As pointed out by the private respondents:
[I]t could not be supposed that private respondents and all other so-called "casual"
workers of [the petitioner] KNOWINGLY and VOLUNTARILY agreed to the 5-month
employment contract. Cannery workers are never on equal terms with their employers.
Almost always, they agree to any terms of an employment contract just to get employed
considering that it is difficult to find work given their ordinary qualifications. Their
freedom to contract is empty and hollow because theirs is the freedom to starve if they
refuse to work as casual or contractual workers. Indeed, to the unemployed, security of

tenure has no value. It could not then be said that petitioner and private respondents
"dealt with each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter. 10
The petitioner does not deny or rebut private respondents' averments (1) that the main bulk of its
workforce consisted of its so-called "casual" employees; (2) that as of July 1991, "casual" workers
numbered 1,835; and regular employee, 263; (3) that the company hired "casual" every month for the
duration of five months, after which their services were terminated and they were replaced by other
"casual" employees on the same five-month duration; and (4) that these "casual" employees were
actually doing work that were necessary and desirable in petitioner's usual business.
As a matter of fact, the petitioner even stated in its position paper submitted to the Labor Arbiter that,
according to its records, the previous employees of the company hired on a five-month basis
numbered about 10,000 as of July 1990. This confirms private respondents' allegation that it was
really the practice of the company to hire workers on a uniformly fixed contract basis and replace
them upon the expiration of their contracts with other workers on the same employment duration.
This scheme of the petitioner was apparently designed to prevent the private respondents and the
other "casual" employees from attaining the status of a regular employee. It was a clear
circumvention of the employees' right to security of tenure and to other benefits like minimum wage,
cost-of-living allowance, sick leave, holiday pay, and 13th month pay. 11 Indeed, the petitioner
succeeded in evading the application of labor laws. Also, it saved itself from the trouble or burden of
establishing a just cause for terminating employees by the simple expedient of refusing to renew the
employment contracts.
The five-month period specified in private respondents' employment contracts having been imposed
precisely to circumvent the constitutional guarantee on security of tenure should, therefore, be struck
down or disregarded as contrary to public policy or morals. 12 To uphold the contractual arrangement
between the petitioner and the private respondents would, in effect, permit the former to avoid hiring
permanent or regular employees by simply hiring them on a temporary or casual basis, thereby
violating the employees' security of tenure in their jobs. 13
The execution by the private respondents of a "Release and Quitclaim" did not preclude them from
questioning the termination of their services. Generally, quitclaims by laborers are frowned upon as
contrary to public policy and are held to be ineffective to bar recovery for the full measure of the
workers' rights. 14 The reason for the rule is that the employer and the employee do not stand on the
same footing. 15
Notably, the private respondents lost not time in filing a complaint for illegal dismissal. This act is
hardly expected from employees who voluntarily and freely consented to their dismissal. 16
The NLRC was, thus, correct in finding that the private respondents were regular employees and that
they were illegally dismissed from their jobs. Under Article 279 of the Labor Code and the recent
jurisprudence, 17 the legal consequence of illegal dismissal is reinstatement without loss of seniority
rights and other privileges, with full back wages computed from the time of dismissal up to the time of

actual reinstatement, without deducting the earnings derived elsewhere pending the resolution of the
case.
However, since reinstatement is no longer possible because the petitioner's tuna cannery plant had,
admittedly, been close in November 1994, 18 the proper award is separation pay equivalent to one
month pay or one-half month pay for every year of service, whichever is higher, to be computed from
the commencement of their employment up to the closure of the tuna cannery plant. The amount of
back wages must be computed from the time the private respondents were dismissed until the time
petitioner's cannery plant ceased operation. 19
WHEREFORE, for lack of merit, the instant petition is DISMISSED and the challenged decision of 30
January 1995 of the National Labor Relations Commission in NLRC CA No. N-001323-93 is hereby
AFFIRMED subject to the above modification on the computation of the separation pay and back
wages.
SO ORDERED.
19. WOODRIDGE SCHOOL VS BENITO

