G.R. No.
212774 that it is clear from the by-laws of WUP that insofar as
WESLEYAN UNIVERSITY-PHILIPPINES,
vs.GUILLERMO T. MAGLAYA, SR.,
The facts are as follows:
WUP is a non-stock, non-profit, non-sectarian
educational corporation duly organized and existing
under the Philippine laws on April 28, 1948.2
Respondent Atty. Guillermo T. Maglaya, Sr. (Maglaya)
was appointed as a corporate member on January 1,
2004, and was elected as a member of the Board of
Trustees (Board) on January 9, 2004 - both for a period
of five (5) years. On May 25, 2005, he was elected as
President of the University for a five-year term. He was
re-elected as a trustee on May 25, 2007. 3
In a Memorandum dated November 28, 2008, the
incumbent Bishops of the United Methodist Church
(Bishops) apprised all the corporate members of the
expiration of their tenns on December 31, 2008, unless
renewed by the former. 4 The said members, including
Maglaya, sought the renewal of their membership in the
WUP's Board, and signified their willingness to serve the
corporation. 5
On January 10, 2009, Dr. Dominador Cabasal,
Chairman of the Board, informed the Bishops of the
cessation of corporate terms of some of the members
and/or trustees since the by-laws provided that the
vacancy shall only be filled by the Bishops upon the
recommendation of the Board. 6
On March 25, 2009, Maglaya learned that the Bishops
created an Ad Hoc Committee to plan the efficient and
orderly turnover of the administration of the WUP in view
of the alleged "gentleman's agreement" reached in
December 2008, and that the Bishops have appointed
the incoming corporate members and trustees. 7 He
clarified that there was no agreement and any
discussion of the turnover because the corporate
members still have valid and existing corporate terms.8
On April 24, 2009, the Bishops, through a formal notice
to all the officers, deans, staff, and employees of WUP,
introduced the new corporate members, trustees, and
officers. In the said notice, it was indicated that the new
Board met, organized, and elected the new set of
officers on April 20, 2009.9 Manuel Palomo (Palomo),
the new Chairman of the Board, informed Maglaya of the
termination of his services and authority as the President
of the University on April 27, 2009. 10
Thereafter, Maglaya and other fonner members of the
Board (Plaintiffs) filed a Complaint for Injunction and
Damages before the Regional Trial Court (RTC) of
Cabanatuan City, Branch 28. 11 In a Resolution12 dated
August 19, 2009, the RTC dismissed the case declaring
the same as a nuisance or harassment suit prohibited
under Section l(b), 13 Rule 1 of the Interim Rules for
Intra-Corporate Controversies. 14 The RTC observed
membership in the corporation is concerned, which can
only be given by the College of Bishops of the United
Methodist Church, it is a precondition to a seat in the
WUP Board. 15 Consequently, the expiration of the
terms of the plaintiffs, including Maglaya, as corporate
members carried with it their termination as members of
the Board. 16 Moreover, their continued stay in their
office beyond their terms was only in hold-over
capacities, which ceased when the Bishops appointed
new members of the corporation and the Board. 17
The CA, in a Decision18 dated .March 15, 2011,
affirmed the decision of the RTC, and dismissed the
petition for certiorari filed by the plaintiffs for being the
improper remedy. The CA held that their status as
corporate members of WUP which expired on December
31, 2008 was undisputed. The CA agreed with the RTC
that the plaintiffs had no legal standing to question the
Bishops' alleged irregular appointment of the new
members in their Complaint on May 18, 2009 as the
termination of their membership in the corporation
necessarily resulted in the conclusion of their positions
as members of the Board pursuant to the WUP by-laws.
