Republic of the Philippines On 4 August 1999, petitioner received a notice of hearing of the complaint.

SUPREME COURT Manila The following day, petitioner’s Engineering Manager, Roy Villacastin,
FIRST DIVISION confronted the private respondents about the said complaint.
G.R. No. 176419 November 27, 2013 On 9 August 1999, private respondents were summoned to the office of
GMA NETWORK, INC., Petitioner, vs. petitioner’s Area Manager, Mrs. Susan Aliño, and they were made to
CARLOS P. PABRIGA, GEOFFREY F. ARIAS, KIRBY N. explain why they filed the complaint. The next day, private respondents
CAMPO, ARNOLD L. LAGAHIT, and ARMANDO A. CATUBIG, were barred from entering and reporting for work without any notice
Respondents. stating the reasons therefor.
DECISION On 13 August 1999, private respondents, through their counsel, wrote a
LEONARDO-DE CASTRO, J.: letter to Mrs. Susan Aliño requesting that they be recalled back to work.
This is a Petition for Review on Certiorari filed by petitioner GMA On 23 August 1999, a reply letter from Mr. Bienvenido Bustria, petitioner’s
Network Inc. assailing the Decision 1 of the Court of Appeals dated head of Personnel and Labor Relations Division, admitted the non-payment
September 8, 2006 and the subsequent Resolution2 dated January 22 2007 of benefits but did not mention the request of private respondents to be
denying reconsideration in CA-G.R. SP No. 73652. allowed to return to work.
The Court of Appeals summarized the facts of the case as follows: On 15 September 1999, private respondents sent another letter to Mr.
On July 19 1999 due to the miserable working conditions private Bustria reiterating their request to work but the same was totally ignored.
respondents were forced to file a complaint against petitioner before the On 8 October 1999, private respondents filed an amended complaint
National Labor Relations Commission Regional Arbitration Branch No. VII raising the following additional issues: 1) Unfair Labor Practice; 2) Illegal
Cebu City assailing their respective employment circumstances as follows: dismissal; and 3) Damages and Attorney’s fees.
NAME DATE HIRED POSITION On 23 September 1999, a mandatory conference was set to amicably settle
Carlos Pabriga 2 May 1997 Television Technicians the dispute between the parties, however, the same proved to be futile. As
Geoffrey Arias 2 May 1997 Television Technicians a result, both of them were directed to file their respective position papers.
Kirby Campo 1 Dec. 1993 Television Technicians On 10 November 1999, private respondents filed their position paper and
on 2 March 2000, they received a copy of petitioner’s position paper. The
Arnold Laganit 11 Feb. 1996 Television Technicians following day, the Labor Arbiter issued an order considering the case
Armand Catubig 2 March 1997 Television Technicians submitted for decision.3
Private respondents were engaged by petitioner to perform the following In his Decision dated August 24, 2000, the Labor Arbiter dismissed the
activities, to wit: complaint of respondents for illegal dismissal and unfair labor practice, but
1) Manning of Technical Operations Center: held petitioner liable for 13th month pay. The dispositive portion of the
(a) Responsible for the airing of local commercials; and Labor Arbiter’s Decision reads:
(b) Logging/monitoring of national commercials WHEREFORE, the foregoing premises considered, judgment is hereby
(satellite) rendered dismissing the complaints for illegal dismissal and unfair labor
2) Acting as Transmitter/VTR men: practice.
(a) Prepare tapes for local airing; Respondents are, however, directed to pay the following complainants their
(b) Actual airing of commercials; proportionate 13th month pay, to wit:
(c) Plugging of station promo; 1. Kirby Campo P
(d) Logging of transmitter reading; and 7,716.04
(e) In case of power failure, start up generator set to 2. Arnold Lagahit 7,925.98
resume program;
3. Armand Catubig 4,233.68
3) Acting as Maintenance staff;
(a) Checking of equipment; 4. Carlos Pabriga 4,388.19
(b) Warming up of generator;
(c) Filling of oil, fuel, and water in radiator; and 5. Geoffrey Arias 4,562.01
4) Acting as Cameramen
 ₱28,826. Five Classifications of Employment
14 At the outset, we should note that the nature of the employment is
10% Attorney’s fees 2,882.61 determined by law, regardless of any contract expressing otherwise. The
supremacy of the law over the nomenclature of the contract and the
GRAND TOTAL ₱31,708. stipulations contained therein is to bring to life the policy enshrined in the
75 Constitution to afford full protection to labor. Labor contracts, being imbued
All other claims are, hereby, dismissed for failure to substantiate the same. 4
with public interest, are placed on a higher plane than ordinary contracts
Respondents appealed to the National Labor Relations Commission (NLRC).
and are subject to the police power of the State.7
The NLRC reversed the Decision of the Labor Arbiter, and held thus:
Respondents claim that they are regular employees of petitioner GMA
WHEREFORE, we make the following findings:
Network, Inc. The latter, on the other hand, interchangeably characterize
a) All complainants are regular employees with respect to the particular
respondents’ employment as project and fixed period/fixed term
activity to which they were assigned, until it ceased to exist. As such,
employment. There is thus the need to clarify the foregoing terms.
they are entitled to payment of separation pay computed at one (1)
The terms regular employment and project employment are taken from
month salary for every year of service;
Article 280 of the Labor Code, which also speaks of casual and seasonal
b) They are not entitled to overtime pay and holiday pay; and
employment:
c) They are entitled to 13th month pay, night shift differential and service
ARTICLE 280. Regular and casual employment. – The provisions of written
incentive leave pay.
agreement to the contrary notwithstanding and regardless of the oral
For purposes of accurate computation, the entire records are REMANDED to
agreement of the parties, an employment shall be deemed to be regular
the Regional Arbitration Branch of origin which is hereby directed to require
where the employee has been engaged to perform activities which are
from respondent the production of additional documents where necessary.
usually necessary or desirable in the usual business or trade of the
Respondent is also assessed the attorney’s fees of ten percent (10%) of all
employer, except where the employment has been fixed for a specific
the above awards.5
project or undertaking the completion or termination of which has been
Petitioner elevated the case to the Court of Appeals via a Petition for
determined at the time of the engagement of the employee or where the
Certiorari. On September 8, 2006, the appellate court rendered its Decision
work or services to be performed is seasonal in nature and employment is
denying the petition for lack of merit.
for the duration of the season.
Petitioner filed the present Petition for Review on Certiorari, based on the
An employment shall be deemed to be casual if it is not covered by the
following grounds:
preceding paragraph: Provided, That, any employee who has rendered at
I.
least one year of service, whether such service is continuous or broken,
THE COURT OF APPEALS GRAVELY ERRED FINDING RESPONDENTS
shall be considered a regular employee with respect to the activity in which
ARE REGULAR EMPLOYEES OF THE PETITIONER AND ARE NOT
he is employed and his employment shall continue while such activity
PROJECT EMPLOYEES.
actually exist.
II.
A fifth classification, that of a fixed term employment, is not expressly
THE COURT OF APPEALS GRAVELY ERRED IN
mentioned in the Labor Code. Nevertheless, this Court ruled in Brent
AWARDING SEPARATION PAY TO RESPONDENTS ABSENT A FINDING
School, Inc. v. Zamora,8 that such a contract, which specifies that
THAT RESPONDENTS WERE ILLEGALLY DISMISSED.
employment will last only for a definite period, is not per se illegal or
III.
against public policy.
THE COURT OF APPEALS GRAVELY ERRED IN
Whether respondents are regular or project employees
AWARDING NIGHT SHIFT DIFFERENTIAL PAY
Pursuant to the above-quoted Article 280 of the Labor Code, employees
CONSIDERING THE ABSENCE OF EVIDENCE WHICH WOULD ENTITLE
performing activities which are usually necessary or desirable in the
THEM TO SUCH AN AWARD.
employer’s usual business or trade can either be regular, project or
IV.
seasonal employees, while, as a general rule, those performing activities
THE COURT OF APPEALS GRAVELY ERRED IN
not usually necessary or desirable in the employer’s usual business or
AWARDING ATTORNEY’S FEES TO RESPONDENTS. 6
trade are casual employees. The reason for this distinction may not be
The parties having extensively elaborated on their positions in their
readily comprehensible to those who have not carefully studied these
respective memoranda, we proceed to dispose of the issues raised.
provisions: only employers who constantly need the specified tasks to be
performed can be justifiably charged to uphold the constitutionally
protected security of tenure of the corresponding workers. The
consequence of the distinction is found in Article 279 of the Labor Code,
which provides:
ARTICLE 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.
On the other hand, the activities of project employees may or may not be
usually necessary or desirable in the usual business or trade of the
employer, as we have discussed in ALU-TUCP v. National Labor Relations
Commission,9and recently reiterated in
Leyte Geothermal Power Progressive Employees Union-ALUTUCP v.
Philippine National Oil Company-Energy Development Corporation. 10 In said
cases, we clarified the term "project" in the test for determining whether an
employee is a regular or project employee:
It is evidently important to become clear about the meaning and scope of
the term "project" in the present context. The "project" for the carrying out
of which "project employees" are hired would ordinarily have some
relationship to the usual business of the employer. Exceptionally, the
"project" undertaking might not have an ordinary or normal relationship to
the usual business of the employer. In this latter case, the determination of
the scope and parameters of the "project" becomes fairly easy. It is unusual
(but still conceivable) for a company to undertake a project which has
absolutely no relationship to the usual business of the company; thus, for
instance, it would be an unusual steel-making company which would
undertake the breeding and production of fish or the cultivation of
vegetables. From the viewpoint, however, of the legal characterization
problem here presented to the Court, there should be no difficulty in
designating the employees who are retained or hired for the purpose of
undertaking fish culture or the production of vegetables as "project
employees," as distinguished from ordinary or "regular employees," so long
as the duration and scope of the project were determined or specified at
the time of engagement of the "project employees." For, as is evident from
the provisions of Article 280 of the Labor Code, quoted earlier, the principal
test for determining whether particular employees are properly
characterized as "project employees" as distinguished from "regular
employees," is whether or not the "project employees" were assigned to
carry out a "specific project or undertaking," the duration (and scope) of
which were specified at the time the employees were engaged for that
project.
In the realm of business and industry, we note that "project" could refer to
one or the other of at least two (2) distinguishable types of activities.
Firstly, a project could refer to a particular job or undertaking that is within
the regular or usual business of the employer company, but which is
distinct and separate, and identifiable as such, from the other undertakings
of the company. Such job or undertaking begins and ends at determined or
determinable times. The typical example of this first type of project is a
particular construction job or project of a construction company. A
construction company ordinarily carries out two or more [distinct]
identifiable construction projects: e.g., a twentyfive-storey hotel in Makati;
a residential condominium building in Baguio City; and a domestic air
terminal in Iloilo City. Employees who are hired for the carrying out of one
of these separate projects, the scope and duration of which has been
determined and made known to the employees at the time of employment,
are properly treated as "project employees," and their services may be
lawfully terminated at completion of the project.
The term "project" could also refer to, secondly, a particular job or
undertaking that is not within the regular business of the corporation. Such
a job or undertaking must also be identifiably separate and distinct from
the ordinary or regular business operations of the employer. The job or
undertaking also begins and ends at determined or determinable times. x x
x.11 (Emphases supplied, citation omitted.)
Thus, in order to safeguard the rights of workers against the arbitrary use
of the word "project" to prevent employees from attaining the status of
regular employees, employers claiming that their workers are project
employees should not only prove that the duration and scope of the
employment was specified at the time they were engaged, but also that
there was indeed a project. As discussed above, the project could either be
(1) a particular job or undertaking that is within the regular or usual
business of the employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company; or (2) a
particular job or undertaking that is not within the regular business of the
corporation. As it was with regard to the distinction between a regular and
casual employee, the purpose of this requirement is to delineate whether
or not the employer is in constant need of the services of the specified
employee. If the particular job or undertaking is within the regular or usual
business of the employer company and it is not identifiably distinct or
separate from the other undertakings of the company, there is clearly a
constant necessity for the performance of the task in question, and
therefore said job or undertaking should not be considered a project.
Brief examples of what may or may not be considered identifiably distinct
from the business of the employer are in order. In Philippine Long Distance
Telephone Company v. Ylagan,12 this Court held that accounting duties were
not shown as distinct, separate and identifiable from the usual
undertakings of therein petitioner PLDT. Although essentially a telephone
company, PLDT maintains its own accounting department to which
respondent was assigned. This was one of the reasons why the Court held
that respondent in said case was not a project employee. On the other
hand, in San Miguel Corporation v. National Labor Relations Commission, 13
respondent was hired to repair furnaces, which are needed by San Miguel
Corporation to manufacture glass, an integral component of its packaging
and manufacturing business. The Court, finding that respondent is a project
employee, explained that San Miguel Corporation is not engaged in the
business of repairing furnaces. Although the activity was necessary to
enable petitioner to continue manufacturing glass, the necessity for such
repairs arose only when a particular furnace reached the end of its life or
operating cycle. Respondent therein was therefore considered a project
employee.
In the case at bar, as discussed in the statement of facts, respondents were
assigned to the following tasks:
1) Manning of Technical Operations Center:
(a) Responsible for the airing of local commercials; and
(b) Logging/monitoring of national commercials
(satellite)
2) Acting as Transmitter/VTR men:
(a) Prepare tapes for local airing;
(b) Actual airing of commercials;
(c) Plugging of station promo;
(d) Logging of transmitter reading; and
(e) In case of power failure, start up generator set to
resume program;
3) Acting as Maintenance staff;
(a) Checking of equipment;
(b) Warming up of generator;
(c) Filling of oil, fuel, and water in radiator; and
4) Acting as Cameramen14
These jobs and undertakings are clearly within the regular or usual
business of the employer company and are not identifiably distinct or
separate from the other undertakings of the company. There is no denying
that the manning of the operations center to air commercials, acting as
transmitter/VTR men, maintaining the equipment, and acting as
cameramen are not undertakings separate or distinct from the business of
a broadcasting company.
Petitioner’s allegation that respondents were merely substitutes or what
they call pinch-hitters (which means that they were employed to take the
place of regular employees of petitioner who were absent or on leave) does
not change the fact that their jobs cannot be considered projects within the
purview of the law. Every industry, even public offices, has to deal with
securing substitutes for employees who are absent or on leave. Such tasks,
whether performed by the usual employee or by a substitute, cannot be
considered separate and distinct from the other undertakings of the
company. While it is management’s prerogative to device a method to deal
with this issue, such prerogative is not absolute and is limited to systems
wherein employees are not ingeniously and methodically deprived of their
constitutionally protected right to security of tenure. We are not convinced
that a big corporation such as petitioner cannot device a system wherein a
sufficient number of technicians can be hired with a regular status who can
take over when their colleagues are absent or on leave, especially when it
appears from the records that petitioner hires so-called pinch-hitters
regularly every month.
In affirming the Decision of the NLRC, the Court of Appeals furthermore
noted that if respondents were indeed project employees, petitioner should
have reported the completion of its projects and the dismissal of
respondents in its finished projects:
There is another reason why we should rule in favor of private respondents.
Nowhere in the records is there any showing that petitioner reported the
completion of its projects and the dismissal of private respondents in its
finished projects to the nearest Public Employment Office as per Policy
Instruction No. 2015 of the
Department of Labor and Employment [DOLE]. Jurisprudence abounds with
the consistent rule that the failure of an employer to report to the nearest
Public Employment Office the termination of its workers’ services
everytime a project or a phase thereof is completed indicates that said
workers are not project employees.
In the extant case, petitioner should have filed as many reports of
termination as there were projects actually finished if private respondents
were indeed project employees, considering that the latter were hired and
again rehired from 1996 up to 1999. Its failure to submit reports of
termination cannot but sufficiently convince us further that private
respondents are truly regular employees. Important to note is the fact that
private respondents had rendered more than one (1) year of service at the
time of their dismissal which overturns petitioner’s allegations that private
respondents were hired for a specific or fixed undertaking for a limited
period of time.16 (Citations omitted.)
We are not unaware of the decisions of the Court in Philippine
Long Distance Telephone Company v. Ylagan17 and ABS-CBN Broadcasting
Corporation v. Nazareno18 which held that the employer’s failure to report
the termination of employees upon project completion to the DOLE
Regional Office having jurisdiction over the workplace within the period
prescribed militates against the employer’s claim of project employment,
even outside the construction industry. We have also previously stated in
another case that the Court should not allow circumvention of labor laws in
industries not falling within the ambit of Policy Instruction No.
20/Department Order No. 19, thereby allowing the prevention of acquisition
of tenurial security by project employees who have already gained the
status of regular employees by the employer’s conduct.19
While it may not be proper to revisit such past pronouncements in this
case, we nonetheless find that petitioner’s theory of project employment
fails the principal test of demonstrating that the alleged project employee
was assigned to carry out a specific project or undertaking, the duration
and scope of which were specified at the time the employee is engaged for
the project.20
The Court of Appeals also ruled that even if it is assumed that respondents
are project employees, they would nevertheless have attained regular
employment status because of their continuous rehiring:
Be that as it may, a project employee may also attain the status of a
regular employee if there is a continuous rehiring of project employees
after the stoppage of a project; and the activities performed are usual [and]
customary to the business or trade of the employer. The Supreme Court
ruled that a project employee or a member of a work pool may acquire the
status of a regular employee when the following concur:
1) There is a continuous rehiring of project employees even
after cessation of a project; and
2) The tasks performed by the alleged project employee are
vital, necessary and indispensable to the usual business or trade of
the employer.
The circumstances set forth by law and the jurisprudence is present in this
case. In fine, even if private respondents are to be considered as project
employees, they attained regular employment status, just the same. 21
(Citation omitted.)
Anent this issue of attainment of regular status due to continuous rehiring,
petitioner advert to the fixed period allegedly designated in employment
contracts and reflected in vouchers. Petitioner cites our pronouncements
in Brent, St. Theresa’s School of Novaliches Foundation v. National Labor
Relations Commission,22 and Fabela v. San Miguel Corporation,23 and
argues that respondents were fully aware and freely entered into
agreements to undertake a particular activity for a specific length of
time.24 Petitioner apparently confuses project employment from fixed term
employment. The discussions cited by petitioner in Brent, St. Theresa’s
and Fabela all refer to fixed term employment, which is subject to a
different set of requirements.
Whether the requisites of a valid fixed term employment are met
As stated above, petitioner interchangeably characterizes respondents’
service as project and fixed term employment. These types of employment,
however, are not the same. While the former requires a project as
restrictively defined above, the duration of a fixed-term employment
agreed upon by the parties may be any day certain, which is understood to
be "that which must necessarily come although it may not be known
when."25 The decisive determinant in fixed-term employment is not the
activity that the employee is called upon to perform but the day certain
agreed upon by the parties for the commencement and termination of the
employment relationship.26
Cognizant of the possibility of abuse in the utilization of fixed-term
employment contracts, we emphasized in Brent 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 as contrary to public policy or morals.27 We thus laid down
indications or criteria under which "term employment" cannot be said to be
in circumvention of the law on security of tenure, namely:
1) The fixed period of employment was knowingly and
voluntarily agreed upon by the parties without any force, duress, or
improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the
employee dealt with each other on more or less equal terms with
no moral dominance exercised by the former or the latter.28
(Citation omitted.)
These indications, which must be read together, make the Brent doctrine
applicable only in a few special cases wherein the employer and employee
are on more or less in equal footing in entering into the contract. The
reason for this is evident: when a prospective employee, on account of
special skills or market forces, is in a position to make demands upon the
prospective employer, such prospective employee needs less protection
than the ordinary worker. Lesser limitations on the parties’ freedom of
contract are thus required for the protection of the employee. These
indications were applied in Pure Foods Corporation v. National Labor
Relations Commission,29 where we discussed the patent inequality between
the employer and employees therein:
[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.
To recall, it is doctrinally entrenched that in illegal dismissal cases, the
employer has the burden of proving with clear, accurate, consistent, and
convincing evidence that the dismissal was valid. 30 It is therefore the
employer which must satisfactorily show that it was not in a dominant
position of advantage in dealing with its prospective employee. Thus, in
Philips Semiconductors (Phils.), Inc. v. Fadriquela, 31 this Court rejected the
employer’s insistence on the application of the Brent doctrine when the
sole justification of the fixed terms is to respond to temporary albeit
frequent need of such workers:
We reject the petitioner’s submission that it resorted to hiring employees
for fixed terms to augment or supplement its regular employment "for the
duration of peak loads" during short-term surges to respond to cyclical
demands; hence, it may hire and retire workers on fixed terms, ad
infinitum, depending upon the needs of its customers, domestic and
international. Under the petitioner's submission, any worker hired by it for
fixed terms of months or years can never attain regular employment
status. x x
x.
Similarly, in the case at bar, we find it unjustifiable to allow petitioner to
hire and rehire workers on fixed terms, ad infinitum, depending upon its
needs, never attaining regular employment status. To recall, respondents
were repeatedly rehired in several fixed term contracts from 1996 to 1999.
To prove the alleged contracts, petitioner presented cash disbursement
vouchers signed by respondents, stating that they were merely hired as
pinch-hitters. It is apparent that respondents were in no position to refuse
to sign these vouchers, as such refusal would entail not getting paid for
their services. Plainly, respondents as "pinchhitters" cannot be considered
to be in equal footing as petitioner corporation in the negotiation of their
employment contract.
In sum, we affirm the findings of the NLRC and the Court of Appeals that
respondents are regular employees of petitioner.1âwphi1 As regular
employees, they are entitled to security of tenure and therefore their
services may be terminated only for just or authorized causes. Since
petitioner failed to prove any just or authorized cause for their termination,
we are constrained to affirm the findings of the NLRC and the Court of
Appeals that they were illegally dismissed.
Separation Pay, Night Shift Differential and Attorney’s Fees
Petitioner admits that respondents were not given separation pay and night
shift differential. Petitioner, however, claims that respondents were not
illegally dismissed and were therefore not entitled to separation pay. As
regards night shift differential, petitioner claims that its admission in its
August 23, 1999 letter as to the nonpayment thereof is qualified by its
allegation that respondents are not entitled thereto. Petitioner points out
that respondents failed to specify the period when such benefits are due,
and did not present additional evidence before the NLRC and the Court of
Appeals.32
In light, however, of our ruling that respondents were illegally dismissed,
we affirm the findings of the NLRC and the Court of Appeals that
respondents are entitled to separation pay in lieu of reinstatement. We
quote with approval the discussion of the Court of Appeals:
However, since petitioner refused to accept private respondents back to
work, reinstatement is no longer practicable. Allowing private respondents
to return to their work might only subject them to further embarrassment,
humiliation, or even harassment.
Thus, in lieu of reinstatement, the grant of separation pay equivalent to
one (1) month pay for every year of service is proper which public
respondent actually did. Where the relationship between private
respondents and petitioner has been severely strained by reason of their
respective imputations of accusations against each other, to order
reinstatement would no longer serve any purpose. In such situation,
payment of separation pay instead of reinstatement is in order. 33 (Citations
omitted.)
As regards night shift differential, the Labor Code provides that every
employee shall be paid not less than ten percent (10%) of his regular wage
for each hour of work performed between ten o’clock in the evening and
six o’clock in the morning.34 As employees of petitioner, respondents are
entitled to the payment of this benefit in accordance with the number of
hours they worked from 10:00 p.m. to 6:00 a.m., if any. In the Decision of
the NLRC affirmed by the Court of Appeals, the records were remanded to
the Regional Arbitration Branch of origin for the computation of the night
shift differential and the separation pay. The Regional Arbitration Branch of
origin was likewise directed to require herein petitioner to produce
additional documents where necessary. Therefore, while we are affirming
that respondents are entitled to night shift differential in accordance with
the number of hours they worked from 10:00 p.m. to 6:00 a.m., it is the
Regional Arbitration Branch of origin which should determine the
computation thereof for each of the respondents, and award no night shift
differential to those of them who never worked from 10:00 p.m. to 6:00
a.m.
It is also worthwhile to note that in the NLRC Decision, it was herein
petitioner GMA Network, Inc. (respondent therein) which was tasked to
produce additional documents necessary for the computation of the night
shift differential. This is in accordance with our ruling in Dansart Security
Force & Allied Services Company v. Bagoy,35where we held that it is entirely
within the employer's power to present such employment records that
should necessarily be in their possession, and that failure to present such
evidence must be taken against them.
Petitioner, however, is correct that the award of attorney's fees is contrary
to jurisprudence. In De las Santos v. Jebsen Maritime Inc., 36 we held:
Likewise legally correct is the deletion of the award of attorney's fees, the
NLRC having failed to explain petitioner's entitlement thereto. As a matter
of sound policy, an award of attorney's fees remains the exception rather
than the rule. It must be stressed, as aptly observed by the appellate court,
that it is necessary for the trial court, the NLRC in this case, to make
express findings of facts and law that would bring the case within the
exception. In fine, the factual, legal or equitable justification for the award
must be set forth in the text of the decision. The matter of attorney's fees
cannot be touched once and only in the fallo of the decision, else, the
award should be thrown out for being speculative and conjectural. In the
absence of a stipulation, attorney's fees are ordinarily not recoverable;
otherwise a premium shall be placed on the right to litigate. They are not
awarded every time a party wins a suit. (Citations omitted.)
In the case at bar, the factual basis for the award of attorney's fees was not
discussed in the text of NLRC Decision. We are therefore constrained to
delete the same.
WHEREFORE the Decision of the Court of Appeals dated September 8, 2006
and the subsequent Resolution denying reconsideration dated January 22,
2007 in CA-G.R. SP No. 73652, are hereby AFFIRMED with the
MODIFICATION that the award of attorney's fees in the affirmed Decision of
the National Labor Relations Commission is hereby DELETED.
SO ORDERED
FIRST DIVISION
[G.R. No. 125606. October 7, 1998]
SAN MIGUEL
CORPORATION, petitioner, vs. NATION
AL LABOR RELATIONS COMMISSION, THIRD DIVISION, and FRANCISCO DE
GUZMAN, JR., respondents.
DECISION
QUISUMBING, J.:
Before us is the petition for certiorari under Rule 65 of the Revised Rules of
Court seeking to set aside the April 18, 1996 Decision[1] and the May 30,
1996 Resolution[2] of public respondent National Labor Relations
Commission[3] in NLRC CA No. 009490-95. Said decision reversed the June
30, 1995 judgment[4] of the Labor Arbiter[5] in NLRC-NCR Case No. 00-08-
05954-94, and ordered the reinstatement of private respondent as follows:
WHEREFORE, premises considered, the assailed decision is hereby
VACATED and SET ASIDE. A new one is hereby entered ordering herein
respondent San Miguel Corporation to reinstate complainant to his former
position with full backwages from the time he was dismissed from work
until he is actually reinstated without loss of seniority rights and other
benefits, less earnings elsewhere, if any.[6]
The facts on record show that in November 1990, private respondent was
hired by petitioner as helper/bricklayer for a specific project, the repair and
upgrading of furnace C at its Manila Glass Plant. His contract of
employment provided that said temporary employment was for a specific
period of approximately four (4) months.
On April 30, 1991, private respondent was able to complete the repair and
upgrading of furnace C. Thus, his services were terminated on that same
day as there was no more work to be done. His employment contract also
ended that day.
On May 10, 1991, private respondent was again hired for a specific job or
undertaking, which involved the draining/cooling down of furnace F and the
emergency repair of furnace E. This project was for a specific period of
approximately three (3) months.
After the completion of this task, namely the draining/cooling down of
furnace F and the emergency repair of furnace E, at the end of July 1991,
private respondents services were terminated.
On August 1, 1991, complainant saw his name in a Memorandum posted at
the Companys Bulletin Board as among those who were considered
dismissed.
On August 12, 1994, or after the lapse of more than three (3) years from
the completion of the last undertaking for which private respondent was
hired, private respondent filed a complaint for illegal dismissal against
petitioner, docketed as NLRC NCR Case No. 08-05954-94.[7]
Both parties submitted their respective position papers, reply and rejoinder
to Labor Arbiter Felipe Garduque II. On June 30, 1995, he rendered the
decision dismissing said complaint for lack of merit. In his ruling Labor
Arbiter Garduque sustained petitioners argument that private respondent
was a project employee. The position of a helper does not fall within the
classification of regular employees. Hence, complainant never attained
regular employment status. Moreover, his silence for more than three (3)
years without any reasonable explanation tended to weaken his claim.[8]
Not satisfied with the decision, private respondent interposed his appeal
with public respondent NLRC on August 8, 1995. Petitioner filed its
opposition thereto on August 29, 1995.
On April 18, 1996, public respondent NLRC, promulgated its assailed
decision, reversing Labor Arbiter Garduques decision. In its ruling, public
respondent made the following findings:
Respondents scheme of subsequently re-hiring complainant after only ten
(10) days from the last day of the expiration of his contract of employment
for a specific period, and giving him again another contract of employment
for another specific period cannot be countenanced. This is one way of
doing violence to the employees constitutional right to security of tenure
under which even employees under probationary status are amply
protected.
Under the circumstances obtaining in the instant case we find that herein
complainant was indeed illegally dismissed. Respondent failed to adduce
substantial evidence to prove that Francisco de Guzman, Jr. was dismissed
for a just or authorized cause and after due process. The only reason they
advanced is that his contract of employment which is for a specific period
had already expired. We, however, find this scheme, as discussed earlier,
not in accordance with law.[9]
Petitioner then moved for the reconsideration of said decision. This was,
however, denied by public respondent on May 30, 1996 as it found no
cogent reason, or patent or palpable error, that would warrant the
disturbance of the decision sought to be reconsidered.
Hence, this petition, based on the following grounds:
1. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN FAILING
TO RULE THAT PRIVATE RESPONDENT IS A PROJECT OR A FIXED PERIOD
EMPLOYEE.
2. RESPONDENT NLRC GRAVELY ABUSED ITS
DISCRETION IN RULING THAT PETITIONER
VIOLATED PRIVATE RESPONDENTS RIGHT TO SECURITY OF TENURE AND
THAT PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED.
3. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN RULING
THAT LACHES OR SILENCE OR INACTION FOR AN UNREASONABLE LENGTH
OF TIME DID NOT BAR PRIVATE RESPONDENTS CLAIM.
Given these grounds, this petition may be resolved once the following
issues are clarified: (a) What is the nature of the employment of private
respondent, that of a project employee or a regular employee? and (b) Was
he terminated legally or dismissed illegally?
As a general rule, the factual findings and conclusions drawn by the
National Labor Relations Commission are accorded not only great weight
and respect, but even clothed with finality and deemed binding on the
Court, as long as they are supported by substantial evidence.
However, when such findings and those of the Labor Arbiter are in conflict,
it behooves this Court to scrutinize the records of the case, particularly the
evidence presented, to arrive at a correct decision.[10]
Art. 280 of the Labor Code defines regular, project 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
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 above mentioned provision reinforces the
Constitutional mandate to protect the interest of labor as it sets the legal
framework for ascertaining ones nature of employment, and distinguishing
different kinds of employees. Its language manifests the intent to
safeguard the tenurial interest of worker who may be denied the enjoyment
of the rights and benefits due to an employee, regardless of the nature of
his employment, by virtue of lopsided agreements with the economically
powerful employer who can maneuver to keep an employee on a casual or
contractual status for as long as it is convenient to the employer.
Thus, under Article 280 of the Labor Code, an employment is deemed
regular when the activities performed by the employee are usually
necessary or desirable in the usual business or trade of the employer even
if the parties enter into an agreement stating otherwise. But considered not
regular under said Article are (1) the so-called project employment the
termination of which is more or less determinable at the time of
employment, such as those connected with a particular construction
project; and (2) seasonal employment, which by its nature is only for one
season of the year and the employment is limited for the duration of that
season, such as the Christmas holiday season. Nevertheless, an exception
to this exception is made: any employee who has rendered at least one (1)
year of service, whether continuous or intermittent, with respect to the
activity he performed and while such activity actually exists, must be
deemed regular.
Following Article 280, whether one is employed as a project employee or
not would depend on whether he was hired to carry out a specific project or
undertaking, the duration and scope of which were specified at the time his
services were engaged for that particular project.[11] Another factor that
may be considered is the reasonable connection between the particular
activity undertaken by the employee in relation to the usual trade or
business of the employer; if without specifying the duration and scope, the
work to be undertaken is usually necessary or desirable in the usual
business or trade of the employer, then it is regular employment and not
just project much less casual employment.
Thus, the nature of ones employment does not depend on the will or word
of the employer. Nor on the procedure of hiring and the manner of
designating the employee, but on the nature of the activities to be
performed by the employee, considering the employers nature of
business[12] and the duration and scope of the work to be done.
In ALU-TUCP vs. NLRC,[13] this Court discussed two types of projects:
In the realm of business and industry, we note that project could refer to
one or the other of at least two (2) distinguishable types of activities.
Firstly, a project could refer to a particular job or undertaking that is within
the regular or usual business of the employer company, but which is
distinct and separate, and identifiable as such, from the other undertakings
of the company. Such job or undertaking begins and ends at determined or
determinable times. xxx
The term project could also refer to, secondly, a particular job or
undertaking that is not within the regular business of the corporation. Such
a job or undertaking must also be identifiably separate and distinct from
the ordinary or regular business operations of the employer. The job or
undertaking also begins and ends at determined or determinable times. x x
x (Italics supplied)
Public respondent NLRCs findings that herein private respondent is a
regular employee is erroneous as the latters employment clearly falls
within the definition of project employees under paragraph 1 of Article 280
of the Labor Code and such is a typical example of the second kind of
project employment in the ALU-TUCP case discussed above.
Note that the plant where private respondent was employed for only seven
months is engaged in the manufacture of glass, an integral component of
the packaging and manufacturing business of petitioner. The process of
manufacturing glass requires a furnace, which has a limited operating life.
Petitioner resorted to hiring project or fixed term employees in having said
furnaces repaired since said activity is not regularly performed. Said
furnaces are to be repaired or overhauled only in case of need and after
being used continuously for a varying period of five (5) to ten (10) years.
In 1990, one of the furnaces of petitioner required repair and upgrading.
This was an undertaking distinct and separate from petitioners business of
manufacturing glass. For this purpose, petitioner must hire workers to
undertake the said repair and upgrading. Private respondent was, thus,
hired by petitioner on November 28, 1990 on a temporary status for a
specific job for a determined period of approximately four months.
Upon completion of the undertaking, or on April 30, 1991, private
respondents services were terminated. A few days, thereafter, two of
petitioners furnaces required draining/cooling down and emergency repair.
Private respondent was again hired on May 10, 1991 to help in the new
undertaking, which would take approximately three (3) months to
accomplish. Upon completion of the second undertaking, private
respondents services were likewise terminated.[14] He was not hired a
third time, and his two engagements taken together did not total one full
year in order to qualify him as an exception to the exception falling under
the cited proviso in the second paragraph of Art. 280 of the Labor Code.
Clearly, private respondent was hired for a specific project that was not
within the regular business of the corporation. For petitioner is not engaged
in the business of repairing furnaces. Although the activity was necessary
to enable petitioner to continue manufacturing glass, the necessity therefor
arose only when a particular furnace reached the end of its life or operating
cycle. Or, as in the second undertaking, when a particular furnace required
an emergency repair. In other words, the undertakings where private
respondent was hired primarily as helper/bricklayer have specified goals
and purposes which are fulfilled once the designated work was completed.
Moreover, such undertakings were also identifiably separate and distinct
from the usual, ordinary or regular business operations of petitioner, which
is glass manufacturing. These undertakings, the duration and scope of
which had been determined and made known to private respondent at the
time of his employment, clearly indicated the nature of his employment as
a project employee. Thus, his services were terminated legally after the
completion of the project.[15]
Public respondent NLRCs decision, if upheld, would amount to negating the
distinctions made in Article 280 of the Labor Code. It would shunt aside the
rule that since a project employees work depends on the availability of a
project, necessarily, the duration of his employment is coterminous with
the project to which he is assigned.[16] It would become a burden for an
employer to retain an employee and pay him his corresponding wages if
there was no project for him to work on. Well to remember is the language
of the Court in the case of Mamansag v. NLRC:[17]
While the Constitution is committed to the policy of social justice and
the protection of the working class, it should not be supposed that every
dispute will be automatically decided in favor of labor.
Management has also rights, which, as such, are entitled to respect and
enforcement in the interest of fair play. Although the Supreme Court
has inclined more often than not toward the worker and has upheld
his cause in his conflicts with the employer, such favoritism has not
blinded the Court to the rule that justice is in every case for the deserving,
to be dispensed in the light of the established facts and the applicable law
and doctrine.
Considering that private respondent was a project employee whose
employment, the nature of which he was fully informed, related to a
specific project, work or undertaking, we find that the Labor Arbiter
correctly ruled that said employment legally ended upon completion of
said project. Hence the termination of his employment was not tantamount
to an illegal dismissal; and it was a grave
abuse of discretion on public respondent's part to order his reinstatement
by petitioner.
WHEREFORE, the instant petition is hereby
GRANTED. The decision of respondent NLRC is hereby REVERSED, and the
judgment of the Labor Arbiter REINSTATED.
NO COSTS.
SO ORDERED.
FIRST DIVISION
G.R. No. 209499 January 28, 2015
MA. CHARITO C. GADIA, ERNESTO M. PENAS,
GEMMABELLE B. REMO, LORENA S. QUESEA, MARIE JOY
FRANCISCO, BEVERLY A. CABINGAS, IVEE U. BALINGIT, ROMA
ANGELICA 0. BORJA, MARIE JOAN RAMOS, KIM GUEVARRA, LYNN S.
DE LOS SANTOS, CAREN C.
ENCANTO, EIDEN BALDOVINO, JACQUELINE B.
CASTRENCE,MA.ESTRELLA V. LAPUZ, JOSELITO L. LORD, RAYMOND
G. SANTOS, ABIGAIL M. VILORIA, ROMMEL C.
ACOSTA, FRANCIS JAN S. BAYLON, ERIC 0. PADIERNOS,
MA. LENELL P. AARON, CRISNELL P. AARON, and LAWRENCE
CHRISTOPHER F. PAPA, Petitioners, vs.
SYKES ASIA, INC./ CHUCK SYKES/ MIKE HINDS/ MICHAEL
HENDERSON, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the
Decision2 dated April 29, 2013 and the Resolution3 dated October 3, 2013
of the Court of Appeals (CA) in CA-G.R. SP No. 120433, which annulled and
set aside the Decision4 dated November 15, 2010 and the Resolution 5
dated May 10, 2011 of the National
Labor Relations Commission (NLRC), in NLRC LAC No. 07001583-10, and
reinstated the Decision6 dated June 23, 2010 of the Labor Arbiter (LA),
holding that herein petitioners Ma. Charito C. Gadia7 (Gadia), Ernesto M.
Peñas,8 Gemmabelle B. Remo
(Remo), Lorena S. Quesea (Quesea), Marie Joy Francisco, Beverly A.
Cabingas, Ivee U. Balingit9(Balingit), Roma Angelica O. Borja, Marie Joan
Ramos, Kim Guevarra, Lynn S. De Los Santos, Caren C. Encanto, Eiden
Baldovino, Jacqueline B.
Castrence (Castrence), Ma. Estrella V.Lapuz (Lapuz), Joselito L. Lord (Lord),
Raymond G. Santos, Abigail M. Viloria (Viloria), Rommel C. Acosta10
(Acosta), Francis Jan S. Baylon,Eric O.
Padiernos, Ma. Lenell P. Aaron, Crisnell P. Aaron, and Lawrence Christopher
F.Papa (petitioners) are project employees of respondent Sykes Asia, Inc.
(Sykes Asia), and thus, were validly terminated from employment.
The Facts
Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO)
which provides support to its international clients from various sectors
(e.g., technology, telecommunications, retail services) by carrying on some
of their operations, governed by service contracts that it enters with
them.11 On September 2, 2003,12 Alltel Communications, Inc. (Alltel), a
United States-based telecommunications firm, contracted Sykes Asia’s
services to accommodate the needs and demands of Alltel clients for its
postpaid and prepaid services (Alltel Project). Thus, on different dates,
Sykes Asia hired petitioners as customer service representatives, team
leaders, and trainers for the Alltel Project.13
Services for the said project went on smoothly until Alltel sent two
(2) letters to Sykes Asia dated August 7, 200914and September 9, 200915
informing the latter that it was terminating all support services provided by
Sykes Asia related to the Alltel Project. In view of this development, Sykes
Asia sent each of the petitioners end-of-life notices, 16informing them of
their dismissal from employment due to the termination of the Alltel
Project. Aggrieved, petitioners filed separate complaints17 for illegal
dismissal against respondents Sykes Asia, Chuck Sykes, the President and
Chief Operating Officer of Sykes Enterprise, Inc., and Mike Hinds and
Michael Henderson, the President and Operations Director, respectively, of
Sykes Asia (respondents), praying for reinstatement, backwages, 13th
month pay, service incentive leave pay, night shift differential, moral and
exemplary damages, and attorney’s fees. In their complaints, petitioners
alleged that their dismissal from service was unjust as the same was
effected without substantive and procedural due process.18
In their defense,19 respondents averred that petitioners were not regular
employees but merely project-based employees, and as such, the
termination of the Alltel Project served as a valid ground for their
dismissal.20 In support of their position, respondents noted that it was
expressly indicated in petitioners’ respective employment contracts that
their positions are "project-based" and thus, "co-terminus to the project." 21
Respondents further maintained that they complied with the requirements
of procedural due process in dismissing petitioners by furnishing each of
them their notices of termination at least thirty (30) days prior to their
respective dates of dismissal.22
The LA Ruling
In a Decision23 dated June 23, 2010 the LA ruled in favor of respondents,
and accordingly, dismissed petitioners’ complaints for lack of merit. 24 It
found that petitioners are merely projectbased employees, as their
respective employment contracts indubitably provided for the duration
and term of their employment, as well as the specific project to which
they were assigned, i.e., the Alltel Project.25 Hence, the LA concluded
that the cessation of the Alltel Project naturally resulted in the
termination of petitioners’ employment in Sykes Asia. 26 Dissatisfied,
petitioners appealed27 to the NLRC.
The NLRC Ruling
In a Decision28 dated November 15, 2010, the NLRC modified the LA
Decision, ruling that petitioners are regular employees but were validly
terminated due to redundancy.29 Accordingly, petitioners, except Viloria and
Acosta whose complaints were dismissed without prejudice for failure to
prosecute,30 were awarded their separation pay with interest of 12% per
annum reckoned from the date of their actual dismissal until full payment,
plus attorney’s fees amounting to 10% of the total monetary award. In
addition, the NLRC awarded nominal damages in the amount of ₱10,000.00
each to petitioners Gadia, Remo, Quesea, Balingit, Castrence, Lapuz, and
Lord for respondents’ failure to furnish them the required written notice of
termination within the prescribed period. 31
Contrary to the LA’s finding, the NLRC found that petitioners could not be
properly characterized as project-based employees, ratiocinating that while
it was made known to petitioners that their employment would be co-
terminus to the Alltel Project, it was neither determined nor made known to
petitioners, at the time of hiring, when the said project would end, be
terminated, or be completed.32 In this relation, the NLRC concluded that
inasmuch as petitioners had been engaged to perform activities which are
necessary or desirable in respondents’ usual business or trade of BPO,
petitioners should be deemed regular employees of Sykes Asia. 33 This
notwithstanding, and in view of the cessation of the Alltel Project, the NLRC
found petitioners’ employment with Sykes Asia to be redundant; hence,
declared that they were legally dismissed from service and were only
entitled to receive their respective separation pay. 34
Respondents moved for reconsideration,35 which was, however, denied in a
Resolution36 dated May 10, 2011. Unconvinced, Sykes Asia37 elevated the
case to the CA on certiorari.38
The CA Ruling
In a Decision39 dated April 29, 2013, the CA annulled and set aside the
ruling of the NLRC, and accordingly, reinstated that of the LA. 40 It held that
a perusal of petitioners’ respective employment contracts readily shows
that they were hired exclusively for the Alltel Project and that it was
specifically stated therein that their employment would be project-based. 41
The CA further held that petitioners’ employment contracts need not state
an actual date as to when their employment would end, opining that it is
enough that such date is determinable.42
Petitioners moved for reconsideration,43 which was, however, denied in a
Resolution44 dated October 3, 2013, hence, this petition.
The Issue Before the Court
The primordial issue for the Court’s resolution is whether or not the CA
correctly granted respondents’ petition for certiorari, thereby setting aside
the NLRC’s decision holding that petitioners were regular employees and
reinstating the LA ruling that petitioners were merely project-based
employees, and thus, validly dismissed from service.
The Court’s Ruling
The petition is without merit.
At the outset, it must be stressed that to justify the grant of the
extraordinary remedy of certiorari, petitioners must satisfactorily show that
the court or quasi-judicial authority gravely abused the discretion conferred
upon it. Grave abuse of discretion connotes judgment exercised in a
capricious and whimsical manner that is tantamount to lack of jurisdiction.
To be considered "grave," discretion must be exercised in a despotic
manner by reason of passion or personal hostility, and must be so patent
and gross as to amount to an evasion of positive duty or to a virtual refusal
to perform the duty enjoined by or to act at all in contemplation of law. 45
In labor disputes, grave abuse of discretion may be ascribed to the NLRC
when, inter alia, its findings and the conclusions reached thereby are not
supported by substantial evidence. This requirement of substantial
evidence is clearly expressed in Section 5, Rule 133 of the Rules of Court
which provides that "in cases filed before administrative or quasi-judicial
bodies, a fact may be deemed established if it is supported by substantial
evidence, or that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion."46
Tested against these considerations, the Court finds that the CA correctly
granted respondents’ certiorari petition before it, since the NLRC gravely
abused its discretion in ruling that petitioners were regular employees of
Sykes Asia when the latter had established by substantial evidence that
they were merely project-based.
Article 29447 of the Labor Code,48 as amended, distinguishes a project-
based employee from a regular employee as follows:
Art. 294. 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. x x x x (Emphasis and underscoring
supplied)
In Omni Hauling Services, Inc. v. Bon,49 the Court extensively discussed how
to determine whether an employee may be properly deemed project-based
or regular, to wit:
A project employee is assigned to a project which begins and ends at
determined or determinable times.1âwphi1 Unlike regular employees who
may only be dismissed for just and/or authorized causes under the Labor
Code, the services of employees who are hired as "project[-based]
employees" may be lawfully terminated at the completion of the project.
According to jurisprudence, the principal test for determining whether
particular employees are properly characterised as "project[-based]
employees" as distinguished from "regular employees," is whether or not
the employees were assigned to carry out a "specific project or
undertaking," the duration (and scope) of which were specified at the time
they were engaged for that project. The project could either be (1) a
particular job or undertaking that is within the regular or usual business of
the employer company, but which is distinct and separate, and identifiable
as such, from the other undertakings of the company; or (2) a particular job
or undertaking that is not within the regular business of the corporation. In
order to safeguard the rights of workers against the arbitrary use of the
word "project" to prevent employees from attaining a regular status,
employers claiming that their workers are project[-based] employees
should not only prove that the duration and scope of the employment was
specified at the time they were engaged, but also, that there was indeed a
project.50 (Emphases and underscoring supplied)
Verily, for an employee to be considered project-based, the employer must
show compliance with two (2) requisites, namely that: (a) the employee
was assigned to carry out a specific project or undertaking; and (b) the
duration and scope of which were specified at the time they were engaged
for such project.
In this case, records reveal that Sykes Asia adequately informed petitioners
of their employment status at the time of their engagement, as evidenced
by the latter’s employment contracts which similarly provide that they
were hired in connection with the Alltel Project, and that their positions
were "project-based and as such is co-terminus to the project." In this light,
the CA correctly ruled that petitioners were indeed project-based
employees, considering that: (a) they were hired to carry out a specific
undertaking, i.e., the Alltel Project; and (b) the duration and scope of such
project were made known to them at the time of their engagement, i.e.,
"co-terminus with the project."
As regards the second requisite, the CA correctly stressed that
"[t]he law and jurisprudence dictate that ‘the duration of the undertaking
begins and ends at determined or determinable times’" while clarifying that
"[t]he phrase ‘determinable times’ simply means capable of being
determined or fixed."51 In this case, Sykes Asia substantially complied with
this requisite when it expressly indicated in petitioners’ employment
contracts that their positions were "co-terminus with the project." To the
mind of the Court, this caveat sufficiently apprised petitioners that their
security of tenure with Sykes Asia would only last as long as the Alltel
Project was subsisting. In other words, when the Alltel Project was
terminated, petitioners no longer had any project to work on, and hence,
Sykes Asia may validly terminate them from employment. Further, the
Court likewise notes the fact that Sykes Asia duly submitted an
Establishment Employment Report52 and an Establishment Termination
Report53 to the Department of Labor and Employment Makati-Pasay Field
Office regarding the cessation of the Alltel Project and the list of employees
that would be affected by such cessation. As correctly pointed out by the
CA, case law deems such submission as an indication that the employment
was indeed project-based.54
In sum, respondents have shown by substantial evidence that petitioners
were merely project-based employees, and as such, their services were
lawfully terminated upon the cessation of the Alltel Project.
WHEREFORE, the petition is DENIED. Accordingly, the Decision dated April
29, 2013 and the Resolution dated October 3, 2013 of the Court of Appeals
in CA-G.R. SP No. 120433 are hereby AFFIRMED.
SO ORDERED.
G.R. No. 184262**, April 24, 2017
UNIVERSITY OF SANTO TOMAS (UST), Petitioner, v. SAMAHANG
MANGGAGAWA NG UST, FERNANDO PONTESOR,* RODRIGO
CLACER, SANTIAGO BUISA, JR., AND JIMMY NAZARETH,
Respondents. D E C I S I O N
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated
June 12, 2008 and the Resolution 3 dated August 22, 2008 of the Court of
Appeals (CA) in CA-G.R. SP No. 85464, which reversed and set aside the
Resolutions dated March 26,
20044 and May 25, 20045 of the National Labor Relations Commission
(NLRC) in NLRC NCR CASE NO. 00-08-08586-99 (NLRC CA No. 035509-03)
and, accordingly, reinstated the Decision 6 dated October 23, 2002 of the
Labor Arbiter (LA) in NLRC-NCR-0-08-
08586-99 declaring respondents Fernando Pontesor
(Pontesor), Rodrigo Clacer (Clacer), Santiago Buisa,
Jr. (Buisa), and Jimmy Nazareth (Nazareth; Pontesor, et al., collectively) as
regular employees of petitioner University of Santo Tomas (petitioner)
and, thus, were illegally dismissed by the latter.
The Facts
The instant case stemmed from a complaint7 for regularization and illegal
dismissal filed by respondents Samahang Manggagawa ng UST and
Pontesor, et al. (respondents) against petitioner before the NLRC.
Respondents alleged that on various periods spanning the years 1990-
1999, petitioner repeatedly hired Pontesor, et al. to perform various
maintenance duties within its campus, i.e., as laborer, mason, tinsmith,
painter, electrician, welder, carpenter. Essentially, respondents insisted
that in view of Pontesor, et al.'s performance of such maintenance tasks
throughout the years, they should be deemed regular employees of
petitioner. Respondents further argued that for as long as petitioner
continues to operate and exist as an educational institution, with rooms,
buildings, and facilities to maintain, the latter could not dispense with
Pontesor, et al.'s services which are necessary and
desirable to the business of petitioner.8
On the other hand, while petitioner admitted that it repeatedly hired
Pontesor, et al. in different capacities throughout the aforesaid years, it
nevertheless maintained that they were merely hired on a perproject
basis, as evidenced by numerous Contractual Employee Appointments
(CEAs)9 signed by them. In this regard, petitioner pointed out that each of
the CEAs that Pontesor, et al. signed defined the nature and term of the
project to
which they are assigned, and that each contract was renewable in the
event the project remained unfinished upon the expiration of the specified
term. In accordance with the express provisions of said CEAs, Pontesor, et
al.'s project employment were automatically terminated: (a) upon the
expiration of the specific term specified in the CEA; (b) when the project is
completed ahead of such expiration; or (c) in cases when their
employment was extended due to the non-completion of the specific
project for which they were hired, upon the completion of the said project.
As such, the termination of Pontesor, et al.'s employment with petitioner
was validly made due to the completion of the specific projects for which
they were hired.10
The LA Ruling