WOODRIDGE SCHOOL (now known as WOODRIDGE COLLEGE, INC.), Petitioner,


vs.
JOANNE C. PE BENITO and RANDY T. BALAGUER, Respondents.
DECISION
NACHURA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to set aside the
Court of Appeals (CA) Decision1 dated June 30, 2003 and its Resolution2 dated September 26, 2003
in CA-G.R. SP No. 75249. The assailed decision in turn set aside the Resolution 3 of the National
Labor Relations Commission (NLRC) dated June 28, 2002 in NLRC Case No. RAB-IV-3-13593-01-C
(CA No. 030579-02).
The factual and procedural antecedents follow:
Petitioner Woodridge School is a private educational institution located at Woodwinds Village, Molino
6, Bacoor, Cavite. Respondents Joanne C. Pe Benito (Pe Benito) and Randy T. Balaguer (Balaguer)
were hired as probationary high school teachers effective June 1998 and June 1999,
respectively.4 Their contracts of employment covered a three (3) year probationary period. Pe Benito
handled Chemistry and Physics while Balaguer taught Values Education and Christian Living. 5
On February 19, 2001, respondents, together with twenty other teachers, presented petitioner with a
Manifesto Establishing Relevant Issues Concerning the School 6 raising various issues which they
wanted addressed, among which were:

I. NSAT/NEAT ANOMALY:
We emphatically condemn the schools grave act of wrongdoing when it involved itself on the NSAT
and NEAT anomaly. We demand that we be given assurance "in writing" that this illegal and immoral
conduct will never happen again, otherwise, we will be obligated as moral guardians of the youth to
make more proper action.
II. TEACHERS RIGHT FOR A DUE PROCESS:
We felt betrayed when one of our former colleague[s] who was then regularly employed and was
perceived to be harmless and an asset to the school, for no solid basis or apparent investigation
conducted by the school, was suddenly expelled from his job.
xxxx
III. ISSUANCE OF INDIVIDUAL CONTRACTS:
We wonder until now even after a number of years have already passed, our copies of individual
contracts with the school have not yet been furnished to us. We demand that this legal document will
be (sic) issued to us for job security and other legal purposes it may serve.
We also demand that AN APPOINTMENT OF PERMANENCY shall be (sic) given to a permanent
teacher from the time the teacher is qualified to be permanent based on the duly set terms/standards
of permanency of the school.
IV. NON-CLEAR-CUT SCHOOL POLICIES:
It has been observed and experienced from the past school years and until the present that there are
a lot of inconsistencies regarding the schools policies like:
A. Changing of:
The narrative forms of students
Grades, and
Behavioral rating sheets
With these experiences, the teachers felt cheated and that these affect (sic) their sense of worth and
credibility. We then ask that the school should as always respect what the teachers deemed to be
right and just fitting for the students. After all, the teachers are the ones meeting and facing the
students and they know what is due to the students better that (sic) anyone else in the school.
B. Others.7
A confrontation between the school administrators and the concerned teachers was held, but no
settlement was arrived at.