19
Thereafter, Maglaya filed on March 22, 2011 the present
illegal dismissal case against WUP, Palomo, Bishop Lito
C. Tangonan (Tangonan), and Bishop Leo A. Soriano
(Soriano ).20 Maglaya claimed that he was
unceremoniously dismissed in a wanton, reckless,
oppressive and malevolent manner on the eve of April
27, 2009.21 Tangonan and Soriano acted in evident bad
faith when they disregarded his five-year term of office
and delegated their protege Palomo as the new
university president.22 Maglaya alleged that he faithfully
discharged his necessary and desirable functions as
President, and received ₱75,000.00 as basic salary,
Pl0,000.00 as cost of living allowance, and ₱10,000.00
as representation allowance. He was also entitled to
other benefits such as: the use of university vehicles; the
use of a post paid mobile cellular phone in his official
transactions; the residence in the University Executive
House located at Inday Street, Magsaysay Sur,
Cabanatuan City, with free water, electricity, and
services of a household helper; and receipt of 13th
month pay, vacation leave pay, retirement pay, and
shares in related learning experience.23 On May 31,
2006, his basic salary was increased to P95,000.00 due
to his additional duty in overseeing the operations of the
WUP Cardiovascular and Medical Center.
Maglaya presented the following pieces of evidence:
copies of his appointment as President, his Identification
Card, the WUP Administration and Personnel Policy
Manual which specified the retirement of the university
president, and the check disbursement in his favor
evidencing his salary, to substantiate his claim that he
was a mere employee.24
WUP, on the other hand, asseverated that the dismissal
or removal of Maglaya, being a corporate officer and not
1
a regular employee, is a corporate act or intra-corporate
controversy under the jurisdiction of the RTC. 25 WUP
also maintained that since Maglaya's appointment was
not renewed, he ceased to be a member of the
corporation and of the Board; thus, his term for
presidency has also been tenninated. 26
Meanwhile, this Court, in a Resolution dated June 13,
2011, denied the petition for review on certiorari filed by
Maglaya and the other former members of the Board for
failure to show any reversible error in the decision of the
CA. The same became final and executory on August
24, 2011.27
In a Decision28 dated September 20, 2011, the Labor
Arbiter (LA) ruled in favor of WUP. The LA held that the
action between employers and employees where the
employer-employee relationship is merely incidental is
within the exclusive and original jurisdiction of the
regular courts.29 Since he was appointed as President
of the University by the Board, Maglaya was a corporate
officer and not a mere employee. The instant case
involves intra-corporate dispute which was definitely
beyond the jurisdiction of the labor tribunal.30 The
dispositive portion of the decision reads:
WHEREFORE, premises considered, the instant
complaint is hereby dismissed for lack of jurisdiction.
SO ORDERED.31
In a Decision32 dated April 25, 2012, the National Labor
Relations Commission (NLRC) in· NLRC-LAC No. 01-
000470-12, reversed and set aside the Decision of the
LA ruling that the illegal dismissal case falls within the
jurisdiction of the labor tribunals. Since the reasons for
his termination cited by WUP were not among the just
causes provided under Article 28233 (now Article 297) of
the Labor Code, Maglaya was illegally dismissed. The
NLRC observed that the Board did not elect Maglaya,
but merely appointed him. Maglaya was appointed for a
fixed period of five (5) years from May 7, 2005 to May 6,
2010, while the period of his appointment as member of
the corporation was five (5) years from January 2004.34
The decretal portion of the decision reads:
WHEREFORE, premises considered, the appealed
decision is hereby REVERSED and SET ASIDE,
declaring:
(a) jurisdiction over this case by virtue of the employer-
employee relation of the parties
(b) the illegality of the dismissal of [respondent] by
[petitioner] [Petitioner] therefore [is] hereby ordered to
pay [respondent]:
1. separation pay - ₱375,000.00
2. full backwages - 1,252,462.50
3. retirement pay - 500,000.00
4. moral damages - 100,000.00
5. exemplary damages - 50,000.00
6. 10% of the above as attorney's fees -
227,746.25
TOTAL AWARDS - [₱]2,505,208.75
Based on the attached computation of this Commission’s
Computation Unit.