In a Decision11 dated October 23, 2002, the LA ruled in Pontesor, et al.'s
favor and, accordingly, ordered petitioner to reinstate them to their former
jobs with full backwages and without loss of seniority rights. 12 The LA
found that Pontesor, et al. should be deemed as petitioner's regular
employees, considering that: (a) they have rendered at least one (1) year
of service to petitioner as its employees; (b) the activities for which they
were hired for are vital or inherently indispensable to the maintenance of
the buildings or classrooms where petitioner's classes were held; and (c)
their CEAs were contrived to preclude them from obtaining security of
tenure. In this light and in the absence of any valid cause for termination,
the LA concluded that Pontesor, et
al. were illegally dismissed by petitioner.13
Aggrieved, petitioner appealed14 to the NLRC.
The NLRC Ruling
In a Resolution15 dated March 26, 2004, the NLRC vacated the LA ruling
and, consequently, entered a new one dismissing respondents' complaint
for lack of merit.16 Contrary to the LA's findings, the NLRC found that
Pontesor, et al. cannot be considered regular employees as they knowingly
and voluntarily entered into fixed term contracts of employment with
petitioner. As such, they could not have been illegally dismissed upon the
expiration of their respective last valid and binding fixed term employment
contracts with petitioner. This notwithstanding, the NLRC rejected
petitioner's contention that Pontesor, et al. should be deemed project
employees, ratiocinating that their work were not usually necessary and
desirable to petitioner's main business or trade, which is to provide
elementary, secondary, tertiary, and post-graduate education. As such,
the NLRC classified Pontesor, et al. as mere fixed term casual employees.17
Respondents moved for reconsideration, 18 which was, however, denied in a
Resolution19 dated May 25, 2004. Dissatisfied, they filed a petition 20 for
certiorari before the CA.
The CA Ruling
In a Decision21 dated June 12, 2008, the CA reversed and set aside the
NLRC ruling and, accordingly, reinstated that of the LA. 22 It held that
Pontesor, et al. cannot be considered as merely fixed term or project
employees, considering that: (a) they performed work that is necessary
and desirable to petitioner's business, as evidenced by their repeated
rehiring and petitioner's continuous need for their services; and (b) the
specific undertaking or project for which they were employed were not
clear as the project description set forth in their respective CEAs were
either too general or too broad. Thus, the CA classified Pontesor, et al. as
regular employees, who are entitled to security of tenure and cannot be
terminated without any just or authorized cause.23
Undaunted, petitioner moved for reconsideration,24 but the same was
denied in a Resolution25 dated August 22, 2008; hence, this petition.
The Issue Before the Court
The issue for the Court's resolution is whether or not the CA correctly ruled
that Pontesor, et al. are regular employees and, consequently, were
illegally dismissed by petitioner.
The Court's Ruling
The petition is without merit.
"Preliminarily, the Court stresses the distinct approach in reviewing a CA's
ruling in a labor case. In a Rule 45 review, the Court examines the
correctness of the CA's Decision in contrast with the review of jurisdictional
errors under Rule 65. Furthermore, Rule 45 limits the review to questions
of law. In ruling for legal correctness, the Court views the CA Decision in
the same context that the petition for certiorariwas presented to the CA.
Hence, the Court has to examine the CA's Decision from the prism of
whether the CA correctly determined the presence or absence of grave
abuse of discretion in the NLRC decision." 26
Case law states that grave abuse of discretion connotes a capricious and
whimsical exercise of judgment, done in a despotic manner by reason of
passion or personal hostility, the character of which being so patent and
gross as to amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act at all in contemplation of law. 27
"In labor cases, grave abuse of discretion may be ascribed to the NLRC
when its findings and conclusions are not supported by substantial
evidence, which refers to that amount of relevant evidence that a
reasonable mind might accept as adequate to justify a conclusion. Thus, if
the NLRC's ruling has basis in the evidence and the applicable law and
jurisprudence, then no grave abuse of discretion exists and the CA should
so declare and, accordingly, dismiss the
petition."28
Guided by the foregoing considerations, the Court finds that the CA
correctly ascribed grave abuse of discretion on the part of the NLRC, as its
finding that Pontesor, et al. are not regular employees of petitioner
patently deviates from the evidence on record as well as settled legal
principles of labor law.
Article 29529 of the Labor Code,30 as amended, distinguishes project
employment from regular employment as
follows:chanRoblesvirtualLawlibrary Art. 295 [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.
Under the foregoing provision, the law provides for two (2) types of regular
employees, namely: (a) those who are engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the
employer (first category); and (b) those who have rendered at least one
year of service, whether continuous or broken, with respect to the activity
in which they are employed (second category). 31 In Universal Robina
Corporation v. Catapang,32 citing Abasolo v. NLRC,33 the Court laid down
the test in determining whether one is a regular employee, to
wit:chanRoblesvirtualLawlibrary The primary standard, therefore, of
determining regular employment is the reasonable connection between
the particular activity performed by the employee in relation to the usual
trade or business of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of work
performed and its relation to the scheme of the particular business or
trade in its entirety. Also, if the emplovee has been performing the
iob 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 necessitv 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.34 (Emphasis and underscoring
supplied.
In Kimberly Independent Labor Union for Solidarity,
Activism, and Nationalism - Organized Labor Ass'n. in Line Industries and
Agrigulture (KJLUSAN-OLALIA) v. Drilon (Kimberly),35 the company was
engaged in the manufacture of paper products, while the questioned
employees occupied the positions of mechanics, electricians, machinists,
machine shop helpers, warehouse helpers, painters, carpenters, pipefitters
and masons. In that case, the Court held that since they have worked for
the company for more than one (1) year, they should belong to the second
category of regular employees by operation of law.
In the case at bar, a review of Pontesor, et al.'s respective CEAs36 reveal
that petitioner repeatedly rehired them for various positions in the nature
of maintenance workers, such as laborer, mason, painter, tinsmith,
electrician, carpenter, and welder, for various periods spanning the years
1990-1999. Akin to the situation of the employees in Kimberly, Pontesor,
et al.'s nature of work are not necessary and desirable to petitioner's usual
business as an educational institution; hence, removing them from the
ambit of the first category of regular employees under Article 295 of the
Labor Code. Nonetheless, it is clear that their respective cumulative
periods of employment as per their respective CEAs each exceed one (1)
year. Thus, Pontesor, et al. fall under the second category of regular
employees under Article 295 of the Labor Code. Accordingly, they should
be deemed as regular employees but only with respect to the activities for
which they were hired and for as long as such activities exist.
In this relation, the Court clarifies that Pontesor, et al. were not project
employees of petitioner, who were validly terminated upon the completion
of their respective projects/undertakings. In Gadia v. Sykes Asia, Inc.,37 the
Court discussed the requisites for a
valid project employment, to wit:chanRoblesvirtualLawlibrary A project
employee is assigned to a project which begins and ends at determined
or determinable times. Unlike regular employees who may only be
dismissed for just and/or authorized causes under the Labor Code, the
services of employees who are hired as "project[-based] employees" may
be lawfully terminated at the completion of the project.
According to jurisprudence, the principal test for determining whether
particular employees are properly characterized as "project[-based]
employees" as distinguished from "regular employees,"
is whether or not the employees were assigned to carry out a fixed term contracts are disregarded for being contrary to public policy, 44
"specific project or undertaking," the duration (and scope) of which as in this case.
were specified at the time they were engaged for that project. The project
could either be (1) a particular job or undertaking that is within In view of the foregoing, Pontesor, et al. should, as discussed earlier, be
the regular or usual business of the employer company, but which considered regularized casual employees who enjoy, inter alia, security of
is distinct and separate, and identifiable as such, from the other tenure. Accordingly, they cannot be terminated from employment without
undertakings of the company; or (2) a particular job or any just and/or authorized cause, which unfortunately, petitioner was
undertaking that is not within the regular business of the guilty of doing in this case. Hence, Pontesor, et al. must be reinstated to
corporation. In order to safeguard the rights of workers against the their former or equivalent positions, with full backwages and without loss
arbitrary use of the word "project" to prevent employees from attaining a of seniority rights. As pointed out by the LA, the NLRC Computation &
regular status, employers claiming that their workers are project[- Examination Unit should be directed to compute the monetary awards that
based] employees should not only prove that the duration and petitioner should be ordered to pay Pontesor, et al. as a consequence of
scope of the employment was specified at the time they were this ruling.
engaged, but also, that there was indeed a project.38 (Emphases and
underscoring supplied)
WHEREFORE, the petition is DENIED. The Decision dated June 12, 2008
As aptly held by the CA, Pontesor, et al. could not be considered as project
and the Resolution dated August 22, 2008 of the Court of Appeals in CA-
employees because the specific undertakings or projects for which they
G.R. SP No.
were employed were not clearly delineated. This is evidenced by the
85464 are hereby AFFIRMED.
vagueness of the project descriptions set forth in their respective CEAs, 39
which states that they were tasked "to assist" in various carpentry,
electrical, and masonry work. In fact, when the aforesaid CEAs are pieced SO ORDERED.
together, it appears that during the years 1990 to 1999, Pontesor, et al.
were each engaged to perform all-around maintenance services
throughout the various facilities/installations in petitioner's campus. Thus,
it seems that petitioner, through the CEAs, merely attempted to
compartmentalize Pontesor, et al.'s various tasks into purported "projects"
so as to make it appear that they were hired on a per-project basis. Verily,
the Court cannot countenance this practice as to do so would effectively
permit petitioners to avoid hiring permanent or regular employees by
simply hiring them on a temporary or casual basis, thereby violating the
employees' security of tenure relative to their
jobs.40 G.R. No. 205688
VALENTINO S. LINGAT AND APRONIANO
ALTOVEROS … Petitioners versus
Lest it be misunderstood, there are instances when the validity of project 41
COCA-COLA BOTTLERS PHILIPPINES, INC., MONTE
or fixed term42 employments were upheld on the ground that it was
DAPPLES TRADING, AND DAVID LYONS, ***** … Respondents
"agreed upon knowingly and voluntarily by the parties, without any force,
PRESENT: LEONARDO-DE CASTRO *; PERALTA **;
duress or improper pressure being brought to bear upon the employee and
DEL CASTILLO, ACTING CHAIRPERSON***; TIJAM
absent any other circumstances vitiating his consent, or where it
AND GESMUNDO****, JJ
satisfactorily appears that the employer and employee dealt with each
Promulgated: JUL 04, 2018
other on more or less equal terms with no moral dominance whatever
DECISION
being exercised by the former over the latter." 43 However, if it is apparent
DEL CASTILLO, J:
from the circumstances of the case "that periods have been imposed to
This Petition for Review on Certiorari assails the July 4, 2012 Decision1 of
preclude acquisition of tenurial security by the employee," such project or
the Court of Appeals (CA) in CA-G.R. SP No. 112829, which modified the July
7, 2009
Decision2 of the National Labor Relations Commission
(NLRC) in NLRC LAC No. 03-000855-09. Also challenged is the January 16,
2013 CA Resolution3 which denied petitioners Valentino S. Lingat (Lingat)
and
Aproniano Altoveros’ (Altoveros) (petitioners) Motion for Reconsideration.
Factual Antecedents
On May 5, 2008, petitioners filed a Complaint4 for illegal dismissal, moral
and exemplary damages, and attorney’s fees against Coca-Cola Bottlers
Phils., Inc. (CCBPI), Monte Dapples Trading Corp. (MDTC), and David Lyons
(Lyons) (respondents).
Petitioners averred in their Position Paper5 and Reply6 that, in August 1993
and January 1996, CCBPI employed Lingat and Altoveros as plant driver
and forklift operator, and segregator/ mixer respectively. They added that
they had continually worked for CCBPI until their illegal dismissal in April
2005 (Lingat) and December 2005 (Altoveros).
According to petitioners, they were regular employees of CCBPI because it
engaged them to perform tasks necessary and desirable in its business or
trade. They explained that CCBPI made them part of its operations, and
without them its products would not reach its clients. They asserted that
their work was the link between CCBPI and its sales force.
Petitioners alleged that CCBPI engaged Lingat primarily as a plant driver
but he also worked as forklift operator. In particular, he drove CCBPI’s truck
loaded with softdrinks and its other products, and thereafter, returned the
empty bottles as well as the unsold softdrinks back to the plant of CCBPI.
On the other hand, as segregator/ mixer of softdrinks, Altoveros was
required to segregate softdrinks based on the orders of the customers.
Altoveros declared, that when a customer needed cases of softdrinks, such
need was relayed to him since no sales personnel was allowed in the
loading area.
Petitioners further stated, that after becoming regular employees (as they
had been employed for more than a year), and by way of a modus
operandi, CCBPI transferred them from one agency to another. These
agencies included Lipercon Services, Inc., People Services, Inc., Interserve
Management and Manpower Resources, Inc. The latest agency to where
they were transferred was MDTC. They claimed that such transfer was a
scheme to avoid their regularization in CCBPI.
In addition, petitioners stressed that the aforesaid agencies were labor-only
contractors which did not have any equipment, machinery, and work
premises for warehousing purposes. They insisted that CCBPI owned the
warehouse where they worked; the supervisors thereat were CCBPI’s
employees; and, petitioners themselves worked for CCBPI, not for any
agency. In fine, they maintained that they were regular employees of CCBPI
because:
[Petitioners] worked within the premises of [CCBPI,] use the equipment, the
facilities, cater on [its] products, [and served] the Sales Forces x x x. In
other words, while at work, [petitioners] were under the direction, control
and supervision of respondent Coca-Cola’s regular employees. The
situation calls for the over-all control of the operations by Coca-Cola
employees as [petitioners] perform[ed] their work with x x x Coca-Cola and
[its] premises, x x x7
Finally, petitioners argued that CCBPI dismissed them after it found out that
they were “overstaying.” As such, they posited that they were illegally
dismissed as their termination was without cause and due process of law.
For their part, CCBPI and Lyons, its President/ Chief
Executive Officer, countered in their Position Paper8 and
Reply9 that this case must be dismissed because the Labor Arbiter (LA)
lacked jurisdiction, there being no employer-employee relationship between
the parties.
CCBPI and Lyons declared that CCBPI was engaged in the business of
manufacturing, distributing, and marketing of softdrinks and other
beverage products. By reason of its business, CCBPI entered into a
Warehousing Management Agreement10 with MDTC for the latter to
perform warehousing and inventory functions for the former.
CCBPI and Lyons insisted that MDTC was a legitimate and independent
contractor, which only assigned petitioners at CCBPI’s plant in Otis, Manila.
They posited that MDTC carried on a distinct and independent business;
catered to other clients, aside from CCBPI; and possessed sufficient capital
and investment in machinery and equipment for the conduct of its business
as well as an office building.
CCBPI and Lyons likewise stressed that petitioners were employees of
MDTC, not CCBPI. They averred that MDTC was the one who engaged
petitioners and paid their salaries. They also claimed that CCBPI only
coordinated with the Operations Manager of MDTC in order to monitor the
end results of the services rendered by the employees of MDTC. They
added that it was MDTC which imposed corrective action upon its
employees when disciplinary matters arose.
Finally, CCBPI and Lyons averred that when the
Warehousing Management Agreement between CCBPI and MDTC expired,
the parties no longer renewed the same. Consequently, it came as a
surprise to CCBPI that petitioners filed this complaint considering that
CCBPI was not their employer, but MDTC.
Meanwhile, LA Catalino R. Laderas declared that despite notice, MDTC
failed to file its position paper on this case.11
Ruling of the Labor Arbiter
On December 9, 2008, the LA ruled for the petitioners, the dispositive
portion of his Decision reads:
WHEREFORE, premised on the foregoing considerations[,] judgment is
hereby rendered declaring that complainants were ILLEGALLY DISMISSED
from their employment.
Respondent CCBPI is hereby ordered, viz.:
1. To reinstate complainants to their former positions without loss of
seniority rights and privileges and to pay complainants backwages from the
time they were illegally dismissed up to the time of this decision.
The computation unit of this Office is hereby directed to compute the
monetary award of the complainant[s] which forms part of this decision.
Other claims are DISMISSED for lack of merit.
SO ORDERED.12
The LA ruled that respondents failed to refute that petitioners were
employees of CCBPI and the latter undermined their regular status by
transferring them to an agency. The LA decreed that, per the identification
cards (IDs) of petitioners, CCBPI hired Lingat in 1993, and Altoveros in
1996. Moreover, as plant driver, and segregator/ mixer, petitioners
performed activities necessary in the usual business or trade of CCBPI; and,
their continued employment for more than one year proved that they were
regular employees of CCBPI.
The LA likewise ratiocinated that the contracts of employment which
petitioners may have entered with
CCBPI’s contractors could not undermine their (petitioners) tenure arising
from their regular status with CCBPI.
In sum, the LA decreed that, since respondents failed to debunk the
allegations raised by petitioners, then judgment must be rendered in favor
of petitioners.
Ruling of the National Labor Relations Commission
On appeal, the NLRC dismissed the illegal dismissal case. It, nonetheless,
ordered MDTC to pay Altoveros separation pay amounting to P10,725.00.
According to the NLRC, Lingat stated that CCBPI illegally dismissed him in
April 2005. However, he only filed his complaint for illegal dismissal on May
5, 2008, which was beyond three years from his dismissal. Thus, Lingat’s
complaint must be dismissed on the ground of prescription.
Also, the NLRC decreed that the complaint of Altoveros was bereft of merit.
It explained that per Altoveros’ ID, CCBPI employed him in January 1996
until September
19, 1996; thereafter, he was employed by Genesis
Logistics and Warehouse Corporation; and, on April 7, 2003, MDTC hired
him and assigned him as loader/ mixer at CCBPI’s warehouse in Paco,
Manila until
December 2005 when MDTC’s contract with CCBPI expired.
In ruling that Altoveros was an employee of MDTC, the
NLRC gave credence to the Warehousing Management Agreement between
MDTC and CCBPI as well as to
MDTC’s Amended Articles of Incorporation. It held that MDTC did not
appear to be a mere agent of CCBPI but was one that provided stock
handling and storage services to CCBPI. It held that, considering MDTC was
the employer of Altoveros, then it must pay him separation pay of ½ month
pay for every year of his service.
On November 4, 2009, the NLRC denied13 petitioners’ Motion for
Reconsideration prompting them to file a Petition for Certiorari with the CA.
Ruling of the Court of Appeals
On July 4, 2012, the CA modified the NLRC Decision in that it ordered MDTC
to pay separation pay to both petitioners.
Contrary to the finding of the NLRC, the CA found that the illegal dismissal
case filed by Lingat had not yet prescribed. It held that, aside from money
claims, Lingat prayed for reinstatement, as such, pursuant to Article 1146
of the Civil Code, Lingat had four years within which to file his case. It
noted that Lingat filed this suit on May 5, 2008 or only three years and one
day from his alleged illegal dismissal; thus, he timely filed his case against
respondents.
Nevertheless, the CA agreed with the NLRC that MDTC was an independent
contractor and the employer of petitioners. It gave weight to petitioners’
latest IDs, which were issued by MDTC as well as to the Articles of
Incorporation of MDTC, which indicated that its secondary purpose was “to
engage in the business of land transportation” and “the business of
warehousing services.” It further ruled that MDTC had substantial capital
stock, as well as properties and equipment, which supported the conclusion
that MDTC was a legitimate labor contractor.
On January 16, 2013, the CA denied the Motion for Reconsideration on the
assailed Decision.
Issues
Undaunted, petitioners filed this Petition raising these issues:
1. Whether or not there exists [an] employer-employ[ee] relationship
between Petitioners and Respondent CCBPI;
2. Whether or not Petitioner Lingat’s complaint is barred by
prescription;
3. Whether or not the Court of Appeals gravely erred in declaring
[that] Petitioners [were] not regular employees of Respondent CCBPI;
4. Whether or not Petitioners were dismissed without cause and due
process;
5. Whether or not moral and exemplary damages lie; and
6. Whether or not the Petitioners are entitled to attorney’s fees.14
Petitioners maintain that they were regular employees of
CCBPI. They insist that their engagement by CCBPI in 1993 (Lingat) and
1996 (Altoveros) proved that they were its employees from the beginning.
They also aver that they worked at CCBPI’s warehouse, wore its uniforms,
operated its machinery, and were under the direct control and supervision
of CCBPI. They likewise contend that CCBPI illegally dismissed them from
work. On this, they insist that respondents themselves admitted that
petitioners’ employment contract expired; and thereafter, they were no
longer given any new assignments. They remain firm that such termination
of contract was not a valid cause for their dismissal from work.
CCBPI and Lyons, for their part, counter that this Petition was not a proper
recourse because petitioners seek a recalibration of facts and evidence
which is not within the scope of the Petition because only pure questions of
law may be raised herein. They add that MDTC was a legitimate and
independent job contractor and was the employer of petitioners, not CCBPI.
Our Ruling
The Petition is impressed with merit.
As a rule, the determination of whether an employeremployee relationship
exists between the parties involves factual matters that are generally
beyond the ambit of this Petition as only questions of law may be raised in
a petition for review on certiorari. However, this rule allows certain
exceptions, which include an instance where the factual findings of the
courts or tribunals below are conflicting. Given the situation here where the
factual findings of the NLRC and the CA are divergent from those of the LA,
the Court deems it proper to re-assess and review these findings in order to
arrive at a just resolution of the issues on hand.15
Moreover, pursuant to Article 295 of the Labor Code, as amended and
renumbered, a regular employee is a) one that has been engaged to
perform tasks usually necessary or desirable in the employer’s usual
business or trade-without falling within the category of either a fixed or a
project or a seasonal employee; or b) one that has been engaged for a
least one year, whether his or her service is continuous or not, with respect
to such activity he or she is engaged, and the work of the employee
remains while such activity exists.
In this case, petitioners described their respective duties at CCBPI in this
manner:
x x x I, V. Lingat, x x x was also engaged as forklift operator [but] my main
work as plant driver [required me] to take out truck loaded with softdrinks/
Coca-Cola products after the same has been checked by the checker area;
[I also] drive back Coca-Cola trucks loaded with empty bottles or
sometimes xxx unsold softdrinks x x x This represented [my] daily chores
while employed at Coca-Cola[.]
x x x I, A. Altoveros, was with the latest work as segregator/ mixer of
softdrinks according to the demands of the customers, that is, when a
customer needed ten (10) cases of Royal Tru-Orange or five (5) cases of
Coke Sakto, the same is relayed to me in the loading area (as no sales
personnel is allowed therein)[.] I have to segregate softdrinks accordingly
to fill up the order of [the] customer.16
To ascertain if one is a regular employee, it is primordial to determine the
reasonable connection between the activity he or she performs and its
relation to the trade or business of the supposed employer.17
Relating petitioners’ tasks to the nature of the business of CCBPI-which
involved the manufacture, distribution, and sale of soft drinks and other
beverages-it cannot be denied that mixing and segregating as well as
loading and bringing of CCBPI’s products to its customers involved
distribution and sale of these items. Simply put, petitioners’ duties were
reasonably connected to the very business of CCBPI. They were
indispensable to such business because without them the products of
CCBPI would not reach its customers.
Interestingly, in Coca-Cola Bottlers Philippines, Inc. v. Agito,18 the Court
held that respondents salesmen therein were regular employees of CCBPI
as their work constituted distribution and sale of its products. The Court
also stressed in Agitothat the repeated rehiring of those salesmen
bolstered the indispensability of their work to the business of CCBPI.
Similarly, herein petitioners have worked for CCBPI since 1993 (Lingat) and
1996 (Altoveros) until the non-renewal of their contracts in 2005. Aside
from the fact that their work involved the distribution and sale of the
products of CCBPI, they remained to be working for CCBPI despite having
been transferred from one agency to another. Hence, such repeated re-
hiring of petitioners, and the performance of the same tasks for CCBPI
established the necessity and the indispensability of their activities in its
business.
In addition, in Pacquing v. Coca-Cola Philippines,
Inc.,19 the Court ruled that the sales route helpers of CCBPI were its
regular employees. In this case, petitioners had similarly undertook to bring
CCBPI’s products to its customers at their delivery points. In Pacquing, it
was even stated that therein sales route helpers “were part of a
complement of three personnel comprised of a driver, a salesman and a
regular route helper, for every delivery truck.”20 As such, it would be
absurd for the Court to hold those helpers as regular employees of CCBPI
without giving the same status to its plant driver, including its segregator
of softdrinks, whose work also had reasonable connection to CCBPI’s
business of distribution and sale of soft drinks and other beverage
products.
Furthermore, in Quintanar v. Coca-Cola Bottlers,
Philippines, Inc.,21 therein route helpers, like petitioners, were tasked to
distribute CCBPI’s products and were likewise successively transferred to
agencies after having been initially employed by CCBPI. The Court decreed
therein that said helpers were regular employees of CCBPI notwithstanding
the fact that they were transferred to agencies while working for CCBPI. In
the same vein, the transfer of herein petitioners from one agency to
another did not adversely affect their regular employment status. Such was
the case because they continued to perform the same tasks for CCBPI even
if they were placed under certain agencies, the last of which was MDTC.
Moreover, CCBPI and Lyons’ contention that MDTC was a legitimate labor
contractor and was the actual employer of petitioners does not hold water.
A labor-only contractor is one who enters into an agreement with the
principal employer to act as the agent in the recruitment, supply, or
placement of workers for the latter. A labor-only contractor 1) does not
have substantial capital or investment in tools, equipment, work premises,
among others, and the recruited employees perform tasks necessary to the
main business of the principal; or 2) does not exercise any right of control
anent the performance of the contractual employee. In such case, where a
labor-only contracting exists, the principal shall be deemed the employer of
the contractual employee; and the principal and the laboronly contractor
shall be solidarily liable for any violation of the Labor Code. On the other
hand, a legitimate job contractor enters into an agreement with the
employer for the supply of workers for the latter but the
“employeremployee relationship between the employer and the
contractor’s employees [is] only for a limited purpose, i.e., to ensure that
the employees are paid their wages.”22
In Diamond Farms, Inc. v. Southern Philippines
Federation of Labor (SPFL)-Workers Solidarity of DARBMUPCO/ Diamond-
SPFL,23 the Court distinguished a labor-only contractor and a legitimate job
contractor in this wise:
The Omnibus Rules Implementing the Labor Code distinguishes between
permissible job contracting (or independent contractorship) and labor-only
contracting.
Job contracting is permissible under the Code if the following conditions are
met:
(a) The contractor carries on an independent business and undertakes
the contract work on his own account under his own responsibility
according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof;
and
(b) 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.
In contrast, job contracting shall be deemed as labor-only contracting, an
arrangement prohibited by law, if a person who undertakes to supply
workers to an employer:
(1) Does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such person are performing
activities which are directly related to the principal business or operations
of the employer in which workers are habitually employed.
Here, based on their Warehousing Management Agreement, CCBPI hired
MDTC to perform warehousing management services, which it claimed did
not directly relate to its (CCBPI’s) manufacturing operations.24 However, it
must be stressed that CCBPI’s business not only involved the manufacture
of its products but also included their distribution and sale.
Thus, CCBPI’s argument that petitioners were employees of MDTC because
they performed tasks directly related to “warehousing management
services,” lacks merit. On the contrary, records show that petitioners were
performing tasks directly related to CCBPI’s distribution and sale aspects of
its business.
To reiterate, CCBPI is engaged in the manufacture, distribution, and sale of
its products; in turn, as plant driver and segregator/ mixer of soft drinks,
petitioners were engaged to perform tasks relevant to the distribution and
sale of CCBPI’s products, which relate to the core business of CCBPI, not to
the supposed warehousing service being rendered by MDTC to CCBPI.
Petitioners’ work were directly connected to the achievement of the
purposes for which CCBPI was incorporated. Certainly, they were regular
employees of CCBPI.
Moreover, we disagree with the CA when it heavily relied on MDTC’s alleged
substantial capital in order to conclude that it was an independent labor
contractor.
To note, in Quintanar v. Coca-Cola Bottlers, Philippines,
Inc.,25 the Court ruled that “the possession of substantial capital is only
one element.”26 To determine whether a person or entity is indeed a
legitimate labor contractor, it is necessary to prove not only substantial
capital or investment in tools, equipment, work premises, among others,
but also that the work of the employee is directly related to the work that
contractor is required to perform for the principal.27 Evidently, the latter
requirement is wanting in the case at bench.
Finally, as regular employees, petitioners may be dismissed only for cause
and with due process. These requirements were not complied with here.
It was not disputed that petitioners ceased to perform their work when they
were no longer given any new
assignment upon the alleged termination of the
Warehousing Management Agreement between CCBPI and MDTC. However,
this is not a just or authorized cause to terminate petitioners’ services.
Otherwise stated, the contract expiration was not a valid basis to dismiss
petitioners from service. At the same time, there was no clear showing that
petitioners were afforded due process when they were terminated.
Therefore, their dismissal was without valid cause and due process of law;
as such, the same was illegal.
Considering that petitioners were illegally terminated, CCBPI and MDTC are
solidarily liable for the rightful claims of petitioners.28
Moreover, by reason of the lapse of more than 10 years since the inception
of this case on May 5, 2008, the Court deems it more practical and would
serve the best interest of the parties to award separation pay to
petitioners, in lieu of reinstatement.29 Finally, since petitioners were
compelled to litigate to protect their rights and interests, attorney’s fees of
10% of the monetary award is given them. The legal interest of 6% per
annum shall be imposed on all the monetary grants from the finality of the
Decision until paid in full.30
WHEREFORE, the Petition is GRANTED. The July 4,
2012 Decision and January 16, 2013 Resolution of the Court of Appeals in
CA-G.R. SP No. 112829 are REVERSED and SET ASIDE. Accordingly, the
December 9, 2008 Decision of the Labor Arbiter is REINSTATED WITH
MODIFICATIONS in that separation pay, in lieu of reinstatement, and
attorney’s fees equivalent to 10% of the monetary grants are awarded to
petitioners. All monetary awards shall earn interest at the legaLrate of 6%
per annum from the finality of this Decision until fully paid.
SO ORDERED.
ABS-CBN BROADCASTING G.R. No. 164156
CORPORATION,
Petitioner, Present
PANGANIBAN, C.J., Chairperson,
YNARES-SANTIAGO,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.
MARLYN NAZARENO, Promulgated:
MERLOU GERZON,
JENNIFER DEIPARINE,
and JOSEPHINE LERASAN,
Respondents. September 26, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision[1] of the Court
of Appeals (CA) in CA-G.R. SP No. 76582 and the Resolution denying the
motion for reconsideration thereof. The CA affirmed the Decision [2] and
Resolution[3] of the National Labor Relations Commission (NLRC) in NLRC
Case No. V-000762-2001 (RAB Case No. VII-10-1661-2001) which likewise
affirmed, with modification, the decision of the Labor Arbiter declaring the
respondents Marlyn Nazareno, Merlou Gerzon, Jennifer Deiparine and
Josephine Lerasan as regular employees.
The Antecedents
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged
in the broadcasting business and owns a network of television and radio
stations, whose operations revolve around the broadcast, transmission, and
relay of telecommunication signals. It sells and deals in or otherwise
utilizes the airtime it generates from its radio and television operations. It
has a franchise as a broadcasting company, and was likewise issued a
license and authority to operate by the National Telecommunications
Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and
Lerasan as production assistants (PAs) on different dates. They were
assigned at the news and public affairs, for various radio programs in the
Cebu Broadcasting Station, with a monthly compensation of P4,000. They
were issued ABS-CBN employees identification cards and were required to
work for a minimum of eight hours a day, including Sundays and
holidays. They were made to perform the following tasks and duties:
a) Prepare, arrange airing of commercial broadcasting
based on the daily operations log and digicart of
respondent ABS-CBN;
b) Coordinate, arrange personalities for air interviews;
 c) Coordinate, prepare schedule of reporters for
scheduled news reporting and lead-in or incoming
reports;
d) Facilitate, prepare and arrange airtime schedule for
public service announcement and complaints;
e) Assist, anchor program interview, etc; and
f) Record, log clerical reports, man based control radio.
[4]
Their respective working hours were as follows:
Name Time No. of Hours
1. Marlene Nazareno 4:30 A.M.-8:00 A.M. 7
8:00 A.M.-12:00 noon
2. Jennifer Deiparine 4:30 A.M.-12:00M.N. (sic) 7
3. Joy Sanchez 1:00 P.M.-10:00 P.M.(Sunday) 9 hrs.
9:00 A.M.-6:00 P.M. (WF) 9 hrs.
4. Merlou Gerzon 9:00 A.M.-6:00 P.M. 9 hrs.[5]
The PAs were under the control and supervision of Assistant Station
Manager Dante J. Luzon, and News Manager Leo Lastimosa.
On December 19, 1996, petitioner and the ABS-CBN Rank-and-File
Employees executed a Collective Bargaining Agreement (CBA) to be
effective during the period from December 11, 1996 to December 11,
1999. However, since petitioner refused to recognize PAs as part of the
bargaining unit, respondents were not included to the CBA. [6]
On July 20, 2000, petitioner, through Dante Luzon, issued a
Memorandum informing the PAs that effective August 1, 2000, they would
be assigned to non-drama programs, and that the DYAB studio operations
would be handled by the studio technician. Thus, their revised schedule
and other assignments would be as follows:
Monday Saturday
4:30 A.M. 8:00 A.M. Marlene Nazareno.
Miss Nazareno will then be assigned at the Research Dept.
From 8:00 A.M. to 12:00
4:30 P.M. 12:00 MN Jennifer Deiparine
Sunday
5:00 A.M. 1:00 P.M. Jennifer Deiparine
1:00 P.M. 10:00 P.M. Joy Sanchez
Respondent Gerzon was assigned as the full-time PA of the TV News
Department reporting directly to Leo Lastimosa.
On October 12, 2000, respondents filed a Complaint for Recognition
of Regular Employment Status, Underpayment of Overtime Pay, Holiday
Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13 th Month
Pay with Damages against the petitioner before the NLRC. The Labor
Arbiter directed the parties to submit their respective position papers. Upon
respondents failure to file their position papers within the reglementary
period, Labor Arbiter Jose G. Gutierrez issued an Order dated
April 30, 2001, dismissing the complaint without prejudice for lack of
interest to pursue the case. Respondents received a copy of the Order
on May 16, 2001.[7] Instead of re-filing their complaint with the NLRC within
10 days from May 16, 2001, they filed, on June 11, 2001, an Earnest Motion
to Refile Complaint with Motion to Admit Position Paper and Motion to
Submit Case For Resolution. [8] The Labor Arbiter granted this motion in an
Order dated June 18, 2001, and forthwith admitted the position paper of
the complainants. Respondents made the following allegations:
1. Complainants were engaged by respondent ABS-CBN as
regular and full-time employees for a continuous period of
more than five (5) years with a monthly salary rate of Four
Thousand (P4,000.00) pesos beginning 1995 up until the
filing of this complaint on November 20, 2000.
Machine copies of complainants ABS-CBN Employees
Identification Card and salary vouchers are hereto attached
as follows, thus:
I. Jennifer Deiparine:
Exhibit A - ABS-CBN Employees Identification Card
Exhibit B, - ABS-CBN Salary Voucher from Nov.
Exhibit B-1 & 1999 to July 2000 at P4,000.00
Exhibit B-2
Date employed: September 15, 1995
Length of service: 5 years & nine (9) months
II. Merlou Gerzon - ABS-CBN Employees Identification Card
Exhibit C
 Exhibit D 7. Premium pay;
Exhibit D-1 & 8. Overtime pay;
Exhibit D-2 - ABS-CBN Salary Voucher from March 9. Night shift differential.
1999 to January 2001 at P4,000.00
Date employed: September 1, 1995 Complainants further pray of this Arbiter to declare
Length of service: 5 years & 10 months them regular and permanent employees of respondent
ABS-CBN as a condition precedent for their admission into
III. Marlene Nazareno the existing union and collective bargaining unit of
Exhibit E - ABS-CBN Employees Identification Card respondent company where they may as such acquire or
Exhibit E - ABS-CBN Salary Voucher from Nov. otherwise perform their obligations thereto or enjoy the
Exhibit E-1 & 1999 to December 2000 benefits due therefrom.
Exhibit :E-2
Date employed: April 17, 1996 Complainants pray for such other reliefs as are just
Length of service: 5 years and one (1) month and equitable under the premises.[10]

IV. Joy Sanchez Lerasan

Exhibit F - ABS-CBN Employees Identification Card For its part, petitioner alleged in its position paper that the
Exhibit F-1 - ABS-CBN Salary Voucher from Aug. respondents were PAs who basically assist in the conduct of a particular
Exhibit F-2 & 2000 to Jan. 2001 program ran by an anchor or talent.Among their duties include monitoring
Exhibit F-3 and receiving incoming calls from listeners and field reporters and calls of
Exhibit F-4 - Certification dated July 6, 2000 news sources; generally, they perform leg work for the anchors during a
Acknowledging regular status of program or a particular production. They are considered in the industry as
Complainant Joy Sanchez Lerasan program employees in that, as distinguished from regular or station
Signed by ABS-CBN Administrative employees, they are basically engaged by the station for a particular or
Officer May Kima Hife specific program broadcasted by the radio station. Petitioner asserted that
Date employed: April 15, 1998 as PAs, the complainants were issued talent information sheets which are
Length of service: 3 yrs. and one (1) month[9] updated from time to time, and are thus made the basis to determine the
Respondents insisted that they belonged to a work pool from which programs to which they shall later be called on to assist. The program
petitioner chose persons to be given specific assignments at its discretion, assignments of complainants were as follows:
and were thus under its direct supervision and control regardless of
nomenclature. They prayed that judgment be rendered in their favor, thus: a. Complainant Nazareno assists in the
programs:
WHEREFORE, premises considered, this Honorable 1) Nagbagang Balita (early morning edition)
Arbiter is most respectfully prayed, to issue an order 2) Infor Hayupan
compelling defendants to pay complainants the following: 3) Arangkada (morning edition)
4) Nagbagang Balita (mid-day edition)
1. One Hundred Thousand Pesos (P100,000.00)
each b. Complainant Deiparine assists in the
and by way of moral damages; programs:
2. Minimum wage differential; 1) Unzanith
3. Thirteenth month pay differential; 2) Serbisyo de Arevalo
4. Unpaid service incentive leave benefits; 3) Arangkada (evening edition)
5. Sick leave; 4) Balitang K (local version)
6. Holiday pay; 5) Abante Subu
 6) Pangutana Lang petitioner; as such, they were awarded monetary benefits. The fallo of the
decision reads:
c. Complainant Gerzon assists in the program:
1) On Mondays and Tuesdays:
(a) Unzanith WHEREFORE, the foregoing premises considered, judgment
(b) Serbisyo de Arevalo is hereby rendered declaring the complainants regular
(c) Arangkada (evening edition) employees of the respondent ABS-CBN Broadcasting
(d) Balitang K (local version) Corporation and directing the same respondent to pay
(e) Abante Sugbu complainants as follows:
(f) Pangutana Lang
2) On Thursdays
Nagbagang Balita I - Merlou A. Gerzon P12,025.00
3) On Saturdays II - Marlyn Nazareno 12,025.00
(a) Nagbagang Balita III - Jennifer Deiparine 12,025.00
(b) Info Hayupan IV - Josephine Sanchez Lerazan 12,025.00
(c) Arangkada (morning edition) _________
(d) Nagbagang Balita (mid-day edition) P48,100.00
4) On Sundays:
(a) Siesta Serenata plus ten (10%) percent Attorneys Fees or a TOTAL
(b) Sunday Chismisan aggregate amount of PESOS: FIFTY TWO THOUSAND NINE
(c) Timbangan sa Hustisya HUNDRED TEN (P52,910.00).
(d) Sayri ang Lungsod
(e) Haranahan[11] Respondent Veneranda C. Sy is absolved from any liability.