For failure of the parties to resolve the issues, especially the alleged NSAT/NEAT anomaly,
respondents filed a formal complaint against petitioner with the Department of Education, Culture and
Sports (DECS)8 requesting the latter to undertake a formal investigation, institute appropriate
charges, and impose proper sanctions against petitioner.9 During the pendency of the DECS case,
and for lack of a positive action from petitioner, respondents appeared on television and spoke over
the radio on the alleged NEAT/NSAT anomaly.
On February 28, 2001, petitioner sent two separate Memoranda 10 to respondents placing them under
preventive suspension for a period of thirty days on the following grounds: 1) uttering defamatory
remarks against the school principal in the presence of their co-teachers; 2) announcing to the
students and teachers their alleged immediate termination from service; 3) tardiness; 4) spreading
false accusations against petitioner; 5) absence without official leave; and 6) appearing on television
and speaking over the radio to malign petitioner. In the same memoranda, respondents were required
to explain in writing within seventy-two (72) hours why they should not be terminated from their
employment. This prompted respondents to commence an action for illegal suspension before the
NLRC. The case was docketed as NLRC NCR CASE NO. RAB-IV-3-13593-01-C.
On March 19, 2001, petitioner issued respondents their Notice of Termination, 11 each to take effect
similarly on March 31, 2001, citing the foregoing grounds. In addition, petitioner informed respondents
that they did not qualify as regular employees for their failure to meet the performance standards
made known to them at the start of their probationary period.
Respondents then amended their initial complaint, to include illegal dismissal.
After the submission of the parties position papers, on November 29, 2001, Labor Arbiter Vicente R.
Layawen rendered a Decision dismissing the complaint. 12 He concluded that the termination of the
respondents probationary employment was justified because of their failure to submit vital teaching
documents. Specifically, Pe Benito failed to submit her day book/lesson plans; while Balaguer failed
to submit the subject syllabi and he had no record of class requirements as to quizzes, seatworks,
homeworks, and recitation which were supposed to be the bases in rating the students
performance.13 More importantly, the Labor Arbiter found respondents guilty of serious misconduct
warranting their dismissal from service because of maliciously spreading false accusation against the
school through the mass media. These acts, according to the Labor Arbiter, made them unfit to
remain in the schools roster of teachers. 14 The Labor Arbiter also validated the preventive suspension
of respondents for their having used the classroom as venue in spreading uncorroborated charges
against petitioner, thus posing a serious threat to petitioners business and reputation as a
respectable institution.15
On appeal to the NLRC, the Commission affirmed16 the Labor Arbiters disposition in its entirety. The
Commission concluded that respondents acts, taken together, constitute serious misconduct,
warranting their dismissal from service.
Aggrieved, respondents elevated the matter to the CA in CA-G.R. SP No. 75249. The CA granted the
petition and set aside the NLRC ruling in a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the present petition is hereby GIVEN DUE COURSE and the
writ prayed for accordingly GRANTED. Consequently, the assailed Resolutions of public respondent
NLRC are hereby SET ASIDE and a new one is hereby entered declaring the thirty (30)-day
suspension of petitioners on February 28, 2001 as illegal and ordering private respondent Woodridge
School to pay to both petitioners Joanne C. Pe Benito and Randy T. Balaguer their salaries and
benefits accruing during said period of illegal suspension. Woodridge School is also ordered to pay to
petitioner Balaguer back wages for the period April 1, 2001 up to March 31, 2002. Finally, it is further
ordered to pay each of the petitioners the sums of P50,000.00 as moral damages, P50,000.00 as
exemplary damages and attorneys fees equivalent to ten percent (10%) of the total amount due.
No pronouncement as to costs.
SO ORDERED.17
The appellate court declared the preventive suspension of respondents invalid because it was based
on the alleged violation of school regulations on the wearing of uniform, tardiness or absence, and
maliciously spreading false accusations against the school, grounds that do not pose a serious threat
to the life or property of the employer or of the workers. 18 Contrary to the Labor Arbiter and the
Commissions findings, the CA concluded that respondents acts do not constitute serious
misconduct. Respondents act of exposing the alleged NSAT/NEAT anomaly, as well as raising the
other issues haunting the school administration, only indicates their concern for the integrity of the
government examination and of the school. The use of the mass media was simply the respondents
response to the petitioners inaction on their grievances. 19 No bad faith could be attributed to
respondents in acting the way they did.
The appellate court likewise refused to sustain petitioners contention that respondents failed to
qualify for permanent employment, as there was no sufficient evidence to prove the same. 20 The
appellate court emphasized that because respondents are probationary employees, legal protection
extends only to the period of their probation.21 The dismissal breached their probationary
employment, and being tainted with bad faith, the court upheld the award of moral and exemplary
damages.22
Aggrieved, petitioner comes before this Court in this petition for review on certiorari, raising the sole
issue of:
WHETHER OR NOT THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN GRANTING
RESPONDENTS PETITION FOR CERTIORARI AND IN SETTING ASIDE THE FINDINGS OF BOTH
THE NLRC AND THE LABOR ARBITER A QUO.23
We deny the petition.
Petitioner asserts that the CA should have outrightly dismissed the petition, because the verification
and certificate of non-forum shopping was signed by only one of the respondents, without the
authority of the other.24