SO ORDERED.35
Ruling in favor of Maglaya, the NLRC explicated that
although the position of the President of the University is
a corporate office, the manner of Maglaya' s
appointment, and his duties, salaries, and allowances
point to his being an employee and subordinate. 36 The
control test is the most important indicator of the
presence of employer-employee relationship. Such was
present in the instant case as Maglaya had the duty to
report to the Board, and it was the Board which
terminated or dismissed him even before his term
ends.37
Thereafter, the NLRC denied the motion for
reconsideration filed by WUP in a Resolution38 dated
February 11, 2013.
In a Resolution, the CA dismissed the petition for
certiorari filed by WUP. The CA noted that the decision
and resolution of the NLRC became final and executory
on March 16, 2013.39 WUP's attempt to resurrect its lost
remedy through filing the petition would not prosper
since final and executory judgment becomes unalterable
and may no longer be modified in any respect.40 Thus:
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.41
Upon denial of his Motion for Reconsideration, WUP
elevated the case before this Court raising the issue:
The Court of Appeals committed an error of law when it
summarily dismissed the special civil action for certiorari
raising lack of jurisdiction of the NLRC filed by [WUP]
where it was very clear that the NLRC had no jurisdiction
over the case involving a corporate officer and where the
nature of the controversy is an intra-corporate dispute.
We find the instant petition impressed with merit.
WUP alleges that while the NLRC decision became final
and executory on March 16, 2013, it did not mean that
the said decision had become immutable and
unalterable as the CA ruled. WUP maintains that the
remedy of the aggrieved party against a final and
executory decision of the NLRC is the filing of the
petition for certiorari under Rule 65 of the Rules of Court.
As such, it was able to meet the conditions set forth in
filing the said remedy before the CA.
Settled is the rule that while the decision of the NLRC
becomes final and executory after the lapse of ten
calendar days from receipt thereof by the parties under
Article 22342 (now Article 229) of the Labor Code, the
2
adverse party is not precluded from assailing it via
Petition for Certiorari under Rule 65 before the CA and
then to this Court via a Petition for Review under Rule
45.43
This Court has explained and clarified the power of the
CA to review NLRC decisions, viz. :
The power of the Court of Appeals to review NLRC
decisions via Rule 65 or Petition for Certiorari has been
settled as early as in our decision in St. Martin Funeral
Home v. National Labor Relations Commission. This
Court held that the proper vehicle for such review was a
Special Civil Action for Certiorari under Rule 65 of the
Rules of Court, and that this action should be filed in the
Court of Appeals in strict observance of the doctrine of
the hierarchy of courts. Moreover, it is already settled
that under Section 9 of Batas Pambansa Blg. 129, as
amended by Republic Act No. 7902[10] (An Act
Expanding the Jurisdiction of the Court of Appeals,
amending for the purpose of Section Nine of Batas
Pambansa Blg. 129 as amended, known as the Judiciary
Reorganization Act of 1980), the Court of Appeals -
pursuant to the exercise of its original jurisdiction over
Petitions for Certiorari – is specifically given the power to
pass upon the evidence, if and hwen necessary, to
resolve factual issues.44
Consequently, the remedy of the aggrieved party is to
timely file a motion for reconsideration as a precondition
for any further or subsequent remedy, and then
seasonably avail of the special civil action of certiorari
under Rule 65, for a period of sixty (60) days from notice
of the decision.45
Records reveal that WUP received the decision of the
NLRC on May 12, 2012, and filed its motion for
reconsideration on May 24, 2012.46 WUP received the
Resolution dated February 11, 2013 denying its motion
on March 12, 2013.47 Thereafter, it filed its petition for
certiorari before the CA on March 26, 2013.48
We find that the application of the doctrine of
immutability of judgment in the case at bar is
misplaced.1âwphi1 To reiterate, although the 10-day
period for finality of the decision of the NLRC may
already have lapsed as contemplated in the Labor Code,
this Court may still take cognizance of the petition for
certiorari on jurisdictional and due process
considerations if filed within the reglementary period
under Rule 65.49 From the abovementioned, WUP was
able to discharge the necessary conditions in availing its
remedy against the final and executory decision of the
NLRC.