SO ORDERED.[13]
Petitioner maintained that PAs, reporters, anchors and talents
occasionally sideline for other programs they produce, such as drama

talents in other productions. As program employees, a PAs engagement is
coterminous with the completion of the program, and may be
extended/renewed provided that the program is on-going; a PA may also be
assigned to new programs upon the cancellation of one program and the
commencement of another. As such program employees, their
compensation is computed on a program basis, a fixed amount for
performance services irrespective of the time consumed. At any rate,
petitioner claimed, as the payroll will show, respondents were paid all
salaries and benefits due them under the law.[12]
Petitioner also alleged that the Labor Arbiter had no jurisdiction to involve
the CBA and interpret the same, especially since respondents were not
covered by the bargaining unit.
On July 30, 2001, the Labor Arbiter rendered judgment in favor of
the respondents, and declared that they were regular employees of
However, the Labor Arbiter did not award money benefits as provided in
the CBA on his belief that he had no jurisdiction to interpret and apply the
agreement, as the same was within the jurisdiction of the Voluntary
Arbitrator as provided in Article 261 of the Labor Code.
Respondents counsel received a copy of the decision on August 29,
2001. Respondent Nazareno received her copy on August 27, 2001, while
the other respondents received theirs on September 8, 2001. Respondents
signed and filed their Appeal Memorandum on September 18, 2001.
For its part, petitioner filed a motion for reconsideration, which the
Labor Arbiter denied and considered as an appeal, conformably with
Section 5, Rule V, of the NLRC Rules of Procedure. Petitioner forthwith
appealed the decision to the NLRC, while respondents filed a partial appeal.
In its appeal, petitioner alleged the following:

1. That the Labor Arbiter erred in reviving or re-opening this
case which had long been dismissed without prejudice
for more than thirty (30) calendar days;
2. That the Labor Arbiter erred in depriving the
respondent of its Constitutional right to due process of
law;
3. That the Labor Arbiter erred in denying respondents
Motion for Reconsideration on an interlocutory order
on the ground that the same is a prohibited pleading;
4. That the Labor Arbiter erred when he ruled that the
complainants are regular employees of the
respondent;
5. That the Labor Arbiter erred when he ruled that the
complainants are entitled to 13th month pay, service
incentive leave pay and salary differential; and
6. That the Labor Arbiter erred when he ruled that
complainants are entitled to attorneys fees.[14]
On November 14, 2002, the NLRC rendered judgment modifying the
decision of the Labor Arbiter. The fallo of the decision reads:
WHEREFORE, premises considered, the decision of
Labor Arbiter Jose G. Gutierrez dated 30 July 2001 is SET
ASIDE and VACATED and a new one is
entered ORDERINGrespondent ABS-CBN Broadcasting
Corporation, as follows:
1. To pay complainants of their wage differentials and
other benefits arising from the CBA as of 30 September
2002 in the aggregate amount of Two Million Five
Hundred, Sixty-One Thousand Nine Hundred Forty-Eight
Pesos and 22/100 (P2,561,948.22), broken down as
follows:
a. Deiparine, Jennifer - P 716,113.49
b. Gerzon, Merlou - 716,113.49
c. Nazareno, Marlyn - 716,113.49
d. Lerazan, Josephine Sanchez - 413,607.75
Total - P 2,561,948.22
2. To deliver to the complainants Two Hundred Thirty-
Three (233) sacks of rice as of 30 September
2002 representing their rice subsidy in the CBA, broken
down as follows:
a. Deiparine, Jennifer - 60 Sacks
b. Gerzon, Merlou - 60 Sacks
c. Nazareno, Marlyn - 60 Sacks
d. Lerazan, Josephine Sanchez - 53 Sacks
Total 233 Sacks; and
3. To grant to the complainants all the benefits of the
CBA after 30 September 2002.
SO ORDERED.[15]
The NLRC declared that the Labor Arbiter acted conformably with
the Labor Code when it granted respondents motion to refile the complaint
and admit their position paper. Although respondents were not parties to
the CBA between petitioner and the ABS-CBN Rank-and-File Employees
Union, the NLRC nevertheless granted and computed respondents
monetary benefits based on the 1999 CBA, which was effective until
September 2002. The NLRC also ruled that the Labor Arbiter had
jurisdiction over the complaint of respondents because they acted in their
individual capacities and not as members of the union. Their claim for
monetary benefits was within the context of Article 217(6) of the Labor
Code. The validity of respondents claim does not depend upon the
interpretation of the CBA.
The NLRC ruled that respondents were entitled to the benefits
under the CBA because they were regular employees who contributed to
the profits of petitioner through their labor. The NLRC cited the ruling of this
Court in New Pacific Timber & Supply Company v. National Labor Relations
Commission.[16]
Petitioner filed a motion for reconsideration, which the NLRC
denied.
 Petitioner thus filed a petition for certiorari under Rule 65 of the
Rules of Court before the CA, raising both procedural and substantive
issues, as follows: (a) whether the NLRC acted without jurisdiction in
admitting the appeal of respondents; (b) whether the NLRC committed
palpable error in scrutinizing the reopening and revival of the complaint of
respondents with the Labor Arbiter upon due notice despite the lapse of 10
days from their receipt of the July 30, 2001 Order of the Labor Arbiter; (c)
whether respondents were regular employees; (d) whether the NLRC acted
without jurisdiction in entertaining and resolving the claim of the
respondents under the CBA instead of referring the same to the Voluntary
Arbitrators as provided in the CBA; and (e) whether the NLRC acted with
grave abuse of discretion when it awarded monetary benefits to
respondents under the CBA although they are not members of the
appropriate bargaining unit.
On February 10, 2004, the CA rendered judgment dismissing the
petition. It held that the perfection of an appeal shall be upon the
expiration of the last day to appeal by all parties, should there be several
parties to a case. Since respondents received their copies of the decision
on September 8, 2001 (except respondent Nazareno who received her copy
of the decision on August 27, 2001), they had until September 18,
2001 within which to file their Appeal Memorandum. Moreover, the CA
declared that respondents failure to submit their position paper on time is
not a ground to strike out the paper from the records, much less dismiss a
complaint.
Anent the substantive issues, the appellate court stated that
respondents are not mere project employees, but regular employees who
perform tasks necessary and desirable in the usual trade and business of
petitioner and not just its project employees. Moreover, the CA added, the
award of benefits accorded to rank-and-file employees under the 1996-
1999 CBA is a necessary consequence of the NLRC ruling that respondents,
as PAs, are regular employees.
Finding no merit in petitioners motion for reconsideration, the CA
denied the same in a Resolution[17] dated June 16, 2004.
Petitioner thus filed the instant petition for review on certiorari and
raises the following assignments of error:
1. THE HONORABLE COURT OF APPEALS ACTED WITHOUT
JURISDICTION AND GRAVELY ERRED IN UPHOLDING THE
NATIONAL LABOR RELATIONS COMMISSION
NOTWITHSTANDING THE PATENT NULLITY OF THE LATTERS
DECISION AND RESOLUTION.
2. THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN AFFIRMING THE RULING OF THE NLRC FINDING
RESPONDENTS REGULAR EMPLOYEES.
3. THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN AFFIRMING THE RULING OF THE NLRC AWARDING
CBA BENEFITS TO RESPONDENTS.[18]
Considering that the assignments of error are interrelated, the
Court shall resolve them simultaneously.
Petitioner asserts that the appellate court committed palpable and
serious error of law when it affirmed the rulings of the NLRC, and
entertained respondents appeal from the decision of the Labor Arbiter
despite the admitted lapse of the reglementary period within which to
perfect
the same. Petitioner likewise maintains that the 10-day period to appeal
must be reckoned from receipt of a partys counsel, not from the time the
party learns of the decision, that is, notice to counsel is notice to party and
not the other way around. Finally, petitioner argues that the reopening of a
complaint which the Labor Arbiter has dismissed without prejudice is a
clear violation of Section 1, Rule V of the NLRC Rules; such order of
dismissal had already attained finality and can no longer be set aside.
Respondents, on the other hand, allege that their late appeal is a
non-issue because it was petitioners own timely appeal that empowered
the NLRC to reopen the case. They assert that although the appeal was
filed 10 days late, it may still be given due course in the interest of
substantial justice as an exception to the general rule that the negligence
of a counsel binds the client. On the issue of the late filing of their position
paper, they maintain that this is not a ground to strike it out from the
records or dismiss the complaint.
We find no merit in the petition.
We agree with petitioners contention that the perfection of an
appeal within the statutory or reglementary period is not only mandatory,
but also jurisdictional; failure to do so renders the assailed decision final
and executory and deprives the appellate court or body of the legal
authority to alter the final judgment, much less entertain the appeal.
However, this Court has time and again ruled that in exceptional cases, a
belated appeal may be given due course if greater injustice may occur if an
appeal is not given due course than if the reglementary period to appeal
were strictly followed.[19] The Court resorted to this extraordinary measure
even at the expense of sacrificing order and efficiency if only to serve the
greater principles of substantial justice and equity. [20]
In the case at bar, the NLRC did not commit a grave abuse of its
discretion in giving Article 223[21] of the Labor Code a liberal application to
prevent the miscarriage of justice. Technicality should not be allowed to
stand in the way of equitably and completely resolving the rights and
obligations of the parties. [22] We have held in a catena of cases that
technical rules are not binding in labor cases and are not to be applied
strictly if the result would be detrimental to the workingman. [23]
Admittedly, respondents failed to perfect their appeal from the
decision of the Labor Arbiter within the reglementary period
therefor. However, petitioner perfected its appeal within the period, and
since petitioner had filed a timely appeal, the NLRC acquired jurisdiction
over the case to give due course to its appeal and render the decision
of November 14, 2002. Case law is that the party who failed to appeal from
the decision of the Labor Arbiter to the NLRC can still participate in a
separate appeal timely filed by the adverse party as the situation is
considered to be of greater benefit to both parties.[24]
We find no merit in petitioners contention that the Labor Arbiter
abused his discretion when he admitted respondents position paper which
had been belatedly filed. It bears stressing that the Labor Arbiter is
mandated by law to use every reasonable means to ascertain the facts in
each case speedily and objectively, without technicalities of law or
procedure, all in the interest of due process. [25] Indeed, as stressed by the
appellate court, respondents failure to submit a position paper on time is
not a ground for striking out the paper from the records, much less for
dismissing a complaint.[26] Likewise, there is simply no truth to petitioners
assertion that it was denied due process when the Labor Arbiter admitted
respondents position paper without requiring it to file a comment before
admitting said position paper. The essence of due process in administrative
proceedings is simply an opportunity to explain ones side or an opportunity
to seek reconsideration of the action or ruling complained of. Obviously,
there is nothing in the records that would suggest that petitioner had
absolute lack of opportunity to be heard. [27] Petitioner had the right to file a
motion for reconsideration of the Labor Arbiters admission of respondents
position paper, and even file a Reply thereto. In fact, petitioner filed its
position paper on April 2, 2001. It must be stressed that Article 280 of the
Labor Code was encoded in our statute books to hinder the circumvention
by unscrupulous employers of the employees right to security of tenure by
indiscriminately and absolutely ruling out all written and oral agreements
inharmonious with the concept of regular employment defined therein. [28]
We quote with approval the following pronouncement of the NLRC:
The complainants, on the other hand, contend that
respondents assailed the Labor Arbiters order dated 18
June 2001 as violative of the NLRC Rules of Procedure and
as such is violative of their right to procedural due
process. That while suggesting that an Order be instead
issued by the Labor Arbiter for complainants to refile this
case, respondents impliedly submit that there is not any
substantial damage or prejudice upon the refiling, even so,
respondents suggestion acknowledges complainants right
to prosecute this case, albeit with the burden of repeating
the same procedure, thus, entailing additional time, efforts,
litigation cost and precious time for the Arbiter to repeat
the same process twice. Respondents suggestion, betrays
its notion of prolonging, rather than promoting the early
resolution of the case.
Although the Labor Arbiter in his Order dated 18
June 2001 which revived and re-opened the dismissed case
without prejudice beyond the ten (10) day reglementary
period had inadvertently failed to follow Section 16, Rule V,
Rules Procedure of the NLRC which states:
A party may file a motion to revive
or re-open a case dismissed without
prejudice within ten (10) calendar days
from receipt of notice of the order
dismissing the same; otherwise, his only
remedy shall be to re-file the case in the
arbitration branch of origin.
the same is not a serious flaw that had prejudiced the
respondents right to due process. The case can still be
refiled because it has not yet prescribed. Anyway, Article
221 of the Labor Code provides:
 In any proceedings before the Commission
or any of the Labor Arbiters, the rules of
evidence prevailing in courts of law or
equity shall not be controlling and it is the
spirit and intention of this Code that the
Commission and its members and the
Labor Arbiters shall use every and all
reasonable means to ascertain the facts in
each case speedily and objectively and
without regard to technicalities of law or
procedure, all in the interest of due
process.
The admission by the Labor Arbiter of the complainants
Position Paper and Supplemental Manifestation which were
belatedly filed just only shows that he acted within his
discretion as he is enjoined by law to use every reasonable
means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law or
procedure, all in the interest of due process.Indeed, the
failure to submit a position paper on time is not a ground
for striking out the paper from the records, much less for
dismissing a complaint in the case of the
complainant. (Universityof Immaculate Conception vs. UIC
Teaching and Non-Teaching Personnel Employees, G.R. No.
144702, July 31, 2001).
In admitting the respondents
position paper albeit late, the Labor Arbiter
acted within her discretion. In fact, she is
enjoined by law to use every reasonable
means to ascertain the facts in each case
speedily and objectively, without
technicalities of law or procedure, all in the
interest of due process. (Panlilio vs. NLRC,
281 SCRA 53).
The respondents were given by the Labor Arbiter
the opportunity to submit position paper. In fact, the
respondents had filed their position paper on 2 April
2001. What is material in the compliance of due process is
the fact that the parties are given the opportunities to
submit position papers.
Due process requirements are
satisfied where the parties are given the
opportunities to submit position
papers. (Laurence vs. NLRC, 205 SCRA
737).
Thus, the respondent was not deprived of its
Constitutional right to due process of law.[29]
We reject, as barren of factual basis, petitioners contention that
respondents are considered as its talents, hence, not regular employees of
the broadcasting company. Petitioners claim that the functions performed
by the respondents are not at all necessary, desirable, or even vital to its
trade or business is belied by the evidence on record.
Case law is that this Court has always accorded respect and finality
to the findings of fact of the CA, particularly if they coincide with those of
the Labor Arbiter and the National Labor Relations Commission, when
supported by substantial evidence. [30] The question of whether respondents
are regular or project employees or independent contractors is essentially
factual in nature; nonetheless, the Court is constrained to resolve it due to
its tremendous effects to the legions of production assistants working in
the Philippine broadcasting industry.
We agree with respondents contention that where a person has
rendered at least one year of service, regardless of the nature of the
activity performed, or where the work is continuous or intermittent, the
employment is considered regular as long as the activity exists, the reason
being that a customary appointment is not indispensable before one may
be formally declared as having attained regular status. Article 280 of the
Labor Code provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT.The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform
activities which are usually necessary or desirable in the
usual business or trade of the employer except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which has
been determined at the time of the engagement of the
 employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration
of the season.
In Universal Robina Corporation v. Catapang,[31] the Court reiterated
the test in determining whether one is a regular employee:
The primary standard, therefore, of determining
regular employment is the reasonable connection between
the particular activity performed by the employee in
relation to the usual trade or business of the employer. The
test is whether the former is usually necessary or desirable
in the usual business or trade of the employer. The
connection can be
determined by considering the nature of work performed
and its relation to the scheme of the particular business or
trade in its entirety. Also, if the employee has been
performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the
law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to
such activity and while such activity exists. [32]
As elaborated by this Court in Magsalin v. National Organization of
Working Men:[33]
Even while the language of law might have been
more definitive, the clarity of its spirit and intent, i.e., to
ensure a regular workers security of tenure, however, can
hardly be doubted. In determining whether an employment
should be considered regular or non-regular, the applicable
test is the reasonable connection between the particular
activity performed by the employee in relation to the usual
business or trade of the employer. The standard, supplied
by the law itself, is whether the work undertaken is
necessary or desirable in the usual business or trade of the
employer, a fact that can be assessed by looking into the
nature of the services rendered and its relation to the
general scheme under which the business or trade is
pursued in the usual course. It is distinguished from a
specific undertaking that is divorced from the normal
activities required in carrying on the particular business or
trade. But, although the work to be performed is only for a
specific project or seasonal, where a person thus engaged
has been performing the job for at least one year, even if
the performance is not continuous or is merely intermittent,
the law deems the repeated and continuing need for its
performance as being sufficient to indicate the necessity or
desirability of that activity to the business or trade of the
employer. The employment of such person is also then
deemed to be regular with respect to such activity and
while such activity exists.[34]
Not considered regular employees are project employees, the
completion or termination of which is more or less determinable at the time
of employment, such as those employed in connection with a particular
construction project, and seasonal employees whose employment by its
nature is only desirable for a limited period of time. Even then, any
employee who has rendered at least one year of service, whether
continuous or intermittent, is deemed regular with respect to the activity
performed and while such activity actually exists.
It is of no moment that petitioner hired respondents as talents. The
fact that respondents received pre-agreed talent fees instead of salaries,
that they did not observe the required office hours, and that they were
permitted to join other productions during their free time are not conclusive
of the nature of their employment. Respondents cannot be considered
talents because they are not actors or actresses or radio specialists or
mere clerks or utility employees. They are regular employees who perform
several different duties under the control and direction of ABS-CBN
executives and supervisors.
Thus, there are two kinds of regular employees under the law: (1)
those engaged to perform activities which are necessary or desirable in
the usual business or trade of the employer; and (2) those casual
employees who have rendered at least one year of service, whether
continuous or broken, with respect to the activities in which they are
employed.[35]
The law overrides such conditions which are prejudicial to the
interest of the worker whose weak bargaining situation necessitates the
succor of the State. What determines whether a certain employment is
regular or otherwise is not the will or word of the employer, to which the
worker oftentimes acquiesces, much less the procedure of hiring the
employee or the manner of paying the salary or the actual time spent at
work. It is the character of the activities performed in relation to the
particular trade or business taking into account all the circumstances, and
in some cases the length of time of its performance and its continued
existence.[36] It is obvious that one year after they were employed by
petitioner, respondents became regular employees by operation of law.[37]
Additionally, respondents cannot be considered as project or
program employees because no evidence was presented to show that the
duration and scope of the project were determined or specified at the time
of their engagement. Under existing jurisprudence, project could refer to
two distinguishable types of activities. First, a project may refer to a
particular job or undertaking that is within the regular or usual business of
the employer, but which is distinct and separate, and identifiable as such,
from the other undertakings of the company. Such job or undertaking
begins and ends at determined or determinable times. Second, the term
project may also refer to a particular job or undertaking that is not within
the regular business of the employer. Such a job or undertaking must also
be identifiably separate and distinct from the ordinary or regular business
operations of the employer. The job or undertaking also begins and ends at
determined or determinable times.[38]
The principal test is whether or not the project employees were
assigned to carry out a specific project or undertaking, the duration and
scope of which were specified at the time the employees were engaged for
that project.[39]
In this case, it is undisputed that respondents had continuously
performed the same activities for an average of five years. Their assigned
tasks are necessary or desirable in the usual business or trade of the
petitioner. The persisting need for their services is sufficient evidence of
the necessity and indispensability of such services to petitioners business
or trade.[40] While length of time may not be a sole controlling test for
project employment, it can be a strong factor to determine whether the
employee was hired for a specific undertaking or in fact tasked to perform
functions which are vital, necessary and indispensable to the usual trade or
business of the employer.[41] We note further that petitioner did not report
the termination of respondents employment in the particular project to the
Department of Labor and Employment Regional Office having jurisdiction
over the workplace within 30 days following the date of their separation
from work, using the prescribed form on employees termination/
dismissals/suspensions.[42]
As gleaned from the records of this case, petitioner itself is not
certain how to categorize respondents. In its earlier pleadings, petitioner
classified respondents as program employees, and in later
pleadings, independent contractors. Program employees, or project
employees, are different from independent contractors because in the case
of the latter, no employer-employee relationship exists.
Petitioners reliance on the ruling of this Court in Sonza v. ABS-CBN
Broadcasting Corporation[43] is misplaced. In that case, the Court explained
why Jose Sonza, a well-known television and radio personality, was an
independent contractor and not a regular employee:
A. Selection and Engagement of Employee
ABS-CBN engaged SONZAS services to co-host its
television and radio programs because of SONZAS peculiar
skills, talent and celebrity status. SONZA contends that the
discretion used by respondent in specifically selecting and
hiring complainant over other broadcasters of possibly
similar experience and qualification as complainant belies
respondents claim of independent contractorship.
Independent contractors often present themselves
to possess unique skills, expertise or talent to distinguish
them from ordinary employees. The specific selection and
hiring of SONZA, because of his unique skills, talent and
celebrity status not possessed by ordinary employees, is a
circumstance indicative, but not conclusive, of an
independent contractual relationship. If SONZA did not
possess such unique skills, talent and celebrity status, ABS-
CBN would not have entered into the Agreement with
SONZA but would have hired him through its personnel
department just like any other employee.
In any event, the method of selecting and engaging
SONZA does not conclusively determine his status. We
must consider all the circumstances of the relationship,
with the control test being the most important element.
B. Payment of Wages

ABS-CBN directly paid SONZA his monthly talent fees with
no part of his fees going to MJMDC. SONZA asserts that this
mode of fee payment shows that he was an employee of
ABS-CBN.SONZA also points out that ABS-CBN granted him
benefits and privileges which he would not have enjoyed if
he were truly the subject of a valid job contract.
All the talent fees and benefits paid to SONZA were the
result of negotiations that led to the Agreement. If SONZA
were ABS-CBNs employee, there would be no need for the
parties to stipulate on benefits such as SSS, Medicare, x x x
and 13th month pay which the law automatically
incorporates into every employer-employee
contract. Whatever benefits SONZA enjoyed arose from
contract and not because of an employer-employee
relationship.
SONZAs talent fees, amounting to P317,000 monthly in the
second and third year, are so huge and out of the ordinary
that they indicate more an independent contractual
relationship rather than an employer-employee
relationship. ABS-CBN agreed to pay SONZA such huge
talent fees precisely because of SONZAS unique skills,
talent and celebrity status not possessed by ordinary
employees. Obviously, SONZA acting alone possessed
enough bargaining power to demand and receive such
huge talent fees for his services. The power to bargain
talent fees way above the salary scales of ordinary
employees is a circumstance indicative, but not conclusive,
of an independent contractual relationship.
The payment of talent fees directly to SONZA and not to
MJMDC does not negate the status of SONZA as an
independent contractor. The parties expressly agreed on
such mode of payment.Under the Agreement, MJMDC is the
AGENT of SONZA, to whom MJMDC would have to turn over
any talent fee accruing under the Agreement.[44]
In the case at bar, however, the employer-employee relationship
between petitioner and respondents has been proven.
First. In the selection and engagement of respondents, no peculiar
or unique skill, talent or celebrity status was required from them because
they were merely hired through petitioners personnel department just like
any ordinary employee.
Second. The so-called talent fees of respondents correspond to
wages given as a result of an employer-employee relationship.
Respondents did not have the power to bargain for huge talent fees, a
circumstance negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it find
their work unsatisfactory, and respondents are highly dependent on the
petitioner for continued work.
Fourth. The degree of control and supervision exercised by
petitioner over respondents through its supervisors negates the allegation
that respondents are independent contractors.
The presumption is that when the work done is an integral
part of the regular business of the employer and when the worker,
relative to the employer, does not furnish an independent business
or professional service, such work is a regular employment of such
employee and not an independent contractor.[45] The Court will peruse
beyond any such agreement to examine the facts that typify the parties
actual relationship.[46]
It follows then that respondents are entitled to the benefits
provided for in the existing CBA between petitioner and its rank-and-file
employees. As regular employees, respondents are entitled to the benefits
granted to all other regular employees of petitioner under the CBA. [47] We
quote with approval the ruling of the appellate court, that the reason why
production assistants were excluded from the CBA is precisely because
they were erroneously classified and treated as project employees by
petitioner:
x x x The award in favor of private respondents of
the benefits accorded to rank-and-file employees of ABS-
CBN under the 1996-1999 CBA is a necessary consequence
of public respondents ruling that private respondents as
production assistants of petitioner are regular
employees. The monetary award is not considered as
claims involving the interpretation or implementation of the
 collective bargaining agreement. The reason why SO ORDERED.
production assistants were excluded from the said
agreement is precisely because they were classified and
treated as project employees by petitioner.

As earlier stated, it is not the will or word of the

employer which determines the nature of employment of
an employee but the nature of the activities performed by
such employee in relation to the particular business or
trade of the employer. Considering that We have clearly
found that private respondents are regular employees of
petitioner, their exclusion from the said CBA on the
misplaced belief of the parties to the said agreement that
they are project employees, is therefore not proper. Finding
said private respondents as regular employees and not as
mere project employees, they must be accorded the
benefits due under the said Collective Bargaining
Agreement.

A collective bargaining agreement is a contract

entered into by the union representing the employees and
the employer. However, even the non-member employees
are entitled to the benefits of the contract. To accord its
benefits only to members of the union without any valid
reason would constitute undue discrimination against non-
members. A collective bargaining agreement is binding on
all employees of the company. Therefore, whatever benefits
are given to the other employees of ABS-CBN must likewise
be accorded to private respondents who were regular
employees of petitioner.[48]
Besides, only talent-artists were excluded from the CBA and not
production assistants who are regular employees of the respondents.
Moreover, under Article 1702 of the New Civil Code: In case of doubt, all
labor legislation and all labor contracts shall be construed in favor of the
safety and decent living of the laborer.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for
lack of merit. The assailed Decision and Resolution of the Court of Appeals
in CA-G.R. SP No. 76582 are AFFIRMED. Costs against petitioner.
G.R. No. 109902 August 2, 1994
ALU-TUCP, Representing Members: ALAN BARINQUE, with 13
others, namely: ENGR. ALAN G. BARINQUE, ENGR.
DARRELL LEE ELTAGONDE, EDUARD H. FOOKSON, JR.,
ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO,
EUSEBIO MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO MEJOS,
EDGAR S. BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B.
DANDASAN, and GERRY I. FETALVERO, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL
CORPORATION (NSC), respondents.
Leonard U. Sawal for petitioners.
Saturnino Mejorada for private respondent.
FELICIANO, J.:
In this Petition for Certiorari, petitioners assail the Resolution of the
National Labor Relations Commission ("NLRC") dated 8 January 1993 which
declared petitioners to be project employees of private respondent National
Steel Corporation ("NSC"), and the NLRC's subsequent Resolution of 15
February 1993, denying petitioners' motion for reconsideration.
Petitioners plead that they had been employed by respondent
NSC in connection with its Five Year Expansion Program (FAYEP I & II) 1 for
varying lengths of time when they were separated from NSC's service:
 Employee Date Nature of Separated
Employed Employment
1. Alan Barinque 5-14-82 Engineer 1 8-31-91
2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92
3. Edgar Bontuyan 11-03-82 Chairman to present
4. Osias Dandasan 9-21-82 Utilityman 1991
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-
92
6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91 7. Gerry
Fetalvero 4-08-85 Mat. Expediter regularized
8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-
91
9. Russell Gacus 1-30-85 Engineer 1 6-30-92 10. Jose
Garguena 3-02-81 Warehouseman to present
11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
12. Bonifacio Mejos 11-17-82 Surv. Party Head
1992
13. Romeo Sarona 2-26-83 Machine Operator 8-
31-912
On 5 July 1990, petitioners filed separate complaints for unfair labor
practice, regularization and monetary benefits with the NLRC, Sub-Regional
Arbitration Branch XII, Iligan City.
The complaints were consolidated and after hearing, the Labor
Arbiter in a Decision dated 7 June 1991, declared petitioners "regular
project employees who shall continue their employment as such for as long
as such [project] activity exists," but entitled to the salary of a regular
employee pursuant to the provisions in the collective bargaining
agreement. It also ordered payment of salary differentials. 3
Both parties appealed to the NLRC from that decision. Petitioners argued
that they were regular, not project, employees. Private respondent, on the
other hand, claimed that petitioners are project employees as they were
employed to undertake a specific project — NSC's Five Year Expansion
Program (FAYEP I & II).
The NLRC in its questioned resolutions modified the Labor Arbiter's
decision. It affirmed the Labor Arbiter's holding that petitioners were
project employees since they were hired to perform work in a specific
undertaking — the Five Years Expansion Program, the completion of which
had been determined at the time of their engagement and which operation
was not directly related to the business of steel manufacturing. The NLRC,
however, set aside the award to petitioners of the same benefits enjoyed
by regular employees for lack of legal and factual basis.
Deliberating on the present Petition for Certiorari, the Court considers that
petitioners have failed to show any grave abuse of discretion or any act
without or in excess of jurisdiction on the part of the NLRC in rendering its
questioned resolutions of 8 January 1993 and 15 February 1993.
The law on the matter is Article 280 of the Labor Code which reads in full:
Art. 280. Regular and Casual Employment — The provisions
of the written agreement to the contrary notwithstanding
and regardless of the oral agreement of the parties, and
employment shall be deemed to be regular where the
employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has
been fixed for a specific project or undertaking the
completion or termination of which has been determined
at the time of the engagement of the employee or where
the work or services to be performed is seasonal in nature
and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity
in which he is employed and his employment shall continue
while such actually exists. (Emphasis supplied)
Petitioners argue that they are "regular" employees of NSC because: (i)
their jobs are "necessary, desirable and work-related to private
respondent's main business, steel-making"; and (ii) they have rendered
service for six (6) or more years to private respondent NSC. 4
The basic issue is thus whether or not petitioners are properly
characterized as "project employees" rather than "regular employees" of
NSC. This issue relates, of course, to an important consequence: the
services of project employees are co-terminous with the project and may
be terminated upon the end or completion of the project for which they
were hired. 5 Regular employees, in contract, are legally entitled to remain
in the service of their employer until that service is terminated by one or
another of the recognized modes of termination of service under the Labor
Code. 6
It is evidently important to become clear about the meaning and scope of
the term "project" in the present context. The "project" for the carrying
out of which "project employees" are hired would ordinarily have some
relationship to the usual business of the employer. Exceptionally, the
"project" undertaking might not have an ordinary or normal relationship to
the usual business of the employer. In this latter case, the determination
of the scope and parameeters of the "project" becomes fairly easy. It is
unusual (but still conceivable) for a company to undertake a project which
has absolutely no relationship to the usual business of the company; thus,
for instance, it would be an unusual steel-making company which would
undertake the breeding and production of fish or the cultivation of
vegetables. From the viewpoint, however, of the legal characterization
problem here presented to the Court, there should be no difficulty in
designating the employees who are retained or hired for the purpose of
undertaking fish culture or the production of vegetables as "project
employees," as distinguished from ordinary or "regular employees," so
long as the duration and scope of the project were determined or specified
at the time of engagement of the "project employees." 7 For, as is evident
from the provisions of Article 280 of the Labor Code, quoted earlier, the
principal test for determining whether particular employees are properly
characterized as "project employees" as distinguished from "regular
employees," is whether or not the "project employees" were assigned to
carry out a "specific project or undertaking," the duration (and scope) of
which were specified at the time the employees were engaged for that
project.
In the realm of business and industry, we note that "project" could refer to
one or the other of at least two (2) distinguishable types of activities.
Firstly, a project could refer to a particular job or undertaking that is within
the regular or usual business of the employer company, but which is
distinct and separate, and identifiable as such, from the other undertakings
of the company. Such job or undertaking begins and ends at determined or
determinable times. The typical example of this first type of project is a
particular construction job or project of a construction company. A
construction company ordinarily carries out two or more discrete
identifiable construction projects: e.g., a twentyfive- storey hotel in Makati;
a residential condominium building in Baguio City; and a domestic air
terminal in Iloilo City. Employees who are hired for the carrying out of one
of these separate projects, the scope and duration of which has been
determined and made known to the employees at the time of employment,
are properly treated as "project employees," and their services may be
lawfully terminated at completion of the project.
The term "project" could also refer to, secondly, a particular job or
undertaking that is not within the regular business of the corporation. Such
a job or undertaking must also be identifiably separate and distinct from
the ordinary or regular business operations of the employer. The job or
undertaking also begins and ends at determined or determinable times.
The case at bar presents what appears to our mind as a typical example of
this kind of "project."
NSC undertook the ambitious Five Year Expansion Program I and II with the
ultimate end in view of expanding the volume and increasing the kinds of
products that it may offer for sale to the public. The Five Year Expansion
Program had a number of component projects: e.g., (a) the setting up of a
"Cold Rolling Mill Expansion Project"; (b) the establishment of a "Billet
SteelMaking Plant" (BSP); (c) the acquisition and installation of a "Five
Stand TDM"; and (d) the "Cold Mill Peripherals Project." 8 Instead of
contracting out to an outside or independent contractor the tasks of
constructing the buildings with related civil and electrical works that would
house the new machinery and equipment, the installation of the newly
acquired mill or plant machinery and equipment and the commissioning of
such machinery and equipment, NSC opted to execute and carry out its
Five Yeear Expansion Projects "in house," as it were, by administration. The
carrying out of the Five Year Expansion Program (or more precisely, each of
its component projects) constitutes a distinct undertaking identifiable from
the ordinary business and activity of NSC. Each component project, of
course, begins and ends at specified times, which had already been
determined by the time petitioners were engaged. We also note that NSC
did the work here involved — the construction of buildings and civil and
electrical works, installation of machinery and equipment and the
commissioning of such machinery — only for itself. Private respondent NSC
was not in the business of constructing buildings and installing plant
machinery for the general business community, i.e., for unrelated, third
party, corporations. NSC did not hold itself out to the public as a
construction company or as an engineering corporation.
Which ever type of project employment is found in a particular case, a
common basic requisite is that the designation of named employees as
"project employees" and their assignment to a specific project, are effected
and implemented in good faith, and not merely as a means of evading
otherwise applicable requirements of labor laws.
Thus, the particular component projects embraced in the Five Year
Expansion Program, to which petitioners were assigned, were
distinguishable from the regular or ordinary business of NSC which, of
course, is the production or making and marketing of steel products.
During the time petitioners rendered services to NSC, their work was
limited to one or another of the specific component projects which made
up the FAYEP I and II. There is nothing in the record to show that petitioners
were hired for, or in fact assigned to, other purposes, e.g., for operating or
maintaining the old, or previously installed and commissioned, steel-
making machinery and equipment, or for selling the finished steel
products.
We, therefore, agree with the basic finding of the NLRC (and the Labor
Arbiter) that the petitioners were indeed "project employees:"
It is well established by the facts and evidence on record
that herein 13 complainants were hired and engaged for
specific activities or undertaking the period of which has
been determined at time of hiring or engagement. It is of
public knowledge and which this Commission can safely
take judicial notice that the expansion program (FAYEP) of
 respondent NSC consist of various phases [of] project whole. No such intent is observable in Article 280 of the Labor Code, which
components which are being executed or implemented has been quoted earlier.
independently or simultaneously from each other . . . ACCORDINGLY, in view of the foregoing, the Petition for Certiorari
In other words, the employment of each "project worker" is is hereby DISMISSED for lack of merit. The Resolutions of the NLRC
dependent and co-terminous with the completion or dated 8 January 1993 and 15 February 1993 are hereby AFFIRMED.
termination of the specific activity or undertaking [for No pronouncement as to costs.
which] he was hired which has been pre-determined at the SO ORDERED.
time of engagement. Since, there is no showing that they
(13 complainants) were engaged to perform workrelated
activities to the business of respondent which is steel-
making, there is no logical and legal sense of applying to
them the proviso under the second paragraph of Article
280 of the Labor Code, as amended.
xxx xxx xxx
The present case therefore strictly falls under the definition
of "project employees" on paragraph one of Article 280 of EQUIPMENT TECHNICAL G.R. No. 157680
the Labor Code, as amended. Moreover, it has been held SERVICES or JOSEPH JAMES DEQUITO, Present:
that the length of service of a project employee is not the Petitioners,
controlling test of employment tenure but whether or not QUISUMBING, J., Chairperson,
"the employment has been fixed for a specific project or CARPIO MORALES,
undertaking the completion or termination of which has - versus - TINGA,
been determined at the time of the engagement of the VELASCO, JR., and BRION, JJ.
employee". (See Hilario Rada v. NLRC, G.R. No. 96078, COURT OF APPEALS, ALEX
January ALBINO, REY ALBINO, JULIUS ABANES, MIGUEL ALINAB,
9, 1992; and Sandoval Shipping, Inc. v. NLRC, CHRISTOPHER BIOL, NELSON
136 SCRA 674 (1985). 9 CATONG, RENATO DULOT,
Petitioners next claim that their service to NSC of more than six (6) years FLORO PACUNDO, MARCELITO
should qualify them as regular employees. We believe this claim is without GAMAS, REYNALDO LIMA,
legal basis. The simple fact that the employment of petitioners as project SAMMY MESAGAL, ERNESTO
employees had gone beyond one (1) year, does not detract from, or legally PADILLA, and CONRADO Promulgated:
dissolve, their status as project employees. 10 The second paragraph of SULIBAGA,
Article 280 of the Labor Code, quoted above, providing that an employee Respondents. October 8, 2008
who has served for at least one (1) year, shall be considered a regular x----------------------------------------------------------------------------------
employee, relates to casual employees, not to project employees. -------x
In the case of Mercado, Sr. vs. National Labor Relations Commission, 11 this
Court ruled that the proviso in the second paragraph of Article 280 relates
DECISION
only to casual employees and is not applicable to those who fall within the
definition of said Article's first paragraph, i.e., project employees. The
familiar grammatical rule is that a proviso is to be construed with reference VELASCO, JR., J.:
to the immediately preceding part of the provision to which it is attached,
and not to other sections thereof, unless the clear legislative intent is to This petition for review under Rule 45 assails and seeks the reversal of the
restrict or qualify not only the phrase immediately preceding the proviso Amended Decision and Resolution dated March 3,
but also earlier provisions of the statute or even the statute itself as a 2003 and March 24, 2003, respectively, of the Court of Appeals (CA) in CA-
G.R. SP No. 67568. The assailed amended decision and resolution
effectively set aside and reversed the consolidated resolutions dated July
30, 2001 and September 24, 2001 rendered by the National Labor Relations
Commission (NLRC) and reinstated the July 24, 2000 Decision of Labor
Arbiter Ermita T. Abrasaldo-Cuyuca in NLRC NCR Case Nos. 00-01-00571-
99, 00-02-01429-99, and 0002-01615-99.
Petitioner Equipment Technical Services (ETS) is primarily engaged in the
business of sub-contracting plumbing works of on-going building
construction. Among its clients was Uniwide Sales, Inc. (Uniwide).
Petitioner Joseph James Dequito was, during the period material,
occupying the position of manager of ETS,[1] albeit the CA referred to him
as ETS president. On various occasions involving different projects, ETS
hired the services of private respondents as pipe fitters, plumbers, or
threaders.
In December 1998, ETS experienced financial difficulties when Uniwide, its
client at the time, failed to pay for the plumbing work being done at its
Coastal Mall. As a result, ETS was only able to pay its employees 13th
month pay equivalent to two weeks salary.
Unhappy over what they thought was ETS failure to release the balance of
their 13th month pay, private respondents brought their case before the
Arbitration Branch of the NLRC, docketed as NLRC NCR Case No. 00-01-
00571-99 and entitled as Alex Albino, Renato Dulot, Miguel Alinab,
Marcelito Gamas, Julius Abanes, Christopher Biol, Sammy Mesagal,
Conrado Sulibaga, Floro Pacundo v. Equipment Technical Services or Joseph
James Dequito.
Later, two other cases were filed against ETS for illegal dismissal
and payment of money claims when the complainants thereat were refused
work in another ETS project, i.e., Richville project, allegedly because they
refused to sign individual employment contracts with ETS. These two other
cases were Nelson Catong, Roger Lamayon, Christopher Lamayon v.
Equipment Technical Services or Joseph James Dequito, docketed as NLRC
NCR Case No. 00-02-01429-99; and Rey Albino, Ernesto Padilla, Reynaldo
Lima v. Equipment Technical Services or Joseph James Dequito, docketed as
NLRC NCR Case No. 00-02-01615-99.
The three cases were consolidated before the labor arbiter. Following failed
conciliation efforts, all concerned, except Roger and Christopher Lamayon,
submitted, as the labor arbiter directed, their respective position papers.
Private respondents position[2] is summed up as follows: (1) they are
regular employees of ETS; (2) ETS dismissed them without cause and
without due process after they filed cases for money claims against ETS in
the arbitration branch of the NLRC; (3) ETS has not paid them their salaries,
13th month pay, service incentive leave pay, overtime pay, and premium
pay for holidays and rest days; and (4) they are entitled to reinstatement to
their former positions with paid backwages in addition to their money
claims and payment of attorneys fees.
ETS position[3] may be summed up as follows: (1) private respondents were
its contractual/project employees engaged for different projects of the
company; (2) they were not illegally dismissed, having been hired on a per
project basis; (3) ETS was unable to fully release private respondents 13th
month pay because Uniwide failed to pay for its contracted plumbing
project; (4) ETS was forced to abandon the Uniwide project and undertake
another project, the Richville project, because the chances of being paid
by Uniwide were dim; (5) ETS asked private respondents to sign
employment contracts to formalize their previous agreement but said
private respondents refused; and (6) as a result, ETS was constrained to
deny employment to private respondents as it considered the execution of
employment contracts part of management prerogative before
employment commences.
On July 24, 2000, Labor Arbiter Abrasaldo-Cuyuca issued a Decision,
holding that private respondents were ETS regular, not merely project,
employees. Accordingly, ETS was adjudged liable for illegal dismissal and
directed to pay private respondents their money claims plus 10% of the
total award as attorneys fees. The fallo of the subject decision reads as
follows:
WHEREFORE, judgment is hereby rendered declaring the
dismissal of the complainants illegal.
Further, respondents are further ordered to pay the
complainants their backwages, proportionate 13th month
pay, [holiday] and service incentive leave pay.
Ten percent of the total award as attorneys fees.
Other claims are dismissed for lack of merit.
The complaints of Roger and Christopher all surnamed
Lamayon are dismissed without prejudice.
The computation prepared by the
Computation Unit, NCR, this Commission is attached [sic] forming
part of this decision.
SO ORDERED.[4]
ETS appealed from the above labor arbiters decision. On July 30, 2001, the
NLRC rendered a resolution which, while reversing the labor arbiters
holding with respect to the nature of private respondents employment and
the illegality of their dismissal, nevertheless upheld the validity of the
monetary award extended by the labor arbiter, part of which included the
award of backwages. The pertinent portion of the modificatory resolution
reads as follows:
ACCORDINGLY, premises considered, the decision
appealed from is hereby MODIFIED in that the findings of
regularity of employment and illegal dismissal are hereby
VACATED. However, respondents are ordered to give
complainants priority in hiring for present and future
projects. All other dispositions are hereby AFFIRMED in
toto.
SO ORDERED.
Following the denial on September 24, 2001 of ETS motion for
reconsideration, ETS elevated its case to the CA via a petition for certiorari
under Rule 65, the recourse docketed as CA-G.R. SP No. 67568. As its
principal contention, ETS ascribed on the NLRC the commission of grave
abuse of discretion in affirming the monetary award in favor of private
respondents, despite its finding that there was no illegal dismissal in this
case.
On January 23, 2002, the CA rendered judgment disposing as follows:
WHEREFORE, premises considered, the assailed
resolutions of the National Labor Relations Commission
dated July 30, 2001 and September 24, 2001 are hereby
ANNULLED and SET ASIDE and a new one rendered
ORDERING petitioner Equipment Technical Services to pay
private respondents their holiday pay and service
incentive leave pay for the year 1998 and the balance of
their 13th month pay for the year 1999.
The case is hereby REMANDED to Labor Arbiter Ermita T.
Abrasaldo-Cuyuca for the computation of the same.
The complaint against petitioner Joseph James
Dequito is hereby DISMISSED, for lack of merit.
No pronouncement as to costs.
SO ORDERED.
Upon motion of private respondents for reconsideration, the CA
issued an Amended Decision[5] dated March 3, 2003 vacating its earlier
January 23, 2002decision. The CA, in main support of its present
disposition, stated that the NLRCs determination that private respondents
are project workers is utterly unsupported by the evidence on record and is
patently erroneous and, therefore, is tainted with grave abuse of discretion.
[6]
The fallo of the Amended Decision reads:
WHEREFORE, premises considered, the present
motion for reconsideration is hereby GRANTED. The
petition is hereby DENIED DUE COURSE and accordingly
DISMISSED, for lack of merit. Our Decision dated January
23, 2002 is hereby RECONSIDERED and SET ASIDE and a
new one is hereby entered REVERSING and SETTING
ASIDE the assailed Resolutions dated July 30, 2001 and
September 24, 2001 of public respondent NLRC in NLRC
NCR case No. 00-01-00571-99 (NLRC CA
No. 027203-2001), NLRC NCR Case No. 00-02-
01429-99 and NLRC NCR Case No. 00-02-0161599. The
Decision dated July 24, 2000 rendered by Labor Arbiter
Ermita T. Abrasaldo-Cuyuca is hereby REINSTATED and
AFFIRMED in all respects, including the computation of the
monetary awards in favor of private respondents forming
part of and attached to the same.
With costs against the petitioners.
SO ORDERED.
Hence, this petition on the submission that, contrary to the findings
of the CA, but conformably with the determination of the NLRC, private
respondents are seasonal or project workers; the duration of their
employment is not permanent but coterminus with the project to which
they are assigned and from whose payroll they are paid. As project
employees, private respondents cannot, according to petitioners, validly
maintain an action for illegal dismissal with prayer for reinstatement and
payment of backwages, both reliefs being usually accorded following a
finding of illegal dismissal.
 The petition is without merit. As we see it, as did the CA and the
NLRC, the primary question to be resolved and to which all others must
yield is whether or not private respondents are project employees. The CA,
siding with the labor arbiter, as indicated earlier, answered the poser in the
affirmative, while the NLRC resolved it in the negative.
As the Court has consistently held, the service of project employees
are coterminus with the project and may be terminated upon the end or
completion of that project or project phase for which they were hired.
Regular employees, in contrast, enjoy security of tenure and are entitled to
hold on to their work or position until their services are terminated by any
of the modes recognized under the Labor Code.[7]
The principal test for determining whether an employee is properly
characterized as project employee, as distinguished from regular
employee, is whether or not the project employee was 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. [8] And
as Article 280 of the Labor Code, defining a regular employee vis--vis a
project employee, would have it:
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 x x x.
It bears to stress at the outset that ETS admits hiring or employing
private respondents to perform plumbing works for various projects. Given
this postulate, regular employment may reasonably be presumed and it
behooves ETS to prove otherwise, that is, that the employment in question
was contractual in nature ending upon the expiration of the term fixed in
the contract or for a specific project or undertaking. But the categorical
finding of the CA, confirmatory for the most part of that of the labor arbiter,
is that not a single written contract of employment fixing the terms of
employment for the duration of the Uniwide project, or any other project,
was submitted by ETS despite the latters allegations that private
respondents were merely contractual employees. Records of payroll and
other pertinent documents, such as job contracts secured by ETS showing
that private respondents were hired for specific projects, were also not
submitted by ETS.[9]
Moreover, if private respondents were indeed employed as project
employees, petitioners should have had submitted a report of termination
every time their employment was terminated owing to the completion of
each plumbing project. As correctly held by the CA in its Amended
Decision, citing Tomas Lao Construction v. NLRC,[10] ETS failure to report the
employment termination and file the necessary papers after every project
completion tends to support the claim of private respondents about their
not being project employees. [11] Under Policy Instruction No. 20, Series of
1977,[12] the report must be made to the nearest public office employment.
[13]
The decision in Violeta v. NLRC is also apropos, particularly when it held:
[The employer] should have filed as many reports of termination as there
were construction projects actually finished if petitioners [employees] were
indeed project employees, considering that petitioners were hired and
again [hired] for various projects or phases of work therein. Its failure to
submit reports of termination cannot but sufficiently convince us further
that petitioners are truly regular employees. Just as important, the fact that
petitioners had rendered more than one year of service at the time of their
dismissal overturns private respondents allegations that petitioners were
hired for a specific or fixed undertaking for a limited period of time. [14]
The Court can allow that, in the instant case, private respondents
may have initially been hired for specific projects or undertaking of
petitioner ETS and, hence, may be classified as project employees. Their
repeated rehiring to perform tasks necessary to the usual trade or business
of ETS changed the legal situation altogether, for in the later instance, their
continuous rehiring took them out from the scope of workers coterminus
with specific projects and had made them regular employees. We said as
much in Phesco, Inc. v. NLRC that where the employment of project
employees is extended long after the supposed project had been finished,
the employees are removed from the scope of project employees and they
shall be considered regular employees.[15]
Parenthetically, petitioners assertion that there can be no illegal
dismissal of project employees inasmuch as they are not entitled to
security of tenure is inaccurate. The constitutionally-protected right of labor
to security of tenure covers both regular and project workers. [16] Their
termination must be for lawful cause and must be done in a way which
affords them proper notice and hearing.[17]
 In termination disputes, the burden of proving that an employee
had been dismissed for a lawful cause or that the exacting procedural Petitioners ETS and Joseph James Dequito are
requirements under the Labor Code had been complied with lies with the ordered jointly and severally to reinstate private
employer.[18] Where there is no showing of a clear, valid, and legal cause for respondents ALEX ALBINO, REY ALBINO, JULIUS
termination of employment, the law considers the case a matter of illegal ABANES, MIGUEL ALINAB, CHRISTOPHER BIOL,
dismissal.[19] NELSON CATONG, RENATO DULOT, FLORO PACUNDO,
MARCELITO GAMAS, REYNALDO LIMA, SAMMY
Based on the foregoing criteria, the factual findings of the labor MESAGAL, ERNESTO PADILLA, and CONRADO
arbiter on the regular nature of private respondents employment, SULIBAGA to their respective positions without loss
juxtaposed with ETS failure to support its project-workers theory, impel us of rank and seniority rights with full backwages from
to dismiss the instant petition. This is as it should be for, to paraphrase the date of dismissal up to the date of actual
Asuncion v. NLRC, if doubt exists between the evidence of the employers reinstatement. Petitioners are likewise jointly and
and the employees, the scales of justice must be tilted in favor of the severally liable to private respondents for
th
latterthe employers must adequately show rationally adequate evidence proportionate 13 month pay, holiday pay, and
that their case is preponderantly superior.[20] service incentive leave pay.