Time and again, we have said that the lack of verification is merely a formal defect that is neither
jurisdictional nor fatal. In a proper case, the court may order the correction of the pleading, or act on
the unverified pleading, if the attending circumstances are such that the rule may be dispensed with
in order to serve the ends of justice. It should be stressed that rules of procedure were conceived and
promulgated to effectively aid the court in the dispensation of justice. 25 Verification is mainly intended
to secure the assurance that the allegations in the petition are done in good faith or are true and
correct and not mere speculation.26
In the instant case, this requirement was substantially complied with when one of the petitioners
(respondents herein), who undoubtedly had sufficient knowledge and belief to swear to the truth of
the allegations in the petition, signed the verification attached to it. Indeed, the Court has ruled in the
past that a pleading required by the Rules of Court to be verified may be given due course even
without a verification, if the circumstances warrant the suspension of the rules in the interest of
justice, as in the present case. 27
As to the certification against forum shopping, the CA correctly relaxed the Rules in order to serve the
ends of justice. While the general rule is that the certificate of non-forum shopping must be signed by
all the plaintiffs or petitioners in a case and the signature of only one of them is insufficient, this Court
has stressed that the rules on forum shopping, which were designed to promote and facilitate the
orderly administration of justice, should not be interpreted with absolute literalness as to subvert its
own ultimate and legitimate objective. Strict compliance with the provisions regarding the certificate of
non-forum shopping merely underscores its mandatory nature in that the certification cannot be
altogether dispensed with or its requirements completely disregarded. It does not, however, interdict
substantial compliance with its provisions under justifiable circumstances. 28
In fact, we have relaxed the rules in a number of cases for two compelling reasons: social justice
considerations29and the apparent merit30 of the petition. In light of these jurisprudential
pronouncements, the CA should not be faulted in setting aside the procedural infirmity, allowing the
petition to proceed and deciding the case on the merits. In rendering justice, courts have always
been, as they ought to be, conscientiously guided by the norm that on the balance, technicalities take
a backseat vis--vis substantive rights, and not the other way around. 31
Now on the substantive issue of the validity of the dismissal and preventive suspension of
respondents.
Petitioner insists that respondents dismissal from service was lawful and justified by the following
grounds: 1) as probationary employees, respondents failed to meet the reasonable standards for their
permanent employment; and 2) in publicly accusing petitioner on radio and national television, of
dishonesty and wrongdoing, during the pendency of the administrative investigation of the alleged
dishonest acts, undertaken by the proper government agency.32
Initially, it should be clarified that this controversy revolves only on respondents probationary
employment. On March 31, 2001, the effective date of their dismissal, 33 respondents were not regular
or permanent employees; they had not yet completed three (3) years of satisfactory service as
academic personnel which would have entitled them to tenure as permanent employees in
accordance with the Manual of Regulations for Private Schools. 34 On that date, Pe Benitos contract

of employment still had two months to run, while Balaguers probationary employment was to expire
after one year and two months.
A probationary employee is one who, for a given period of time, is being observed and evaluated to
determine whether or not he is qualified for permanent employment. A probationary appointment
affords the employer an opportunity to observe the skill, competence and attitude of a probationer.
The word "probationary," as used to describe the period of employment, implies the purpose of the
term or period. While the employer observes the fitness, propriety and efficiency of a probationer to
ascertain whether he is qualified for permanent employment, the probationer at the same time, seeks
to prove to the employer that he has the qualifications to meet the reasonable standards for
permanent employment.35
Probationary employees enjoy security of tenure in the sense that during their probationary
employment, they cannot be dismissed except for cause or when he fails to qualify as a regular
employee.36 However, upon expiration of their contract of employment, probationary employees
cannot claim security of tenure and compel their employers to renew their employment contracts. In
fact, the services of an employee hired on probationary basis may be terminated when he fails to
qualify as a regular employee in accordance with reasonable standards made known by the employer
to the employee at the time of his engagement. There is nothing that would hinder the employer from
extending a regular or permanent appointment to an employee once the employer finds that the
employee is qualified for regular employment even before the expiration of the probationary period.
Conversely, if the purpose sought by the employer is neither attained nor attainable within the said
period, the law does not preclude the employer from terminating the probationary employment on
justifiable ground.37
The notices of termination sent by petitioner to respondents stated that the latter failed to qualify as
regular employees.38 However, nowhere in the notices did petitioner explain the details of said "failure
to qualify" and the standards not met by respondents. We can only speculate that this conclusion was
based on the alleged acts of respondents in uttering defamatory remarks against the school and the
school principal;39 failure to report for work for two or three times;40 going to class without wearing
proper uniform;41 delay in the submission of class records; and non-submission of class syllabi. Yet,
other than bare allegations, petitioner failed to substantiate the same by documentary evidence.
Considering that respondents were on probation for three years, and they were subjected to yearly
evaluation by the students and by the school administrators (principal and vice-principal), it is safe to
assume that the results thereof were definitely documented. As such, petitioner should have
presented the evaluation reports and other related documents to support its claim, instead of relying
solely on the affidavits of their witnesses. The unavoidable inference, therefore, remains that the
respondents dismissal is invalid.
If respondents could not be dismissed on the above-mentioned ground, could their services have
been validly terminated on the ground of serious misconduct?
The Labor Code commands that before an employer may legally dismiss an employee from the
service, the requirement of substantial and procedural due process must be complied with. 42 Under
the requirement of substantial due process, the grounds for termination of employment must be
based on just43 or authorized causes.44