There is an underlying power of the courts to scrutinize
the acts of such agencies on questions of law and
jurisdiction even though no right of review is given by
statute.50 Furthermore, the purpose of judicial review is
to keep the administrative agency within its jurisdiction
and protect the substantial rights of the parties.51
Now on the issue of whether or not the NLRC has
jurisdiction over the illegal dismissal case filed by
Maglaya.
The said issue revolves around the question on whether
Maglaya is a corporate officer or a mere employee. For
purposes of identifying an intracorporate controversy,
We have defined corporate officers, thus:
"Corporate officers" in the context of Presidential Decree
No. 902- A are those officers of the corporation who are
given that character by the Corporation Code or by the
corporation's by-laws. There are three specific officers
whom a corporation must have under Section 25 of the
Corporation Code. These are the president, secretary
and the treasurer. The number of officers is not limited to
these three. A corporation may have such other officers
as may be provided for by its by-laws like, but not limited
to, the vice-president, cashier, auditor or general
manager. The number of corporate officers is thus
limited by law and by the corporation's by-laws.52
The president, vice-president, secretary and treasurer
are commonly regarded as the principal or executive
officers of a corporation, and they are usually designated
as the officers of the corporation. However, other officers
are sometimes created by the charter or by-laws of a
corporation, or the board of directors may be
empowered under the by-laws of a corporation to create
additional offices as may be necessary. This Court
expounded that an "office" is created by the charter of
the corporation and the officer is elected by the directors
or stockholders, while an "employee" usually occupies
no office and generally is employed not by action of the
directors or stockholders but by the managing officer of
the corporation who also determines the compensation
to be paid to such employee. 53
From the foregoing, that the creation of the position is
under the corporation's charter or by-laws, and that the
election of the officer is by the directors or stockholders
must concur in order for an individual to be considered a
corporate officer, as against an ordinary employee or
officer. It is only when the officer claiming to have been
illegally dismissed is classified as such corporate officer
that the issue is deemed an intracorporate dispute which
falls within the jurisdiction of the trial courts. 54 In its
position paper before the LA, WUP presented its
amended ByLaws55 dated November 28, 1988
submitted to the SEC to prove that Maglaya, as the
University President, was a corporate officer whose
rights do not fall within the jurisdiction of the labor
tribunal. It also presented the Resolution dated. August
19, 2009 of the RTC, and the Decision dated March 15,
2011 of the CA to show that the earlier case was filed by
Maglaya and others, as members of the Board,
questioning the Bishops' appointment of the new
members without their recommendation.
The relevant portions of the amended By-Laws provide:
ARTICLE VI. BOARD OF TRUSTEES
3

xxxx
Section 2. Membership - (a) The Board of Trustees shall
be composed of Ten (10) members of the corporation
from among themselves provided, that six (6) shall come
from the Ministry and Laity of the United Methodist
[C]hurch in the Philippines, tlu·ee (3) shall be non-
Methodist, friends and sympathizers of the Wesleyan
UniversityPhilippines and of the United Methodist
Church, and one (1) representative of the Wesleyan
Alumni Association, as provided in section 1 (c), Aiiicle
IV hereof, and (b) provided further that the incumbent
area bishop and the President of the Wesleyan
University-Philippines shall be honorary members of the
Board.
x x x x56
ARTICLE VIII. OFFICERS
Section 1. Officers -The officers of the Board of Trustees
shall be:
(a) Chairman
(b) Vice-Chairman
(c) Secretary
(d) Treasurer
xxxx
Section 6. The President of Wesleyan University-
Philippines -The President of the University, who must
be an active member of the United Methodist Church in
the Philippines at the time of his election shall be
incharge of and be responsible for the administration of
the University and other institutions of learning that [
m]ay hereafter be established by the corporation, and
(a) May, with the Board of Trustees;
(1) Organize and/or reorganize the administrative set up
of the Wesleyan University-Philippines to effect
efficiency and upgrade institutional administration and
supervision;
(2) Employ, suspend, dismiss, transfer or replace
personnel and prescribe and enforce rules and
regulations for their proper conduct in the discharge of
their duties;
(3) Shall make reports during the different ammal
conference of the United Methodist Church and to such
agencies as may be deemed necessary on the
operations of the university and related matters;
(4) Shall prescribe and enforce rules and regulations for
the promotion and maintenance of discipline in the
proper conduct and discharge of the functions and duties
of subordinate administrative officers, professors,
teachers, employees and students and other personnel.