As did the CA, the Court holds that private respondents are regular
employees whose services were terminated without lawful cause and
effected without the requisite notice and hearing.
In view of the illegality of the dismissal, the fallo of the Decision of
Labor Arbiter Abrasaldo-Cuyuca, as reinstated by the CA in its assailed
Amended Decision, has to be modified in the sense that private
respondents are entitled to reinstatement to their previous positions as
pipe fitters or threaders, as the case may be, without loss of rank and
seniority rights and with full backwages.
Ten percent of the total award shall be paid to the
counsel of private respondents as attorneys fees.
Other claims are dismissed for lack of merit.
The complaints of Roger and Christopher, both
surnamed Lamayon, are dismissed without prejudice.
Costs against petitioners.
SO ORDERED.

At this juncture, the Court wishes to state that it is taking judicial

notice of the fact that no corporation is registered with the Securities and
Exchange Commission under the name Equipment
Technical Services. It is thus but fair that both petitioners liability under this
Decision be joint and several.

WHEREFORE, the Amended Decision dated March 3, 2003 of the

CA in CA-G.R. SP No. 67568, reinstating the July 24, 2000 Decision of Labor
Arbiter Abrasaldo-Cuyuca, is AFFIRMED with the MODIFICATION that
petitioners are jointly and severally ordered to reinstate private
respondents to their former positions, without loss of rank and seniority
rights, with backwages from the date of dismissal until reinstated. As
modified, the fallo of the labor arbiters Decision shall read:
JUDY O. DACUITAL,[1] EUGENIO L.
MONDANO, JR., JOSEPH
WHEREFORE, judgment is hereby rendered declaring the
GALER, [2]MARIANO MORALES, ROBERTO
dismissal of private respondents illegal.
RUANCE, JOSEPH PORCADILLA, RAULITO Respondent L.M. Camus Engineering Corporation (LMCEC) is a
PALAD, RICARDO DIGAMON, NONITO PRISCO , EULOGIO M. TUTOR, domestic corporation duly organized and existing under and by
MELVIN virtue of Philippine laws, engaged in construction, engineering, and
PEPITO, HELYTO N. REYES,[3]RANDOLF C. airconditioning business; while respondent Luis M. Camus (Camus)
BALUDO, ALBERTO EPONDOL, RODELO A. SUSPER,[4]EVARISTO is the company president.
VIGORI, [5] JONATHAN P. AYAAY, FELIPE ERILLA, ARIS A.
GARCIA, ROY A. GARCIA, and RESTITUTO Petitioners Judy O. Dacuital (Dacuital), Eugenio L. Mondano, Jr.,
TAPANAN, Joseph Galer (Galer), Mariano Morales, Roberto Ruance (Ruance),
Petitioners, Joseph Porcadilla, Raulito Palad (Palad), Ricardo Digamon
x-----------------------------------------------------------------------------------x
- versus -
DECISION
L.M. CAMUS ENGINEERING
CORPORATION and/or LUIS M. CAMUS, (Digamon), Nonito Prisco, Eulogio M. Tutor, Melvin Pepito, Helyto N.
Respondents. Reyes (Reyes), Randolf C. Baludo (Baludo), Alberto Epondol, Rodelo
A. Susper, Evaristo Vigori, Jonathan P. Ayaay, Felipe Erilla, Aris A.
G.R. No. 176748 Garcia (Aris), Roy A. Garcia (Roy), and Restituto Tapanan (Tapanan)
were hired by LMCEC as welder, tinsmith, pipefitter, and
Present: mechanical employees.[8]

CARPIO, J., During the months of January, February and March 2001,
Chairperson, petitioners were required by LMCEC to surrender their identification
NACHURA, cards and ATM cards and were ordered to execute contracts of
BERSAMIN,* ABAD, and employment. Most of the petitioners did not comply with the
MENDOZA, JJ. directive as they believed that it was only respondents strategy to
Promulgated: get rid of petitioners regular status since they would become new
employees disregarding their length of service. Petitioners were
later dismissed from employment.[9]
September 1, 2010

Hence, the complaint for illegal dismissal and non-payment of

NACHURA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules
of Court, assailing the Court of Appeals (CA) Decision[6] dated
September 25, 2006 and Resolution[7] dated February 14, 2007 in
CAG.R. SP No. 90377.
The case stemmed from the following factual and procedural
antecedents:
monetary benefits filed by petitioners and other LMCEC employees
who were similarly situated, namely: Guillermo S. Lucas (Lucas),
Alvin Bontugay, Rector Palajos, and Hermes B. Pacatang
(Pacatang), against respondents before the National Labor
Relations Commission (NLRC). The employees alleged that they
were illegally dismissed from employment and that their employer
failed to pay them their holiday pay, premium pay for holiday, rest
day, service incentive leave pay, and 13th month pay during the
existence and duration of their employment. They also averred that
they were not provided with sick and vacation leaves.[10]
Respondents denied that petitioners were illegally dismissed from
employment. They claimed that petitioners were project employees
and, upon the completion of each project, they were served notices
of project completion.[11] They clarified that the termination of
petitioners employment was due to the completion of the projects
for which they were hired.[12]
Petitioners, however, countered that they were regular employees
as they had been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of LMCEC.
They denied that they were project or contractual employees
because their employment was continuous and uninterrupted for
more than one (1) year. Finally, they maintained that they were
part of a work pool from which LMCEC drew its workers for its
various projects.[13]
On July 24, 2002, Labor Arbiter (LA) Lilia S. Savari rendered a
decision,[14] the dispositive portion of which reads:
WHEREFORE, a Decision is hereby rendered declaring the dismissal
of the complainants illegal. Corollarily, except for complainant
Helyto N. Reyes, who has voluntarily withdrawn his case against
the respondents, all the other complainants are hereby ordered to
report to respondents for reinstatement but without backwages.
All other claims are dismissed for lack of merit.
SO ORDERED.[15]
The LA did not give credence to respondents claim that petitioners
were project employees because of the formers failure to present
evidence showing that petitioners contracts of employment
reflected the duration of each project for which they were
employed and that respondents duly reported to the Department of
Labor and Employment every termination of employment and
project. As petitioners dismissal was without just and valid cause,
the LA ruled that their termination from employment was illegal.
However, the LA refused to award backwages and other monetary
claims on the ground that petitioners employment was not
continuous as they belonged to the regular work pool of LMCEC.
[16]
The employees jointly filed a partial appeal to the NLRC, except
Pacatang and Lucas who filed their separate appeal. On the other
hand, the Administrative Officer of LMCEC issued individual
communications to petitioners directing their reinstatement
pursuant to the LA decision.[17]
On June 9, 2004, the NLRC modified[18] the LA decision, the
dispositive portion of which reads:
WHEREFORE, the employees enumerated above are hereby
ordered reinstated with limited backwages, without loss of seniority
rights and other privileges.
The computation division of the RAB-NCR is hereby ordered to
compute the award as herein established.
SO ORDERED.[19]
The NLRC agreed with the LA that petitioners were illegally
dismissed from employment. As a consequence of this
pronouncement, the tribunal deemed it proper not only to reinstate
them to their original position but also to give them their
backwages. However, in view of the delayed resolution of the case
that could not be attributed to respondents, the NLRC limited the
award of backwages from the date of dismissal up to six (6) months
after the case was elevated on appeal on September 23, 2002.[20]
The appeal filed by Pacatang and Lucas was dismissed for having
been filed out of time.
Respondents and complainants Pacatang and Lucas moved for the
reconsideration of the NLRC decision. In a Resolution[21] dated
April
11, 2005, the NLRC denied the motion for reconsideration filed by
respondents, but granted that of Pacatang and Lucas, thereby
entitling the latter to receive backwages.
Petitioners subsequently moved for the execution of the NLRC
decision. Respondents, however, filed a Clarificatory Motion and
Opposition to the Motion for Issuance of Entry of Judgment and Writ
of Execution and for Recomputation of the Monetary Award[22] in
view of respondents petition before the CA and the reinstatement
of some of the employees.
In an Order[23] dated August 23, 2005, the NLRC granted the
motion. The NLRC took into consideration the fact that some of the
employees who were earlier dismissed from employment had
actually been reinstated. Hence, it limited the award of backwages
from illegal dismissal up to the date of actual reinstatement. These
employees who were actually reinstated were Galer, Ruance, Palad,
Digamon,
Aris, Roy, and Baludo.[24]
In the meantime, in their petition before the CA, respondents
obtained a favorable decision when the appellate court declared
petitioners termination from employment valid and legal and
consequently set aside the award of backwages.[25] The pertinent
portion of the decision reads:
IN VIEW WHEREOF, the Petition is GRANTED. The assailed Decision
(dated June 9, 2004) of the National Labor Relations Commission is
hereby MODIFIED. The termination from employment of the public
respondents herein are declared valid and legal. Their award of
backwages computed from the date of their termination are (sic)
SET ASIDE.
SO ORDERED.[26]
Contrary to the conclusions of the LA and the NLRC, the CA held
that petitioners were project employees as their employment
contracts provided that their respective tenures of employment
were dependent on the duration of the construction projects. As
such employees, their employment could lawfully be terminated
upon the completion of the project for which they were hired.
Consequently, there was no illegal dismissal.[27] Petitioners motion
for reconsideration was denied on
February 14, 2007.[28]
Aggrieved, petitioners come to us seeking a review of the CA
Decision, anchored on the following issues:
I. Whether or not the Findings of the Honorable Labor Arbiter
as affirmed by the Honorable National Labor Relations Commission
should be accorded high respect and finality.
II. Whether or not Petitioners were regular employees of
respondent Corporation.
III. Whether or not Complainants were illegally dismissed
from their
employment.[29]
Petitioners aver that the CA erred in completely disregarding the
findings of the LA, as affirmed by the NLRC, in view of the settled
rule that findings of fact and conclusions of law of quasi-judicial
agencies like the NLRC are generally entitled to great respect and
even finality. They also insist that they were regular employees,
considering that the services they rendered were not only
necessary but also indispensable to LMCECs business. They
likewise claim that they had been in the service for a continuous
period and a considerable length of time, and are in fact members
of a work pool from which LMCEC draws its workers for its projects.
Hence, even if they were initially hired as project employees, they
eventually attained the status of regular employees. Petitioners
also insist that they were illegally dismissed as their employment
was terminated without just and valid cause, and without affording
them due process of law. Lastly, petitioners claim that the NLRC
had previously rendered decisions in favor of LMCEC employees
who were similarly situated, hence, their case should also be
decided in favor of labor.[30]
The petition is meritorious.
We discuss first the procedural issues.
Respondents point out that the decision of the LA had attained
finality, except as to Palad, because of their failure to appeal. They
explain that the Memorandum on Appeal filed with the NLRC was
verified only by Palad without stating therein that he did it in
representation of the other petitioners. In view of the finality of the
NLRC decision, the instant petition should not prosper.
We do not agree.
Our pronouncement in Pacquing v. Coca-Cola Philippines,
Inc.[31] is instructive.
As to the defective verification in the appeal memorandum before
the NLRC, the same liberality applies. After all, the requirement
regarding verification of a pleading is formal, not jurisdictional.
Such requirement is simply a condition affecting the form of
pleading, the non-compliance of which does not necessarily render
the pleading fatally defective. Verification is simply intended to
secure an assurance that the allegations in the pleading are true
and correct and not the product of the imagination or a matter of
speculation, and that the pleading is filed in good faith. The court
or tribunal may order the correction of the pleading if verification is
lacking or act on the pleading although it is not verified, if the
attending circumstances are such that strict compliance with the
rules may be dispensed with in order that the ends of justice may
thereby be served.
Moreover, no less than the Labor Code directs labor officials to use
reasonable means to ascertain the facts speedily and objectively,
with little regard to technicalities or formalities; while Section 10,
Rule VII of the New Rules of Procedure of the NLRC provides that
technical rules are not binding. Indeed, the application of technical
rules of procedure may be relaxed in labor cases to serve the
demand of substantial justice. Thus, the execution of the
verification in the appeal memorandum by only two complainants
in behalf of the other complainants also constitute substantial
compliance.[32]
Clearly, the NLRC properly took cognizance of the appeal of all the
named complainants even though it was signed by only one of
them. While the right to appeal is a statutory and not a natural
right, it is nonetheless an essential part of our judicial system.
Courts are, therefore, advised to proceed with caution, so as not to
deprive a party of the right to appeal. Litigants should have the
amplest opportunity for the proper and just disposition of their
cause free, as much as possible, from the constraints of procedural
technicalities.[33] Thus, contrary to respondents claim, the
decision had not attained finality even as to those who did not sign
the appeal memorandum.
Now on the substantive aspect.
The issues boil down to whether the CA was correct in concluding
that petitioners were project employees and that their dismissal
from employment was legal.
We answer in the negative.
Even if the questions that need to be settled are factual in nature,
this Court nevertheless feels obliged to resolve them due to the
incongruent findings of the NLRC and the LA and those of the CA.
[34]
Article 280 of the Labor Code distinguishes a project employee
from a regular employee in this wise:
Article 280. Regular and casual employment.The provisions of
written agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by
the preceding paragraph: Provided, That, any employee who has
rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment
shall continue while such activity exists.[35]
A project employee is assigned to a project which begins and ends
at determined or determinable times.[36] Employees who work
under different project employment contracts for several years do
not automatically become regular employees; they can remain as
project employees regardless of the number of years they work.
Length of service is not a controlling factor in determining the
nature of ones employment.[37] Their rehiring is only a natural
consequence of the fact that experienced construction workers are
preferred.[38] In fact, employees who are members of a work pool
from which a company draws workers for deployment to its
different projects do not become regular employees by reason of
that fact alone. The Court has consistently held that members of a
work pool can either be project employees or regular employees.
[39]
The principal test used to determine whether employees are
project employees is whether or not the employees were assigned
to carry out a specific project or undertaking, the duration or scope
of which was specified at the time the employees were engaged for
that project.[40]
Admittedly, respondents did not present the employment contracts
of petitioners except that of Dacuital. They explained that it was no
longer necessary to present the other contracts since petitioners
were similarly situated. Having presented one contract,
respondents believed that they sufficiently established petitioners
status as project employees.
Even though the absence of a written contract does not by itself
grant regular status to petitioners, such a contract is evidence that
petitioners were informed of the duration and scope of their work
and their status as project employees.[41] In this case, where no
other evidence was offered, the absence of the employment
contracts raises a serious question of whether the employees were
properly informed at the onset of their employment of their status
as project employees.[42]
While it is true that respondents presented the employment
contract of Dacuital, the contract does not show that he was
informed of the nature, as well as the duration of his employment.
In fact, the duration of the project for which he was allegedly hired
was not specified in the contract. The pertinent provision thereof is
quoted hereunder for easy reference:
3. In accordance with Policy No. 20 of the Labor Code of the
Philippines, parties agree that the effective date of this
employment is 4-5-00 up to the duration of the
DUCTWORK/ELECTRICAL/MECHANICAL
phase of the project estimated to be finished in the month of
_______, 19______ or earlier.[43]
Even if we assume that under the above provision of the contract,
Dacuital was informed of the nature of his employment and the
duration of the project, that same contract is not sufficient
evidence to show that the other employees were so informed. It is
undisputed that petitioners had individual employment contracts,
yet respondents opted not to present them on the lame excuse
that they were similarly situated as Dacuital. The non-presentation
of these contracts gives rise to the presumption that the
employees were not informed of the nature and duration of their
employment. It is doctrinally entrenched that in illegal dismissal
cases, the employer has the burden of proving with clear, accurate,
consistent, and convincing evidence that the dismissal was valid.
Absent any other proof that the project employees were informed
of their status as such, it will be presumed that they are regular
employees.[44]
Moreover, Department Order No. 19 (as well as the old Policy
Instructions No. 20) requires employers to submit a report of an
employees termination to the nearest public employment office
everytime the employment is terminated due to the completion of
a project.[45] In this case, there was no evidence that there was
indeed such a report. LMCECs failure to file termination reports
upon the cessation of petitioners employment was an indication
that petitioners were not project but regular employees.
Well-established is the rule that regular employees enjoy security
of tenure and they can only be dismissed for just or valid cause and
upon compliance with due process, i.e., after notice and hearing. In
cases involving an employees dismissal, the burden is on the
employer to prove that the dismissal was legal.[46] This burden
was not amply discharged by LMCEC in this case. Being regular
employees, petitioners were entitled to security of tenure, and their
services may not be terminated except for causes provided by law.
[47]
Finally, records failed to show that LMCEC afforded petitioners, as
regular employees, due process prior to their dismissal, through
the twin requirements of notice and hearing. Petitioners 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, if any. Certainly,
petitioners dismissal was not carried out in accordance with law
and was, therefore, illegal.[48] Article 279 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 from the
time his compensation was withheld from him up to the time of his
actual reinstatement.[49]
Contrary to the conclusion of the NLRC, the backwages due
petitioners must be computed from the time they were unjustly
dismissed until actual reinstatement to their former positions. Thus,
until LMCEC implements the reinstatement aspect, its obligation to
petitioners, insofar as accrued backwages and other benefits are
concerned, continues to accumulate.[50]
The fact that petitioners did not appeal the NLRC decision on this
matter does not bar this Court from ordering its modification. As
held in Cocomangas Hotel Beach Resort v. Visca[51]
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.
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. 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 [petitioners] were illegally dismissed by
petitioners
[respondents].[52]
As to respondent Camus liability as LMCEC president, it is settled
that in the absence of malice, bad faith, or specific provision of law,
a director or officer of a corporation cannot be made personally
liable for corporate liabilities.[53]
As held in Lowe, Inc. v. Court of Appeals,[54] citing McLeod
v. NLRC:[55]
Personal liability of corporate directors, trustees or officers attaches
only when (1) they assent to a patently unlawful act of the
corporation, or when they are guilty of bad faith or gross
negligence in directing its affairs, or when there is a conflict of
interest resulting in damages to the corporation, its stockholders or
other persons; (2) they consent to the issuance of watered down
stocks or when, having knowledge of such issuance, do not
forthwith file with the corporate secretary their written objection;
(3) they agree to hold themselves personally and solidarily liable
with the corporation; or (4) they are made by specific provision of
law personally
answerable for their corporate action.[56]
To be sure, Camus has a personality which is distinct and separate
from that of LMCEC. There was no proof that Camus acted in bad
faith in dismissing petitioners from employment. The mere fact that
he is the president of the company does not make him personally
liable for the payment of backwages.
Finally, the Court notes that although Tapanan was named as
petitioner, he was never included as a complainant before the
NLRC. As such, he is not a party to this case. Moreover, as clearly
stated in the LA decision, Reyes has voluntarily withdrawn his case
against respondents. Thus, although he is one of the petitioners
here, he is not covered by this Decision. Lastly, some of the
petitioners had already been actually reinstated by LMCEC. We
emphasize that the computation of their backwages should be up
to the date of actual reinstatement.
WHEREFORE, premises considered, the petition is GRANTED.
The Court of Appeals Decision dated September 25, 2006 and
Resolution dated February 14, 2007 in CA-G.R. SP No. 90377 are
REVERSED and SET ASIDE. Petitioners dismissal from employment
is declared illegal and, except Helyto N. Reyes and Restituto
Tapanan, they are entitled to full backwages from the time of illegal
dismissal until actual reinstatement.
SO ORDERED.