Misconduct is defined as improper or wrong conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error of judgment. The misconduct to be serious within the meaning of the Act,
must be of such a grave and aggravated character and not merely trivial or unimportant. 45 Such
misconduct, however serious, must nevertheless be in connection with the work of the employee to
constitute just cause for his separation.46 It is not sufficient that the act or conduct complained of has
violated some established rules or policies. It is equally important and required that the act or conduct
must have been performed with wrongful intent. 47
Petitioner anchored its imputation of serious misconduct principally on the respondents expose of the
NSAT/NEAT anomaly. Petitioner argues that by appearing on television and speaking over the radio,
respondents were undeserving to become part of the school community, and the school, therefore,
could not be compelled to retain in its employ such undisciplined teachers.
In this regard, we find it necessary to go back to where the controversy started, when the concerned
teachers, including respondents, presented to petitioner a manifesto, setting forth the issues they
wanted the school to address. As correctly observed by the CA, the tenor of the manifesto indicated
good faith, as the teachers, in fact, expressly stated that their ultimate objective was not to put the
school down, but to work for some changes which would be beneficial to the students, teachers, the
school and the country as a whole.48 In their effort to settle the issues amicably, the teachers
(including respondents) asked for a dialogue with petitioner but the latter, instead of engaging in
creative resolution of the matter, uttered unnecessary statement against respondents. This incident
was followed by subsequent acts of petitioner showing abuse of its power over the teachers,
especially respondents, who at that time, were under probation. Notwithstanding its claim that
respondents were remiss in their duties as teachers during the whole period of probation, it was only
after the NSAT/NEAT expos when petitioner informed respondents of their alleged substandard
performance. The chronology of events, therefore, supports the view that respondents suspension
and eventual dismissal from service were tainted with bad faith, as obvious retaliatory acts on the part
of petitioner.
The totality of the acts of respondents cannot be characterized as "misconduct" under the law,
serious enough to warrant the severe penalty of dismissal. This is especially true because there is no
finding of malice or wrongful intent attributable to respondents. We quote with approval the CAs
ratiocination in this wise:
Petitioners [respondents herein], along with their colleagues, initiated the dialogue and brought the
above issues to the school authorities but the School Principals reaction was far from what the
teachers expected. Instead of taking serious concern and properly addressing the teachers
grievances as expressed in the Manifesto, Mrs. Palabrica got angry and hysterical accusing the
petitioners [respondents] of malice and bad faith and even threatened to dismiss them. Petitioners
[respondents] subsequent media expos and filing of a formal complaint was necessitated by private
respondents [petitioners] inaction and refusal to heed their legitimate complaint. Being but a
legitimate exercise of their rights as such teachers/educators and as citizens, under the
circumstances, We cannot readily impute malice and bad faith on the part of the petitioners
[respondents] who, in fact, risked such the harsh consequence of loss of their job and non-renewal of
their probationary employment contract just so the issue of the NEAT/NSAT anomaly involving their