(b) Shall make reports and recommendations to the
Board of Trustees or to the Chairman of the Board of
Trustees on matters pertaining to the institution as he
may find necessary;
(c) Shall countersign all checks drawn by the Treasurer
from the depository of the University, and
(d) Shall exercise, perform and discharge all such other
powers, functions and duties as are interest in the office
of the President.
x x x57
It is apparent from the By-laws of WUP that the
president was one of the officers of the corporation, and
was an honorary member of the Board. He was
appointed by the Board and not by a managing officer of
the corporation. We held that one who is included in the
by-laws of a corporation in its roster of corporate officers
is an officer of said corporation and not a mere
employee58
The alleged "appointment" of Maglaya instead of
"election" as provided by the by-laws neither convert the
president of university as a mere employee, nor amend
its nature as a corporate officer. With the office
specifically mentioned in the by-laws, the NLRC erred in
taking cognizance of the case, and in concluding that
Maglaya was a mere employee and subordinate official
because of the manner of his appointment, his duties
and responsibilities, salaries and allowances, and
considering the Identification Card, the Administration
and Personnel Policy Manual which specified the
retirement of the university president, and the check
disbursement as pieces of evidence supporting such
finding.
A corporate officer's dismissal is always a corporate act,
or an intracorporate controversy which arises between a
stockholder and a corporation, and the nature is not
altered by the reason or wisdom with which the Board of
Directors may have in taking such action.59 The issue of
the alleged termination involving a corporate officer, not
a mere employee, is not a simple labor problem but a
matter that comes within the area of corporate affairs
and management and is a corporate controversy in
contemplation of the Corporation Code.60
The long-established rule is that the jurisdiction over a
subject matter is conferred by law.61 Perforce, Section 5
(c) of PD 902-A, as amended by Subsection 5.2, Section
5 of Republic Act No. 8799, which provides that the
regional trial courts exercise exclusive jurisdiction over
all controversies in the election or appointment of
directors, trustees, officers or managers of corporations,
partnerships or associations, applies in the case at
bar.62
4
To emphasize, the determination of the rights of a
corporate officer dismissed from his employment, as well
as the corresponding liability of a corporation, if any, is
an intra-corporate dispute subject to the jurisdiction of
the regular courts.63
As held in Leonor v. Court of Appeals,64 a void
judgment for want of jurisdiction is no judgment at all. It
cannot be the source of any right nor the creator of any
obligation. All acts perfonned pursuant to it and all
claims emanating from it have no legal effect. Hence, it
can never become final and any writ of execution based
on it is void. 65
Since this Court is now reversing the challenged
decision of the CA and affirming the decision of the LA in
dismissing the case for want of jurisdiction, Maglaya is
not entitled to collect the amount of ₱2,505,208.75
awarded from the time the NLRC decision became final
and executory up to the time the CA dismissed WUP's
petition for certiorari.
In sum, this Court finds that the NLRC eITed in
assuming jurisdiction over, and thereafter in failing to
dismiss, Maglaya's complaint for illegal dismissal against
WUP, since the subject matter of the instant case is an
intra-corporate controversy which the NLRC has no
jurisdiction.
WHEREFORE, the petition for review on certiorari filed
by petitioner Wesleyan University-Philippines is hereby
GRANTED. The assailed Resolution dated January 20,
2014 of the Court of Appeals in CAG.R. SP No. 129196
is hereby REVERSED and SET ASIDE. Respondent
Atty. Guillermo T. Maglaya, Sr. is hereby ORDERED to
REIMBURSE the petitioner the amount of ₱2,505,208.75
awarded by the National Labor Relations Commission.