[G.R. No. 153832. March 18, 2005]
FILIPINAS PRE-FABRICATED BUILDING SYSTEMS
(FILSYSTEMS), INC., and FELIPE A. CRUZ JR., petitioners, vs.
ROGER D.
PUENTE,[1]respondent.
D E C I S I O N PANGANIBAN, J.:
Without a valid cause, the employment of project employees cannot be
terminated prior to expiration. Otherwise, they shall be entitled to
reinstatement with full back wages. However, if the project or work is
completed during the pendency of the ensuing suit for illegal dismissal, the
employees shall be entitled only to full back wages from the date of the
termination of their employment until the actual completion of the project
or work.
The Case
Before us is a Petition for Review[2] under Rule 45 of the Rules of Court,
seeking to annul and reverse the April 16, 2002 Decision[3] and the May
30, 2002 Resolution[4] of the Court of Appeals (CA) in CA-GR SP No. 66756.
The assailed Decision disposed as follows:
WHEREFORE, premises considered, the petition is GRANTED and the
decision dated May 18, 2001 and resolution dated June 29, 2001 of the
NLRC are hereby annulled and set aside. [Petitioner] Filsystems, Inc. is
hereby ordered to reinstate [respondent] immediately to his former position
without loss of seniority and privileges with full back wages from the date
of his dismissal until his actual reinstatement, plus 10% of the total
monetary award as attorneys fees.[5]
The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts
The factual antecedents are summarized by the CA as follows:
[Respondent] avers that he started working with [Petitioner]
Filsystems, Inc., a corporation engaged in construction business, on June
12, 1989; that he was initially hired by [petitioner] company as an installer;
that he was later promoted to mobile crane operator and was stationed at
the company premises at No. 69 Industria Road, Bagumbayan, Quezon
City; that his work was not dependent on the completion or termination of
any project; that since his work was not dependent on any project, his
employment with the [petitioner-
]company was continuous and without interruption for the past ten (10)
years; that on October 1, 1999, he was dismissed from his employment
allegedly because he was a project employee. He filed a pro forma
complaint for illegal dismissal against the [petitioner] company on
November 18, 1999.
The [petitioner-]company however claims that complainant was hired
as a project employee in the companys various projects; that his
employment contracts showed that he was a project worker with specific
project assignments; that after completion of each project assignment, his
employment was likewise terminated and the same was correspondingly
reported to the DOLE.
Labor Arbiter Veneranda C. Guerrero dismissed the complaint for lack of
merit, ruling thus:
WHEREFORE, premises considered, judgment is hereby rendered dismissing
the complaint for illegal dismissal for lack of merit.
[Petitioner] Filsystems, Inc. is hereby ordered to pay complainant
Roger D. [F]uente the amount of FOUR THOUSAND TWO HUNDRED TWELVE
PHILIPPINE PESOS (P4,212.00)
representing his pro-rata 13th month pay for 1999, plus ten percent (10%)
thereof as and for attorneys fees.
SO ORDERED.
[Respondent] appealed. However, [the] National Labor Relations
Commission (NLRC) dismissed the same and the subsequent motion for
reconsideration.[6]
Ruling of the Court of Appeals
The Court of Appeals reversed the NLRC and the labor arbiter thus:
The employment contracts signed by petitioner Puente do not have the
specified duration for each project contrary to the provision of Article 280
of the Labor Code, nor did petitioner work in the project sites, but had
always been assigned at the company plant attending to the maintenance
of all mobile cranes of the company, performing tasks vital and desirable in
the employers usual business for ten (10) continuous years.[7]
The CA concluded that respondent was a regular employee of petitioners.
Hence, this Petition.[8]
The Issues
In its Memorandum, petitioners raise the following issues for our
consideration:
1. Whether or not the Court of Appeals erred and committed grave
abuse of discretion in finding that:
The employment contracts signed by private respondent Puente do not
have the specified duration for each project contrary to the provision of Art.
280 of the Labor Code, nor did petitioner work in the project sites, but had
always been assigned at the company plant attending to the maintenance
of all mobile cranes of the company, performing tasks vital and desirable in
the companys usual business for ten (10) continuous years.
2. Whether or not the Court a quo erred and committed grave abuse
of discretion in finding that the private respondent is a regular employee
and not a project employee?
3. Whether or not the Court a quo erred and committed grave abuse
of discretion in giving due course to the private respondents petition for
certiorari under Rule 65 of the 1997 Rules on Civil Procedure; and in
annulling and setting aside the Decision dated May 18, 2001 and the
Resolution dated June 29, 2001 of the NLRC?
4. Whether or not the Court a quo erred and committed grave abuse
of discretion in ruling that the evidence submitted by the petitioners
proving that there was retrenchment program implemented by the
petitioner company, as a defense that the private respondents services
was terminated due to absence if not lack of construction project contract,
where he may be redeployed or reinstated?
5. Whether or not the Court a quo erred and committed grave abuse
of discretion in ordering the reinstatement of the private respondent, with
full back wages plus payment of 10% attorneys fees?[9]
In the main, the issues boil down to (1) whether Roger Puente is a project
employee, and (2) whether he is entitled to reinstatement with full back
wages.
This Courts Ruling
The Petition is partly meritorious.
First Issue:
Project Employee
In general, the factual findings of the Court of Appeals are binding on the
Supreme Court. One exception to this rule, however, 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).[10] The question of whether
respondent is a regular or a project employee is essentially factual in
nature; nonetheless, the Court is constrained to resolve it due to the
incongruent findings of the NLRC and the CA.
The Labor Code defines regular, project and casual employees as follows:
ART. 280. Regular and Casual Employment. - 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.
With particular reference to the construction industry, to which Petitioner
Filsystems belongs, Department (of Labor and Employment) Order No. 19,
[11] Series of 1993, states:
2.1 Classification of employees. The employees in the construction industry
are generally categorized as a) project employees and b) non-project
employees. Project employees are those employed in connection with a
particular construction project or phase thereof and whose employment is
co-terminous with each project or phase of the project to which they are
assigned.
xxxxxxxxx
2.2 Indicators of project employment. Either one or more of the following
circumstances, among other, 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.
The above-quoted provisions make it clear that 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 services to be
performed is seasonal in nature and the employment is for the duration of
the season. In D.M. Consunji, Inc. v. NLRC,[12] this Court has ruled 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.
In the present case, the contracts of employment[13] of Puente attest to
the fact that he was hired for specific projects. His employment was
coterminous with the completion of the projects for which he had been
hired. Those contracts expressly provided that his tenure of employment
depended on the duration of any phase of the project or on the completion
of the construction projects. Furthermore, petitioners regularly submitted to
the labor department reports of the termination of services of project
workers. Such compliance with the reportorial requirement confirms that
respondent was a project employee.[14]
With regard specifically to the last employment contract executed by the
parties, a contract that respondent accepted on August 26, 1996, we find
that he worked at the site of the World Finance Plaza project. That he did is
amply proven by the Affidavit of Eduardo Briagas,[15] another employee
who was also stationed at the World Finance Plaza project, as well as by
respondents Travel Trip Reports.[16]
Furthermore, respondents Complaint[17] specified the address of
Filsystems, as 69 INDUSTRIA ROAD, B.BAYAN Q.C., but specified his place of
work as PROJECT TO PROJECT. These statements, coupled with the other
pieces of evidence presented by petitioners, convinces the Court that --
contrary to the subsequent claims of respondent -- he performed his work
at the project site, not at the companys premises.
That his employment contract does not mention particular dates that
establish the specific duration of the project does not preclude his
classification as a project employee. This fact is clear from the provisions of
Clause 3.3(a) of Department Order No. 19, which states:
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 is 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
object. (Italicization and emphasis supplied)
Respondents employment contract provides as follows:
x x x employment, under this contract is good only for the duration of the
project unless employees services is terminated due to completion of the
phase of work/section of the project or piece of work to which employee is
assigned:
We agree clearly that employment is on a Project to Project Basis and that
upon termination of services there is no separation pay:
POSITION : Mobil Crane Operator
PROJECT NAME : World Finance Plaza
LOCATION : Meralco Ave., Ortigas Center, Pasig City
ASSIGNMENT : Lifting & Hauling of Materials
(Phase of Work/Piece of Work)[18]
Evidently, although the employment contract did not state a particular
date, it did specify that the termination of the parties employment
relationship was to be on a day certain -- the day when the phase of work
termed Lifting & Hauling of Materials for the World Finance Plaza project
would be completed. Thus, respondent cannot be considered to have been
a regular employee. He was a project employee.
That he was employed with Petitioner Filsystems for ten years in various
projects did not ipso facto make him a regular employee, considering that
the definition of regular employment in Article 280 of the Labor Code
makes a specific exception with respect to project employment. The mere
rehiring of respondent on a project-to-project basis did not confer upon him
regular employment status.[19] The practice was dictated by the practical
consideration that experienced construction workers are more preferred.
[20] It did not change his status as a project employee.
Second Issue:
Reinstatement
In termination cases, the burden of proving that an employee has been
lawfully dismissed lies with the employer.[21] Thus, employers who hire
project employees are mandated to state and, once its veracity is
challenged, to prove the actual basis for the latters dismissal.[22]
In the present case, petitioners claim that respondents services were
terminated due to the completion of the project.[23] There is no allegation
or proof, however, that the World Finance Plaza project -- or the phase of
work therein to which respondent had been assigned -- was already
completed by October 1, 1999, the date when he was dismissed. The
inescapable presumption is that his services were terminated for no valid
cause prior to the expiration of the period of his employment; hence, the
termination was illegal. Reinstatement with full back wages, inclusive of
allowances and other benefits or their monetary equivalents -- computed
from the date of his dismissal until his reinstatement -- is thus in order.[24]
However, if indeed the World Finance Plaza project has already been
completed during the pendency of this suit, then respondent -- being a
project employee -- can no longer be reinstated.[25] Instead, he shall
entitled to the payment of his salary and other benefits corresponding to
the unexpired portion
of his employment,[26] specifically from the time of the termination of his
employment on October 1, 1999, until the date of the completion of the
World Finance Plaza project.
WHEREFORE, the Petition is PARTLY GRANTED. Respondent Roger D.
Puente is DECLARED to be a project
employee, whose employment was terminated without any valid cause
prior to its expiration and is thus entitled to reinstatement with full back
wages. However, if reinstatement is no longer possible due to the
completion of the World Finance Plaza project during the pendency of this
case, Petitioner Filipinas Pre-Fabricated Building Systems (Filsystems), Inc.
is ORDERED to PAY respondent the equivalent of his salaries and other
employment benefits, computed from October 1,
1999, until the date of the projects actual completion. No costs.
SO ORDERED.
[G.R. No. 116781. September 5, 1997]
TOMAS LAO CONSTRUCTION, LVM CONSTRUCTION CORPORATION,
THOMAS and JAMES
DEVELOPERS (PHIL.), INC., petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, MARIO O. LABENDIA, SR., ROBERTO LABENDIA, NARCISO
ADAN, FLORENCIO GOMEZ, ERNESTO BAGATSOLON, SALVADOR BABON,
PATERNO
BISNAR, CIPRIANO BERNALES, ANGEL MABULAY, SR., LEO SURIGAO, and
ROQUE MORILLO, respondents.
D E C I S I O N BELLOSILLO, J.:
From October to December 1990 private respondents individually filed
complaints for illegal dismissal against petitioners with the National Labor
Relations Commission Regional Arbitration Branch No. VIII (NLRC - RAB VIII),
Tacloban City. Alleging that they were hired for various periods as
construction workers in different capacities they described their contractual
terms as follows: (a) Roberto Labendia, general construction foreman, from
1971 to 17 October 1990 at P3,700/month; (b) Narciso Adan, tireman, from
October 1981 to November 1990 at P75.00/day; (c) Florencio Gomez,
welder, from July 1983 to July 1990 at P60.00/day; (d) Ernesto Bagatsolon
leadman/checker, from June 1982 to October 1990 at P2,800/month; (e)
Salvador Babon, clerk/timekeeper/paymaster, from June 1982 to October
1990 at P3,200/month; (f) Paterno Bisnar, road grader operator, from
January 1979 to October 1990 at P105/day; (g) Cipriano Bernales,
instrument man, from February 1980 to November 1990 at P3,200/month;
(h) Angel Mabulay, Sr., dump truck driver, from August 1974 to October
1990 at P90/day; (I) Leo Surigao, payloader operator, from March 1975 to
January 1978 at P100/day; (J) Mario Labendia, Sr. surveyor/foreman, from
August 1971 to July 1990 at P2,900/month; and, (k) Roque Morillo,
company watchman, from August 1983 to October 1990 at P3,200/month.
[1]
Within the periods of their respective employments, they alternately
worked for petitioners Tomas Lao Corporation (TLC), Thomas and James
Developers (T&J) and LVM
Construction Corporation (LVM), altogether informally referred to as the Lao
Group of Companies, the three (3) entities comprising a business
conglomerate exclusively controlled and managed by members of the Lao
family.
TLC, T&J and LVM are engaged in the construction of public roads and
bridges. Under joint venture agreements they entered into among each
other, they would undertake their projects either simultaneously or
successively so that, whenever necessary, they would lease tools and
equipment to one another. Each one would also allow the utilization of their
employees by the other two (2). With this arrangement, workers were
transferred whenever necessary to on-going projects of the same company
or of the others, or were rehired after the completion of the project or
project phase to which they were assigned. Soon after, however, TLC
ceased its operations[2] while T&J and LVM stayed on.
Sometime in 1989 Andres Lao, Managing Director of LVM and President of
T&J,[3] issued a memorandum[4] requiring all workers and company
personnel to sign employment contract forms and clearances which were
issued on 1 July 1989 but antedated 10 January 1989. These were to be
used allegedly for audit purposes pursuant to a joint venture agreement
between LVM and T&J. To ensure compliance with the directive, the
company ordered the withholding of the salary of any employee who
refused to sign. Quite notably, the contracts expressly described the
construction workers as project employees whose employments were for a
definite period, i.e., upon the expiration of the contract period or the
completion of the project for which the workers was hired.
Except for Florencio Gomez[5] all private respondents refused to sign
contending that this scheme was designed by their employer to downgrade
their status from regular employees to mere project employees.
Resultantly, their salaries were withheld. They were also required to explain
why their services should not be terminated for violating company rules
and warned that failure to satisfactorily explain would be construed as
disinterest in continued employment with the company. Since the workers
stood firm in their refusal to comply with the directives their services were
terminated.
NLRC RAB VIII dismissed the complaints lodged before it, finding that
private respondents were project employees whose employments could be
terminated upon completion of the projects or project phase for which they
were hired. It upheld petitioners contention that the execution of their
employment contracts was to forestall the eventuality of being compelled
to pay the workers their salaries even if there was no more work to be done
due to the completion of the projects or project phases. The labor court
however granted each employee a separation pay of P6,435.00 computed
at one-half (1/2) month salary for every year of service, uniformly rounded
at five (5) years.[6]
The decision of Labor Arbiter Gabino A. Velasquez, Jr., was reversed on
appeal by the Fourth Division of the National Labor Relations Commission
(NLRC) of Cebu City which found that private respondents were regular
employees who were dismissed without just cause and denied due process.
The
NLRC also overruled the fixing by the Labor Arbiter of the term of
employment of complainants uniformly at five (5) years since the periods
of employment of the construction workers as alleged in their complaints
were never refuted by petitioners. In granting monetary awards to
complainants, NLRC disregarded the veil of corporate fiction and treated
the three (3) corporations as forming only one entity on the basis of the
admission of petitioners that the three (3) operated as one (1),
intermingling and commingling all its resources, including manpower
facility.[7]
Petitioners now lay their cause before us and assign the following errors:
(a) NLRC erred in classifying the employees as regular instead of project
employees; (b) assuming that the workers were regular employees, NLRC
failed to consider that they were terminated for cause; (c) assuming further
that the employees were illegally dismissed, NLRC erred in awarding back
wages in excess of three (3) years; and, (d) assuming finally that the
decision is correct, NLRC erred when it pierced the veil of corporate
personality of petitioner-corporations.
The main thrust of petitioners expostulation is that respondents have no
valid cause to complain about their employment contracts since these
documents merely formalized their status as project employees. They cite
Policy Instruction No. 20 of the Department of Labor which defines project
employees as those employed in connection with a particular construction
project, adding that the ruling in Sandoval Shipyards, Inc. v. NLRC[8]
applies squarely to the instant case because there the Court declared that
the employment of project employees is co-terminous with the completion
of the project regardless of the number of projects in which they have
worked. And as their employment is one for a definite period, they are not
entitled to separation pay nor is their employer required to obtain
clearance from the Secretary of Labor in connection with their termination.
Petitioners thus argue that their dismissal from the service of private
respondents was legal since the projects for which they were hired had
already been completed. As additional ground, they claim that Mario
Labendia and Roberto Labendia had absented themselves without leave
giving management no choice but to sever their employment.
We are not convinced. The principal test in determining whether particular
employees are project employees distinguished from regular employees is
whether the project employees are assigned to carry out specific project or
undertaking, the duration (and scope) of which are specified at the time the
employees are engaged for the project.Project in the realm of business and
industry refers to a particular job or undertaking that is within the regular
or usual business of employer, but which is distinct and separate and
identifiable as such from the undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times.[9]
While it may be allowed that in the instant case the workers were initially
hired for specific projects or undertakings of the company and hence can
be classified as project employees, the repeated re-hiring and the
continuing need for their services over a long span of time (the shortest, at
seven [7] years) have undeniably made them regular employees. Thus, we
held that where the employment of project employees is extended long
after the supposed project has been finished, the employees are removed
from the scope of project employees and considered regular employees.
[10]
While length of time may not be a controlling test for project employment,
it can be a strong factor in determining whether the employee was hired for
a specific undertaking or in fact tasked to perform functions which are vital,
necessary and indispensable to the usual business or trade of the
employer. In the case at bar, private respondents had already gone through
the status of project employees. But their employments became non-
coterminous with specific projects when they started to be continuously re-
hired due to the demands of petitioners business and were re-engaged for
many more projects without interruption. We note petitioners own
admission -
[t]hese construction projects have been prosecuted by either of the three
petitioners, either individually or in a joint venture with one another.
Likewise, these construction projects have been prosecuted by either of the
three petitioners, either simultaneously, one construction project
overlapping another and/or one project commencing immediately after
another project has been completed or terminated. Perhaps because of
their capacity to prosecute government projects and their good record and
performance, at least one of the three petitioners had an on-going
construction project and/or one of the three petitioners construction project
overlapped that of another. [11]
The denial by petitioners of the existence of a work pool in the company
because their projects were not continuous is amply belied by petitioners
themselves who admit that -
All the employees of either of the three petitioners were actually assigned
to a particular project to remain in said project until the completion or
termination of that project. However, after the completion of that particular
project or when their services are no longer needed in the project or
particular phase of the project where they were assigned, they were
transferred and rehired in another ongoing project. [12]
A work pool may exist although the workers in the pool do not receive
salaries and are free to seek other employment during temporary breaks in
the business, provided that the worker shall be available when called to
report for a project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project workers insofar as
the effect of temporary cessation of work is concerned. This is beneficial to
both the employer and employee for it prevents the unjust situation of
coddling labor at the expense of capital and at the same time enables the
workers to attain the status of regular employees. Clearly, the continuous
rehiring of the same set of employees within the framework of the Lao
Group of Companies is strongly indicative that private respondents were an
integral part of a work pool from which petitioners drew its workers for its
various projects.
In a final attempt to convince the Court that private respondents were
indeed project employees, petitioners point out that the workers were not
regularly maintained in the payroll and were free to offer their services to
other companies when there were no on-going projects. This argument
however cannot defeat the workers status of regularity. We apply by
analogy the case of Industrial-Commercial-Agricultural Workers
Organization v. CIR [13] which deals with regular seasonal employees.
There we held -
That during the temporary layoff the laborers are free to seek other
employment is natural, since the laborers are not being paid, yet must find
means of support. A period during which the Central is forced to suspend or
cease operation for a time xxx should not mean starvation for employees
and their families (emphasis supplied).
Truly, the cessation of construction activities at the end of every project is a
foreseeable suspension of work. Of course, no compensation can be
demanded from the employer because the stoppage of operations at the
end of a project and before the start of a new one is regular and expected
by both parties to the labor relations. Similar to the case of regular
seasonal employees, the employment relation is not severed by merely
being suspended. [14] The employees are, strictly speaking, not separated
from services but merely on leave of absence without pay until they are
reemployed. [15] Thus we cannot affirm the argument that non-payment of
salary or non-inclusion in the payroll and the opportunity to seek other
employment denote project employment.
Contrary to petitioners assertion, our ruling in Sandoval Shipyards is
inapplicable considering the special circumstances attendant to the present
case. In Sandoval, the hiring of construction workers, unlike in the instant
case, was intermittent and not continuous for the shipyard merely accepts
contracts for shipbuilding or for repair of vessels from third parties and,
only on occasions when it has work contract of this nature that it hires
workers to do the job which, needless to say, lasts only for less than a year
or longer. [16]
Moreover, if private respondents were indeed employed as project
employees, petitioners should have submitted a report of termination to
the nearest public employment office every time their employment was
terminated due to completion of each construction project. [17] The
records show that they did not. Policy Instruction No. 20 is explicit that
employers of project employees are exempted from the clearance
requirement but not from the submission of termination report. We have
consistently held that failure of the employer to file termination reports
after every project completion proves that the employees are not project
employees. [18] Nowhere in the New Labor Code is it provided that the
reportorial requirement is dispensed with. The fact is that Department
Order No. 19 superseding Policy Instruction No. 20 expressly provides that
the report of termination is one of the indicators of project employment.
[19]
We agree with the NLRC that the execution of the project employment
contracts was farcical. [20] Obviously, the contracts were a scheme of
petitioners to prevent respondents from being considered as regular
employees. It imposed time frames into an otherwise flexible employment
period of private respondents some of whom were employed as far back as
1969. Clearly, here was an attempt to circumvent labor laws on tenurial
security. Settled is the rule that when periods have been imposed to
preclude the acquisition of tenurial security by the employee, they should
be struck down as contrary to public morals, good customs or public order.
[21] Worth noting is that petitioners had engaged in various joint venture
agreements in the past without having to draft project employment
contracts. That they would require execution of employment contracts and
waivers at this point, ostensibly to be used for audit purposes, is a suspect
excuse, considering that petitioners enforced the directive by withholding
the salary of any employee who spurned the order.
We likewise reject petitioners justification in re-hiring private respondents
i.e., that it is much cheaper and economical to re-hire or re-employ the
same workers than to train a new set of employees. It is precisely because
of this cost-saving benefit to the employer that the law deems it fair that
the employees be given a regular status. We need not belabor this point.
The NLRC was correct in finding that the workers were illegally dismissed.
The rule is that in effecting a valid dismissal, the mandatory requirements
of substantive and procedural due process must be strictly complied with.
These were wanting in the present case. Private respondents were
dismissed allegedly because of insubordination or blatant refusal to comply
with a lawful directive of their employer. But willful disobedience of the
employers lawful orders as a just cause for the dismissal of the employees
envisages the concurrence of at least two (2) requisites: (a) the employees
assailed conduct must have been willful or intentional, the willfulness being
characterized by a wrongful and perverse attitude; and, (b) the order
violated must have been reasonable, lawful, made known to the employee
and must pertain to the duties which he has been engaged to discharge.
[22] The refusal of private respondents was willful but not in the sense of
plain and perverse insubordination. It was dictated by necessity and
justifiable reasons - for what appeared to be an innocent memorandum was
actually a veiled attempt to deny them their rightful status as regular
employees. The workers therefore had no option but to disobey the
directive which they deemed unreasonable and unlawful because it would
result in their being downsized to mere project workers. This act of
selfpreservation should not merit them the extreme penalty of dismissal.
The allegation of petitioners that private respondents are guilty of
abandonment of duty is without merit. The elements of abandonment are:
(a) failure to report for work or absence without valid or justifiable reason,
and, (b) a clear intention to sever the employer-employee relationship, with
the second element as the more determinative factor manifested by some
overt acts. [23] In this case, private respondents Roberto Labendia and
Mario Labendia were forced to leave their respective duties because their
salaries were withheld. They could not simply sit idly and allow their
families to starve. They had to seek employment elsewhere, albeit
temporarily, in order to survive. On the other hand, it would be the height
of injustice to validate abandonment in this particular case as a ground for
dismissal of respondents thereby making petitioners benefit from a gross
and unjust situation which they themselves created. [24] Private
respondents did not intend to sever ties with petitioner and permanently
abandon their jobs; otherwise, they would not have filed this complaint for
illegal dismissal.[25]
Petitioners submit that since private respondents were only project
employees, they are not entitled to security of tenure. This is incorrect. In
Archbuild
Masters andConstruction, Inc. v. NLRC [26] we held -
x x x a project employee hired for a specific task also enjoys security of
tenure. A termination of his employment must be for a lawful cause and
must be done in a manner which affords him the proper notice and hearing
x x x x To allow employers to exercise their prerogative to terminate a
project workers employment based on gratuitous assertions of project
completion would destroy the constitutionally protected right of labor to
security of tenure (emphasis supplied).
The burden of proving that an employee has been lawfully dismissed
therefore lies with the employer. In the case at bar, the assertions of
petitioners were self-serving and insufficient to substantiate their claim of
proximate project completion. The services of the employees were
terminated not because of contract expiration but as sanction for their
refusal to sign the project employment forms and quitclaims.
Finding that the dismissal was without just cause, we find it unnecessary to
dwell on the non-observance of procedural due process. Suffice it to state
that private respondents were not priorly notified of their impending
dismissal and that they were not provided ample opportunity to defend
themselves.
Petitioners charge as erroneous the grant to private respondents by NLRC
of back wages in excess of three (3) years or, in the alternative, to an
award of separation pay if reinstatement is no longer feasible.
We disagree. Since the illegal dismissal was made in 1990 or after the
effectivity of the amendatory provision of RA No. 6715 on 21 March 1989,
private respondents back wages should be computed on the basis of Art.
279 of the Labor Code which states that (a)n employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full back wages, 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.
Conformably with our ruling in Bustamante v. NLRC [27] the illegally
dismissed employees are entitled to full back wages, undiminished by
earnings derived elsewhere during the period of their illegal dismissal. In
the event that reinstatement is no longer feasible, back wages shall be
computed from the time of illegal termination until the time of the finality
of the decision. [28] The award shall be based on the documents submitted
by private respondents, i.e. affidavits, SSS and Medicare documents, since
petitioners failed to adduce competent evidence to the contrary. The
separation pay shall be equivalent to "at least one (1) month salary or to
one (1) month salary for every year of service, whichever is higher, a
fraction of at least six (6) months being considered as one whole year." [29]
Finally, public respondent NLRC did not err in disregarding the veil of
separate corporate personality and holding petitioners jointly and severally
liable for private respondents back wages and separation pay. The records
disclose that the three (3) corporations were in fact substantially owned
and controlled by members of the Lao family composed of Lao Hian Beng
alias Tomas Lao, Chiu Siok Lian (wife of Tomas Lao), Andrew C. Lao, Lao Y.
Heng, Vicente Lao Chua, Lao E. Tin, Emmanuel Lao and Ismaelita Maluto. A
majority of the outstanding shares of stock in LVM and T&J is owned by the
Lao family. T&J is 100% owned by the Laos as reflected in its Articles of
Incorporation.The Lao Group of Companies therefore is a closed corporation
where the incorporators and directors belong to a single family. Lao Hian
Beng is the same Tomas Lao who owns Tomas Lao Corporation and is the
majority stockholder of T&J. Andrew C. Lao is the Managing Director of LVM
Construction, and President and Managing Director of the Lao Group of
Companies. Petitioners are engaged in the same line of business under one
management and use the same equipment including manpower services.
Where it appears that [three] business enterprises are owned, conducted
and controlled by the same parties, both law and equity will, when
necessary to protect the rights of third persons, disregard the legal fiction
that the [three] corporations are distinct entities, and treat them as
identical.[30]
Consonant with our earlier ruling, [31] we hold that the liability of
petitioners extends to the responsible officers acting in the interest of the
corporations. In view of the peculiar circumstances of this case, we FIRST DIVISION
disregard the separate G.R. No. 192394 July 3, 2013
ROY D. P ASOS, Petitioner, vs.
personalities of the three (3) corporations and at the same time declare PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, Respondent.
the members of the corporations jointly and severally liable with the DECISION
corporations for the monetary awards due to private respondents. It VILLARAMA, JR., J.:
should always be borne in mind that the Before us is a petition for review on certiorari under Rule 45 of the
fiction of law that a corporation as a juridical entity has a distinct 1997 Rules of Civil Procedure, as amended, assailing the March
and separate personality was envisaged for convenience and to serve 26, 2010 Decision1 and May 26, 2010 Resolution2 of the Court of Appeals
justice; therefore it should not be used as a subterfuge to commit injustice (CA) in CA-G.R. SP No. 107805. The appellate court had affirmed the
and circumvent labor laws. Decision3 of the National Labor Relations Commission (NLRC) dismissing
the illegal dismissal complaint filed by petitioner Roy D. Pasos against
respondent Philippine National Construction Corporation (PNCC).
WHEREFORE, the petition is DENIED and the decision of the National Labor
The antecedent facts follow:
Relations Commission dated 05 August 1994 is AFFIRMED. Petitioners are
Petitioner Roy D. Pasos started working for respondent PNCC on
ordered to reinstate private respondents to their former positions without
April 26, 1996. Based on the PNCC's "Personnel Action Form
loss of seniority rights and other privileges with full back wages, inclusive
Appointment for Project Employment" dated April 30, 1996,4 petitioner was
of allowances, computed from the time compensation was withheld up to
designated as "Clerk II (Accounting)" and was assigned to the "NAIA – II
the time of actual reinstatement. In the event that reinstatement is no
Project." It was likewise stated therein:
longer feasible, petitioners are directed to pay private respondents
PARTICULARS: Project employment starting on April 26, 1996 to
separation pay equivalent to one month salary for every year of service, a
July 25, 1996. This contract maybe terminated at anytime for cause as
fraction of at least six (6) months being considered one (1) year in the
provided for by law and/or existing Company Policy. This maybe terminated
computation thereof, and full back wages computed from the time
if services are unsatisfactory, or when it shall no longer needed, as
compensation was withheld until the finality of this decision. All other
determined by the Company. If services are still needed beyond the validity
claims of the parties are DISMISSED for lack of merit. Costs against
of this contract, the Company shall extend your services. After services are
petitioners.
terminated, the employee shall be under no obligation to reemploy with the
Company nor shall the Company be obliged to re-employ the employee.5
SO ORDERED. (Emphasis supplied.)
Petitioner’s employment, however, did not end on July 25, 1996 but was
extended until August 4, 1998, or more than two years later, based on the
"Personnel Action Form – Project Employment" dated July 7, 1998.6
Based on PNCC’s "Appointment for Project Employment" dated November
11, 1998,7 petitioner was rehired on even date as "Accounting Clerk
(Reliever)" and assigned to the "PCSO – Q.I.
Project." It was stated therein that his employment shall end on February
11, 1999 and may be terminated for cause or in accordance with the
provisions of Article 282 of the Labor Code, as amended. However, said
employment did not actually end on February 11, 1999 but was extended
until February 19, 1999 based on the "Personnel Action Form-Project
Employment" dated February 17, 1999.8
On February 23, 1999, petitioner was again hired by PNCC as "Accounting
Clerk" and was assigned to the "SM-Project" based on the "Appointment for
Project Employment" dated February 18, 1999.9 It did not specify the date
when his employment will end but it was stated therein that it will be "co-
terminus with the completion of the project." Said employment supposedly
ended on August 19, 1999 per "Personnel Action Form – Project
Employment" dated August 18, 1999,10 where it was stated, "termination
of petitioner’s project employment due to completion of assigned
phase/stage of work or project effective at the close of office hours on 19
August 1999." However, it appears that said employment was extended
per "Appointment for Project employment" dated August 20, 199911 as
petitioner was again appointed as "Accounting Clerk" for "SM Project
(Package II)." It did not state a specific date up to when his extended
employment will be, but it provided that it will be "co-terminus with the x x
x project." In "Personnel Action Form – Project Employment" dated October
17, 2000,12 it appears that such extension would eventually end on
October 19, 2000.
Despite the termination of his employment on October 19, 2000, petitioner
claims that his superior instructed him to report for work the following day,
intimating to him that he will again be employed for the succeeding SM
projects. For purposes of reemployment, he then underwent a medical
examination which allegedly revealed that he had pneumonitis. Petitioner
was advised by
PNCC’s physician, Dr. Arthur C. Obena, to take a 14-day sick leave.
On November 27, 2000, after serving his sick leave, petitioner claims that
he was again referred for medical examination where it was revealed that
he contracted Koch’s disease. He was then required to take a 60-day leave
of absence.13 The following day, he submitted his application for sick leave
but PNCC’s Project Personnel Officer, Mr. R.S. Sanchez, told him that he was
not entitled to sick leave because he was not a regular employee.
Petitioner still served a 60-day sick leave and underwent another medical
examination on February 16, 2001. He was then given a clean bill of health
and was given a medical clearance by Dr. Obena that he was fit to work.
Petitioner claims that after he presented his medical clearance to the
Project Personnel Officer on even date, he was informed that his services
were already terminated on October 19, 2000 and he was already replaced
due to expiration of his contract. This prompted petitioner on February 18,
2003 to file a complaint14 for illegal dismissal against PNCC with a prayer
for reinstatement and back wages. He argued that he is deemed a regular
employee of PNCC due to his prolonged employment as a project employee
as well as the failure on the part of PNCC to report his termination every
time a project is completed. He further contended that his termination
without the benefit of an administrative investigation was tantamount to an
illegal dismissal.
PNCC countered that petitioner was hired as a project employee in several
projects with specific dates of engagement and termination and had full
knowledge and consent that his appointment was only for the duration of
each project. It further contended that it had sufficiently complied with the
reportorial requirements to the Department of Labor and Employment
(DOLE). It submitted photocopies of three Establishment Termination
Reports it purportedly filed with the DOLE. They were for: (1) the "PCSOQ.I.
Project" for February 1999;15 (2) "SM Project" for August 1999;16 and (3)
"SM Project" for October 2000,17 all of which included petitioner as among
the affected employees. The submission of termination reports by PNCC
was however disputed by petitioner based on the verifications18 issued by
the DOLE NCR office that he was not among the affected employees listed
in the reports filed by PNCC in August 1998, February 1999, August 1999
and October 2000.
On March 28, 2006, the Labor Arbiter rendered a Decision19 in favor of
petitioner. The fallo reads:
WHEREFORE, premises considered, the complainant had attained regular
employment thereby making his termination from employment illegal since
it was not for any valid or authorized causes. Consequently, Respondent is
ordered to pay complainant his full backwages less six (6) months
computed as follows:
Backwages:
Feb. 18, 2000 – March 28, 2006 = 73.33 mos.
₱6,277.00 x 73.33 = ₱460,292.41
Less:
₱6,277.00 X 6 mos. = 37,662.00
₱422,630.41
The reinstatement could not as well be ordered due to the strained
relations between the parties, that in lieu thereof, separation pay is ordered
paid to complainant in the amount of ₱37,662.00 [₱6,277.00 x 6].
SO ORDERED.20
The Labor Arbiter ruled that petitioner attained regular employment status
with the repeated hiring and rehiring of his services more so when the
services he was made to render were usual and necessary to PNCC’s
business. The Labor Arbiter likewise found that from the time petitioner
was hired in 1996 until he was terminated, he was hired and rehired by
PNCC and made to work not only in the project he had signed to work on
but on other projects as well, indicating that he is in fact a regular
employee. He also noted petitioner’s subsequent contracts did not
anymore indicate the date of completion of the contract and the fact that
his first contract was extended way beyond the supposed completion date.
According to the Labor Arbiter, these circumstances indicate that the
employment is no longer a project employment but has graduated into a
regular one. Having attained regular status, the Labor Arbiter ruled that
petitioner should have been accorded his right to security of tenure.
Both PNCC and petitioner appealed the Labor Arbiter’s decision. PNCC
insisted that petitioner was just a project employee and his termination was
brought about by the completion of the contract and therefore he was not
illegally dismissed. Petitioner, on the other hand, argued that his
reinstatement should have been ordered by the Labor Arbiter since there
was no proof that there were strained relations between the parties. He
also questioned the deduction of six months pay from the back wages
awarded to him and the failure of the Labor Arbiter to award him damages
and attorney’s fees. Petitioner likewise moved to dismiss PNCC’s appeal
contending that the supersedeas bond in the amount of ₱422,630.41 filed
by the latter was insufficient considering that the Labor Arbiter’s monetary
award is ₱460,292.41. He also argued that the person who verified the
appeal, Felix M. Erece, Jr., Personnel Services Department Head of PNCC,
has no authority to file the same for and in behalf of PNCC.
On October 31, 2008, the NLRC rendered its Decision granting PNCC’s
appeal but dismissing that of petitioner. The dispositive portion reads:
WHEREFORE, premises considered, the appeal of respondent is GRANTED
and the Decision dated 28 March 2006 is REVERSED and SET ASIDE.
A new Decision is hereby issued ordering respondent Philippine National
Construction Corporation to pay completion bonus to complainant Roy
Domingo Pasos in the amount of ₱25,000.
Complainant’s appeal is DISMISSED for lack of merit.
SO ORDERED.21
As to the procedural issues raised by petitioner, the NLRC ruled that there
was substantial compliance with the requirement of an appeal bond and
that Mr. Erece, Jr., as head of the Personnel Services Department, is the
proper person to represent PNCC. As to the substantive issues, the NLRC
found that petitioner was employed in connection with certain construction
projects and his employment was co-terminus with each project as
evidenced by the Personnel Action Forms and the Termination Report
submitted to the DOLE. It likewise noted the presence of the following
project employment indicators in the instant case, namely, the duration of
the project for which petitioner was engaged was determinable and
expected completion was known to petitioner; the specific service that
petitioner rendered in the projects was that of an accounting clerk and that
was made clear to him and the service was connected with the projects;
and PNCC submitted termination reports to the DOLE and petitioner’s name
was included in the list of affected employees.
Petitioner elevated the case to the CA via a petition for certiorari but the
appellate court dismissed the same for lack of merit.
Hence this petition. Petitioner argues that the CA erred when it:
I.
SUSTAINED THAT THE AMOUNT OF THE BOND POSTED BY
THE RESPONDENTS FOR PURPOSES OF APPEAL WAS SUFFICIENT
NOTWITHSTANDING THAT THE SAME IS LESS THAN THE ADJUDGED
AMOUNT.
II.
SUSTAINED THAT FELIX M. ERECE, JR., HEAD OF RESPONDENT PNCC’S
PERSONNEL SERVICE
DEPARTMENT, IS DULY AUTHORIZED TO REPRESENT RESPONDENT IN THIS
CASE NOTWITHSTANDING THE ABSENCE OF ANY BOARD RESOLUTION OR
SECRETARY’S CERTIFICATE OF THE RESPONDENT STATING THAT INDEED HE
WAS DULY AUTHORIZED TO INSTITUTE THESE PROCEEDINGS.
III.
SUSTAINED THAT PETITIONER WAS A PROJECT EMPLOYEE
DESPITE THE FACT THAT RESPONDENT PNCC HAD NOT
SUBMITTED THE REQUISITE TERMINATION REPORTS IN ALL OF THE
ALLEGED PROJECTS WHERE THE PETITIONER WAS ASSIGNED.
IV.
SUSTAINED THAT THE PETITIONER IS A PROJECT
EMPLOYEE DESPITE THE CIRCUMSTANCE THAT THE
ACTUAL WORK UNDERTAKEN BY THE PETITIONER WAS NOT LIMITED TO THE
WORK DESCRIBED IN HIS ALLEGED APPOINTMENT AS A PROJECT
EMPLOYEE.
V.
FAILED TO FIND THAT AT SOME TIME, THE EMPLOYMENT
OF THE PETITIONER WAS UNREASONABLY EXTENDED
BEYOND THE DATE OF ITS COMPLETION AND AT OTHER
TIMES THE SAME DID NOT BEAR A DATE OF COMPLETION
OR THAT THE SAME WAS READILY DETERMINABLE AT THE TIME OF
PETITIONER’S ENGAGEMENT THEREBY INDICATING THAT HE WAS NOT
HIRED AS A PROJECT EMPLOYEE.
VI.
FAILED TO ORDER THE REINSTATEMENT OF THE
PETITIONER BY FINDING THAT THERE WAS STRAINED
RELATIONS BETWEEN THE PARTIES NOTWITHSTANDING
THAT THE RESPONDENT NEVER EVEN ALLEGED NOR PROVED IN ITS
PLEADINGS THE CIRCUMSTANCE OF STRAINED RELATIONS.
VII.
SUSTAINED THE FAILURE OF THE NATIONAL LABOR
RELATIONS COMMISSION TO RECTIFY THE ERROR
COMMITTED BY LABOR ARBITER LIBO-ON IN DEDUCTING
THE EQUIVALENT OF SIX MONTHS PAY OF BACKWAGES
DESPITE THE MANDATE OF THE LABOR CODE THAT WHEN
THERE IS A FINDING OF ILLEGAL DISMISSAL, THE PAYMENT OF FULL
BACKWAGES FROM DATE OF DIMISSAL UP TO ACTUAL REINSTATEMENT
SHOULD BE AWARDED.
VIII.
SUSTAINED THE FAILURE OF THE NATIONAL LABOR
RELATIONS COMMISSION TO RECTIFY THE ERROR
COMMITTED BY LABOR ARBITER LIBO-ON IN FAILING TO AWARD DAMAGES
AND ATTORNEY’S FEES TO THE
PETITIONER.22
Petitioner contends that PNCC’s appeal from the Labor Arbiter’s decision
should not have been allowed since the appeal bond filed was insufficient.
He likewise argues that the appellate court erred in heavily relying in the
case of Cagayan Valley Drug Corporation v. Commissioner of Internal
Revenue23 which enumerated the officials and employees who can sign
the verification and certification without need of a board resolution. He
contends that in said case, there was substantial compliance with the
requirement since a board resolution was submitted albeit belatedly unlike
in the instant case where no board resolution was ever submitted even
belatedly.
As to the substantive issue, petitioner submits that the CA erroneously
concluded that he was a project employee when there are indicators which
point otherwise. He contends that even if he was just hired for the NAIA 2
Project from April 26, 1996 to July 25, 1996, he was made to work until
August 4, 1998. He also avers the DOLE had certified that he was not
among the employees listed in the termination reports submitted by PNCC
which belies the photocopies of termination reports attached by PNCC to its
pleadings listing petitioner as one of the affected employees. Petitioner
points out that said termination reports attached to PNCC’s pleadings are
mere photocopies and were not even certified by the DOLE-NCR as true
copies of the originals on file with said office. Further, he argues that in
violation of the requirement of Department Order No. 19 that the duration
of the project employment is reasonably determinable, his contracts for the
SM projects did not specify the date of completion of the project nor was
the completion determinable at the time that petitioner was hired.
PNCC counters that documentary evidence would show that petitioner was
clearly a project employee and remained as such until his last engagement.
It argues that the repeated rehiring of petitioner as accounting clerk in
different projects did not make him a regular employee. It also insists that
it complied with the reportorial requirements and that it filed and reported
the termination of petitioner upon every completion of project to which he
was employed.
In sum, three main issues are presented before this Court for resolution: (1)
Should an appeal be dismissed outright if the appeal bond filed is less than
the adjudged amount? (2) Can the head of the personnel department sign
the verification and certification on behalf of the corporation sans any
board resolution or secretary’s certificate authorizing such officer to do the
same? and (3) Is petitioner a regular employee and not a mere project
employee and thus can only be dismissed for cause?
Substantial compliance with appeal bond requirement
The perfection of an appeal within the reglementary period and in the
manner prescribed by law is jurisdictional, and noncompliance with such
legal requirement is fatal and effectively renders the judgment final and
executory. As provided in Article 223 of the Labor Code, as amended, in
case of a judgment involving a
monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to
the monetary award in the judgment appealed from.
However, not only in one case has this Court relaxed this requirement in
order to bring about the immediate and appropriate resolution of cases on
the merits.24 In Quiambao v. National Labor Relations Commission,25 this
Court allowed the relaxation of the requirement when there is substantial
compliance with the rule. Likewise, in Ong v. Court of Appeals,26 the Court
held that the bond requirement on appeals may be relaxed when there is
substantial compliance with the Rules of Procedure of the NLRC or when the
appellant shows willingness to post a partial bond. The Court held that
"while the bond requirement on appeals involving monetary awards has
been relaxed in certain cases, this can only be done where there was
substantial compliance of the Rules or where the appellants, at the very
least, exhibited willingness to pay by posting a partial bond."
In the instant case, the Labor Arbiter in his decision ordered PNCC to pay
petitioner back wages amounting to ₱422,630.41 and separation pay of
₱37,662 or a total of ₱460,292.41. When PNCC filed an appeal bond
amounting to ₱422,630.41 or at least 90% of the adjudged amount, there
is no question that this is substantial compliance with the requirement that
allows relaxation of the rules.
Validity of the verification and certification signed by a corporate officer on
behalf of the corporation without the requisite board resolution or
secretary’s certificate
It has been the constant holding of this Court in cases instituted by
corporations that an individual corporate officer cannot exercise any
corporate power pertaining to the corporation without authority from the
board of directors pursuant to Section 23, in relation to Section 25 of the
Corporation Code which clearly enunciates that all corporate powers are
exercised, all business conducted, and all properties controlled by the
board of directors. However, we have in many cases recognized the
authority of some corporate officers to sign the verification and certification
against forum-shopping. Some of these cases were enumerated in Cagayan
Valley Drug Corporation v. Commissioner of Internal Revenue27 which was
cited by the appellate court:
In Mactan-Cebu International Airport Authority v. CA, we recognized the
authority of a general manager or acting general manager to sign the
verification and certificate against forum shopping; in Pfizer v. Galan, we
upheld the validity of a verification signed by an "employment specialist"
who had not even presented any proof of her authority to represent the
company; in Novelty Philippines, Inc. v. CA, we ruled that a personnel
officer who signed the petition but did not attach the authority from the
company is authorized to sign the verification and non-forum shopping
certificate; and in Lepanto Consolidated Mining Company v. WMC
Resources International Pty. Ltd.
(Lepanto), we ruled that the Chairperson of the Board and President of the
Company can sign the verification and certificate against non-forum
shopping even without the submission of the board’s authorization.
In sum, we have held that the following officials or employees of the
company can sign the verification and certification without need of a board
resolution: (1) the Chairperson of the Board of Directors, (2) the President
of a corporation, (3) the General Manager or Acting General Manager, (4)
Personnel Officer, and (5) an Employment Specialist in a labor case.
While the above cases do not provide a complete listing of authorized
signatories to the verification and certification required by the rules, the
determination of the sufficiency of the authority was done on a case to
case basis. The rationale applied in the foregoing cases is to justify the
authority of corporate officers or representatives of the corporation to sign
the verification or certificate against forum shopping, being "in a position to
verify the truthfulness and correctness of the allegations in the petition."28
(Citations omitted.)
While we agree with petitioner that in Cagayan Valley, the requisite board
resolution was submitted though belatedly unlike in the instant case, this
Court still recognizes the authority of Mr. Erece, Jr. to sign the verification
and certification on behalf of PNCC sans a board resolution or secretary’s
certificate as we have allowed in Pfizer, Inc. v. Galan,29 one of the cases
cited in Cagayan Valley. In Pfizer, the Court ruled as valid the verification
signed by an employment specialist as she was in a position to verify the
truthfulness and correctness of the allegations in the petition30 despite the
fact that no board resolution authorizing her was ever submitted by Pfizer,
Inc. even belatedly. We believe that like the employment specialist in Pfizer,
Mr. Erece, Jr. too, as head of the Personnel Services Department of PNCC,
was in a position to assure that the allegations in the pleading have been
prepared in good faith and are true and correct.
Even assuming that the verification in the appeal filed by PNCC is
defective, it is well settled that rules of procedure in labor cases maybe
relaxed. As provided in Article 221 of the Labor Code, as amended, "rules of
evidence prevailing in courts of law or equity shall not be controlling and it
is the spirit and intention of this
Code that the Commission and its members and the Labor Arbiters shall
use every and all reasonable means to ascertain the facts in each case
speedily and objectively and without regard to technicalities of law or
procedure, all in the interest of due process." Moreover, the requirement of
verification is merely formal and not jurisdictional. As held in Pacquing v.
Coca-Cola Philippines, Inc.31:
As to the defective verification in the appeal memorandum before the
NLRC, the same liberality applies. After all, the requirement regarding
verification of a pleading is formal, not jurisdictional. Such requirement is
simply a condition affecting the form of pleading, the noncompliance of
which does not necessarily render the pleading fatally defective.
Verification is simply intended to secure an assurance that the allegations
in the pleading are true and correct and not the product of the imagination
or a matter of speculation, and that the pleading is filed in good faith. The
court or tribunal may order the correction of the pleading if verification is
lacking or act on the pleading although it is not verified, if the attending
circumstances are such that strict compliance with the rules may be
dispensed with in order that the ends of justice may thereby be served.32
Duration of project employment should be determined at the time of hiring
In the instant case, the appointments issued to petitioner indicated that he
was hired for specific projects. This Court is convinced however that
although he started as a project employee, he eventually became a regular
employee of PNCC.
Under Article 280 of the Labor Code, as amended, 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
services to be performed is seasonal in nature and the employment is for
the duration of the season." Thus, the principal test used to determine
whether employees are project employees is whether or not the employees
were assigned to carry out a specific project or undertaking, the duration or
scope of which was specified at the time the employees were engaged for
that project.33
In the case at bar, petitioner worked continuously for more than two years
after the supposed three-month duration of his project employment for the
NAIA II Project. While his appointment for said project allowed such
extension since it specifically provided that in case his "services are still
needed beyond the validity of the contract, the Company shall extend his
services," there was no subsequent contract or appointment that specified
a particular duration for the extension. His services were just extended
indefinitely until "Personnel Action Form – Project Employment" dated July
7, 1998 was issued to him which provided that his employment will end a
few weeks later or on August 4, 1998.
While for first three months, petitioner can be considered a project
employee of PNCC, his employment thereafter, when his services were
extended without any specification of as to the duration, made him a
regular employee of PNCC. And his status as a regular employee was not
affected by the fact that he was assigned to several other projects and
there were intervals in between said projects since he enjoys security of
tenure.
Failure of an employer to file termination reports after every project
completion proves that an employee is not a project employee
As a rule, the findings of fact of the CA are final and conclusive and this
Court will not review them on appeal.34 The rule, however, is subject to the
following exceptions:
The jurisdiction of the Court in cases brought before it from the appellate
court is limited to reviewing errors of law, and findings of fact of the Court
of Appeals are conclusive upon the Court since it is not the Court’s function
to analyze and weigh the evidence all over again. Nevertheless, in several
cases, the Court enumerated the exceptions to the rule that factual
findings of the Court of Appeals are binding on the Court: (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 grave abuse of discretion; (4) when the judgment is based on
a misapprehension of facts; (5) when the findings of fact are conflicting; (6)
when in making its findings the Court of Appeals went beyond the issues of
the case, or its findings are contrary to the admissions of both the
appellant and the appellee; (7) when the findings are contrary to that of the
trial court; (8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the
petition as well as in the petitioner’s main and reply briefs are not disputed
by the respondent; (10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on record;
or (11) when the Court of Appeals manifestly overlooked certain relevant
facts not disputed by the parties, which, if properly considered, would
justify a different conclusion.35
In this case, records clearly show that PNCC did not report the termination
of petitioner’s supposed project employment for the NAIA II Project to the
DOLE. Department Order No. 19, or the
"Guidelines Governing the Employment of Workers in the Construction
Industry," requires employers to submit a report of an employee’s
termination to the nearest public employment office every time an
employee’s employment is terminated due to a completion of a project.
PNCC submitted as evidence of its compliance with the requirement
supposed photocopies of its termination reports, each listing petitioner as
among the employees affected. Unfortunately, none of the reports
submitted pertain to the NAIA II Project. Moreover, DOLE NCR verified that
petitioner is not included in the list of affected workers based on the
termination reports filed by PNCC on August 11, 17, 20 and 24, 1998 for
petitioner’s supposed dismissal from the NAIA II Project effective August 4,
1998. This certification from DOLE was not refuted by PNCC. In Tomas Lao
Construction v. NLRC,36 we emphasized the indispensability of the
reportorial requirement:
Moreover, if private respondents were indeed employed as "project
employees," petitioners should have submitted a report of termination to
the nearest public employment office every time their employment was
terminated due to completion of each construction project. The records
show that they did not. Policy Instruction No. 20 is explicit that employers
of project employees are exempted from the clearance requirement but not
from the submission of termination report. We have consistently held that
failure of the employer to file termination reports after every project
completion proves that the employees are not project employees. Nowhere
in the New Labor Code is it provided that the reportorial requirement is
dispensed with. The fact is that Department Order No. 19 superseding
Policy Instruction No. 20 expressly provides that the report of termination is
one of the indicators of project employment.37
A regular employee dismissed for a cause other than the just or authorized
causes provided by law is illegally dismissed
Petitioner’s regular employment was terminated by PNCC due to contract
expiration or project completion, which are both not among the just or
authorized causes provided in the Labor Code, as amended, for dismissing
a regular employee. Thus, petitioner was illegally dismissed.
Article 279 of the Labor Code, as amended, provides that an illegally
dismissed employee is entitled to reinstatement, full back wages, inclusive
of allowances, and to his other benefits or their monetary equivalent from
the time his compensation was withheld from him up to the time of his
actual reinstatement.
We agree with petitioner that there was no basis for the Labor Arbiter’s Appeals in CAG.R. SP No. 107805 are hereby REVERSED. The decision of
finding of strained relations and order of separation pay in lieu of the Labor Arbiter is hereby REINSTATED with the following MODIFICATIONS:
reinstatement. This was neither alleged nor proved. Moreover, it has long
been settled that the doctrine of strained relations should be strictly 1) respondent PNCC is DIRECTED to pay petitioner Roy D. Pasos full
applied so as not to deprive an illegally dismissed employee of his right to back wages from the time of his illegal dismissal on October 19, 2000 up to
reinstatement. As held in Globe-Mackay Cable and Radio Corporation v. the finality of this Decision, with interest at 6% per annum, and 12%
NLRC:38 legal interest thereafter until fully paid;
Obviously, the principle of "strained relations" cannot be applied 2) respondent PNCC is ORDERED to reinstate petitioner Pasos to his
indiscriminately. Otherwise, reinstatement can never be possible simply former position or to a substantially equivalent one, without loss of
because some hostility is invariably engendered between the parties as a seniority rights and other benefits attendant to the position; and
result of litigation. That is human nature. 3) respondent PNCC is DIRECTED to pay petitioner Pasos
Besides, no strained relations should arise from a valid and legal act of attorney's fees equivalent to 10% of his total monetary award.
asserting one’s right; otherwise an employee who shall assert his right No pronouncement as to costs.
could be easily separated from the service, by merely paying his separation SO ORDERED.
pay on the pretext that his relationship with his employer had already
become strained.39
As to the back wages due petitioner, there is likewise no basis in deducting
therefrom back wages equivalent to six months "representing the
maximum period of confinement PNCC can require him to undergo medical
treatment." Besides, petitioner was not dismissed on the ground of disease
but expiration of term of project employment.
Regarding moral and exemplary damages, this Court rules that
petitioner is not entitled to them.1âwphi1 Worth reiterating is the rule that
moral damages are recoverable where the dismissal of the employee was
attended by bad faith or fraud or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good customs, or public policy.
Likewise, exemplary damages may be awarded if the dismissal was
effected in a wanton, oppressive or malevolent manner.40 Apart from his
allegations, petitioner did not present any evidence to prove that his
dismissal was attended with bad faith or was done oppressively.
Petitioner is also entitled to attorney's fees m the amount of ten percent RAYCOR AIRCONTROL G.R. NO. 158132
(10%) of his total monetary award, having been forced to litigate in order to SYSTEMS, INC.,
seek redress of his grievances, as provided in Article 111 of the Labor Petitioner, Present:
Code, as amended, and following this
Court's pronouncement in Exodus International Construction Corporation v.
YNARES-SANTIAGO, J.,
Biscocho.41
Chairperson,
In line with current jurisprudence, the award of back wages shall earn legal
- versus - AUSTRIA-MARTINEZ, CHICO-
interest at the rate of six percent ( 6%) per annum from the date of
NAZARIO, and NACHURA, JJ.
petitioner's dismissal until the finality of this decision.42 Thereafter, it shall
earn 12% legal interest until fully paid43 in accordance with the guidelines
in Eastern Shipping Lines, Inc. v. Court of Appeals.44 MARIO SAN PEDRO and
WHEREFORE, the petition is GRANTED. The assailed March 26, NATIONAL LABOR RELATIONS COMMISSION,
2010 Decision and May 26, 2010 Resolution of the Court of Promulgated: Respondents. July 4, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
AUSTRIA-MARTINEZ, J.:
Assailed in the Petition for Review[1] before this Court are the
August 24, 2001 Decision [2] and April 30, 2003 Resolution [3] of the Court of
Appeals (CA) in CA-G.R. SP No.
63403.[4]
The facts are as stated by the CA.
Raycor Aircontrol Systems, Inc. (petitioner) hired Mario San Pedro
(respondent) as tinsmith operator subject to the condition that his
employment shall commence on August 24, 1995 and shall be effective
only for the duration of the contract at Uniwide Las Pias after completion of
which on November 18, 1995, it automatically terminates without necessity
of further notice.[5] As the Uniwide Las Pias project (first project) lasted for
one year, petitioner extended respondent's contract beyond November 18,
1995. When this first project was finally completed, petitioner again
extended respondent's employment by assigning him to its Olivarez Plaza,
Bian, Laguna project (second project) until December 1996. Subsequently,
petitioner rehired respondent as ducting man and assigned him to its
Cabuyao, Laguna project (third project) until April 1997. Thereafter,
petitioner transferred respondent to its Llanas, Alabang project (fourth
project) and later, to its Uniwide Coastal project in Baclaran, Paranaque
(fifth project).[6] Petitioner did not anymore issue new contracts to
respondent each time his employment was extended.
In a Memorandum[7] dated October 30, 1997, petitioner declared
that the contract of employment of respondent was set to expire on
November 1, 1997, thesame to take effect on November 3, 1997. Thus,
when respondent reported for work on November 3, 1997, he was informed
by the company timekeeper that he had been terminated.
Respondent filed a Complaint[8] for illegal dismissal with damages.
The Labor Arbiter (LA) rendered a Decision dated July 15,
1999 in favor of respondent, thus:
WHEREFORE, premises considered, this Office finds and so
rule that the complainant was illegally dismissed by the
respondent without just cuase and without due process of
law on November 3, 1997. As such he is entitled to
reinstatement without loss of seniority rights and other
benefits; and payment of full backwages from the time of
his dismissal up to the time of his actual reinstatement
which up to this date is in the amount of P105,534.00
(P198.00/day x 26 days x 20.5 mos.).
Other claims are dismissed for lack of merit. SO
ORDERED.[9]
On appeal by petitioner, the National Labor Relations Commission
(NLRC) issued a Resolution[10] dated September 18, 2000, affirming the July
15, 1999 LA Decision, and a
Resolution[11] dated December 15, 2000, denying petitioner's Motion for
Reconsideration.
Petitioner filed a Petition for Certiorari which the CA denied in the
August 24, 2001 Decision impugned herein. Its Motion for Reconsideration
was also denied by the CA in a Resolution dated April 30, 2003.
Hence, the present recourse of petitioner on the sole issue:
Whether or not the Court of Appeals committed grave error in
ruling that private respondent was illegally
dismissed.[12]
The Court denies the petition for lack of merit.
The CA, as well as the NLRC and LA, considered respondent a regular
employee of petitioner because of the existence of a reasonable connection
between the former's regular activity in relation to the latter's business.
They based this finding on the uncontroverted fact that petitioner
repeatedly rehired respondent in five successive projects for 23 continuous
months - nine months in the first project, four months in the second, four
months in the third, four months in the fourth, and two months in the fifth -
which repeated rehiring is indicative of the desirability and indispensability
of the activity performed by respondent to the usual business or trade of
petitioner. They held that, being a regular employee entitled to security of
tenure, respondent's dismissal was illegal for lack of a just or authorized
cause and due process. [13]
Petitioner denies that it dismissed respondent, insisting that the latters
services were terminated for he was a mere project employee whose
employment contract expired when the fifth project to which he was
assigned was scrapped due to non-payment by the project owner, Uniwide
Holdings, Inc. (Uniwide).[14] It argues that the rehiring of respondent for 23
months did not make him a regular employee, given the following nature of
its business:
Petitioner is engaged in the installation of air conditioning
units in high and low rise building[s]. Petitioner gets
business from architects/engineers who invite petitioner to
participate in a public bidding on a certain project. If the
project is awarded to it, that will only be the time when it
mobilizes and engages the services of workers to install the
air conditioning units in the building. Petititioner is not a
manufacturing or trading company. Workers are hired
according to their skills. It is for this reason that private
respondent was hired as tinsmith operator. [15]
The concurrent findings of the CA and the labor tribunals on the existence
of an employer-employee relationship between the parties in the present
case are factual in nature and are accorded due deference [16] for being well-
founded.
The issue of regularization of employees had already beset petitioner, as
early as the year 1996, in Raycor Aircontrol Systems, Inc. v. National Labor
Relations Commission.[17] In said case, the Court resolved the issue whether
several individuals it hired and rehired to work as tinsmith, leadman,
aircon mechanic, installer, welder, and painter in its various projects
became regular employees after rendering service for more than one year,
with some of them serving for two to six years.The Court recognized that
petitioner was engaged in a peculiar business which constrained it not to
maintain a regular work force. The Court observed:
It is not so much that this Court cannot appreciate
petitioner's contentions about the nature of its business
and its inability to maintain a large workforce on its
permanent payroll.Private respondents have admitted
that petitioner is engaged only in the installation
(not manufacture) of aircon systems or units in
buildings, and since such a line of business would
obviously be highly (if not wholly) dependent on the
availability of buildings or projects requiring such
installation services, which factor no businessman,
no matter how savvy, can accurately forecast from
year to year, it can be easily surmised that
petitioner, aware that its revenues and income
would be unpredictable, would always try to keep its
overhead costs to a minimum, and would naturally
want to engage workers on a per-project or per-
building basis only, retaining very few employees (if
any) on its permanent payroll. It would also have
been more than glad if its employees found other
employment elsewhere, in between projects. To our
mind, it appears rather unlikely that petitioner
would keep private respondents -- all fifteen of them
-- continuously on its permanent payroll for, say, ten
or twelve years, knowing fully well that there would
be periods (of uncertain duration) when no project
can be had. To illustrate, let us assume that private
respondents (who were each making about P118.00 to
P119.50 per day in 1991) were paid only P100.00 per day. If
the fifteen were, as they claimed, regular employees
entitled to their wages regardless of whether or not they
were assigned to work on any project, the overhead for
their salaries alone -- computed at P100.00/day for 30 days
in a month -- would come to no less than P45,000.00 a
month, or P540,000.00 a year, not counting 13th month
pay, Christmas bonus, SSS/Medicare premium payments,
sick leaves and service incentives leaves, and so forth.
Even if petitioner may have been able to afford such
overhead costs, it certainly does not make business sense
for it or anyone else to do so, and is in every sense contrary
to human nature, not to mention common business
practice. On this score alone, we believe that petitioner
could have made out a strong case. x x x (Emphasis ours)
[18]
Nonetheless, the Court ruled against petitioner because the latter failed to
adduce clear and convincing evidence that the projects to which its workers
were assigned were of limited scope and duration and that, at the time of
hiring, said workers knowingly accepted the restrictions on their
employment, thus:
For that matter, it seems self-evident to this Court that, even if
the contracts presented by petitioner had been signed by the
employees concerned, still, they would not constitute
conclusive proof of petitioner's claim. After all, in the usual
scheme of things, contract terms are normally dictated by the
employer and simply acceded to and accepted by the
 employee, who may be desperate for work and therefore in no
position to bargain freely or negotiate terms to his liking.
In any event, petitioner in this case undoubtedly could have
presented additional evidence to buttress its claim. For
instance, petitioner could have presented copies of
its contracts with its clients, to show the time,
duration and scope of past installation projects. The
data from these contracts could then have been
correlated to the data which could be found in
petitioner's payroll records for, let us say, the past
three years or so, to show that private respondents
had been working intermittently as and when they
were assigned to said projects, and that their
compensation had been computed on the basis of
such work. But petitioner did not produce such
additional evidence, and we find that it failed to
discharge its burden of proof.[19] (Emphasis ours)
The same fate befalls petitioner once again.
Other than the 1995 employment contract it issued to respondent, which
contract we have held to be insufficient evidence of project employment, [20]
petitionerutterly failed to adduce additional evidence which would have
convinced us that: 1) each time it hired and rehired respondent, it intended
for him to accomplish specific tasks in the particular project to which he
was assigned; 2) it intended for respondent to carry out these specific tasks
in accordance with the project plan it had drawn out and within the limited
time it had to complete the same; and 3) it made such restrictions on each
engagement known to respondent, and the same were freely accepted by
him. Petitioner's failure to present such evidence is inexcusable, given its
access to such documents as project contracts, payment remittances,
employment records and payslips.[21] Such lapse is dismaying, considering
that in Raycor v. National Labor Relations Commission, the Court had
signalled to petitioner that, given the peculiar nature of its business, it had
a strong case against the regularization of some of its workers. The Court
even enumerated the kind of evidence petitioner should present to
establish the project employment of its workers.
Evidently, petitioner did not heed the Courts observations in Raycor v.
National Labor Relations Commission, leaving us no option but to declare
that it failed, yet again, to discharge its burden of proving that respondent
was a project employee.
Consequently, the Court affirms the finding of the CA and the labor
tribunals that respondent became a regular employee after 23 months of
rehiring.
The next question then is whether respondent was validly dismissed on
November 3, 1997.
Petitioner claims that respondent was laid off due to adverse business
conditions it suffered at that time, attributing these to the Asian currency
crisis, in general, and to the rehabilitation of Uniwide, in particular. [22]
The CA rejected such pretext and held:
In the instant case, Raycor merely alleged that its business
was affected by the Asian currency. It could not also rely on
the financial reverses suffered by its client,
UniwideHoldings, Inc. without adducing sufficient and
convincing proof that by reason of such economic reverses,
it suffered imminent substantial losses and retrenchment
was the most reasonable and effective recourse to prevent
the expected losses. In short, Raycor could not establish
exculpation from liability in the illegal dismissal of San
Pedro by
invoking another company's economic reverses.[23]
The CA is correct.
To justify termination of employment under Article 283 [24] of the Labor
Code, the employer must prove compliance with the following
requirements: (a) a written notice must be served on the employees, and
the Department of Labor and Employment (DOLE) at least one month
before the intended cessation of business;[25] and (b) the cessation of
business must be bona fide in character.[26]
It is readily apparent that petitioner did not comply with any of the
foregoing requirements. There is no evidence that it complied with the one-
month notice requirement. While petitioner claims that it issued to
respondent an October 30, 1997 Memorandum of termination of
employment, it failed to prove that such document was ever served upon
respondent and the DOLE. Moreover, the notice is less than one month, for
the memorandum states that respondents contract of employment is to
expire on November 3, 1997, or only three days later from the date of the
Memorandum.
Worse, there is no evidence at all that petitioner dismissed respondent
because it actually ceased or suspended business operations, or it resorted
to the dismissal of respondent and other employees to stave off cessation
or suspension of its business. The best evidence of reversal of fortune is
audited financial and income statements which detail the extent and
pattern of business losses suffered by the employer. [27] Petitioner did not
present any such document where it could have demonstrated how the
1997 Asian financial currency crisis or the rehabilitation of Uniwide
adversely and significantly affected the viability of its business.
Again, for failure of petitioner to discharge its burden of proving business
reverses as a ground for the lay-off of respondent, we uphold the CA in
ruling that the latter's dismissal was illegal.
WHEREFORE, the petition is DENIED.
Costs against petitioner.
SO ORDERED.
MACARTHUR MALICDEM and HERMENIGILDO
FLORES, Petitioners, vs.
MARULAS INDUSTRIAL CORPORATION and MIKE MANCILLA,
Respondents.
DECISION
MENDOZA, J.:
This petition for review on certiorari1 under Rule 45 of the Rules of
Court filed by Macarthur Malicdem (Malicdem) and Hermenigildo
Flores (Flores) assails the July 18, 2012 Decision2 and the
November 12, 2012 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP
No. 1244 70, dismissing their petition for certiorari under Rule 65 in an
action for illegal dismissal.
The Facts:
A complaint4 for illegal dismissal, separation pay, money claims, moral and
exemplary damages, and attorney's fees was filed by petitioners Malicdem
and Flores against respondents Marulas Industrial Corporation (Marulas)
and Mike Mancilla (Mancilla), who were engaged in the business of
manufacturing sacks intended for local and export markets.
Malicdem and Flores were first hired by Marulas as extruder operators in
2006, as shown by their employment contracts. They were responsible for
the bagging of filament yarn, the quality of pp yarn package and the
cleanliness of the work place area. Their employment contracts were for a
period of one (1) year. Every year thereafter, they would sign a
Resignation/Quitclaim in favor of Marulas a day after their contracts ended,
and then sign another contract for one (1) year. Until one day, on
December 16, 2010, Flores was told not to report for work anymore after
being asked to sign a paper by Marulas' HR Head to the effect that he
acknowledged the completion of his contractual status. On February 1,
2011, Malicdem was also terminated after signing a similar document.
Thus, both claimed to have been illegally dismissed.
Marulas countered that their contracts showed that they were fixed-term
employees for a specific undertaking which was to work on a particular
order of a customer for a specific period. Their severance from employment
was due to the expiration of their contracts.
On February 7, 2011, Malicdem and Flores lodged a complaint against
Marulas and Mancilla for illegal dismissal.
On July 13, 2011, the Labor Arbiter (LA) rendered a decision 5 in favor of the
respondents, finding no illegal dismissal. He ruled that Malicdem and Flores
were not terminated and that their employment naturally ceased when
their contracts expired. The LA, however, ordered Marulas to pay Malicdem
and Flores their respective wage differentials, to wit:
WHEREFORE, the complaints for illegal dismissal are dismissed for lack of
merit. Respondent Marulas Industrial Corporation is, however, ordered to
pay complainants wage differential in the following amounts:
1. Macarthur Malicdem ₱20,111.26
2/2/07 – 6/13/08 = None 6/14/08 – 8/27/08 = 2.47 mos.
₱377 – 362 = ₱15
x 26 days x 2.47 mos. = 963.30
8/28/08 – 6/30/10 = 22.06 mos.
₱382 – ₱362 = ₱20
 x 26 days x 22.06 mos. = 11,471.20 7/1/10 – 2/2/11 = 7.03
mos.
₱404 – ₱362 = ₱42
x 26 days x 7.03 mos. = 7,676.76
20,111.26
; and
2. Herminigildo Flores ₱18,440.50
2/2/08 – 6/13/08 = 4.36 mos. None
6/14/08 – 8/27/08 = 963.30
8/28/08 – 6/30/10 = 11,471.20
7/1/10 – 12/16/10 = 5.50 mos.
₱404 x ₱362 = ₱42
x 26 days x 5.50 mos. = 6,006.00
18,440.50
All other claims are dismissed for lack of merit.
SO ORDERED.6
Malicdem and Flores appealed to the NLRC which partially granted their
appeal with the award of payment of 13th month pay, service incentive
leave and holiday pay for three (3) years. The dispositive portion of its
December 19, 2011 Decision7 reads:
WHEREFORE, the appeal is GRANTED IN PART. The Decision of Labor Arbiter
Raymund M. Celino, dated July 13, 2011, is MODIFIED. In addition to the
award of salary differentials, complainants should also be awarded 13th
month pay, service incentive leave and holiday pay for three years.
SO ORDERED.8
Still, petitioners filed a motion for reconsideration, but it was denied by the
NLRC on February 29, 2011.
Aggrieved, Malicdem and Flores filed a petition for certiorari under Rule 65
with the CA.
On July 18, 2012, the CA denied the petition, 9 finding no grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the
NLRC. It ruled that the issue of whether or not the petitioners were project
employees or regular employees was factual in nature and, thus, not within
the ambit of a petition for certiorari. Moreover, it accorded respect and due
consideration to the factual findings of the NLRC, affirming those of the LA,
as they were supported by substantial evidence.
On the substantive issue, the CA explained that "the repeated and
successive rehiring of project employees do not qualify them as regular
employees, as length of service is not the controlling determinant of the
employment tenure of a project employee, but whether the employment
has been fixed for a specific project or undertaking, its completion has
been determined at the time of the engagement of the employee."10
Corollarily, considering that there was no illegal dismissal, the CA ruled that
payment of backwages, separation pay, damages, and attorney's fees had
no factual and legal bases. Hence, they could not be awarded to the
petitioners.
Aggrieved, Malicdem and Flores filed a motion for reconsideration, but their
pleas were denied in the CA Resolution, dated November 12, 2012.
The Petition
Malicdem and Flores now come before this Court by way of a petition for
review on certiorari under Rule 45 of the Rules of Court praying for the
reversal of the CA decision anchored on the principal argument that the
appellate court erred in affirming the NLRC decision that there was no
illegal dismissal because the petitioners’ contracts of employment with the
respondents simply expired. They claim that their continuous rehiring
paved the way for their regularization and, for said reason, they could not
be terminated from their jobs without just cause.
In their Comment,11 the respondents averred that the petitioners failed to
show that the CA erred in affirming the NLRC decision. They posit that the
petitioners were contractual employees and their rehiring did not amount
to regularization. The CA cited William Uy Construction Corp. v. Trinidad, 12
where it was held that the repeated and successive rehiring of project
employees did not qualify them as regular employees, as length of service
was not the controlling determinant of the employment tenure of a project
employee, but whether the employment had been fixed for a specific
project or undertaking, its completion had been determined at the time of
the engagement of the employee. The respondents add that for said
reason, the petitioners were not entitled to full backwages, separation pay,
moral and exemplary damages, and attorney’s fees.
Now, the question is whether or not the CA erred in not finding any grave
abuse of discretion amounting to lack or excess of jurisdiction on the part
of the NLRC.
The Court’s Ruling:
The Court grants the petition.
The petitioners have convincingly shown that they should be considered
regular employees and, as such, entitled to full backwages and other
entitlements.
A reading of the 2008 employment contracts,13 denominated as "Project
Employment Agreement," reveals that there was a stipulated probationary
period of six (6) months from its commencement. It was provided therein
that in the event that they would be able to comply with the company’s
standards and criteria within such period, they shall be reclassified as
project employees with respect to the remaining period of the effectivity of
the contract. Specifically, paragraph 3(b) of the agreement reads:
The SECOND PARTY hereby acknowledges, agrees and understands that the
nature of his/her employment is probationary and on a project-basis. The
SECOND PARTY further acknowledges, agrees and understands that within
the effectivity of this Contract, his/her job performance will be evaluated in
accordance with the standards and criteria explained and disclosed to
him/her prior to signing of this Contract. In the event that the SECOND
PARTY is able to comply with the said standards and criteria within the
probationary period of six month/s from commencement of this Contract,
he/she shall be reclassified as a project employee of (o)f the FIRST PARTY
with respect to the remaining period of the effectivity of this Contract.
Under Article 281 of the Labor Code, however, "an employee who is
allowed to work after a probationary period shall be considered a regular
employee." When an employer renews a contract of employment after the
lapse of the six-month probationary period, the employee thereby becomes
a regular employee. No employer is allowed to determine indefinitely the
fitness of its employees.14 While length of time is not the controlling test for
project employment, it is vital in determining if the employee was hired for
a specific undertaking or tasked to perform functions vital, necessary and
indispensable to the usual business of trade of the employer. 15 Thus, in the
earlier case of Maraguinot, Jr. v. NLRC,16 it was ruled that a project or work
pool employee, who has been: (1) continuously, as opposed to
intermittently, rehired by the same employer for the same tasks or nature
of tasks; and (2) those tasks are vital, necessary and indispensable to the
usual business or trade of the employer, must be deemed a regular
employee. Thus:
x x x. Lest it be misunderstood, this ruling does not mean that simply
because an employee is a project or work pool employee even outside the
construction industry, he is deemed, ipso jure, a regular employee. All that
we hold today is that once a project or work pool employee has been: (1)
continuously, as opposed to intermittently, re-hired by the same employer
for the same tasks or nature of tasks; and (2) these tasks are vital,
necessary and indispensable to the usual business or trade of the
employer, then the employee must be deemed a regular employee,
pursuant to Article 280 of the Labor Code and jurisprudence. To rule
otherwise would allow circumvention of labor laws in industries not falling
within the ambit of Policy Instruction No. 20/Department Order No. 19,
hence allowing the prevention of acquisition of tenurial security by project
or work pool employees who have already gained the status of regular
employees by the
employer's conduct.1âwphi1
The test to determine whether employment is regular or not is the
reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. If the
employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of
the necessity, if not indispensability of that activity to the business. 17
Guided by the foregoing, the Court is of the considered view that there was
clearly a deliberate intent to prevent the regularization of the petitioners.
To begin with, there is no actual project. The only stipulations in the
contracts were the dates of their effectivity, the duties and responsibilities
of the petitioners as extruder operators, the rights and obligations of the
parties, and the petitioners’ compensation and allowances. As there was no
specific project or undertaking to speak of, the respondents cannot invoke
the exception in Article 280 of the Labor Code.18 This is a clear attempt to
frustrate the regularization of the petitioners and to circumvent the law.
Next, granting that they were project employees, the petitioners could only
be considered as regular employees as the two factors enumerated in
Maraguinot, Jr., are present in this case. It is undisputed that the petitioners
were continuously rehired by the same employer for the same position as
extruder operators. As such, they were responsible for the operation of
machines that produced the sacks. Hence, their work was vital, necessary
and indispensable to the usual business or trade of the employer.
In D.M. Consunji, Inc. v. Estelito Jamin19 and Liganza v. RBL Shipyard
Corporation,20 the Court reiterated the ruling that an employment ceases to
be coterminous with specific projects when the employee is continuously
rehired due to the demands of the employer’s business and re-engaged for
many more projects without interruption.
The respondents cannot use the alleged expiration of the employment
contracts of the petitioners as a shield of their illegal acts. The project
employment contracts that the petitioners were made to sign every year
since the start of their employment were only a stratagem to violate their
security of tenure in the company. As restated in Poseidon Fishing v.
NLRC,21 "if from the circumstances it is apparent that periods have been
imposed to preclude acquisition of tenurial security by the employee, they
should be disregarded for being contrary to public policy."
The respondents’ invocation of William Uy Construction Corp. v. Trinidad 22 is
misplaced because it is applicable only in cases involving the tenure of
project employees in the construction industry. It is widely known that in
the construction industry, a project employee's work depends on the
availability of projects, necessarily the duration of his employment. 23 It is
not permanent but coterminous with the work to which he is assigned. 24 It
would be extremely burdensome for the employer, who depends on the
availability of projects, to carry him as a permanent employee and pay him
wages even if there are no projects for him to work on.25 The rationale
behind this is that once the project is completed it would be unjust to
require the employer to maintain these employees in their payroll. To do so
would make the employee a privileged retainer who collects payment from
his employer for work not done. This is extremely unfair to the employers March 10, 2010
and amounts to labor coddling at the expense of management. 26" x ---------------------------------------------------------------------------------
Now that it has been clearly established that the petitioners were regular ------ x
employees, their termination is considered illegal for lack of just or
authorized causes. Under Article 279 of the Labor Code, an employee who DECISION
is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages,
ABAD, J.:
inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement. The law intends the award
of backwages and similar benefits to accumulate past the date of the LA This case is about the tenure of project employees in the construction
decision until the dismissed employee is actually reinstated. industry.
WHEREFORE, the petition is GRANTED. The assailed July 18, The Facts and the Case
2012 decision of the Court of Appeals and its November 12, 2012
Resolution in CA-G.R. SP No. 1244 70, are hereby ANNULLED and SET
On August 1, 2006 respondent Jorge R. Trinidad filed a complaint for illegal
ASIDE.
dismissal and unpaid benefits against petitioner William Uy Construction
Accordingly, respondent Marulas Industrial Corporation is hereby ordered to
Corporation.Trinidad claimed that he had been working with the latter
reinstate petitioners Macarthur Malicdem and Hermenigildo Flores to their
company for 16 years since 1988 as driver of its service vehicle, dump
former positions without loss of seniority rights and other privileges and to
truck, and transit mixer. He had signed several employment contracts with
pay their full backwages, inclusive of allowances and their other benefits or
the company that identified him as a project employee although he had
their monetary equivalent computed from the time their compensations
always been assigned to work on one project after another with some
were withheld from them up to the time of their actual reinstatement plus
intervals.
the wage differentials stated in the July 13, 2011 decision of the Labor
Arbiter, as modified by the December 19, 2011 NLRC decision.
SO ORDERED. Respondent Trinidad further alleged that in December 2004
petitioner company terminated him from work after it shut down operations
because of lack of projects. He learned later, however, that although it
opened up a project in Batangas, it did not hire him back for that project.