school would be ventilated in the proper forum as to compel or somehow pressure not only their
school but more important, the governments education officials at the DECS to undertake proper and
urgent measures. Hardly would such acts in relation to a matter impressed with public interest i.e.
the integrity of the NEAT/NSAT process as a tool designed by the DECS to measure or gauge the
achievement level of pupils and students in the schools nationwide be considered as showing moral
depravity or ill will on the part of the petitioners. x x x 49
In light of this disquisition, it is settled that petitioner failed to comply with the requirement of
substantial due process in terminating the employment of respondents.
We now determine whether petitioner had complied with the procedural aspect of lawful dismissal.
In the termination of employment, the employer must (a) give the employee a written notice specifying
the ground or grounds of termination, giving to said employee reasonable opportunity within which to
explain his side; (b) conduct a hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given the opportunity to respond to the charge,
present his evidence or rebut the evidence presented against him; and (c) give the employee a
written notice of termination indicating that upon due consideration of all circumstances, grounds
have been established to justify his termination.50
Suffice it to state that respondents were afforded their rights to answer to petitioners allegation and
were given the opportunity to present evidence in support of their defense. Nowhere in any of their
pleadings did they question the procedure for their termination except to challenge the ground relied
upon by petitioner. Ostensibly, therefore, petitioner had complied with the procedural aspect of due
process in terminating the employment of respondents. However, we still hold that the dismissal is
illegal, because of petitioners failure to satisfy the substantive aspect thereof, as discussed above.
We are not unmindful of the equally important right of petitioner, as employer, under our Constitution,
to be protected in their property and interest. Nevertheless, the particular circumstances surrounding
this case convince us that the supreme penalty of dismissal upon respondents is not justified. The law
regards the workers with compassion. This is not only because of the laws concern for the
workingman. There is, in addition, his family to consider. Unemployment brings untold hardships and
sorrows on those dependent upon the wage-earner.51
Respondents likewise questioned their preventive suspension, but the Labor Arbiter and the NLRC
sustained its validity. The CA, on the other hand, declared the same to be illegal. Thus, petitioner
insists that respondents preventive suspension was proper, in view of the latters acts of utilizing their
time, not to teach, but to spread rumors that the former was about to cease operation. 52
The law is clear on this matter. While the employer may place the worker concerned under preventive
suspension, it can do so only if the latters continued employment poses a serious and imminent
threat to the life or property of the employer or of his co-workers. 53 In this case, the grounds relied
upon by petitioner in placing respondents under preventive suspension were the alleged violation of
school rules and regulations on the wearing of uniform, tardiness or absence, and maliciously
spreading false accusations against the school.54 These grounds do not, in any way, pose a threat to

the life or property of the school, of the teachers or of the students and their parents. Hence, we
affirm the CAs conclusion that respondents preventive suspension was illegal.lawphi1
As probationary employees, respondents security of tenure is limited to the period of their probation
for Pe Benito, until June 200155 and for Balaguer, June 2002.56 As they were no longer extended new
appointments, they are not entitled to reinstatement and full backwages. Rather, Pe Benito is only
entitled to her salary for her 30-day preventive suspension. 57 As to Balaguer, in addition to his 30-day
salary during his illegal preventive suspension, he is entitled to his backwages for the unexpired term
of his contract of probationary employment.
Lastly, petitioner faults the appellate court for awarding moral and exemplary damages in favor of
respondents despite lack of sufficient basis to support the award. 58
A dismissed employee is entitled to moral damages when the dismissal is attended by bad faith or
fraud; or constitutes an act oppressive to labor; or is done in a manner contrary to good morals, good
customs or public policy. Exemplary damages, on the other hand, may be awarded if the dismissal is
effected in a wanton, oppressive or malevolent manner.59 The award of said damages cannot be
justified solely upon the premise that the employer fired his employee without just cause or due
process. It is necessary that additional facts be pleaded and proven that the act of dismissal was
attended by bad faith, fraud, et al., and that social humiliation, wounded feelings and grave anxiety
resulted therefrom.60
Be that as it may, we find the award of moral and exemplary damages proper, as we quote with
approval the CAs justification for the award, thus:
At any rate, there is no question that both petitioners [respondents herein] are entitled to the award of
moral and exemplary damages, in view of the proven acts done in bad faith on the part of private
respondents [petitioner herein] who threatened petitioners [respondents] immediate dismissal when
the Manifesto was presented by petitioners [respondents], berating and verbally castigating petitioner
[respondent] Pe Benito, portraying them as mere detractors in an open letter to the parents who were
merely motivated by the design to malign the integrity of the school. x x x We find such bad faith on
the part of private respondents [petitioner] in effectively exerting pressure to silence the petitioners
[respondents] regarding their legitimate grievances against the school as sufficiently established in
the records, private respondents [petitioners] actuations having sullied the professional integrity of
the petitioners [respondents] and divided the faculty members on the controversy. For such unjustified
acts in relation to the NEAT/NSAT controversy that resulted to loss, prejudice and damage to
petitioners [respondents], private respondents [petitioner] are liable for moral and exemplary
damages.61
WHEREFORE, premises considered, the petition is hereby DENIED. The Court of Appeals Decision
and Resolution dated June 30, 2003 and September 26, 2003, respectively, in CA-G.R. SP No.
75249, are AFFIRMED.
SO ORDERED.