SO ORDERED.
G.R. No. 197899
JOAQUIN LU, v TIRSO ENOPIA, et al.
Petitioners (now herein respondents) were hired from
January 20, 1994 to March 20, 1996 as crew members
of the fishing mother boat F/B MG-28 owned by
respondent Joaquin "Jake" Lu (herein petitioner Lu) who
is the sole proprietor of Mommy Gina Tuna Resources
[MGTR] based in General Santos City. Petitioners and
Lu had an income-sharing arrangement wherein 55%
goes to Lu, 45% to the crew members, with an additional
4% as "backing incentive." They also equally share the
expenses for the maintenance and repair of the mother
boat, and for the purchase of nets, ropes and payaos.
Sometime in August 1997, Lu proposed the signing of a
Joint Venture Fishing Agreement between them, but
petitioners refused to sign the same as they opposed the
one-year term provided in the agreement. According to
petitioners, during their dialogue on August 18, 1997, Lu
terminated their services right there and then because of
their refusal to sign the agreement. On the other hand,
Lu alleged that the master fisherman (piado) Ruben
Salili informed him that petitioners still refused to sign
the agreement and have decided to return the vessel
F/B MG-28.
On August 25, 1997, petitioners filed their complaint for
illegal dismissal, monetary claims and damages. Despite
serious efforts made by Labor Arbiter (LA) Arturo P.
Aponesto, the case was not amicably settled, except for
the following matters: (1) Balansi 8 and 9; (2) 10% piado
share; (3) sud-anon refund; and (4) refund of payment of
motorcycle in the amount of ₱15,000.00. LA Aponesto
further inhibited himself from the case out of
"delicadeza," and the case was raffled to LA Amado M.
Solamo.
In their Position Paper, petitioners alleged that their
refusal to sign the Joint Venture Fishing Agreement is
not a just cause for their termination. Petitioners also
asked for a refund of the amount of ₱8,700,407.70 that
was taken out of their 50% income share for the repair
and maintenance of boat as well as the purchase of
fishing materials, as Lu should not benefit from such
deduction.
On the other hand, Lu denied having dismissed
petitioners, claiming that their relationship was one of
joint venture where he provided the vessel and other
fishing paraphernalia, while petitioners, as industrial
partners, provided labor by fishing in the high seas. Lu
alleged that there was no employer-employee
relationship as its elements were not present, viz.: it was
the piado who hired petitioners; they were not paid
wages but shares in the catch, which they themselves
determine; they were not subject to his discipline; and
respondent had no control over the day-to-day fishing
operations, although they stayed in contact through
respondent's radio operator or checker. Lu also claimed
that petitioners should not be reimbursed for their share
in the expenses since it was their joint venture that
shouldered these expenses.3
On June 30, 1998, the LA rendered a Decision4
dismissing the case for lack of merit finding that there
was no employer-employee relationship existing
between petitioner and the respondents but a joint
venture.
In so ruling, the LA found that: (1) respondents were not
hired by petitioner as the hiring was done by the piado or
master fisherman; (2) the earnings of the fishermen from
the labor were in the form of wages they earned based
on their respective shares; (3) they were never
disciplined nor sanctioned by the petitioner; and, (4) the
income-sharing and expense-splitting was no doubt a
working set up in the nature of an industrial partnership.
While petitioner issued memos, orders and directions,
however, those who were related more on the aspect of
management and supervision of activities after the
actual work was already done for purposes of order in
hauling and sorting of fishes, and thus, not in the nature
5
of control as to the means and method by which the
actual fishing operations were conducted as the same
was left to the hands of the master fisherman.
The LA also ruled that the checker and the use of radio
were for the purpose of monitoring and supplying the
logistics requirements of the fishermen while in the sea;
and that the checkers were also tasked to monitor the
recording of catches and ensure that the proper sharing
system was implemented; thus, all these did not mean
supervision on how, when and where to fish.