Petitioner company countered[1] that it was in the construction business. By

the nature of such business, it had to hire and engage the services of
project construction workers, including respondent Trinidad, whose
employments had to be co-terminous with the completion of specific
company projects. For this reason, every time the company employed
Trinidad, he had to execute an employment contract with it, called
Appointment as Project Worker.
UY and WILLIAM UY,
Petitioners, Present: Petitioner company stressed that employment intervals or gaps
CARPIO, J., Chairperson, were inherent in the construction business. Consequently, after it finished
- versus - BRION, its Boni Serrano-Katipunan Interchange Project in December 2004,
DEL Trinidads work ended as well. In compliance with labor rules, the company
CASTILLO, ABAD, and PEREZ, JJ. JORGE R. TRINIDAD, submitted an establishment termination report to the Department of Labor
Respondent. Promulgated: and Employment (DOLE).
 On December 23, 2006 the Labor Arbiter rendered a decision,
dismissing respondent Trinidads complaint for unjust dismissal. The Labor
Arbiter, however, ordered petitioner company to pay Trinidad P1,500.00 in
unpaid service incentive leave, taking into consideration the three-year
prescriptive period for money claims.[2] The Labor Arbiter held that, since
Trinidad was a project employee and since his company submitted the
appropriate establishment termination report to DOLE, his loss of work
cannot be regarded as unjust dismissal. The Labor Arbiter found no basis
for granting Trinidad overtime pay, holiday pay, and 13th month pay.
On August 31, 2007 the National Labor Relations Commission
(NLRC) affirmed the Labor Arbiters ruling,[3] prompting respondent Trinidad
to elevate his case to the Court of Appeals (CA). [4] On April 24, 2008 the
latter rendered a decision, reversing the NLRCs findings. Petitioner
company moved for a reconsideration of the decision but the CA denied the
motion.
The Issue Presented
The core issue presented in the case is whether or not the CA
correctly ruled that petitioner companys repeated rehiring of respondent
Trinidad over several years as project employee for its various projects
automatically entitled him to the status of a regular employee.
The Courts Ruling
The CA held that, although respondent Trinidad initially worked as a
project employee, he should be deemed to have acquired the status of a
regular employee since petitioner company repeatedly rehired him in its
past 35 projects that lasted 16 years. The CA explained that Trinidads work
as driver of the companys service vehicle, dump truck, and transit mixer
was vital, necessary, and indispensable to the companys construction
business. The intervals between his employment contracts were
inconsequential since stoppage in operations at the end of every
construction project was a foreseeable interruption of work.
But the test for distinguishing a project employee from a regular
employee is whether or not he has been assigned to carry out a specific
project or undertaking, with the duration and scope of his engagement
specified at the time his service is contracted. [5] Here, it is not disputed that
petitioner company contracted respondent Trinidads service by specific
projects with the duration of his work clearly set out in his employment
contracts.[6] He remained a project employee regardless of the number of
years and the various projects he worked for the company.[7]
Generally, length of service provides a fair yardstick for
determining when an employee initially hired on a temporary basis
becomes a permanent one, entitled to the security and benefits of
regularization. But this standard will not be fair, if applied to the
construction industry, simply because construction firms cannot guarantee
work and funding for its payrolls beyond the life of each project. And
getting projects is not a matter of course. Construction companies have no
control over the decisions and resources of project proponents or owners.
There is no construction company that does not wish it has such control but
the reality, understood by construction workers, is that work depended on
decisions and developments over which construction companies have no
say.
For this reason, the Court held in Caseres v. Universal Robina Sugar
Milling Corporation[8] that the repeated and successive rehiring of project
employees do not qualify them as regular employees, as length of service
is not the controlling determinant of the employment tenure of a project
employee, but whether the employment has been fixed for a specific
project or undertaking, its completion has been determined at the time of
the engagement of the employee.
In this case, respondent Trinidads series of employments with
petitioner company were co-terminous with its projects. When its Boni
Serrano-Katipunan Interchange Project was finished in December 2004,
Trinidads employment ended with it. He was not dismissed. His
employment contract simply ended with the project for which he had
signed up. His employment history belies the claim that he continuously
worked for the company. Intervals or gaps separated one contract from
another.[9]
The CA noted that DOLE Order 19 required employers to submit a
report of termination of employees every completion of construction
project. And, since petitioner company submitted at the hearing before the
Labor Arbiter only the termination report covering respondent Trinidads last
project, it failed to satisfy such requirement.
But respondent Trinidad did not say in his complaint that he had
been illegally dismissed after each of the projects for which he had been
signed up. His complaint was essentially that he should have been rehired
from the last project since he had already acquired the status of a regular
employee. Consequently, petitioner company needed only to show the last
status of Trinidads employment, namely, that of a project employee under
a contract that had ended and the companys compliance with the reporting
requirement for the termination of that employment. Indeed, both the
Labor Arbiter and the NLRC were satisfied that the fact of petitioner
companys compliance with DOLE Order 19 had been proved in this case.
Parenthetically, the Social Security System should be able to
alleviate the temporary unemployment of construction workers, a problem
that is inherent in the nature of their work.
WHEREFORE, the Court GRANTS the petition, SETS ASIDE the decision
of the Court of Appeals in CA-G.R. SP 101903 dated April 24, 2008, and
REINSTATES the decision of the National Labor Relations Commission in
NLRC-NCR-CA 051703-07(7) dated
August 31, 2007, which affirmed the decision of the Labor Arbiter in NLRC-
NCR Case 07-05764-06.
G.R. No. 227982, April 23, 2018
MARIO DIESTA BAJARO, Petitioner, v. METRO STONERICH CORP., AND/OR
IBRAHIM M. NUÑO, Respondents.
DECISION
REYES, JR., J.:
In view of the distinct nature of the construction industry, the Court
recognizes the right of an employer to hire a construction worker for a
specific project, provided that the latter is sufficiently apprised of the
duration and scope of such undertaking. In this instance, the worker's
tenure shall be coterminous with the project. Notably, the employee's
performance of work that is necessary and desirable to the construction
business, as well as his repeated rehiring, do not bestow upon him regular
employment status.
This treats of the Petition for Review on Certiorari1 under Rule 45 of the
Revised Rules of Court seeking the reversal of the Decision2 dated July 22,
2016, and Resolution3 dated October 27, 2016, rendered by the Court of
Appeals (CA) in CA-G.R. SP No.
143243. The CA affirmed the ruling of the National Labor Relations
Commission (NLRC), Second Division, in NLRC LAC No. 07-001980-
15(4) and NLRC NCR CN. 06-06903-14,4 which dismissed the
Complaint for illegal dismissal filed by petitioner Mario Diesta Bajaro
(Bajaro) against respondent Metro Stonerich Corporation (Metro Stonerich)
and/or Ibrahim M. Nuño (Nuño).
The Antecedents
Metro Stonerich is a domestic entity engaged in the construction business,
owned and operated by Nuño.5
On June 4, 2008, Metro Stonerich hired Bajaro as a concrete pump
operator, tasked with operating the pouring of freshly mixed concrete on
the former's construction projects. Bajaro was called to work from 7:00 a.m.
until 4:00 p.m., from Mondays to Saturdays.6 He was assigned in various
construction projects until
May 10, 2014.7 He received a daily wage of Php 500.00.8
Sometime in April 21, 2014, while Bajaro was working at the KCC Mall of
Marbel in Koronadal City, South Cotabato, he noticed that one of the pipes
was filled with concrete. He lifted the said pipe to empty and clean it. Upon
lifting, he suddenly felt an excruciating pain on his thighs and since then,
could no longer walk properly.9 Due to his injury, he requested the
Secretary and Manager of Metro Stonerich to take him to the hospital.
However, he was ignored and instead, was told to go home and have
himself treated.10
On April 23, 2014, Bajaro went to the office of Metro Stonerich to seek
financial help, but Metro Stonerich refused to pay for his medical
expenses.11
Bajaro went to the East Avenue Medical Center to have himself treated.12
He fully recovered after two weeks. Consequently, on May 5, 2014, he was
issued a Certificate that he was fit to return to work.13
Thus, on May 7, 2014, Bajaro arrived at his work place. However, he was
informed to return to work the next day.14
Meanwhile, on May 8 and 9, 2014, Bajaro was informed that he should no
longer report for work. Instead, he was offered money in
lieu of his employment. He did not accept the money.15
This prompted Bajaro to file a complaint before the Labor Arbiter
(LA) for illegal dismissal with monetary claims against Metro Stonerich.16
In his position paper, Bajaro asserted that he was a regular employee of
Metro Stonerich,17 as he was continuously employed for six years and
performed activities that were necessary and desirable to the latter's usual
business. As a regular employee, he was entitled to security of tenure and
could not be dismissed except for just or authorized cause.18
Additionally, Bajaro claimed that he was entitled to his monetary benefits
consisting of overtime pay differential, as he was merely given Php 50.00
per hour of overtime pay. He also alleged that he was entitled to night shift
differential, holiday pay, and proportionate 13th month pay.19 Finally,
Bajaro sought an award of
moral damages, exemplary damages and attorney's fees.20
On the other hand, Metro Stonerich argued that Bajaro is not a regular
employee, but a project employee. Bajaro was hired for five different
construction projects, with each project lasting for a period of five months
or 12 months. As proof that Bajaro was engaged on a per project basis,
Metro Stonerich pointed out that it even submitted reports to the
Department of Labor and Employment (DOLE) upon the completion of the
projects Bajaro was
engaged in.21
Furthermore, Metro Stonerich countered that contrary to Bajaro's claim that
he was not given the monetary benefits due him, he was actually given
overtime pay, service incentive leave (SIL) pay and
13th month pay as shown in its accounting ledgers.22
Ruling of the LA
On June 25, 2014, the LA rendered a Decision23 dismissing Bajaro's
complaint for illegal dismissal. The LA held that Bajaro was a project
employee, as evidenced by the employment contracts he signed each time
he was engaged by Metro Stonerich. Each contract clearly indicated the
specific project, as well as the duration of his work. As a project employee,
his employment was coterminous with each project.
As for Bajaro's money claims, the LA awarded a total overtime pay
differential of Php 14,921.10, finding that Bajaro was entitled to an
overtime pay differential of Php 28.10 per hour of overtime pay, multiplied
by the 531 (overtime) hours. Also, the LA awarded Php 4,333.30 as
proportionate l3th month pay for 2014, and Php 7,500.00, as SIL pay
equivalent to 15 days. In addition, the LA awarded attorney's fees
equivalent to 10% of the total monetary award, recognizing that Bajaro was
forced to litigate to protect his rights.24
The LA denied Bajaro's other claims of holiday pay and rest pay premiums,
due to the latter's failure to substantiate his claims. The LA also denied
Bajaro's claims for moral and exemplary damages,
finding that there was no illegal dismissal to speak of.25
The dispositive portion of the LA decision reads:
WHEREFORE premises considered, judgment is hereby rendered
DISMISSING the complaint for illegal dismissal. However, respondent Metro
Stonerich Corporation/Ibrahim M. Nuño are directed to pay [Bajaro] the
amount of Php 14,921.10 representing his underpaid overtime pay, Php
4,333.30 unpaid proportionate 13th month pay for 2014 and unpaid [SIL]
pay in the amount of Php 7,500.00 plus ten percent by way of attorney's
fees in the amount of Php 2,675.44 or a total of Php 29,429.84.
Other claims are DISMISSED for lack of merit.
SO ORDERED.26
Aggrieved, Bajaro filed an appeal against the same LA decision.
Ruling of the NLRC
On July 30, 2015, the NLRC rendered a Resolution27 dismissing
Bajaro's appeal for lack of merit. Echoing the ruling of the LA, the NLRC
found that Bajaro was a project employee since his employment contracts
prove that at the time he was hired/rehired, the duration and scope of his
engagement were already specified. The NLRC rejected Bajaro's claim that
his continued and repeated rehiring made him a regular employee. The
NLRC observed that based on the records presented by Metro Stonerich, it
was clear that Bajaro was hired on different dates for various projects. The
projects for which he was hired had gaps in between, and did not constitute
a continuous employment. Thus, the NLRC concluded that Bajaro was
validly dismissed due to the completion of the project in which he was
hired. Furthermore, the NLRC affirmed the monetary awards granted by the
LA.
The dispositive portion of the NLRC resolution reads:
WHEREFORE, the appeal filed by [Bajaro] is DISMISSED.
The [LA's] decision is AFFIRMED.
SO ORDERED.28
Dissatisfied with the ruling, Bajaro filed with the CA a Petition for Certiorari
under Rule 65 of the Revised Rules of Court.
Ruling of the CA
On July 22, 2016, the CA rendered the assailed Decision29 dismissing the
Petition for Certiorari, on the ground that the NLRC did not commit any
grave abuse of discretion to warrant the nullification of its decision. The CA
agreed with the findings of the NLRC that Bajaro was a project employee.
The CA opined that every time Bajaro was hired as a concrete pump
operator on Metro Stonerich's projects, he was made to sign a Kasunduan
Para Sa Katungkulang Serbisyo (Pamproyekto). This indicated that Bajaro
was adequately apprised of his employment status, and was sufficiently
informed that his employment will last only until the completion of each
construction project. Accordingly, the CA held that Bajaro was not illegally
dismissed as his employment was terminated due to the completion of the
project. The CA affirmed the benefits awarded by the LA and the NLRC.
The dispositive portion of the CA decision states:
WHEREFORE, the instant Petition is DISMISSED and the assailed
Resolutions dated July 30, 2015 and September 30, 2015 of the NLRC,
Second Division, in NLRC LAC No. 07-001980-15(4) and NLRC NCR CN. 06-
06903-14 are hereby AFFIRMED.
SO ORDERED.30
Undeterred, Bajaro filed the instant Petition for Review on Certiorari under
Rule 45 of the Revised Rules of Court.
Issues
The main issues raised for the Court's resolution are: (i) whether or not
Bajaro was a regular employee of Metro Stonerich; and (ii) whether or not
he was illegally dismissed by the latter company.
Ruling of the Court
The instant petition is bereft of merit.
It is a well-settled rule that the jurisdiction of the Court in a petition for
review on certiorari under Rule 45 of the Revised Rules of Court is limited
only to reviewing errors of law, not of fact, unless the factual findings
complained of are completely devoid of support from the evidence on
record, or the assailed judgment is based on a gross misapprehension of
facts.31 The Couti finds that none of the mentioned circumstances are
present to warrant a review of the factual findings of the case. At any rate,
the CA did not commit any reversible error that would wanant the exercise
of the Court's appellate jurisdiction.
Bajaro is a Project Employee of Metro Stonerich
Essentially, the Labor Code classifies four (4) kinds of employees, namely:
(i) 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; (ii) 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 employees'
engagement; (c) seasonal employees or those who perform services which
are seasonal in nature, and whose employment lasts during the duration of
the season; and (d) casual employees or those who are not regular, project,
or seasonal employees. Jurisprudence has added a fifth kind fixed-term
employees or those hired only for a definite period of time.32
Focusing on the first two kinds of employment, Article 294 of the Labor
Code distinguishes a regular from project-based employment as follows:
Art. 294. 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.
Parenthetically, in a project-based employment, the employee is assigned
to a particular project or phase, which begins and ends at a determined or
determinable time. Consequently, the services of the project employee
may be lawfully terminated upon the completion of such project or
phase.33 For employment to be regarded as project-based, it is incumbent
upon the employer to prove that (i) the employee was hired to carry out a
specific project or undertaking; and (ii) the employee was notified of the
duration and scope of the project.34 In order to safeguard the rights of
workers against the arbitrary use of the word "project" as a means to
prevent employees from attaining regular status, employers must prove
that the duration and scope of the employment were specified at the time
the employees were engaged, and prove the
existence of the project.35
In the case at bar, Bajaro was hired by Metro Stonerich as a concrete pump
operator in five different construction projects, to wit: (i) SM Cubao
Expansion and Renovation project located at Araneta Center, Cubao for five
months, which began on June 3, 2008; (ii) Robinson's Place Ilocos Nmie for
five months, which commenced on January 24, 2009; (iii) Robinson's
Tacloban, Marasbaras for five months, which stmied on December 14,
2010;
(iv) KCC Mall Marbel Expansion, Koronadal City for 12 months,
which commenced on October 24, 2011; and (v) KCC Mall Zamboanga
Project, Zamboanga City for 12 months, which started
on January 11, 2013.36
It is undisputed that Bajaro was adequately informed of his employment
status (as a project employee) at the time of his engagement. This is
clearly substantiated by his employment contracts (Kasunduan Para sa
Katungkulang Serbisyo (Pamproyekto), stating that: (i) he was hired as a
project employee; and (ii) his employment was for the indicated stmiing
dates therein, and will end on the completion of the project. The said
contracts that he signed sufficiently apprised him that his security of tenure
with Metro Stonerich would only last as long as the specific phase for which
he was assigned. In fact, the target date of completion was even indicated
in each individual contract clearly warning him of the period of his
employment.
Furthermore, pursuant to Department Order No. 19, Series of 1993, or the
"Guidelines Governing the Employment of Workers in the Construction
Industry," Metro Stonerich duly submitted the required Establishment
Employment Report on April 23, 2014 to the DOLE for the reduction of its
workforce. Bajaro was included among the 10 workers reported for
termination as a consequence of the completion of the construction project
effective May 23, 2014.37 As aptly pointed out by the CA, the submission
of the said Establishment Employment Report is a clear indication of project
employment.
Verily, being a project employee, Metro Stonerich was justified in
terminating Bajaro's employment upon the completion of the project for
which the latter was hired.
Bajaro's Continuous Rehiring and His Performance of Work that was
Necessary and Desirable to Metro Stonerich's Business Did Not Confer
Upon Him Regular Employment Status
Remarkably, in Gadia, et al. v. Sykes Asia, Inc., et al.,38 the Court explained
that the "projects" wherein the project employee is hired may consist of "(i)
a particular job or undertaking that is within the regular or usual business
of the employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company; or (ii) a
particular job or undertaking
that is not within the regular business of the corporation."39
Accordingly, it is not uncommon for a construction firm to hire project
employees to perform work necessary and vital for its business. Suffice it to
say, in William Uy Construction Corp. and/or Uy, et al. v. Trinidad,40 the
Court acknowledged the unique characteristic of the construction industry
and emphasized that the laborer's performance of work that is necessary
and vital to the employer's construction business, and the former's
repeated rehiring, do not automatically lead to regularization, viz.:
Generally, length of service provides a fair yardstick for determining when
an employee initially hired on a temporary basis becomes a permanent
one, entitled to the security and benefits of regularization. But this
standard will not be fair, if applied to the construction industry, simply
because construction firms cannot guarantee work and funding for its
payrolls beyond the life of each project. And getting projects is not a matter
of course. Construction companies have no control over the decisions and
resources of project proponents or owners. There is no construction
company that does not wish it has such control but the reality, understood
by construction workers, is that work depended on decisions and
developments over which construction companies have no say.
For this reason, the Court held in Caseres v. Universal Robina Sugar
Milling Corporationthat the repeated and successive rehiring of project
employees do not qualify them as regular employees, as length of service
is not the controlling determinant of the employment tenure of a project
employee, but whether the employment has been fixed for a specific
project or undertaking, its completion has been determined at the time of
the engagement of the employee.41 (Citations omitted and emphasis and
underscoring Ours)
Additionally, in Malicdem, et al. v. Marulas Industrial Corporation, et al.,42
the Court took judicial notice of the fact that in the construction industry,
an employee's work depends on the availability of projects. The employee's
tenure "is not permanent but coterminous with the work to which he is
assigned."43Consequently, it would be extremely burdensome for the
employer, who depends on the availability of projects, to carry the
employee on a permanent status and pay him wages even if there are no
projects for him to work on. An employer cannot be forced to maintain the
employees in the payroll, even after the completion of the project.44 "To do
so would make the employee a privileged retainer who collects payment
from his employer for work not done. This is extremely unfair to the
employers and
amounts to labor coddling at the expense of management."45
Accordingly, it is all too apparent that the employee's length of service and
repeated re-hiring constitute an unfair yardstick for deter!nining regular
employment in the construction industry. Thus, Bajaro's rendition of six
years of service, and his repeated re-hiring are not badges of
regularization.
Bajaro is Entitled to Overtime Pay Differentials, Proportionate
13th Month Pay, SIL Pay and Attorney's Fees
Although Bajaro was hired as a project employee, he is still entitled to
certain benefits under the law. Particularly, Bajaro is bound to receive
overtime pay differentials, SIL pay, and proportionate
13th month pay, with attorney's fees equivalent to 10% of the total
monetary award.
Specifically, as for Bajaro's overtime pay, the records show that Bajaro
rendered 531 hours of overtime work. Pursuant to Article 87 of the Labor
Code, Bajaro is entitled to receive an additional compensation equivalent to
25% of his daily wage of Php 500.00 for every hour of overtime work he
rendered. Unfortunately however, Bajaro merely received a meager
overtime pay of Php 50.00. Thus, the Court agrees with the LA's conclusion
that Bajaro is entitled to an overtime pay differential.46
Additionally, Metro Stonerich failed to prove that it paid Bajaro his SIL pay.
Notably, Atiicle 95 of the Labor Code states that "every employee who has
rendered at least one year of service shall be entitled to a yearly SIL of five
days with pay." Metro Stonerich failed to prove that it gave Bajaro his SIL
pay.47 It must be noted that in claims for payment of salary differential,
SIL, holiday pay and 13th month pay, the burden rests on the employer to
prove payment. This standard follows the basic rule that in all illegal
dismissal cases the burden rests on the defendant to prove payment rather
than on the plaintiff to prove non-payment. This likewise stems from the
fact that all pertinent personnel files, payrolls, records, remittances and
other similar documents - which will show that the differentials, SIL and
other claims of workers have been paid - are not in the possession of the
worker but are in the custody and control of the employer.48
Likewise, Bajaro is entitled to receive his proportionate 13th month
pay corresponding to January 2014 to April 22, 2014.49
In addition, Bajaro should be awarded attorney's fees equivalent to 10% of
the total monetary award, as the instant case includes a claim for
unlawfully withheld wages.50 Added to this, all amounts
due shall earn a legal interest of six percent (6%) per annum.
On the other hand, Bajaro's claims for premium pay for holiday and
rest day are denied for lack of factual basis, due to Bajaro's failure to
specify the dates that he worked during special days, or rest days.51 It
bears stressing that premium pays for holidays and rest days, are
not usually incurred in the normal course of business.52 As such, the
burden is shifted on the employee to prove that he actually rendered
service on holidays and rest days.53
In fine, the Court affirms the right of an employer to hire project
employees, for as long as the latter are sufficiently apprised of the
nature and tenn of their employment. Metro Stonerich was not remiss in
informing Bajaro of his limited tenure as a project employee.
Accordingly, being a project employee, Bajaro was validly terminated
from employment due to the completion of the project in which he was
engaged.
WHEREFORE, premises considered, the instant appeal is hereby
DISMISSED for lack of merit. Accordingly, the Decision dated July 22,
2016 of the Court of Appeals in CA-G.R. SP No. 143243 is AFFIRMED with
modification in that all monetary awards shall earn legal interest of six
percent (6%) per annum from the finality of this Decision until the full
satisfaction of the obligation. The Labor Arbiter is ordered to
prepare a comprehensive accounting of all monetary awards pursuant
to this Court's ruling.
 June 2004 Resolution, the Court of Appeals denied the motion for
reconsideration of Alcatel and petitioner Yolanda Delos Reyes (petitioner
Delos Reyes).

The Facts

Alcatel is a domestic corporation primarily engaged in the business of

installation and supply of telecommunications equipment. Petitioner Delos
Reyes was a former Administrative Officer of Alcatel.

On 4 January 1988, Alcatel offered respondent temporary employment as

Estimator/Draftsman Civil Works to assist in the preparation of manholes
and conduit design for the proposal preparation for PLDT X-5 project for the
period 4 January 1988 to 28 February 1988.[6] On 1 March 1988, Alcatel
again offered respondent temporary employment as Estimator/Draftsman
to assist in the PLDTs
X-4 IOT project for the period 1 March 1988 to 30 April 1988.[7]
ALCATEL PHILIPPINES, INC., G.R. No. 164315
and YOLANDA DELOS REYES, Subsequently, Alcatel undertook the PLDT 1342 project (project) which
Petitioners, Present: involved the installation of microwave antennas and towers in
Eastern Visayas and Eastern Mindanao for the Philippine Long Distance
PUNO, C.J., Chairperson, Company. On 1 February 1991, Alcatel offered respondent temporary
- versus - CARPIO, employment as Civil Works Inspector, to assist in the implementation of the
CORONA, PLDT 1342 Project, for the period 1 February 1991 to 31 March 1991.[8]
LEONARDO-DE CASTRO, and BERSAMIN, JJ. Upon the expiration of his contract, respondent was again offered
temporary employment this time as Civil Works Engineer from 1 April 1991
to 30 September 1991.[9] Respondent was offered temporary employment
in the same capacity five more times from 1 October 1991 to 31 July
RENE R. RELOS, Promulgated: Respondent. July 3, 2009 1992.[10] Then, on 1 August 1992, Alcatel hired respondent as project
x----------------------------------------------- employee for the PLDT 1342 project to work as Civil Engineer from the
- - - -x period of 1 August 1992 to 31 July 1993.[11] Alcatel renewed respondents
contract twice from 1 August 1993 to 31 December 1993.[12] In a letter
DECISION dated 22 December 1993,[13] Alcatel informed respondent that the civil
CARPIO, J.: works portion of the project was near completion; however, the remaining
The Case works encountered certain delays and had not been completed as
scheduled. Alcatel then extended respondents employment for another
Before the Court is a petition for review[1] of the 31 March 2004 three months or until 31 March 1994. Thereafter, Alcatel employed
Decision[2] and 14 June 2004 Resolution[3] of the Court of Appeals in CA- respondent as a Site Inspector until 31 December 1995.[14]
G.R. SP No. 75965. In its 31 March 2004 Decision, the Court of Appeals set
aside the 20 February 2002 Decision[4] of the National Labor Relations On 11 December 1995, Alcatel informed respondent that the project would
Commission (NLRC) and reinstated the 24 September 1998 Decision[5] of be completed on 31 December 1995 and that his contract with Alcatel
the Labor Arbiter which declared respondent Rene R. Relos (respondent) a would expire on the same day.[15] Alcatel asked respondent to settle all his
regular employee of petitioner Alcatel Philippines, Inc. (Alcatel). In its 14
accountabilities with the company and advised him that he would be called
if it has future projects that require his expertise. Respondent appealed to the Court of Appeals.

In March 1997, respondent filed a complaint for illegal dismissal, separation In its 31 March 2004 Decision, the Court of Appeals set aside the NLRCs
pay, unpaid wages, unpaid overtime pay, damages, and attorneys fees Decision and reinstated the Labor Arbiters Decision.
against Alcatel.Respondent alleged that he was a regular employee of
Alcatel and that he was dismissed during the existence of the project.

Alcatel filed a motion for reconsideration. In its 14 June 2004 Resolution,

In its 24 September 1998 Decision, the Labor Arbiter declared that
the Court of Appeals denied Alcatels motion.
respondent was a regular employee of Alcatel. The Labor Arbiter also ruled
that respondent was illegally dismissed and, therefore, entitled to back
wages. The Labor Arbiters Decision provides: WHEREFORE, premises Hence, this petition.
considered, judgment is hereby rendered, finding that [sic] complainant to
be a regular employee and finding further that [sic] complainant to have
been illegally dismissed from employment and ordering respondents,
The Ruling of the Labor Arbiter
jointly and severally, to pay complainant the following:

The Labor Arbiter declared that, since respondent was repeatedly hired by
1. Backwages from the time he was illegally dismissed until his actual
Alcatel, respondent performed functions that were necessary and desirable
reinstatement in the amount of THREE
in the usual business or trade of Alcatel. The Labor Arbiter concluded that
HUNDRED FORTY EIGHT
respondent belonged to the work pool of nonproject employees of Alcatel.
THOUSAND PESOS
(P348,000.00). The award of backwages shall be re-computed once this
decision has become final; As to the project, the Labor Arbiter noted that respondents employment
contracts did not specify the projects completion date. The Labor Arbiter
said that a short extension of respondents employment contract was
2. Money claims in the total amount of FOURTEEN THOUSAND TWO
believable, but an extension up to 1995, when respondent was originally
HUNDRED FORTY PESOS
engaged only from 1 February to 31 March 1991, was unbelievable. The
(P14,240.00);
Labor Arbiter also said that Alcatels unsubstantiated claim, that the project
was merely extended for unavoidable causes, was absurd. The Labor
3. Attorneys fees of ten (10%) percent of the total monetary award. Arbiter concluded that there was really no fixed duration of the project and
that Alcatel used the periods of employment as a facade to show that
SO ORDERED.[16] respondent was only a project employee.

Alcatel appealed to the NLRC. The Ruling of the NLRC

In its 20 February 2002 Decision, the NLRC reversed the Labor Arbiters
Decision and dismissed respondents complaint for illegal dismissal. The
NLRC declared that respondent was a project employee and that
respondent was not illegally dismissed but that his employment contract
expired.
Respondent filed a motion for reconsideration. In its 19 December 2002
Order,[17] the NLRC denied respondents motion.
The NLRC set aside the Labor Arbiters ruling and declared that respondent
was a project employee. The NLRC said respondent was assigned to carry
out a specific project or undertaking and the duration of his services was
always stated in his employment contracts. The NLRC also pointed out that,
by the nature of Alcatels business, respondent would remain a project
employee regardless of the number of projects for which he had been
employed. Since respondent was a project employee, the NLRC said he was
not illegally dismissed, but that his dismissal was brought about by the
expiration of his employment contract.
The Ruling of the Court of Appeals
The Court of Appeals set aside the NLRCs decision and reinstated the Labor
Arbiters ruling. The Court of Appeals declared that respondent was a
regular employee of Alcatel because (1) respondent was assigned to
positions and performed tasks that were necessary to the main line and
business operations of Alcatel; (2) respondent was repeatedly hired and
contracted, continuously and for prolonged periods, with his employment
contracts renewed each time they fell due; and (3) Alcatel did not report
the termination of the projects with the nearest public employment office.
The Court of Appeals also said that, although respondents employment
contracts specified that he was being engaged for a specific period, there
was no clear provision on the actual scope of the project for which
respondent was engaged or the actual length of time that the project was
going to last. The Court of Appeals concluded that Alcatel imposed the
periods of employment to preclude respondent from acquiring tenurial
security.
The Issues
Alcatel raises the following issues:
1. Whether respondent was a regular employee or a project
employee; and
2. Whether respondent was illegally dismissed. The Ruling of the
Court
The petition is meritorious.
Alcatel argues that respondent was a project employee because he worked
on distinct projects with the terms of engagement and the specific project
made known to him at the time of the engagement. Alcatel clarifies that
respondents employment was coterminous with the project for which he
was hired and, therefore, respondent was not illegally dismissed but was
validly dismissed upon the expiration of the term of his project
employment. Alcatel explains that its business relies mainly on the projects
it enters into and thus, it is constrained to hire project employees to meet
the demands of specific projects.
On the other hand, respondent insists that he is a regular employee
because he was assigned by Alcatel on its various projects since 4 January
1988 performing functions desirable or necessary to Alcatels business.
Respondent adds that his employment contracts were renewed
successively by Alcatel for seven years.Respondent contends that, even
assuming that he was a project employee, he became a regular employee
because he was re-hired every termination of his employment contract and
he performed functions necessary to Alcatels business. Respondent also
claims that he was illegally dismissed because he was dismissed during the
existence of the project.
The principal test for determining whether a particular employee is a
project employee or a regular employee is whether the project employee
was assigned to carry out a specific project or undertaking, the duration
and scope of which were specified at the time the employee is engaged for
the project.[18] Project may refer to a particular job or undertaking that is
within the regular or usual business of the employer, but which is distinct
and separate and identifiable as such from the undertakings of the
company. Such job or undertaking begins and ends at determined or
determinable times.[19]
In our review of respondents employment contracts, we are convinced that
respondent was a project employee. The specific projects for which
respondent was hired and the periods of employment were specified in his
employment contracts. The services he rendered, the duration and scope
of each employment are clear indications that respondent was hired as a
project employee.
We do not agree with respondent that he became a regular employee
because he was continuously rehired by Alcatel every termination of his
contract. In Maraguinot, Jr. v. NLRC,[20] we said:
A project employee or a member of a work pool may acquire the status of a
regular employee when the following concur:
1) There is a continuous rehiring of project
employees even after the cessation of a project; and
2) The tasks performed by the alleged project employee are vital,
necessary and indispensable to the usual business or trade of the
employer.[21] (Emphasis ours)

While respondent performed tasks that were clearly vital, necessary and
indispensable to the usual business or trade of Alcatel, respondent was not
continuously rehired by Alcatel after the cessation of every project. Records
show that respondent was hired by Alcatel from 1988 to 1995 for three
projects, namely the PLDT X-5 project, the PLDT X-4 IOT project and the
PLDT 1342 project. On 30 April 1988, upon the expiration of respondents
contract for the PLDT X-4 IOT project, Alcatel did not rehire respondent until
1 February 1991, or after a lapse of 33 months, for the PLDT 1342 project.
Alcatels continuous rehiring of respondent in various capacities from
February 1991 to December 1995 was done entirely within the framework
of one and the same project ― the PLDT 1342 project. This did not make
respondent a regular employee of Alcatel as respondent was not
continuously rehired after the cessation of a project. Respondent
remained a project employee of Alcatel working on the PLDT 1342
project.
The employment of a project employee ends on the date specified in the
employment contract. Therefore, respondent was not illegally dismissed
but his employment terminated upon the expiration of his employment
contract. Here, Alcatel employed respondent as a Site
Inspector until 31 December 1995.
WHEREFORE, we GRANT the petition. We SET ASIDE the 31
March 2004 Decision and 14 June 2004 Resolution of the Court of
Appeals and REINSTATE the 20 February 2002 Decision and 19
December 2002 Order of the National Labor Relations Commission.
SO ORDERED.
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 Decision1 dated 25 September 2006 and Resolution2 dated 15
June 2007 of the Court of Appeals in CA-G.R. SP No. 72795, which affirmed
the Decision dated 14 December 2001 of the National Labor Relations
Commission (NLRC) in NLRC NCR Case No. 30-03-01274-2000 finding that
petitioners were not illegally dismissed by respondents.
The factual antecedents of the case are as follows:
Respondent Innodata Philippines, Inc./Innodata Corporation (INNODATA)
was a domestic corporation engaged in the data encoding and data
conversion business. It employed encoders, indexers, formatters,
programmers, quality/quantity staff, and others, to maintain its business
and accomplish the job orders of its clients.
Respondent Leo Rabang was its Human Resources and Development
(HRAD) Manager, while respondent Jane Navarette was its Project Manager.
INNODATA had since ceased operations due to business losses in June
2002.
Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera were
employed as formatters by INNODATA. The parties executed an
employment contract denominated as a "Contract of Employment for a
Fixed Period," stipulating that the contract shall be for a period of one
year,3 to wit:
CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD
xxxx
WITNESSETH: That
WHEREAS, the EMPLOYEE has applied for the position of FORMATTER and in
the course thereof and represented himself/herself to be fully qualified and
skilled for the said position;
WHEREAS, the EMPLOYER, by reason of the aforesaid representations, is
desirous of engaging that the (sic) services of the EMPLOYEE for a fixed
period;
NOW, THEREFORE, for and in consideration of the foregoing premises, the
parties have mutually agreed as follows:
TERM/DURATION
The EMPLOYER hereby employs, engages and hires the
EMPLOYEE and the EMPLOYEE hereby accepts such appointment as
FORMATTER effective FEB. 16, 1999 to FEB. 16, 2000 a period of ONE YEAR.
xxxx
TERMINATION
6.1 In the event that EMPLOYER shall discontinue operating its business,
this CONTRACT shall also ipso facto terminate on the last day of the month
on which the EMPLOYER ceases operations with the same force and effect
as is such last day of the month were originally set as the termination date
of this Contract. Further should the Company have no more need for the
EMPLOYEE’s services on account of completion of the project, lack of work
(sic) business losses, introduction of new production processes and
techniques, which will negate the need for personnel, and/or overstaffing,
this contract maybe pre-terminated by the EMPLOYER upon giving of three
(3) days notice to the employee.
6.2 In the event period stipulated in item 1.2 occurs first vis-à-vis the
completion of the project, this contract shall automatically terminate.
6.3 COMPANY’s Policy on monthly productivity shall also apply to the
EMPLOYEE.
6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT,
with or without cause, by giving at least Fifteen – (15) notice to that effect.
Provided, that such pre-termination shall be effective only upon issuance of
the appropriate clearance in favor of the said EMPLOYEE.
6.5 Either of the parties may terminate this Contract by reason of the
breach or violation of the terms and conditions hereof by giving at least
Fifteen (15) days written notice. Termination with cause under this
paragraph shall be effective without need of judicial action or approval.4
During their employment as formatters, petitioners were assigned to
handle jobs for various clients of INNODATA, among which were CAS, Retro,
Meridian, Adobe, Netlib, PSM, and Earthweb. Once they finished the job for
one client, they were immediately assigned to do a new job for another
client.
On 16 February 2000, the HRAD Manager of INNODATA wrote petitioners
informing them of their last day of work. The letter reads:
RE: End of Contract
Date: February 16, 2000
Please be informed that your employment ceases effective at the end of
the close of business hours on February 16, 2000.5
According to INNODATA, petitioners’ employment already ceased due to the
end of their contract.
On 22 May 2000, petitioners filed a Complaint6 for illegal dismissal and
damages against respondents. Petitioners claimed that they should be
considered regular employees since their positions as formatters were
necessary and desirable to the usual business of INNODATA as an encoding,
conversion and data processing company. Petitioners also averred that the
decisions in Villanueva v. National Labor Relations Commission7 and
Servidad v. National Labor Relations Commission,8 in which the Court
already purportedly ruled "that the nature of employment at Innodata
Phils., Inc. is regular,"9 constituted stare decisis to the present case.
Petitioners finally argued that they could not be considered project
employees considering that their employment was not coterminous with
any project or undertaking, the termination of which was predetermined.
On the other hand, respondents explained that INNODATA was engaged in
the business of data processing, typesetting, indexing, and abstracting for
its foreign clients. The bulk of the work was data processing, which
involved data encoding. Data encoding, or the typing of data into the
computer, included pre-encoding, encoding 1 and 2, editing, proofreading,
and scanning. Almost half of the employees of INNODATA did data encoding
work, while the other half monitored quality control. Due to the wide range
of services rendered to its clients, INNODATA was constrained to hire new
employees for a fixed period of not more than one year. Respondents
asserted that petitioners were not illegally dismissed, for their employment
was terminated due to the expiration of their terms of employment.
Petitioners’ contracts of employment with INNODATA were for a limited
period only, commencing on 6 September 1999 and ending on 16 February
2000.10 Respondents further argued that petitioners were estopped from
asserting a position contrary to the contracts which they had knowingly,
voluntarily, and willfully agreed to or entered into. There being no illegal
dismissal, respondents likewise maintained that petitioners were not
entitled to reinstatement and backwages.
On 17 October 2000, the Labor Arbiter11 issued its Decision12 finding
petitioners’ complaint for illegal dismissal and damages meritorious. The
Labor Arbiter held that as formatters, petitioners occupied jobs that were
necessary, desirable, and indispensable to the data processing and
encoding business of INNODATA. By the very nature of their work as
formatters, petitioners should be considered regular employees of
INNODATA, who were entitled to security of tenure. Thus, their termination
for no just or authorized cause was illegal. In the end, the Labor Arbiter
decreed:
FOREGOING PREMISES CONSIDERED, judgment is hereby rendered
declaring complainants’ dismissal illegal and ordering
respondent INNODATA PHILS. INC./INNODATA CORPORATION to
reinstate them to their former or equivalent position without loss of
seniority rights and benefits. Respondent company is further ordered to pay
complainants their full backwages plus ten percent (10%) of the totality
thereof as attorney’s fees. The monetary awards due the complainants as
of the date of this decision are as follows:
A. Backwages
1. Cherry J. Price
2/17/2000 – 10/17/2000 at 223.50/day
P5,811.00/mo/ x 8 mos. P46,488.00
2. Stephanie Domingo 46,488.00
(same computation)
3. Lolita Arbilera 46,488.00
(same computation)
Total Backwages P139,464.00
B. Attorney’s fees (10% of total award) 13,946.40
Total Award P153,410.40
Respondent INNODATA appealed the Labor Arbiter’s Decision to the NLRC.
The NLRC, in its Decision dated 14 December 2001, reversed the Labor
Arbiter’s Decision dated 17 October 2000, and absolved INNODATA of the
charge of illegal dismissal.
The NLRC found that petitioners were not regular employees, but were
fixed-term employees as stipulated in their respective contracts of
employment. The NLRC applied Brent School, Inc. v. Zamora13 and St.
Theresa’s School of Novaliches Foundation v. National Labor Relations
Commission,14 in which this Court upheld the validity of fixed-term
contracts. The determining factor of such contracts is not the duty of the
employee but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship. The NLRC
observed that the petitioners freely and voluntarily entered into the fixed-
term employment contracts with INNODATA. Hence, INNODATA was not
guilty of illegal dismissal when it terminated petitioners’ employment upon
the expiration of their contracts on 16 February 2000.
The dispositive portion of the NLRC Decision thus reads:
WHEREFORE, premises considered, the decision appealed from is hereby
REVERSED and SET ASIDE and a new one entered DISMISSING the instant
complaint for lack of merit.15
The NLRC denied petitioners’ Motion for Reconsideration in a Resolution
dated 28 June 2002.16
In a Petition for Certiorari under Rule 65 of the Rules of Court filed before
the Court of Appeals, petitioners prayed for the annulment, reversal,
modification, or setting aside of the Decision dated 14
December 2001 and Resolution dated 28 June 2002 of the NLRC.lawphil.net
On 25 September 2006, the Court of Appeals promulgated its Decision
sustaining the ruling of the NLRC that petitioners were not illegally
dismissed.
The Court of Appeals ratiocinated that although this Court declared in
Villanueva and Servidad that the employees of INNODATA working as data
encoders and abstractors were regular, and not contractual, petitioners
admitted entering into contracts of employment with INNODATA for a term
of only one year and for a project called Earthweb. According to the Court
of Appeals, there was no showing that petitioners entered into the fixed-
term contracts unknowingly and involuntarily, or because INNODATA
applied force, duress or improper pressure on them. The appellate court
also observed that INNODATA and petitioners dealt with each other on
more or less equal terms, with no moral dominance exercised by the former
on latter. Petitioners were therefore bound by the stipulations in their
contracts terminating their employment after the lapse of the fixed term.
The Court of Appeals further expounded that in fixed-term contracts, the
stipulated period of employment is governing and not the nature thereof.
Consequently, even though petitioners were performing functions that are
necessary or desirable in the usual business or trade of the employer,
petitioners did not become regular employees because their employment
was for a fixed term, which began on 16
February 1999 and was predetermined to end on 16 February 2000.
The appellate court concluded that the periods in petitioners’ contracts of
employment were not imposed to preclude petitioners from acquiring
security of tenure; and, applying the ruling of this Court in Brent, declared
that petitioners’ fixed-term employment contracts were valid. INNODATA
did not commit illegal dismissal for terminating petitioners’ employment
upon the expiration of their contracts.
The Court of Appeals adjudged:
WHEREFORE, the instant petition is hereby DENIED and the
Resolution dated December 14, 2001 of the National Labor Relations
Commission declaring petitioners were not illegally dismissed is
AFFIRMED.17
The petitioners filed a Motion for Reconsideration of the aforementioned
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, fixedterm 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 anessential 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 preterminate petitioners’
employment under the following circumstances:
6.1 x x x Further should the Company have no more need for the
EMPLOYEE’s services on account of completion of the project, lack of work
(sic) business losses, introduction of new production processes and
techniques, which will negate the need for personnel, and/or overstaffing,
this contract maybe pre-terminated by the
EMPLOYER upon giving of three (3) days notice to the employee.
xxxx
6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this
CONTRACT, with or without cause, by giving at least Fifteen – (15) [day]
notice to that effect. Provided, that such pre-termination shall be effective
only upon issuance of the appropriate clearance in favor of the said
EMPLOYEE. (Emphasis ours.)
Pursuant to the afore-quoted provisions, petitioners have no right at all to
expect security of tenure, even for the supposedly one-year period of
employment provided in their contracts, because they can still be pre-
terminated (1) upon the completion of an unspecified project; or (2) with or
without cause, for as long as they are given a three-day notice. Such
contract provisions are repugnant to the basic tenet in labor law that no
employee may be terminated except for just or authorized cause.
Under Section 3, Article XVI of the Constitution, it is the policy of the State
to assure the workers of security of tenure and free them from the bondage
of uncertainty of tenure woven by some employers into their contracts of
employment. This was exactly the purpose of the legislators in drafting
Article 280 of the Labor Code – to prevent the circumvention by
unscrupulous employers of the employee’s right to be secure in his tenure
by indiscriminately and completely ruling out all written and oral
agreements inconsistent with the concept of regular employment.
In all, respondents’ insistence that it can legally dismiss petitioners on the
ground that their term of employment has expired is untenable. To
reiterate, petitioners, being regular employees of INNODATA, are entitled to
security of tenure. In the words of Article 279 of the Labor Code:
ART. 279. Security of Tenure. – In cases of regular employment, the
employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.
By virtue of the foregoing, an illegally dismissed employee is entitled to
reinstatement without loss of seniority rights and other privileges, with full
back wages computed from the time of dismissal up to the time of actual
reinstatement.
Considering that reinstatement is no longer possible on the ground that
INNODATA had ceased its operations in June 2002 due to business losses,
the proper award is separation pay equivalent to one month pay31 for
every year of service, to be computed from the commencement of their
employment up to the closure of INNODATA.
The amount of back wages awarded to petitioners must be
computed from the time petitioners were illegally dismissed until the
time INNODATA ceased its operations in June 2002.32
Petitioners are further entitled to attorney’s fees equivalent to 10% of the
total monetary award herein, for having been forced to litigate and incur
expenses to protect their rights and interests herein.
Finally, unless they have exceeded their authority, corporate officers
are, as a general rule, not personally liable for their official acts, because a
corporation, by legal fiction, has a personality separate and distinct from its
officers, stockholders and members. Although as an exception,
corporate directors and officers are solidarily held
liable with the corporation, where terminations of employment are
done with malice or in bad faith,33 in the absence of evidence that they
acted with malice or bad faith herein, the Court exempts the individual
respondents, Leo Rabang and Jane Navarette, from any personal liability for
the illegal dismissal of petitioners.
WHEREFORE, the Petition for Review on Certiorari is GRANTED.
The Decision dated 25 September 2006 and Resolution dated 15 June 2007
of the Court of Appeals in CA-G.R. SP No. 72795are
hereby REVERSED and SET ASIDE. RespondentInnodata
Philippines, Inc./Innodata Corporation is ORDERED to pay petitioners Cherry
J. Price, Stephanie G. Domingo, and Lolita
Arbilera: (a) separation pay, in lieu of reinstatement, equivalent to one
month pay for every year of service, to be computed from the
commencement of their employment up to the date respondent Innodata
Philippines, Inc./Innodata Corporation ceased operations;
(b) full backwages, computed from the time petitioners’ compensation was
withheld from them up to the time respondent
Innodata Philippines, Inc./Innodata Corporation ceased operations; and (3)
10% of the total monetary award as attorney’s fees. Costs against
respondent Innodata Philippines, Inc./Innodata Corporation.
SO ORDERED.
OMSI is a corporation engaged in the business of providing janitorial and
maintenance services to various clients, including governmentowned and
controlled corporations. On various dates beginning 1986, OMSI hired the
respondents as janitors, grass cutters, and degreasers, and assigned them
at the Ninoy AquinoInternational Airport (NAIA).
On January 14, 1999, OMSI terminated respondents' employment.
Claiming termination without just cause and non-payment of labor standard
benefits, respondents filed a complaint for illegal dismissal, underpayment
of wages, and non-payment of holiday and service incentive leave pays,
with prayer for payment of separation pay, against OMSI.
For its part, OMSI denied the allegations in the complaint. It averred
that when Manila International Airport Authority (MIAA) awarded to OMSI
the service contracts for the airport, OMSI hired respondents as janitors,
cleaners, and degreasers to do the services under the contracts. OMSI
informed the respondents that they were hired for the MIAA project and
their employments were coterminous with the contracts. As project
employees, they were not dismissed from work but their employments
ceased when the MIAA contracts were not renewed upon their expiration.
The termination of respondents employment cannot, thus, be considered
illegal.

OLONGAPO G.R. No. 156146

In a Decision[3] dated November 19, 1999, the Labor Arbiter
MAINTENANCE SERVICES, INC., Petitioner, Present:
dismissed the complaint, viz.:
WHEREFORE, premises considered, judgment is hereby
- versus - YNARES- rendered DISMISSING for lack of merit the claims for
separation pay, wage differentials and holiday pay except
that respondent is hereby ordered to pay the seventy one
-- (71) complainants listed in pages three and four of the
latters position paper their service incentive leave pay.
Promulgated
June 21, 2007 SO ORDERED.[4]
On appeal by the respondents, the NLRC modified the Labor Arbiters ruling.
NACHURA, J.: It held that respondents were regular and not project employees. Hence,
they are entitled to separation pay:
This Petition for Review on Certiorari assails the July 29, 2002 Decision [1] of
the Court of Appeals and its Resolution [2] dated November 14, 2002 in CA- WHEREFORE, the decision appealed from is hereby
G.R. SP No. 67474, which, respectively, denied the petition for certiorari modified by granting in addition to the grant of service
and the motion for reconsideration filed by Olongapo Maintenance incentive leave pay, payment of separation pay equivalent
Services, Inc. (OMSI). to half-month pay per [every] year of service or one month
pay, whichever is higher.

SO ORDERED.[5]

OMSI sought reconsideration of the ruling, but the NLRC denied the motion
on July 30, 2001.
Petitioner went up to the Court of Appeals via a petition for certiorari,
imputing grave abuse of discretion to the NLRC for reversing the factual
findings and the decision of the Labor Arbiter. However, the Court of
Appeals dismissed the petition. The appellate court agreed with the NLRC
that the continuous rehiring of respondents, who performed tasks
necessary and desirable in the usual business of OMSI, was a clear
indication that they were regular, not project employees. The court added
that OMSI failed to establish that respondents employment had been fixed
for a specific project or undertaking, the completion or termination of which
had been determined at the time of their engagement or hiring. Neither
had it shown that respondents were informed of the duration and scope of
their work when they were hired. Furthermore, OMSI did not submit to the
Department of Labor and Employment (DOLE) reports of termination of the
respondents, thereby bolstering respondents claim of regular employment.
OMSI filed a motion for reconsideration, but the Court of Appeals denied it
on November 14, 2002.
Aggrieved by the resolutions of the Court of Appeals, OMSI comes to this
Court theorizing that:
THE COURT OF APPEALS COMMITTED GRAVE ERROR AND
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN SUSTAINING THE NLRC'S RULING
THAT RESPONDENTS
ARE NOT PROJECT
EMPLOYEES. CONCOMITANT THERETO, THERE IS NEITHER
FACTUAL NOR LEGAL BASIS FOR THE AWARD OF
SEPARATION
PAY.[6]
OMSI insists that respondents were project employees.
Respondents, on the other hand, maintain that they were OMSI's regular
employees.
Article 280 of the Labor Code provides:
ART. 280. Regular and Casual
Employment. - The provisions of written agreement to the
contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed
to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable
in the usual business or trade of the employer, except
where the employment has been fixed for a specific project
or undertaking the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration
of the season . . . (Italics supplied.)
Without question, respondents, as janitors, grass cutters, and degreasers,
performed work necessary or desirable in the janitorial and maintenance
service business of OMSI.
OMSI, however, argues that the respondents' performance of activities
necessary and desirable to its business does not necessarily and
conclusively mean that respondents were regular employees. OMSI asserts
that respondents were project employees and their employment was
coterminous with OMSIs service contracts with the MIAA. Thus, when the
service contracts were terminated and the respondents were not re-
assigned to another project, OMSI cannot be held liable for illegal dismissal.
The argument does not persuade.
The principal test in determining whether an employee is a project
employee is whether he/she is assigned to carry out a specific project or
undertaking, the duration and scope of which are specified at the time the
employee is engaged in the project,[7] or where the work or service to be
performed is seasonal in nature and the employment is for the duration of
the season.[8] 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.[9]
In the instant case, the record is bereft of proof that the
respondents engagement as project employees has been predetermined,
as required by law. We agree with the Court of Appeals that OMSI did not
provide convincing evidence that respondents were informed that they
were to be assigned to a specific project or undertaking when OMSI hired
them. Notably, the employment contracts for the specific project signed by
the respondents were never presented. All that OMSI submitted in the
proceedings a quo are the service contracts between OMSI and the MIAA.
Clearly, OMSI utterly failed to establish by substantial evidence that,
indeed, respondents were project employees and their employment was
coterminous with the MIAA contract.
reinstatement.Accordingly, the Court of Appeals committed no reversible
error nor grave abuse of discretion in denying OMSIs petition for certiorari.
WHEREFORE, the petition for review is DENIED and the assailed
Decision and Resolution of the Court of Appeals are AFFIRMED.

Evidently cognizant of such neglect, OMSI attempted to correct the

situation by attaching copies of the application forms [10] of the respondents
to its motion for reconsideration of the Court of Appeals' Decision. Such
practice cannot be tolerated. This practice of submitting evidence late is
properly rejected as it defeats the speedy administration of justice
involving poor workers. It is also unfair.[11]

OMSI's reliance on Mamansag v. National Labor Relations

Commission,[12] Cartagenas v. Romago Electric Company, Inc.,[13] and
Sandoval Shipyards, Inc. v. National Labor Relations Commission [14] is
misplaced. Said cases are not on all fours with the case at bench. PNOC-ENERGY DEVELOPMENT G.R. No. 169353
CORPORATION, Southern Negros
Geothermal Project, Petitioner,
In Mamansag, Consumer Pulse Inc. duly presented the contract of
Present:
employment showing that Mamansag was hired for a specific project and
the completion or termination of said project was determined at the start of
the employment. In Cartagenas, documentary exhibits were offered - versus - YNARES-SANTIAGO, J.,
showing that the employee had been issued appointments from project to Chairperson,
project and was issued a notice of temporary lay-off when the project was NATIONAL LABOR RELATIONS AUSTRIA-MARTINEZ,
suspended due to lack of funds. Finally, in the case ofSandoval COMMISSION, Fourth Division, CALLEJO, SR.,
Shipyards, the termination of the project employees was duly reported to Cebu City, and PNOC-EDC, CHICO-NAZARIO, and SNGPEU-ASSOCIATED
the then Ministry of Labor and Employment. These circumstances are not LABOR NACHURA, JJ.
true in OMSI's case. As mentioned, no convincing evidence was offered to UNIONS-TUCP, LEONORA A.
prove that respondents were informed that they were to be assigned to a TORRES, ALEJANDRO B.
specific project or undertaking. Also, OMSI never reported respondents' TABAERA, JR., ARNEL T. AMOR, ROSELA S.
termination to the then Department of Labor and Employment (DOLE). In CALIMPONG, WILSON Promulgated:
Philippine Long Distance Telephone Co. v. Ylagan,[15] we held that the failure D. NUAY, and ROBERTO S. RENZAL,
of the employee to file termination reports was an indication that an Respondents. April 13, 2007
employee was not a project but a regular employee.
x--------------------------------------------------x
In termination cases, the burden of proof rests on the employer to show
that the dismissal is for a just cause. Thus, employers who hire project CALLEJO, SR., J.:
employees are mandated to state and, once its veracity is challenged, to
prove the actual basis for the latter's dismissal. [16] Unfortunately for OMSI, it Before the Court is a Petition for Review on Certiorari of the Decision[1] of
failed to discharge the burden.All that we have is OMSIs self-serving the Court of Appeals (CA) in CA-G.R. SP No. 77584 as well as its
assertion that the respondents were hired as project employees. Resolution[2] dated August 11, 2005.
Having been illegally dismissed, the NLRC cannot be considered to have
acted whimsically in granting respondents separation pay in lieu of their
The antecedents are as follows:
Petitioner PNOC-Energy Development Corporation is a governmentowned
and controlled corporation engaged in the exploration, development, and On May 29, 1998, petitioner submitted reports [3] to the Department
utilization of energy. It undertakes several projects in areas where of Labor and Employment (DOLE) Regional Sub-Branch No. VII in
geothermal energy has been discovered. Each geothermal project Dumaguete City, stating that six of its employees were being terminated.
undergoes the stages of exploration, development, and utilization or
production. For each stage, several activities are undertaken such as
Petitioner thereafter furnished the employees uniformly worded notices of
drilling, construction, civil works, structural works, mechanical works, and
termination, stating that they were being terminated from employment
electrical works until the project is finally completed. Aside from its projects
effective June 30, 1998 due to the substantial completion of the civil works
in Negros Oriental, petitioner also had geothermal projects in Negros
phase of PAL II.
Occidental, Leyte, Albay, Sorsogon, and North Cotabato.

On October 29, 1998, the six employees, herein respondents, filed before
Petitioners Southern Negros Geothermal Production Field in Negros
the National Labor Relations Commission (NLRC) a complaint for illegal
Oriental is divided into two phases: Palinpinon I (PAL I) and Palinpinon II
dismissal against petitioner. Aside from reinstatement, respondents sought
(PAL II). To augment its manpower requirement occasioned by the
the payment of backwages, salary differential, collective bargaining
increased activities in the development of PAL II, petitioner hired the
agreement benefits, damages and attorneys fees.
following employees in the Administration and
Maintenance Section:
In their Position Paper, respondents averred that they had rendered
continuous and satisfactory services from the dates of their respective
employment until illegally dismissed on June 30, 1998:
Name Date Hired Position Date
Separated
NAMES MONTHS and YEARS
1) Leonora July 3, 1995 Clerk/Typist June 3
OF SERVICE
Torres 1998 0,
1) Arnel Amor 3 years and 1 month
2) Rosela July 1, 1997 Clerk/Typist June 3
2) Rosela Calimpong 2 years and 11 months
Calimpong 1998 0,
3) Wilson Nuay 3 years and 1 month
3) Arnel Amor May 24, Helper June 3
4) Roberto Renzal 3 years and 5 months
1995 Mechanic 1998 0,
5) Alejandro Tabaera 2 years and 4 months
4) Wilson Nuay May 16, Service June 3
1995 Driver 1998 0, 6) Leonora Torres 2 years and 11 months

5) Roberto January Pipe Fitter June 3

Renzal 25, 1998 0,
1995 Respondents further contended that their dismissal from employment was
6) Alejandro February 27, Mechanic June 3 a clear case of union busting for they had previously sought union
Tabaera 1996 1998 0, membership and actually filed a notice of strike.

For its part, petitioner asseverated that respondents were contractual

The termination/expiration of their respective employment were specified employees; as such, they cannot claim to have been illegally dismissed
in their initial employment contracts, which, however, were renewed and because upon the expiration of the term of the contract or the completion
extended on their respective expiry dates. of the project, their employer-employee relationship also ended.
After evaluating the evidence presented, the Labor Arbiter rendered
judgment dismissing the complaint for lack of legal and factual basis. [4] The
Labor Arbiter ruled that respondents were not dismissed from work; the
employer-employee relationship between the parties was severed upon the
expiration of the respective contracts of respondents and the completion of
the projects concerned.
Not satisfied, respondents interposed an appeal to the NLRC which
rendered judgment reversing the decision of the Labor Arbiter. The
dispositive portion reads:
WHEREFORE, the decision of the Labor Arbiter dated May
31, 1999 is SET ASIDE and a new one is rendered
ORDERING the respondent the following:
(1) to immediately reinstate the following
complainants to their respective positions
without loss of seniority rights and other
privileges:
a) LEONORA TORRES
b) ARNEL AMOR
c) WILSON NUAY
d) ROBERTO RENZAL, and
e) ALEJANDRO TABAERA;
(2) to pay each of the complainants his/her
backwages from July 1, 1998 until actual
reinstatement at the rate of P116.00 per day
plus his/her 13th month pay and service
incentive leave pay for the same period.
(3) to pay attorneys fees equivalent to ten percent
(10%) of the total award.
The claim of Rosela Calimpong is dismissed for lack of
merit.
SO ORDERED.[5]
The NLRC ratiocinated that respondents were regular nonproject
employees for having worked for more than one year in positions that
required them to perform activities necessary and desirable in the normal
business or trade of petitioner. The NLRC further ruled that the employment
contracts of respondents were not for a specific project or for a fixed
period. According to the NLRC, the dismissals made on June 30, 1998 under
the pretext of project completion were illegal, being founded on an invalid,
unjust, and unauthorized cause.
Respondents filed a motion for reconsideration, which the
NLRC denied with modification in a Resolution [6] dated March 19, 2003. Only
respondent Rosela Calimpong was granted relief.
Aggrieved, petitioner filed a petition for certiorari before the CA
seeking to have the NLRC decision reversed. It claimed that respondents
were engaged for one definite phase of petitioners geothermal project, the
execution and implementation of the civil works portion of the Fluid
Collection and Disposal System (FCDS) and Associated Work Projects.
Petitioner averred that at the time of respondents termination, the projects
had already been substantially if not fully completed.
On August 31, 2004, the CA dismissed the
petition. The fallo of the decision reads:
WHEREFORE, premises considered, the petition is
hereby DENIED. The assailed May 23, 2001 Decision and
March 19, 2003 Resolution of the National Labor Relations
Commission, Fourth Division of Cebu City are AFFIRMED.
SO ORDERED.[7]
The CA ruled that respondents were performing activities necessary
and desirable in the normal operations of the business of petitioner. The
appellate court explained that the repeated re-hiring and the continuing
need for the services of the project employees over a span of time had
made them regular employees. The motion for reconsideration filed by
petitioner was denied by the CA in its Resolution[8] dated August 11, 2005.
Petitioner sought relief from this Court via petition for review on
certiorari.
The pivotal questions involved in this case for our resolution are:
(a) whether respondents were project employees or regular employees;
and (b) whether or not they were illegally dismissed from employment.
 Petitioner argues that respondents are project employees because
as gleaned from their standard contracts of employment, they were hired
for a specific project or undertaking, the completion or termination of which
had been determined at the time of their engagement. Their contracts
clearly indicated the completion or termination of the specific project or of
the specific phase thereof at the time they were engaged.
For their part, respondents posit that they were undeniably
performing activities which are necessary or desirable in the usual trade or
business of petitioner. They aver that the completion of their individual
employment was not determined at the time of their engagement due to
the fact that their contracts were renewed and extended over and over
again. They claim that had the periods of their employment been
determined, then their work with petitioner would not have lasted beyond
the three-month period provided in their respective initial employment
contracts. They likewise theorized that the contracts they signed were
short-term contracts covering a long period of the same activity, not for a
specific project or undertaking.
The contentions of petitioner have no merit.
Customarily, the findings made by the NLRC are afforded great
respect and are even clothed with finality and considered binding on this
Court, except that when such findings are contrary to those of the Labor
Arbiter, this Court may elect to re-examine the same, as we shall do in this
case now.
Article 280 of the Labor Code of the Philippines states
Article 280. REGULAR AND CASUAL
EMPLOYEES. 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.
Thus, the applicable formula to ascertain 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. [9] As we held in Grandspan
Development Corporation v.
Bernardo:[10]
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.[11]
As defined, project employees are those workers hired (1) for a
specific project or undertaking, and (2) the completion or termination of
such project or undertaking has been determined at the time of the
engagement of the employee.[12] However, petitioner failed to substantiate
its claim that respondents were hired merely as project employees. A
perusal of the records of the case reveals that the supposed specific project
or undertaking of petitioner was not satisfactorily identified in the
contracts of respondents. To illustrate, the following is a list of the names of
respondents and the projects written in their employment contracts:
NAMES PROJECT NAME
Leonora A. Additional Manpower cover additional
Torres workloads of PAL II transferred to PAL I
Operations,[13] PAL II Transfer to PAL I
Operations[14]
Arnel T. Amor EDC-Drilling,[15] Maintenance of Drilling
Materials,[16]Assist in Repair Maintenance of
Vehicles/Equipments at Equipment
Maintenance Section[17]
Wilson D. Nuay EDC Drilling Activities,[18] Rig #3 Operation on
OK-3RWOBL-2DWO,[19] Maintenance of In Filipinas Pre-Fabricated Building Systems (Filsystems), Inc. v.
Drilling Materials,[20] LG4D Drilling Puente,[35] the Court ruled that the length of service of a project employee
Operation,[21] SNGP FCDS is not the controlling test of employment tenure but whether or not the
Project,[22]Fabrication Personal Driver for CD employment has been fixed for a specific project or undertaking the
Turned-Over Projects[23] completion or termination of which has been determined at the time of the
Roberto S. PAL II FCDS Nasuji-NJA RI Line and Associated engagement of the employee.[36] Indeed, while length of time may not be
Renzal Works,[24]PAL II FCDS the controlling test for project employment, it is vital in determining if the
PN33/PN25 Branchline/ Nasuji-NJA- employee was hired for a specific undertaking or tasked to perform
Sogongon,[25] SNGP FCDS functions vital, necessary and indispensable to the usual business or trade
Project,[26] Cawayan Restoration of the employer. Here, respondents had been project employees several
Works,[27] SNGP FCDS Project PAL I/PAL II times over. Their employment ceased to be coterminous with specific
Refurbishments,[28] Support Workload projects when they were repeatedly re-hired by petitioner. [37] Where the
increase in Fabrication/Equipment employment of project employees is extended long after the supposed
Maintenance project has been finished, the employees are removed from the scope of
Section[29] project employees and are considered regular employees. [38]
Alejandro B. Temporary Increase in Workload of
Tabaera, Jr. Maintenance and Repair Activities of Light As regular workers, respondents are entitled to security of tenure
and Heavy Equipment, under Article 279 of the Labor Code and can only be dismissed for a just or
[30]
Troubleshooting/Repair of All authorized cause. Article 279 of the Labor Code provides:
Equipments[31]
Rosela S PAL II Transfer to PAL I Operations Clerical Article. 279. SECURITY OF TENURE. In cases of
Calimpong . Workloads,[32]Additional Manpower to cover regular employment, the employer shall not terminate the
additional workloads of PAL II transferred to services of an employee except for a just cause or when
PAL I Operations[33] 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
Unmistakably, the alleged projects stated in the employment
other benefits or their monetary equivalent computed from
contracts were either too vague or imprecise to be considered as the
the time his compensation was withheld from him up to
specific undertaking contemplated by law. Petitioners act of repeatedly and
the time of his actual reinstatement.
continuously hiring respondents to do the same kind of work belies its
contention that respondents were hired for a specific project or
undertaking. The absence of a definite duration for the project/s has led the
Court to conclude that respondents are, in fact, regular employees. In termination cases, it is incumbent upon the employer to prove by
the quantum of evidence required by law that the dismissal of an employee
Another cogent factor which militates against petitioners insistence is not illegal; otherwise the dismissal would be unjustified. [39] In the case at
that the services of respondents were terminated because the projects for bar, petitioner failed to discharge the burden.
which they were hired had been completed is the fact that respondents
contracts of employment were extended a number of times for different The notices of termination indicated that respondents services
or new projects. It must be stressed that a contract that misuses a were terminated due to the completion of the project. However, this
purported fixed-term employment to block the acquisition of tenure by allegation is contrary to the statement of petitioner in some of its pleadings
employees deserves to be struck down for being contrary to law, morals, that the project was merely substantially completed. There is likewise no
good customs, public order and public policy.[34]
proof that the project, or the phase of work to which respondents had been
assigned, was already completed at the time of their dismissal.
Since respondents were illegally dismissed from work, they are
entitled to reinstatement without loss of seniority rights, full backwages,
inclusive of allowances and other benefits or their monetary equivalent
computed from the time their compensation was withheld from them up to
the time of their actual reinstatement, pursuant to
Article 279 of the Labor Code.[40]
G.R. No. 97747 March 31, 1993
PHILIPPINE NATIONAL OIL COMPANY-ENERGY
DEVELOPMENT CORPORATION/FRANCIS
PALAFOX, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION and FRANCISCO MATA,
respondents.
NOCON, J.:
Texans used to complain that when they tried to dig for water, all they
struck was oil. On the other hand, Filipinos have been heard to complain
that every time they tried to dig for oil, all they got was water — and
steam, to boot. In the 1970's, with the energy crisis having become
unmanageable, the government decided to harness steam to drive turbine
engines to generate electricity. When petitioner Philippine National Oil
Company-Energy
Development Corporation started to develop the Bacon-Manito Geothermal
Project in Bonga, Sorsogon, one question which arose is whether or not an
employee contracted to drive for petitioner during the construction of the
steam wells is considered a project employee or a regular employee.
As summarized by the Solicitor General, the facts leading to the filing of
the instant petition, are as follows:
On November 11, 1980, petitioners hired private respondent Francisco
Mata as Service Driver on a daily wage of P39.74. Assigned to the
PNOCEDA Bacon-Manito Geothermal Project in Bonga,
Sorsogon, Sorsogon, he worked there until September 1, 1985. On this day,
his employment was terminated through a letter advice dated September
1, 1985, signed by his supervisor, B.B.
Balista, allegedly for "contract expiration" (Exh "A", p. 10, Records), even
when the project was still a continuing one.
On November 8, 1985, private respondent complained of illegal dismissal,
and accused petitioners of withholding his backwages, overtime pay, and
separation pay (p. 1, Records). A dismissal of the complaint was sought on
jurisdictional ground, petitioner company asserting that it is a government-
owned and controlled corporation, hence, its employees must be governed
WHEREFORE, in the light of the foregoing, the petition
is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 77584
and the Resolution are AFFIRMED. No costs.
SO ORDERED.
by the Civil Service Law and not by the Labor Code, and citing National
Housing Corporation v. Benjamin Juco and the NLRC (134 SCRA 176).
On February 26, 1987, Labor Arbiter Voltaire A. Balitaan dismissed the
complaint for lack of jurisdiction (pp. 116-118, Records). On appeal to
public respondent, however, the First Division, on September 16, 1988, set
aside the Labor Arbiter's decision, assumed jurisdiction over the case, and
directed the Arbitration Branch to conduct further proceedings (pp. 127-
131, Records).
Petitioners maintained that private respondent was a project employee
whose employment was for a definite period and coterminous with the
project for which he was hired. It was for this reason that his employment
was terminated.
Finding for private respondent, Executive Labor Arbiter Vito C. Bose's
Decision of August 23, 1990, held:
There is no dispute that complainant was hired as service driver assigned
in the Administrative Department of respondent since November 11, 1980
at its Bacon-Manito Geothermal Project working regularly from 6:00 A.M. to
6:00 P.M. Monday thru Saturday until he was dismissed on September 15,
1985 for alleged contract expiration. As driver assigned in the
Administrative Department servicing or performing activities which are
usually necessary or at least desirable in the business of the company. He
was actually a company driver and not a contractual project employee as
what respondent perceived him to be.
Hence, contrary to the provisions of the Employment Contract,
complainant is a regular and permanent employee of respondent entitled
to the protective mantle of the security of tenure provisions of the Labor
Code, . . . .
. . . We entertain no doubt that respondent is guilty of illegal dismissal for
having terminated the services of complainant without just or authorized
cause. The alleged contract expiration is not one of the valid or authorized
causes for dismissal . . . (pp. 6-7, Decision, pp. 175-176, Records).
and concluded:
WHEREFORE, judgment is hereby rendered finding respondent company
guilty of illegal dismissal and ordering the same to pay complainant thru
this Branch within ten (10) days from receipt of this order, the following:
1. Backwages P51,408.00
2. Overtime pay 2,100.00
3. Separation pay 3,570.00
4. Moral damages 20,000.00
5. Exemplary damages 20,000.00 6. Attorney's fee (10% of the
award) 5,350.00
—————
P102,428.80
=========
SO ORDERED (p. 8, Decision, p. 177, Records).
Dissatisfied, petitioners appealed to public respondent, on the following
grounds:
A. THAT THE EXECUTIVE LABOR ARBITER
ERRED WHEN IT RULED THAT FRANCISCO
MATA WAS A REGULAR EMPLOYEE;
B. WHEN IT RULED THAT FRANCISCO MATA WAS TERMINATED
ILLEGALLY; and
C. WHEN IT AWARDED BACKWAGES, OVERTIME PAY, MORAL
DAMAGES, EXEMPLARY DAMAGES, AND ATTORNEY'S FEES' (P. 178,
Records).
Public respondent, through its Third Division, modified the appealed
decision in its Resolution of November 29, 1990, (as follows) . . . . . .
xxx xxx xxx
WHEREFORE, premises considered, except to the awards of backwages and
separation pay which are hereby AFFIRMED, all other claims are DISMISSED
for lack of merit (pp. 4-7, Resolution, annex "H", Petition).
On January 15, 1991, petitioners filed a Motion for Reconsideration based
on practically the same grounds (Annex "I", Petition). This was denied for
lack of merit by public respondent in the second question Resolution issued
on February 15, 1991 (Annex "J", Petition). 1
Thus, petitioners filed this petition for certiorari.
The three (3) issues presented to this Court are whether or not public
respondent National Labor Relations Commission committed grave abuse
of discretion amounting to lack of jurisdiction when it ruled that Francisco
Mata was (a) a regular employee and (b) that he was illegally terminated;
and (c) when it awarded Francisco Mata backwages and separation pay.2
I each other on more or less equal terms with no moral dominance whatever
Petitioners claim that the fixed contract of employment which private
respondent entered into was read, translated to, comprehended and
voluntarily accepted by him. No evidence was presented to prove improper
pressure or undue influence when he entered, perfected and consummated
said contract. And even if private respondent's services were necessary
and desirable in petitioner's business, nevertheless private respondent's
term was limited, citing as authority Brent School v. Zamora. 3
Private respondent, while admitting such fixed term contract of
employment, counters that the same was used as a vehicle to circumvent
the law on security of tenure, as provided not only by the Labor Code but
likewise guaranteed by the Constitution.
Much can be learned from the leading case of Brent School v. Zamora,
supra. In this case, the Court analyzed the development of Article 280 from
its first version as Article 319 and its amendments under PD 850 and BP
130 and made the following observation:
Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention of
the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has
singled out: agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter. Unless thus limited in its
purview. the law would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless and arbitrary,
unjust in its effects and apt to lead to absurd and unintended
consequences.4 (Emphasis supplied)
As can be gleaned from the said case, the two guidelines, by which fixed
contracts of employments can be said NOT to circumvent security of
tenure, are either:
1. The fixed period of employment was knowingly and voluntarily
agreed upon by the parties, without any force, duress or improper pressure
being brought to bear upon the employee and absent any other
circumstances vitiating his consent;
or:
2. It satisfactorily appears that the employer and employee dealt with
being exercised by the former on the latter.
Does petitioner's fixed contract of employment with private respondent
satisfy any of the guidelines above stated?
Yes, it does.
A careful examination of the last Employment Contract signed by
respondent Mata shows that he indeed signed the same.5 In fact
petitioners claim that all the previous employment contracts were also
translated for the benefit of private respondent, and it was only when he
understood the same that he signed said contracts. As per Guideline No. 1,
given the circumstances behind private respondent Mata's employment,
private respondent is a project employee.
As explained by petitioners in their memorandum:
[I]t must be clarified that the Bacon-Manito Geothermal Project is one big
"project consisting of several phases, namely the exploration, development
and operation stages. Mata was employed in connection with the
wellcompletion project which was part of the exploration stage. Said well-
completion which follows a drilling operation is now finished and
completed. The other projects in the development stage are still on-going
but the project for which Mata's services were required is now complete
and terminated. . . .6 (Emphasis in petitioner's
memorandum)
Paraphrasing Rada v. NLRC,7 it is clear that private respondent Mata is a
project employee considering that he does not belong to a "work pool"
from which petitioner PNOC would draw workers for assignment to other
projects at its discretion. It is likewise apparent from the facts of the case
that private respondent Mata was utilized only for one particular project,
the well-completion project which was part of the exploration stage of the
PNOC Bacon-Manito Geothermal Project. Hence, private respondent Mata
can be dismissed upon the termination of the projects as there would be no
need for his services. We should not expect petitioner to continue on hiring
private respondent in the other phases of the project when his services will
no longer be needed.8
II
As a project employee, was he legally terminated?
Paragraph No. 5, Policy Instruction No. 20,9 reads, as follows:
If a construction project or any phase thereof has a duration of more than
one year and a Project employee is allowed to be employed therein for at
least one year, such employee may not be terminated until the completion
of the project or of any phase thereof in which he is employed without a
previous written clearance from the Secretary of Labor. If such an
employee is terminated without a clearance from the Secretary of Labor,
he shall be entitled to reinstatement with backwages.
As to the manner private respondent was terminated, public respondent
NLRC found it to be as follows:
[I]n the case of Ochoco vs. NLRC, 120 SCRA 774, the Supreme Court ruled
that "if petitioner was employed as a project employee, private respondent
should have submitted a report of termination to the nearest public
employment office every time his employment is terminated due to the
completion of each project as required by Policy Instruction No. 20.
Applying the (Ochoco) doctrine to the instant case, respondent corporation
should have filed as many reports of termination as there were
construction projects actually finished, considering that petitioner had
been hired since 1980 up to 1985. Not a single report was submitted by
the respondent company. This failure to submit reports of termination
convinced Us more that petitioner was indeed a regular employee. 10
The records do not show that petitioners obtained the necessary written
clearance to terminate the contract of employment of private respondent
Mata. The latter is. therefore, entitled to reinstatement with backwages.
Considering, however, that the Bacon-Manito project has already been
completed and is, presumably, now operating, 11 reinstatement of private
respondent is impossible. He is, however, entitled to backwages and
separation pay. For this purpose, We adopt the Executive Labor Arbiter's
computation as to how much backwages and separation pay private
respondent will get, as follows:
[S]ince at the time of his dismissal complainant was receiving P56.00 dally
wage then his backwages for three (3) years amounted to P51,408.00
computed as follows: P56.00 daily wage x 25.5 normal days work in a
month x 12 mos. x 3 years.
xxx xxx xxx
[W]e feel that reinstatement is no longer feasible or advisable hence,
separation pay equivalent to one-half month pay for every year of service
should take its place. Since, complainant started working with respondent
on November 11, 1980 and stopped on September 18, 1985 or five (5)
years. the complainant's separation pay should be P3,570.00
(P1,428.00 monthly rate x 5 years + 2). 12
Note, that while We have reversed the decision of the public
respondent, We still affirm the granting of backwages and separation
pay due to the fact that petitioners did not secure the necessary written
clearance from the Secretary of Labor in terminating private
respondent Mata. The dispositive portions of the public respondent's
resolutions — which. actually constitute the resolutions of public
respondent NLRC have to — be affirmed.
WHEREFORE, the petition is DISMISSED. It is hereby ORDERED that
petitioners pay private respondent Mata
P51,408.00 as backwages and P3,570.00 as separation pay.
SO ORDERED.
Narvasa, C.J., Padilla, Regalado and Campos, Jr., JJ., concur.
[G.R. No. 120969. January 22, 1998]
ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) composed
of Presiding Commissioner RAUL T. AQUINO, Commissioner ROGELIO I.
RAYALA and Commissioner VICTORIANO R. CALAYCAY (Ponente), VIC DEL
ROSARIO and VIVA
FILMS, respondents.
D E C I S I O N DAVIDE, JR., J.:
By way of this special civil action for certiorari under Rule 65 of the Rules of
Court, petitioners seek to annul the 10 February 1995 Decision[1] of the
National Labor Relations Commission (hereafter NLRC), and its 6 April 1995
Resolution[2] denying the motion to reconsider the former in NLRC-NCR-CA
No. 006195-94. The decision reversed that of the Labor Arbiter in NLRC-
NCR-Case No. 00-07-03994-92.
The parties present conflicting sets of facts.
Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by
private respondents on 18 July 1989 as part of the filming crew with a
salary of P375.00 per week. About four months later, he was designated
Assistant Electrician with a weekly salary of P400.00, which was increased
to P450.00 in May 1990. In June 1991, he was promoted to the rank of
Electrician with a weekly salary of P475.00, which was increased to
P593.00 in September 1991.
Petitioner Paulino Enero, on his part, claims that private respondents
employed him in June 1990 as a member of the shooting crew with a
weekly salary of P375.00, which was increased to P425.00 in May 1991,
then to P475.00 on 21 December 1991.[3]
Petitioners tasks consisted of loading, unloading and arranging movie
equipment in the shooting area as instructed by the cameraman, returning
the equipment to Viva Films warehouse, assisting in the fixing of the
lighting system, and performing other tasks that the cameraman and/or
director may assign.[4]
Sometime in May 1992, petitioners sought the assistance of their
supervisor, Mrs. Alejandria Cesario, to facilitate their request that private
respondents adjust their salary in accordance with the minimum wage law.
In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario
would agree to increase their salary only if they signed a blank
employment contract. As petitioners refused to sign, private respondents
forced Enero to go on leave in June 1992, then refused to take him back
when he reported for work on 20 July 1992. Meanwhile, Maraguinot was
dropped from the company payroll from 8 to 21 June 1992, but was
returned on 22 June 1992. He was again asked to sign a blank employment
contract, and when he still refused, private respondents terminated his
services on 20 July 1992.[5] Petitioners thus sued for illegal dismissal[6]
before the Labor Arbiter.
On the other hand, private respondents claim that Viva Films (hereafter
VIVA) is the trade name of Viva Productions, Inc., and that it is primarily
engaged in the distribution and exhibition of movies -- but not in the
business of making movies; in the same vein, private respondent Vic del
Rosario is merely an executive producer, i.e., the financier who invests a
certain sum of money for the production of movies distributed and
exhibited by VIVA.[7]
Private respondents assert that they contract persons called producers --
also referred to as associate producers[8] -- to produce or make movies for
private respondents; and contend that petitioners are project employees of
the associate producers who, in turn, act as independent contractors. As
such, there is no employer-employee relationship between petitioners and
private respondents.
Private respondents further contend that it was the associate producer of
the film Mahirap Maging Pogi, who hired petitioner Maraguinot. The movie
shot from 2 July up to 22 July 1992, and it was only then that Maraguinot
was released upon payment of his last salary, as his services were no
longer needed. Anent petitioner Enero, he was hired for the movie entitled
Sigaw ng Puso, later re-titled Narito ang Puso. He went on vacation on 8
June 1992, and by the time he reported for work on 20 July 1992, shooting
for the movie had already been completed.[9]
After considering both versions of the facts, the Labor Arbiter found as
follows:
On the first issue, this Office rules that complainants are the employees of
the respondents. The producer cannot be considered as an independent
contractor but should be considered only as a labor-only contractor and as
such, acts as a mere agent of the real employer, the herein respondents.
Respondents even failed to name and specify who are the producers. Also,
it is an admitted fact that the complainants received their salaries from the
respondents. The case cited by the respondents, Rosario Brothers, Inc.
vs.Ople, 131 SCRA 72 does not apply in this case.
It is very clear also that complainants are doing activities which are
necessary and essential to the business of the respondents, that of movie-
making. Complainant Maraguinot worked as an electrician while
complainant Enero worked as a crew [member].[10]
Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as
follows:
WHEREFORE, judgment is hereby rendered declaring that complainants
were illegally dismissed.
Respondents are hereby ordered to reinstate complainants to their former
positions without loss [of] seniority rights and pay their backwages starting
July 21, 1992 to December 31, 1993 temporarily computed in the amount
of P38,000.00 for complainant Paulino Enero and P46,000.00 for
complainant Alejandro Maraguinot, Jr. and thereafter until actually
reinstated.
Respondents are ordered to pay also attorneys fees equivalent to ten
(10%) and/or P8,400.00 on top of the award.[11]
Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No.
006195-94). In its decision[12] of 10 February 1995, the NLRC found the
following circumstances of petitioners work clearly established:
1. Complainants [petitioners herein] were hired for specific movie projects
and their employment was co-terminus with each movie project the
completion/termination of which are pre-determined, such fact being made
known to complainants at the time of their engagement.
xxx
2. Each shooting unit works on one movie project at a time. And the
work of the shooting units, which work independently from each other, are
not continuous in nature but depends on the availability of movie projects.
3. As a consequence of the non-continuous work of the shooting
units, the total working hours logged by complainants in a month show
extreme variations... For instance, complainant Maraguinot worked for only
1.45 hours in June 1991 but logged a total of 183.25 hours in January 1992.
Complainant Enero logged a total of only 31.57 hours in September 1991
but worked for 183.35 hours the next month, October 1991.
4. Further shown by respondents is the irregular work schedule of
complainants on a daily basis. Complainant Maraguinot was supposed to
report on 05 August 1991 but reported only on 30 August 1991, or a gap of
25 days. Complainant Enero worked on 10 September 1991 and his next
scheduled working day was 28 September 1991, a gap of 18 days.
5. The extremely irregular working days and hours of complainants
work explain the lump sum payment for complainants services for each
movie project. Hence, complainants were paid a standard weekly salary
regardless of the number of working days and hours they logged in.
Otherwise, if the principle of no work no pay was strictly applied,
complainants earnings for certain weeks would be very negligible.
6. Respondents also alleged that complainants were not prohibited
from working with such movie companies like Regal, Seiko and FPJ
Productions whenever they are not working for the independent movie
producers engaged by respondents... This allegation was never rebutted by
complainants and should be deemed admitted.
The NLRC, in reversing the Labor Arbiter, then concluded that these
circumstances, taken together, indicated that complainants (herein
petitioners) were project employees.
After their motion for reconsideration was denied by the NLRC in its
Resolution[13] of 6 April 1995, petitioners filed the instant petition,
claiming that the NLRC committed grave abuse of discretion amounting to
lack or excess of jurisdiction in: (1) finding that petitioners were project
employees; (2) ruling that petitioners were not illegally dismissed; and (3)
reversing the decision of the Labor Arbiter.
To support their claim that they were regular (and not project) employees
of private respondents, petitioners cited their performance of activities that
were necessary or desirable in the usual trade or business of private
respondents and added that their work was continuous, i.e., after one
project was completed they were assigned to another project. Petitioners
thus considered themselves part of a work pool from which private
respondents drew workers for assignment to different projects. Petitioners
lamented that there was no basis for the NLRCs conclusion that they were
project employees, while the associate producers were independent
contractors; and thus reasoned that as regular employees, their dismissal
was illegal since the same was premised on a false cause, namely, the
completion of a project, which was not among the causes for dismissal
allowed by the Labor Code.
Private respondents reiterate their version of the facts and stress that their
evidence supports the view that petitioners are project employees; point to
petitioners irregular work load and work schedule; emphasize the NLRCs
finding that petitioners never controverted the allegation that they were
not prohibited from working with other movie companies; and ask that the
facts be viewed in the context of the peculiar characteristics of the movie
industry.
The Office of the Solicitor General (OSG) is convinced that this petition is
improper since petitioners raise questions of fact, particularly, the NLRCs
finding that petitioners were project employees, a finding supported by
substantial evidence; and submits that petitioners reliance on Article 280
of the Labor Code to support their contention that they should be deemed
regular employees is misplaced, as said section merely distinguishes
between two types of employees, i.e., regular employees and casual
employees, for purposes of determining the right of an employee to certain
benefits.
The OSG likewise rejects petitioners contention that since they were hired
not for one project, but for a series of projects, they should be deemed
regular employees. Citing Mamansag v. NLRC,[14] the OSG asserts that
what matters is that there was a time-frame for each movie project made
known to petitioners at the time of their hiring. In closing, the OSG
disagrees with petitioners claim that the NLRCs classification of the movie
producers as independent contractors had no basis in fact and in law,
since, on the contrary, the NLRC took pains in explaining its basis for its
decision.
As regards the propriety of this action, which the Office of the Solicitor
General takes issue with, we rule that a special civil action for certiorari
under Rule 65 of the Rules of Court is the proper remedy for one who
complains that the NLRC acted in total disregard of evidence material to or
decisive of the controversy.[15] In the instant case, petitioners allege that
the NLRCs conclusions have no basis in fact and in law, hence the petition
may not be dismissed on procedural or jurisdictional grounds.
The judicious resolution of this case hinges upon, first, the determination of
whether an employer-employee relationship existed between petitioners
and private respondents or any one of private respondents. If there was
none, then this petition has no merit; conversely, if the relationship
existed, then petitioners could have been unjustly dismissed.
A related question is whether private respondents are engaged in the
business of making motion pictures. Del Rosario is necessarily engaged in
such business as he finances the production of movies. VIVA, on the other
hand, alleges that it does not make movies, but merely distributes and
exhibits motion pictures. There being no further proof to this effect, we
cannot rely on this self-serving denial. At any rate, and as will be discussed
below, private respondents evidence even supports the view that VIVA is
engaged in the business of making movies.
We now turn to the critical issues. Private respondents insist that
petitioners are project employees of associate producers who, in turn, act
as independent contractors. It is settled that the contracting out of labor is
allowed only in case of job contracting. Section 8, Rule VIII, Book III of the
Omnibus Rules Implementing the Labor Code describes permissible job
contracting in this wise:
Sec. 8. Job contracting. -- There is job contracting permissible under the
Code if the following conditions are met:
(1) The contractor carries on an independent business and undertakes
the contract work on his own account under his own responsibility
according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of
tools, equipment, machineries, work premises, and other materials which
are necessary in the conduct of his business.
Assuming that the associate producers are job contractors, they must then
be engaged in the business of making motion pictures. As such, and to be
a job contractor under the preceding description, associate producers must
have tools, equipment, machinery, work premises, and other materials
necessary to make motion pictures. However, the associate producers here
have none of these. Private respondents evidence reveals that the movie-
making equipment are supplied to the producers and owned by VIVA.
These include generators,[16] cables and wooden platforms,[17] cameras
and shooting equipment;[18] in fact, VIVA likewise owns the trucks used to
transport the equipment.[19] It is thus clear that the associate producer
merely leases the equipment from VIVA.[20] Indeed, private respondents
Formal Offer of Documentary Evidence stated one of the purposes of
Exhibit 148 as:
To prove further that the independent Producers rented Shooting Unit No. 2
from Viva to finish their films.[21]
While the purpose of Exhibits 149, 149-A and 149-B was:
[T]o prove that the movies of Viva Films were contracted out to the
different independent Producers who rented Shooting Unit No. 3 with a
fixed budget and time-frame of at least 30 shooting days or 45 days
whichever comes first.[22]
Private respondents further narrated that VIVAs generators broke down
during petitioners last movie project, which forced the associate producer
concerned to rent generators, equipment and crew from another company.
[23] This only shows that the associate producer did not have substantial
capital nor investment in the form of tools, equipment and other materials
necessary for making a movie. Private respondents in effect admit that
their producers, especially petitioners last producer, are not engaged in
permissible job contracting.
If private respondents insist that their associate producers are labor
contractors, then these producers can only be laboronly contractors,
defined by the Labor Code as follows: Art. 106. Contractor or
subcontractor.-- x x x
There is labor-only contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others, and the
workers recruited and placed by such persons are performing activities
which are directly related to the principal business of such employer. In
such cases, the person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
A more detailed description is provided by Section 9, Rule VIII, Book III of
the Omnibus Rules Implementing the Labor Code:
Sec. 9. Labor-only contracting. -- (a) Any person who undertakes to supply
workers to an employer shall be deemed to be engaged in labor-only
contracting where such person:
(1) Does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such person are performing
activities which are directly related to the principal business or operations
of the employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and
the person acting as contractor shall be considered merely as an agent or
intermediary of the employer who shall be responsible to the workers in
the same manner and extent as if the latter were directly employed by
him.
(c) For cases not falling under this Article, the Secretary of Labor shall
determine through appropriate orders whether or not the contracting out of
labor is permissible in the light of the circumstances of each case and after
considering the operating needs of the employer and the rights of the
workers involved. In such case, he may prescribe conditions and
restrictions to insure the protection and welfare of the workers.
As labor-only contracting is prohibited, the law considers the person or
entity engaged in the same a mere agent or intermediary of the direct
employer. But even by the preceding standards, the associate producers of
VIVA cannot be considered labor-only contractors as they did not supply,
recruit nor hire the workers. In the instant case, it was Juanita Cesario,
Shooting Unit Supervisor and an employee of VIVA, who recruited crew
members from an available group of free-lance workers which includes the
complainants Maraguinot and Enero.[24] And in their Memorandum,
private respondents declared that the associate producer hires the services
of... 6) camera crew which includes (a) cameraman; (b) the utility crew; (c)
the technical staff; (d) generator man and electrician; (e) clapper; etc....
[25] This clearly showed that the associate producers did not supply the
workers required by the movie project.
The relationship between VIVA and its producers or associate producers
seems to be that of agency,[26] as the latter make movies on behalf of
VIVA, whose business is to make movies. As such, the employment
relationship between petitioners and producers is actually one between
petitioners and VIVA, with the latter being the direct employer.
The employer-employee relationship between petitioners and VIVA can
further be established by the control test. While four elements are usually
considered in determining the existence of an employment relationship,
namely: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employees conduct, the most important element is
the employers control of the employees conduct, not only as to the result
of the work to be done but also as to the means and methods to
accomplish the same.[27] These four elements are present here. In their
position paper submitted to the Labor Arbiter, private respondents
narrated the following circumstances:
[T]he PRODUCER has to work within the limits of the budget he is given by
the company, for as long as the ultimate finish[ed] product is acceptable to
the company...
To ensure that quality films are produced by the PRODUCER who is an
independent contractor, the company likewise employs a Supervising
PRODUCER, a Project accountant and a Shooting unit supervisor. The
Companys Supervising PRODUCER is Mr. Eric Cuatico, the Project
accountant varies from time to time, and the Shooting Unit Supervisor is
Ms.
Alejandria Cesario.
The Supervising PRODUCER acts as the eyes and ears of the company and
of the Executive Producer to monitor the progress of the PRODUCERs work
accomplishment. He is there usually in the field doing the rounds of
inspection to see if there is any problem that the PRODUCER is
encountering and to assist in threshing out the same so that the film
project will be finished on schedule. He supervises about 3 to 7 movie
projects simultaneously [at] any given time by coordinating with each film
PRODUCER. The Project Accountant on the other hand assists the
PRODUCER in monitoring the actual expenses incurred because the
company wants to insure that any additional budget requested by the
PRODUCER is really justified and warranted especially when there is a
change of original plans to suit the tast[e] of the company on how a certain
scene must be presented to make the film more interesting and more
commercially viable. (emphasis ours)
VIVAs control is evident in its mandate that the end result must be a
quality film acceptable to the company. The means and methods to
accomplish the result are likewise controlled by VIVA, viz., the movie
project must be finished within schedule without exceeding the budget,
and additional expenses must be justified; certain scenes are subject to
change to suit the taste of the company; and the Supervising Producer, the
eyes and ears of VIVA and del Rosario, intervenes in the movie-making
process by assisting the associate producer in solving problems
encountered in making the film.
It may not be validly argued then that petitioners are actually subject to
the movie directors control, and not VIVAs direction. The director merely
instructs petitioners on how to better comply with VIVAs requirements to
ensure that a quality film is completed within schedule and without
exceeding the budget. At bottom, the director is akin to a supervisor who
merely oversees the activities of rank-and-file employees with control
ultimately resting on the employer.
Moreover, appointment slips [28] issued to all crew members state:
During the term of this appointment you shall comply with the duties and
responsibilities of your position as well as observe the rules and regulations
promulgated by your superiors and by Top Management.
The words superiors and Top Management can only refer to the superiors
and Top Management of VIVA. By commanding crew members to observe
the rules and regulations promulgated by VIVA, the appointment slips only
emphasize VIVAs control over petitioners.
Aside from control, the element of selection and engagement is likewise
present in the instant case and exercised by VIVA. A sample appointment
slip offered by private respondents to prove that members of the shooting
crew except the driver are project employees of the Independent
Producers[29] reads as follows:
VIVA PRODUCTIONS, INC.
16 Sct. Albano St.
Diliman, Quezon City
PEDRO NICOLAS Date: June 15, 1992
__________________
APPOINTMENT SLIP
You are hereby appointed as SOUNDMAN for the film project entitled
MANAMBIT. This appointment shall be effective upon the commencement
of the said project and shall continue to be effective until the completion of
the same.
For your services you shall receive the daily/weekly/monthly compensation
of P812.50.
During the term of this appointment you shall comply with the duties and
responsibilities of your position as well as observe the rules and regulations
promulgated by your superiors and by Top Management.
Very truly yours,
(an illegible signature)
CONFORME:
___________________
Name of appointee
Signed in the presence of:
_____________________
Notably, nowhere in the appointment slip does it appear that it was the
producer or associate producer who hired the crew members; moreover, it
is VIVAs corporate name which appears on the heading of the appointment
slip. What likewise tells against VIVA is that it paid petitioners salaries as
evidenced by vouchers, containing VIVAs letterhead, for that purpose.[30]
All the circumstances indicate an employment relationship between
petitioners and VIVA alone, thus the inevitable conclusion is that
petitioners are employees only of VIVA.
The next issue is whether petitioners were illegally dismissed. Private
respondents contend that petitioners were project employees whose
employment was automatically terminated with the completion of their
respective projects. Petitioners assert that they were regular employees
who were illegally dismissed.
It may not be ignored, however, that private respondents expressly
admitted that petitioners were part of a work pool;[31] and, while
petitioners were initially hired possibly as project employees, they had
attained the status of regular employees in view of VIVAs conduct.
A project employee or a member of a work pool may acquire the status of
a regular employee when the following concur:
1) There is a continuous rehiring of project employees even after
cessation of a project;[32] and
2) The tasks performed by the alleged project employee are vital,
necessary and indispensable to the usual business or trade of the
employer.[33]
However, the length of time during which the employee was continuously
re-hired is not controlling, but merely serves as a badge of regular
employment.[34]
In the instant case, the evidence on record shows that petitioner Enero was
employed for a total of two (2) years and engaged in at least eighte
en (18) projects, while petitioner Maraguinot was employed for some three
(3) years and worked on at least twenty-three (23) projects.[35] Moreover,
as petitioners tasks involved, among other chores, the loading, unloading
and arranging of movie equipment in the shooting area as instructed by
the cameramen, returning the equipment to the Viva Films warehouse, and
assisting in the fixing of the lighting system, it may not be gainsaid that t
hese tasks were vital, necessary and indispensable to the usual business or
trade of the employer. As regards the underscored phrase, it has been held
that this is ascertained by considering the nature of the work performed
and its relation to the scheme of the particular business or trade in its
entirety.[36]
A recent pronouncement of this Court anent project or work pool
employees who had attained the status of regular employees proves most
instructive:
The denial by petitioners of the existence of a work pool in the company
because their projects were not continuous is amply belied by petitioners
themselves who admit that: xxx
A work pool may exist although the workers in the pool do not receive
salaries and are free to seek other employment during temporary breaks in
the business, provided that the worker shall be available when called to
report for a project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project workers insofar as
the effect of temporary cessation of work is concerned. This is beneficial to
both the employer and employee for it prevents the unjust situation of
coddling labor at the expense of capital and at the same time enables the
workers to attain the status of regular employees. Clearly, the continuous
rehiring of the same set of employees within the framework of the Lao
Group of Companies is strongly indicative that private respondents were an
integral part of a work pool from which petitioners drew its workers for its
various projects.
In a final attempt to convince the Court that private respondents were
indeed project employees, petitioners point out that the workers were not
regularly maintained in the payroll and were free to offer their services to
other companies when there were no on-going projects. This argument
however cannot defeat the workers status of regularity. We apply by
analogy the case of Industrial-Commercial-Agricultural Workers
Organization v. CIR [16 SCRA 562, 567-68 (1966)] which deals with regular
seasonal employees.There we held: xxx
Truly, the cessation of construction activities at the end of every project is
a foreseeable suspension of work. Of course, no compensation can be
demanded from the employer because the stoppage of operations at the
end of a project and before the start of a new one is regular and expected
by both parties to the labor relations. Similar to the case of regular
seasonal employees, the employment relation is not severed by merely
being suspended. [citing Manila Hotel Co. v. CIR, 9 SCRA 186 (1963)] The
employees are, strictly speaking, not separated from services but merely
on leave of absence without pay until they are reemployed. Thus we
cannot affirm the argument that non-payment of salary or non-inclusion in
the payroll and the opportunity to seek other employment denote project
employment.[37] (underscoring supplied)
While Lao admittedly involved the construction industry, to which Policy
Instruction No. 20/Department Order No. 19[38] regarding work pools
specifically applies, there seems to be no impediment to applying the
underlying principles to industries other than the construction industry.[39]
Neither may it be argued that a substantial distinction exists between the
projects undertaken in the construction industry and the motion picture
industry. On the contrary, the raison d' etre of both industries concern
projects with a foreseeable suspension of work.
At this time, we wish to allay any fears that this decision unduly burdens
an employer by imposing a duty to re-hire a project employee even after
completion of the project for which he was hired. The import of this
decision is not to impose a positive and sweeping obligation upon the
employer to re-hire project employees. What this decision merely
accomplishes is a judicial recognition of the employment status of a project
or work pool employee in accordance with what is fait accompli, i.e., the
continuous re-hiring by the employer of project or work pool employees
who perform tasks necessary or desirable to the employers usual business
or trade. Let it not be said that this decision coddles labor, for as Lao has
ruled, project or work pool employees who have gained the status of
regular employees are subject to the no work-no pay principle, to repeat:
A work pool may exist although the workers in the pool do not receive
salaries and are free to seek other employment during temporary breaks in
the business, provided that the worker shall be available when called to
report for a project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project workers insofar as
the effect of temporary cessation of work is concerned. This is beneficial to
both the employer and employee for it prevents the unjust situation of
coddling labor at the expense of capital and at the same time enables the
workers to attain the status of regular employees.
The Courts ruling here is meant precisely to give life to the constitutional
policy of strengthening the labor sector,[40] but, we stress, not at the
expense of management. Lest it be misunderstood, this ruling does not
mean that simply because an employee is a project or work pool employee
even outside the construction industry, he is deemed, ipso jure, a regular
employee. All that we hold today is that once a project or work pool
employee has been: (1) continuously, as opposed to intermittently, re-hired
by the same employer for the same tasks or nature of tasks; and (2) these
tasks are vital, necessary and indispensable to the usual business or trade
of the employer, then the employee must be deemed a regular employee,
pursuant to Article 280 of the Labor Code and jurisprudence. To rule
otherwise would allow circumvention of labor laws in industries not falling
within the ambit of Policy Instruction No. 20/Department Order No. 19,
hence allowing the prevention of acquisition of tenurial security by project
or work pool employees who have already gained the status of regular
employees by the employers conduct.
In closing then, as petitioners had already gained the status of regular
employees, their dismissal was unwarranted, for the cause invoked by
private respondents for petitioners dismissal, viz., completion of project,
was not, as to them, a valid cause for dismissal under Article 282 of the
Labor Code. As such, petitioners are now entitled to back wages and
reinstatement, without loss of seniority rights and other benefits that may
have accrued.[41] Nevertheless, following the principles of suspension of
work and no pay between the end of one project and the start of a new
one, in computing petitioners back wages, the amounts corresponding to
what could have been earned during the periods from the date petitioners
were dismissed until their reinstatement when petitioners respective
Shooting Units were not undertaking any movie projects, should be
deducted.
Petitioners were dismissed on 20 July 1992, at a time when Republic Act D.M. CONSUNJI CORPORATION, Petitioner,
No. 6715 was already in effect. Pursuant to Section 34 thereof which vs.
amended Section 279 of the Labor Code of the Philippines and Bustamante ROGELIO P. BELLO, Respondent.
v. NLRC,[42] petitioners are entitled to receive full back wages from the
date of their dismissal up to the time of their reinstatement, without DECISION
deducting whatever earnings derived elsewhere during the period of illegal
dismissal, subject, however, to the above observations. BERSAMIN, J.:
WHEREFORE, the instant petition is GRANTED. The assailed decision of the
National Labor Relations Commission in NLRC NCR CA No. 006195-94 dated
For the resignation of an employee to be a viable defense in an action for
10 February 1995, as well as its Resolution dated 6 April 1995, are hereby
illegal dismissal, an employer must prove that the resignation was
ANNULLED and SET ASIDE for having been rendered with grave abuse of
voluntary, and its evidence thereon must be clear, positive and convincing.
discretion, and the decision of the Labor Arbiter
The employer cannot rely on the weakness of the employee's evidence.