Respondents appealed to the National Labor Relations
Commission (NLRC), which affirmed the LA Decision in
its Resolution5 dated March 12, 1999. Respondents'
motion for reconsideration was denied in a Resolution6
dated July 9, 1999.
Respondents filed a petition for certiorari with the CA
which dismissed7 the same for having been filed beyond
the 60-day reglementary period as provided under Rule
65 of the Rules of Court, and that the sworn certification
of non-forum shopping was signed only by two (2) of the
respondents who had not shown any authority to sign in
behalf of the other respondents. As their motion for
reconsideration was denied, they went to Us via a
petition for certiorari assailing the dismissal which We
granted in a Resolution8 dated July 31, 2006 and
remanded the case to the CA for further proceedings.
Petitioner filed its Comment to the petition. The parties
submitted their respective memoranda as required by
the CA.
On October 22, 2010, the CA rendered its assailed
Decision reversing the NLRC, the decretal portion of
which reads as follows:
WHEREFORE, premises considered, the assailed
March 12, 1999 Resolution of public respondent National
Labor Relations Commission (NLRC), Fifth Division,
Cagayan de Oro City, is hereby REVERSED and SET
ASIDE, and a new one is entered.
Thus, private respondent Mommy Gina Tuna Resources
(MGTR) thru its sole proprietor/general manager,
Joaquin T. Lu (Lu), is hereby ORDERED to pay each of
the petitioners, namely, TIRSO ENOPIA, ROBERTO
ABANES, ALEJANDRE BAGAS, SALVADOR BERNAL,
SAMUEL CAHAYAG, ALEJANDRO CAMPUNGAN,
RUPERTO CERNA, JR., REYNALDO CERNA, PETER
CERVANTES, LEONARDO CONDESTABLE,
ROLANDO ESLOPOR, ROLLY FERNANDEZ, EDDIE
FLORES, ROLANDO FLORES, JUDITO FUDOLIN, LEO
GRAPANI, FELIX HUBAHIB, JERRY JUAGPAO,
MARCIANO LANUTAN, JOVENTINO MATOBATO,
ALFREDO MONIVA, VICTORIANO ORTIZ, JR.,
RENALDO PIALAN, SEVERO PIALAN, ALFREDO
PRUCIA, POCIANO REANDO, HERMENIO REMEGIO,
DEMETRIO RUAYA, EDGARDO RUSIANA, NESTOR
SALILI, RICHARD SALILI, SAMUEL SALILI, VICENTE
SASTRELLAS, ROMEO SUMAYANG and DESIDERIO
TABAY the following:
(1) SEPARATION PAY (in lieu of the supposed
reinstatement) equivalent to one (1) month pay for every
year of service reckoned from the very moment each
petitioner was hired as fishermen-crew member of FIB
MG-28 by MGTR until the finality of this judgment. A
fraction of at least six (6) months shall be considered
one (l) whole year. Any fraction below six months shall
be paid pro rata;
(2) FULL BACKWAGES (inclusive of all allowances and
other benefits required by law or their monetary
equivalent) computed from the time they were dismissed
from employment on August 18, 1997 until finality of this
Judgment;
(3) EXEMPLARY DAMAGES in the sum of Fifty
Thousand Pesos (₱50,000.00);
(4) ATTORNEY'S FEES equivalent to 10% of the total
monetary award.
Considering that a person's income or earning is his
"lifeblood," so to speak, i.e., equivalent to life itself, this
Decision is deemed immediately executory pending
appeal should MGTR decide to elevate this case to the
Supreme Court.