in NLRC NCR Case No. 00-07-03994-92 is REINSTATED, subject, however, The Case
to the modification above mentioned in the computation of back wages.

We now review the decision promulgated on February 18, 2003, 1 whereby

the Court of Appeals (CA) granted the petition for certiorari of respondent
No pronouncement as to costs. Rogelio P. Bello, reversed and set aside the resolutions dated January 3,
SO ORDERED. 20022and February 26, 20023 of the National Labor Relations Commission
(NLRC), and reinstated the decision rendered on January 9, 2001 by the
Executive Labor Arbiter (ELA) declaring Bello to have been illegally
dismissed and ordering petitioner D.M. Consunji Corporation (DMCI) to
reinstate him, and to pay him full backwages reckoned from the time of his
dismissal until his actual reinstatement.4

Antecedents

Bello brought a complaint for illegal dismissal and damages against DMCI
and/or Rachel Consunji. In his position paper, he claimed that DMCI had
employed him as a mason without any interruption from February 1, 1990
until October 10, 1997 at an hourly rate of ₱25.081; that he had been a
very diligent and devoted worker and had served DMCI as best as he could
and without any complaints; that he had never violated any company
rules; that his job as a mason had been necessary and desirable in the
usual business or trade of DMCI; that he had been diagnosed to be
suffering from pulmonary tuberculosis, thereby necessitating his leave of
absence; that upon his recovery, he had reported back to work, but DMCI
had refused to accept him and had instead handed to him a termination
paper; that he had been terminated due to "RSD" effective November 5,
1997; that he did not know the meaning of "RSD" as the cause of his
termination; that the cause had not been explained to him; that he had not
been given prior notice of his termination; that he had not been paid
separation pay as mandated by law; that at that time of his dismissal,
DMCI’s projects had not yet been completed; and that even if he had been
terminated due to an authorized cause, he should have been given at least
one month pay or at least one-half month pay for every year of service he
had rendered, whichever was higher.
In its position paper submitted on March 6, 2000, 5 DMCI contended that
Bello had only been a project employee, as borne out by his contract of
employment and appointment papers; that after his termination from
employment, it had complied with the reportorial requirements of the
Department of Labor and Employment (DOLE) pursuant to the mandates of
Policy Instruction No. 20, as revised by Department Order No. 19, series of
1993; and that although his last project employment contract had been set
to expire on October 7, 1997, he had tendered his voluntary resignation on
October 4, 1997 for health reasons that had rendered him incapable of
performing his job, per his resignation letter.
On January 9, 2001, ELA Isabel G. Panganiban-Ortiguerra rendered a
decision,6 disposing thusly:
WHEREFORE, premises considered, judgment is hereby rendered declaring
respondent company DM Consunji, Inc., guilty of illegal dismissal and it is
hereby ordered to reinstate complainant to his former position without loss
of seniority rights and to pay him full backwages reckoned from the time of
his dismissal up to his actual reinstatement which as of this date is in the
amount of ₱232,648,81.
SO ORDERED.
DMCI appealed to the NLRC, citing the following grounds, namely:
I. THE LABOR ARBITER A QUO GRAVELY ABUSED HER DISCRETION
IN HOLDING THAT COMPLAINANT IS A REGULAR EMPLOYEE NOT
EVEN AS THIS IS CONTRARY TO LAW, EVIDENCE AND
JURISPRUDENCE.
II. THE LABOR ARBITER A QUO GRAVELY ABUSED HER DISCRETION
IN DECLARING COMPLAINANT’S TERMINATION AS ILLEGAL EVEN AS
HE HAD VOLUNTARILY RESIGNED
FROM HIS LAST PROJECT EMPLOYMENT.7
On January 3, 2002, the NLRC issued its resolution setting aside the
decision of ELA Panganiban-Ortiguerra, and dismissing Bello’s claims, 8 viz:
Addressing the first issue on appeal, a cursory reading of the records
indeed show that contrary to the declaration of the Labor Arbiter that
complainant’s years of service was without any gaps and was continuous
to warrant regularity of employment, the same was not so. In fine what
was clearly illustrated by respondents in their appeal memorandum by way
of matrix, there were considerable and substantial gaps between
complainant’s employment. In addition, it is of judicial notice that
respondent company, being one of the biggest and well known
construction company, as even admitted by the Executive Labor Arbiter,
cater to so many clients/projects. So much that it is not improbable that
complainant may be hired continuously one after the other in different
projects considering that he is a mason whose functions are more than
highly needed in construction. Even as it is, the matrix presented by
respondents still showed considerable gaps. The fact that sometimes
complainant’s contract is extended beyond approximated date of finish
contract, do not in anyway (sic) readily make his employment regular. For it
is common among construction projects for a certain phase of work to be
extended, depending on varied factors such as weather, availability of
materials, whims and caprice of clients and many more. So much so, it was
error on the part of the Executive Labor Arbiter to take this against
respondents and pin it as another determining factor of regularity of
employment. Neither can it be said that as mason complainant’s function
is necessary and desirable to respondents business hence, he is a regular
employee. x x x we simply cannot close our eyes to the reality that
complainant is a project employee and that the case she is citing does not
fit herein as it is akin to a square peg being in a round hole. To top it all,
records show that respondents have faithfully complied with the provision
of Policy Instruction No. 20 on project employees.
Lastly, records do show that complainant executed a voluntary resignation.
And while there may indeed be a slight difference in the signature and
handwriting, this do not readily mean that complainant did not execute the
same as was the inclination of the Executive Labor Arbiter. For one, she has
no expertise to determine so. Secondly, and as was validly pointed out,
complainant if indeed he was coerced, cheated or shortchanged, would
ordinarily almost immediately seek redress. In the case at bar, he sat it out
and waited two (2) years. Is this case, an afterthought? We believe
so.1âwphi1
ACCORDINGLY, finding merit in respondent’s appeal, the decision of the
Executive Labor Arbiter is hereby SET ASIDE and this case DISMISSED for
want of merits (sic).
SO ORDERED.
Bello moved for a reconsideration,9 but the NLRC denied his motion on
February 26, 2002.10
Ruling of the CA
Bello then assailed the dismissal of his complaint via petition for
certiorari,11 averring that the NLRC committed grave abuse of discretion
amounting to lack of jurisdiction in upholding DMCI’s appeal, in setting
aside the decision of the ELA, and in dismissing his complaint and denying
his motion for reconsideration.
On February 18, 2003, the CA promulgated its assailed decision, 12 finding
Bello to have acquired the status of a regular employee although he had
started as a project employee of DMCI by his having been employed as a
mason who had performed tasks that had been usually necessary and
desirable in the business or trade of DMCI continuously from February 1,
1990 to October 5, 1997; that his repeated re-hiring and the continuing
need for his services over a long span of time had undeniably made him a
regular employee; that DMCI’s compliance with the reportorial
requirements under Policy Instruction No. 20 (by which the project
employer was required to make a report to the Department of Labor and
Employment of every termination of its projects) could not preclude the
acquisition of tenurial security by the employee; that the cause of his
dismissal after he had acquired the status of a regular employee – the
completion of the phase of work – could not be considered as a valid cause
under Article 282 of the Labor Code; and that his supposedly voluntary
resignation could not be accorded faith after the ELA had concluded that
the handwriting in the supposed resignation letter was "undeniably
different from that of complainant," a fact "not rebutted by herein
respondents."
DMCI sought the reconsideration of the decision, but the CA denied its
motion on July 24, 2003.13
Issues
Hence, DMCI appeals, presenting the following issues for our consideration
and resolution, to wit:
I. WHETHER OR NOT PRIVATE RESPONDENT WAS A REGULAR
EMPLOYEE; AND
II. WHETHER OR NOT PRIVATE RESPONDENT WAS DISMISSED OR
VOLUNTARILY RESIGNED.
Ruling of the Court
The petition for review lacks merit.
The provision that governs the first issue is Article 280 of the Labor Code,
which is quoted hereunder as to its relevant part, viz:
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 and desirable to the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the employment
is for the duration of the season. (Emphasis supplied)
xxxx
A project employee is, therefore, one who is hired for a specific project or
undertaking, and the completion or termination of such project or
undertaking has been determined at the time of engagement of the
employee.14 In the context of the law, Bello was a project employee of
DMCI at the beginning of their employer-employee relationship. The project
employment contract they then entered into clearly gave notice to him at
the time of his engagement about his employment being for a specific
project or phase of work. He was also thereby notified of the duration of
the project, and the determinable completion date of the project.
However, the history of Bello’s appointment and employment showed that
he performed his tasks as a mason in DMCI’s various constructions
projects, as the following tabulation indicates, to wit:15
Duration of Actual Caus Annexe
Project
Employment Termination e s
SM 2-01-90 to 05-01-
10-28-91 CPW 1 & 1-A
Megamall 90
10-28-91 to 01-28-
JMT 05-29-92 CPW 2 & 2-A
91
 Renaissanc 05-29-92 to 08-29- Still, DMCI contends that Bello’s services as a mason were deemed
09-10-92 CPW 3 & 3-A necessary and desirable in its usual business only for the period of time it
e 92
had taken it to complete the project.
09-11-92 to 12-11-
Bayview 06-15-93 CPW 4 &4-A
92 The contention may be correct if each engagement of Bello as a mason
Golden Bay 06-17-93 to 09-17- over the span of eight years was to be treated separately. The contention
04-18-94 CPW 5 & 5-A cannot be upheld, however, simply because his successive reengagement
I 93
in order to perform the same kind of work as a mason firmly manifested
Golden Bay 04-18-94 to 07-18- the necessity and desirability of his work in DMCI’s usual business of
09-06-94 CPW 6& 6-A
II 94 construction.20
09-07-94 to 10-07-
ADC 02-09-96 CPW 7 & 7-A
94 Lastly, DMCI claims that Bello voluntarily resigned from work. It presented
his supposed handwritten resignation letter to support the claim. However,
02-10-96 to 03-10-
ADC 10-01-96 CPW 8 & 8-A Bello denied having resigned, explaining that he had signed the letter
96
because DMCI had made him believe that the letter was for the purpose of
09-07-97 to 10-07- extending his sick leave.
ICEC 10-07-97 CPW 9 & 9-A
97
In resolving the matter against DMCI, the CA relied on the conclusion by
Based on the foregoing, we affirm the CA’s conclusion that Bello acquired ELA Panganiban-Ortiguerra that she could not give credence to the
in time the status of a regular employee by virtue of his continuous work voluntary resignation for health reasons in the face of Bello’s declaration
as a mason of DMCI. The work of a mason like him – a skilled workman that he had been led to sign the letter to obtain the extension of his leave
working with stone or similar material16 – was really related to building or of absence due to illness, and on her observation that "the handwriting in
constructing, and was undoubtedly a function necessary and desirable to the supposed resignation letter is undeniably different from that of
the business or trade of one engaged in the construction industry like complainant," something that she said DMCI had not rebutted. 21
DMCI. His being hired as a mason by DMCI in not one, but several of its
projects revealed his necessity and desirability to its construction business. The CA’s reliance on the conclusion and finding by ELA Panganiban-
Ortiguerra was warranted. Her observation that the handwriting in the
It is settled that the extension of the employment of a project employee resignation letter was "undeniably different" from that of Bello could not be
long after the supposed project has been completed removes the ignored or shunted aside simply because she had no expertise to make
employee from the scope of a project employee and makes him a regular such a determination, as the NLRC tersely stated in its decision. To begin
employee.17 In this regard, the length of time of the employee’s service, with, her supposed lack of expertise did not appear in the records,
while not a controlling determinant of project employment, is a strong rendering the NLRC's statement speculative and whimsical. If we were now
factor in determining whether he was hired for a specific undertaking or in to outrightly discount her competence to make that observation, we would
fact tasked to perform functions vital, necessary and indispensable to the disturb the time-honored practice of according respect to the findings of
usual business or trade of the employer.18 On the other hand, how DMCI the first-line trier of facts in order to prefer the speculative and whimsical
chose to categorize the employment status of Bello was not decisive of his statement of an appellate forum like the NLRC. Yet, even had the letter
employment status. What were of consequence in that respect were his been actually signed by him, the voluntariness of the resignation could not
actual functions and the length of his stay with DMCI. Verily, the principal be assumed from such fact alone. His claim that he had been led to believe
test for determining whether an employee is a project employee, as that the letter would serve only as the means of extending his sick leave
distinguished from a regular employee, is whether or not he is assigned to from work should have alerted DMCI to the task of proving the
carry out a specific project or undertaking, the duration and scope of which voluntariness of the resignation. It was obvious that, if his claim was true,
are specified at the time he is engaged for the project. 19 then he did not fully comprehend the import of the letter, rendering the
resignation farcical. The doubt would then be justifiably raised against the
letter being at all intended to end his employment. Under the
circumstances, DMCI became burdened with the obligation to prove the Contract of Employment for Specific Project or
due execution and genuineness of the document as a letter of Undertaking. Petitioners' contracts were renewed from time to time, until
resignation.22 May 1999 when they were informed that their contracts will not be
renewed anymore.
We reiterate that it is axiomatic in labor law that the employer who
interposes the defense of voluntary resignation of the employee in an Petitioners filed a complaint for illegal dismissal, regularization, incentive
illegal dismissal case must prove by clear, positive and convincing leave pay, 13th month pay, damages and attorneys fees.
evidence that the resignation was voluntary; and that the employer cannot
rely on the weakness of the defense of the employee.23 The requirement
In a Decision[1] dated August 24, 1999, the Labor Arbiter (LA) dismissed the
rests on the need to resolve any doubt in favor of the working man.
complaint for not being substantiated with clear and convincing evidence.

WHEREFORE, the Court AFFIRMS the decision promulgated on February 18,

The National Labor Relations Commission (NLRC) affirmed the LA's
2003; and ORDERS petitioner to pay the costs of suit.
dismissal,[2] and the Court of Appeals (CA) [3] dismissed the petition filed
before it.[4]
SO ORDERED.

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

PEDY CASERES and ANDITO G.R.NO. 159343 ILLEGALLY DISMISSED AND ARE ENTITLED TO BACKWAGES
PAEL, AND OTHER MONETARY BENEFITS PRAYED FOR IN THE
Petitioners, COMPLAINT.[5]
- versus -
UNIVERSAL ROBINA SUGAR
The petition is without merit.
MILLING CORPORATION (URSUMCO) and/or
RESIDENT MANAGER RENE CABATE, Promulgated:
Respondents. September 28, 2007 The rule is clear that a petition for review on certiorari under Rule 45 of the
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x 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]

AUSTRIA-MARTINEZ, J.:
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
Universal Robina Sugar Milling Corporation (respondent) is a corporation petitioners were project employees binds this Court.[8]
engaged in the cane sugar milling business. Pedy Caseres (petitioner
Caseres) started working for respondent in 1989, while Andito Pael The Court finds no cogent reason to depart from their ruling.
(petitioner Pael) in 1993. At the start of their respective employments, they
were made to sign a
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 It should be stressed that contracts for project employment are valid under
would be coterminus with the phase of work to which he the law. In Villa v. National Labor Relations
would be then assigned, that is until February 5, 1989 and Commission,[16] the Court stated that:
thereafter he would be free to seek employment
elsewhere. Caseres agreed and signed the contract of
x x x by entering into such contract, an employee is
employment for specific project or undertaking. After an
deemed to understand that his employment is coterminous
absence of more than five (5) months, Caseres reapplied
with the project. He may not expect to be employed
with respondent as a seasonal project worker assisting in
continuously beyond the completion of the project. It is of
the general underchassis reconditioning to transport units
judicial notice that project employees engaged for manual
on July 17, 1989.Like his first assignment, Caseres was
services or those for special skills like those of carpenters
made to understand that his services would be co-terminus
or masons, are, as a rule, unschooled. However, this fact
with the work to which he would be then assigned that is
alone is not a valid reason for bestowing special treatment
from July 17, 1989 to July 20, 1989 and that thereafter he is
on them or for invalidating a contract of employment.
free to seek employment elsewhere to which Caseres
Project employment contracts are not lopsided agreements
agreed and readily signed the contract of employment for
in favor of only one party thereto. The employers interest is
specific project or undertaking issued to him. Thereafter
equally important as that of the employees for theirs is the
Caseres voluntarily signed several other employment
interest that propels economic activity. While it may be
contracts for various undertakings with a determinable
true that it is the employer who drafts project employment
period. As in the first contract, Caseres' services were co-
contracts with its business interest as overriding
terminus with the work to which he was assigned, and that
consideration, such contracts do not, of necessity,
thereafter, he was free to seek employment with other
prejudice the employee. Neither is the employee left
sugar millers or elsewhere.
helpless by a prejudicial employment contract. After all,
under the law, the interest of the worker is paramount.[17]
The nature and terms and conditions of employment of petitioner
Andito Pael were the same as that of his co-petitioner Caseres.

xxx
It must be noted that there were intervals in petitioners' respective
employment contracts, and that their work depended on the
availability of such contracts or projects.Consequently, the
employment of URSUMCO's work force was not permanent but co-
terminous with the projects to which the employees were assigned
and from whose payrolls they were paid (Palomares 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]
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 rehired, 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.
G.R. No. 170181 June 26, 2008
HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD., HAK
KON KIM and/or JHUNIE ADAJAR,petitioners,
vs.
FELICITO IBAÑEZ, 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 Ibañez, Aligwas Carolino, Elmer
Gacula, Enrique Dagotdot, Ruel Calda, and four other co-workers filed a
complaint before the NLRC, docketed as NLRC Case No. RAB-IV-04-15515-
02-RI, for illegal dismissal with prayer for reinstatement and full backwages
against petitioners. In their Position Paper dated 29 July 2002, respondents
alleged that HANJIN hired them for various positions on different dates,
hereunder specified:
Position Date of
Employment
Felicito Ibañez Tireman 7 March 2000
Elmer Gacula Crane Operator 1992
Enrique Dagotdot Welder 1995
Aligwas Carolino Welder September 1994
Ruel Calda Warehouseman 26 January 19963
Respondents stated that their tasks were usual and necessary or desirable
in the usual business or trade of HANJIN. Respondents additionally averred
that they were employed as members of a work pool from which HANJIN
draws the workers to be dispatched to its various construction projects;
with the exception of Ruel Calda, who as a warehouseman was required to
work in HANJIN's main office.4 Among the various construction projects to
which they were supposedly assigned, respondents named the North
Harbor project in 1992-1994; Manila International Port in 1994-1996;
Batangas Port in 1996-1998; the Batangas Pier, and La Mesa Dam. 5
On 15 April 2002, Hanjin dismissed respondents from employment.
Respondents claimed that at the time of their dismissal, HANJIN had
several construction projects that were still in progress, such as Metro Rail
Transit (MRT) II and MRT III, and continued to hire employees to fill the
positions vacated by the respondents.6
Petitioners denied the respondents' allegations. They maintained that
respondents were hired as project employees for the construction of the
LRT/MRT Line 2 Package 2 and 3 Project. HANJIN and respondents
purportedly executed contracts of employment, in which it was clearly
stipulated that the respondents were to be hired as project employees for a
period of only three months, but that the contracts may be renewed, to
wit:
Article II
TERM OF AGREEMENT
This Agreement takes effect xxx for the duration of three (3)
months and shall be considered automatically renewed in the
absence of any Notice of Termination by the EMPLOYER to the
PROJECT EMPLOYEE. This AGREEMENT automatically terminates at
the completion of the project or any particular phase
thereof, depending upon the progress of the project.7
However, petitioners failed to furnish the Labor Arbiter a copy of said
contracts of employment.
Petitioners asserted that respondents were duly informed of HANJIN's
policies, rules and regulations, as well as the terms of their contracts.
Copies of the employees' rules and regulations were posted on the bulletin
boards of all HANJIN campsite offices.8
Petitioners further emphasized that prior to 15 April 2002, Hak Kon Kim,
HANJIN's Project Director, notified respondents of the company's intention
to reduce its manpower due to the completion of the LRT/MRT Line 2
Package 2 and 3 Project. Respondents were among the project employees
who were thereafter laid off, as shown in the Establishment Termination
Report filed by HANJIN before the Department of Labor and Employment
(DOLE) Regional Office (IV) in Cainta, Rizal on 11 April 2002. 9
Finally, petitioners insist that in accordance with the usual practice of the
construction industry, a completion bonus was paid to the
respondents.10 To support this claim, they offered as evidence payroll
records for the period 4 April 2002 to 20 April 2002, with the words
"completion bonus" written at the lower left corner of each page. 11
Petitioners attached copies of the Quitclaims,12 executed by the
respondents, which uniformly stated that the latter received all wages and
benefits that were due them and released HANJIN and its representatives
from any claims in connection with their employment. These Quitclaims
also contained Clearance Certificates which confirmed that the employees
concerned were cleared of all accountabilities at the close of the working
hours on 15 April 2002.
In their Reply13 dated 27 August 2002, respondents vehemently refuted
having signed any written contract stating that they were project
employees.
The Labor Arbiter found merit in the respondents' complaint and declared
that they were regular employees who had been dismissed without just
and valid causes and without due process. It ruled that HANJIN's allegation
that respondents were project employees was negated by its failure to
present proof thereof. It also noted that a termination report should be
presented after the completion of every project or a phase thereof and not
just the completion of one of these projects. The Labor Arbiter further
construed the number of years that respondents rendered their services
for HANJIN as an indication that respondents were regular, not project,
employees.14 The Labor Arbiter ordered in its Decision, dated 30 April 2003,
that:
WHEREFORE, premises considered, judgment is hereby rendered
as follows;
1) Declaring respondent HANJIN HEAVY INDUSTRIES &
CONSTRUCTION CO. LTD. guilty of illegal dismissal
>2) Ordering respondent to reinstate all the complainants to
positions previously occupied by them with full backwages from
the time compensation was withheld from them up to date of
actual reinstatement in the following amount (as of date of this
decision):
1. Felicito Ibañez P 88,020.83
2. Elmer A. Gacula 88,020.83
3. Rizalino De Vera 88,020.83
4. Enrique Dagotdot 88,020.83
 5) Ordering respondent to pay complainants litigation expenses in
5. Carolino Aligwas 88,020.83 the sum of P30,000.00

6. Ruel Calda 88,020.83 All other claims are DISMISSED for lack of merit.15

7. Roldan Lanojan 88,020.83 Petitioners filed an appeal before the NLRC. In their Notice of
Appeal/Memorandum Appeal16 dated 5 July 2003, petitioners discarded
their earlier claim that respondents signed employment contracts,
8. Pascual Caranguian 88,020.83
unequivocally informing them of their status as project employees.
Nonetheless, they still contended that the absence of respondents'
9. Carmelito Dalumangcad 88,020.83
contracts of employment does not vest the latter with regular status.

Total P792, 187.47

The NLRC reversed the Labor Arbiter's Decision dated 30 April 2003, and
pronounced that the respondents were project employees who were legally
3) In lieu of reinstatement, respondent is ordered to pay terminated from employment.17 The NLRC gave probative value to the
complainants their separation pay in the following sum:
Termination Report submitted by HANJIN to the DOLE, receipts signed by
respondents for their completion bonus upon phase completion, and the
Felicito Ibañez P 19,500.00 Quitclaims executed by the respondents in favor of HANJIN. The NLRC also
observed that the records were devoid of any proof to support
Elmer A. Gacula 71,500.00 respondents' allegation that they were employed before 1997, the time
when construction work on the MRT started. Lastly, it overruled the Labor
Rizaliano De Vera 19,500.00 Arbiter's award of moral and exemplary damages.18 The dispositive part of
the Decision dated 7 May 2004 of the NLCR states that:
Enrique Dagotdot 52,000.00
WHEREFORE, in view of the foregoing, the decision subject of
Carolino Aligwas 58,500.00 appeal is hereby REVERSED and SET ASIDE and a new one is
entered DISMISSING complainants' complaint for lack of merit. 19
Ruel Calda 45,500.00
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
Roldan Lanojan 19,500.00
initial position before the Labor Arbiter-from its initial argument that
respondents executed employment contracts; to its modified argument
Pascual Caranguian 26,000.00 during its appeal before the NLRC-that respondents could still be
categorized as project workers despite the absence of contracts of
Carmelito Dalumangcad 78,000.00 employment. Additionally, it adjudged the Termination Report as
inconclusive proof that respondents were project employees. Emphasizing
Total P390,000.00 that the employer had the burden of proving the legality of the dismissal,
the appellate court ruled that respondents were regular employees and
4) Ordering respondent to pay each complainant P50,000.00 for upheld the Labor Arbiter's finding that they were illegally dismissed. The
moral damages and P30,000.00 as exemplary damages, or the Court of Appeals, however, adopted the NLRC's deletion of the award of
total sum of P450,000.00 and P270,000.00, respectively; and 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. 41 To determine
whether the Quitclaims signed by respondents are valid, one important
factor that must be taken into account is the consideration accepted by
respondents; the amount must constitute a reasonable settlement
equivalent to the full measure of their legal rights. 42 In this case, the
Quitclaims signed by the respondents do not appear to have been made
for valuable consideration. Respondents, who are regular employees, are
entitled to backwages and separation pay and, therefore, the Quitclaims
which they signed cannot prevent them from seeking claims to which they
are entitled.43
Due to petitioners' failure to adduce any evidence showing that petitioners
were project employees who had been informed of the duration and scope
of their employment, they were unable to discharge the burden of proof
required to establish that respondents' dismissal was legal and valid.
Furthermore, it is a well-settled doctrine that if doubts exist between the
evidence presented by the employer and that by the employee, the scales
of justice must be tilted in favor of the latter. 44 For these reasons,
respondents are to be considered regular employees of HANJIN.
Finally, in the instant case, records failed to show that HANJIN afforded
respondents, as regular employees, due process prior to their dismissal,
through the twin requirements of notice and hearing. Respondents were
not served notices informing them of the particular acts for which their
dismissal was sought. Nor were they required to give their side regarding
the charges made against them. Certainly, the respondents' dismissal was
not carried out in accordance with law and was, therefore, illegal. 45
IN VIEW OF THE FOREGOING, the instant Petition is DENIED. This
Court AFFIRMS the assailed Decision of the Court of Appeals in CA-G.R. SP
No. 87474, promulgated on 28 July 2005, declaring that the respondents
are regular employees who have been illegally dismissed by Hanjin Heavy
Industries & Construction Company, Limited, and are, therefore, entitled to
full backwages, separation pay, and litigation expenses. Costs against the
petitioners.

SO ORDERED.