Let this case be referred back to the Office of the Labor
Arbiter for proper computation of the awards.9
The CA found that petitioner exercised control over
respondents based on the following: (1) respondents
were the fishermen crew members of petitioner's fishing
vessel, thus, their services to the latter were so
indispensable and necessary that without them,
petitioner's deep-sea fishing industry would not have
come to existence much less fruition; (2) he had control
over the entire fishing operations undertaken by the
respondents through the master fisherman (piado) and
the assistant master fisherman (assistant piado)
employed by him; (3) respondents were paid based on a
percentage share of the fish catch did not in any way
affect their regular employment status; and (4) petitioner
had already invested millions of pesos in its deep-sea
fishing industry, hence, it is highly improbable that he
had no control over respondents' fishing operations.
Petitioner's motion for reconsideration was denied by the
CA in its Resolution dated May 12, 2011.
Aggrieved, petitioner filed the instant petition for review
on certiorari citing the following as reasons for granting
the same, to wit:
I
THE HONORABLE COURT OF APPEALS RENDERED
THE ASSAILED DECISION CONTRARY TO LAW AND
LOGIC BY CITING THE ABSENCE OF PROOF OF
6
REQUISITES OF A VALID DISMISSAL AS BASIS FOR
CONCLUDING THAT THE NLRC GRAVELY ABUSED
ITS DISCRETION.
II
THE HONORABLE COURT OF APPEALS EXCEEDED
ITS JURISDICTION BY TREATING RESPONDENTS'
PETITION FOR CERTIORARI UNDER RULE 65 AS AN
ORDINARY APPEAL, AND BY INSISTING ON ITS
OWN EVALUATION OF THE EVIDENCE.
III
THE HONORABLE COURT OF APPEALS RENDERED
THE DECISION DATED 22 OCTOBER 2010
CONTRARY TO LAW AND THE EVIDENCE ON
RECORD.
IV
THE HONORABLE COURT OF APPEALS HAS
DEPARTED FROM THE ACCEPTED AND USUAL
COURSE OF JUDICIAL PROCEEDINGS BY MAKING
ITS ASSAILED DECISION IMMEDIATELY
EXECUTORY PENDING APPEAL IN SPITE OF THE
FACT THAT RESPONDENTS DID NOT ASK FOR
IMMEDIATE PAYMENT OF SEPARATION PAY AND
OTHER CLAIMS, AND DESPITE THE CLAIM OF
RESPONDENTS THAT MOST OF THEM ARE
CURRENTLY EMPLOYED IN OTHER DEEP-SEA
FISHING COMPANIES.10
Petitioner contends that no grave abuse of discretion
can be attributed to the NLRC's finding affirming that of
the LA that the arrangement between petitioner and
respondents was a joint venture partnership; and that
the CA, in assuming the role of an appellate body, had
re-examined the facts and re-evaluated the evidence
thereby treating the case as an appeal instead of an
original action for certiorari under Rule 65.
We are not persuaded.
In Prince Transport, Inc. v. Garcia,11 We held:
The power of the CA to review NLRC decisions via a
petition for certiorari under Rule 65 of the Rules of Court
has been settled as early as this Court's decision in St.
Martin Funeral Homes v. NLRC. In said case, the Court
held that the proper vehicle for such review is a special
civil action for certiorari under Rule 65 of the said Rules,
and that the case should be filed with the CA in strict
observance of the doctrine of hierarchy of courts.
Moreover, it is already settled that under Section 9 of
Batas Pambansa Blg. 129, as amended by Republic Act
No. 7902, the CA, pursuant to the exercise of its original
jurisdiction over petitions for certiorari, is specifically
given the power to pass upon the evidence, if and when
necessary, to resolve factual issues. Section 9 clearly
states:
xxxx
The Court of Appeals shall have the power to try cases
and conduct hearings, receive evidence and perform any
and all acts necessary to resolve factual issues raised in
cases falling within its original and appellate jurisdiction,
including the power to grant and conduct new trials or
further proceedings.x x x.
However, equally settled is the rule that factual findings
of labor officials, who are deemed to have acquired
expertise in matters within their jurisdiction, are generally
accorded not only respect but even finality by the courts
when supported by substantial evidence, i.e., the
amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion. But
these findings are not infallible. When there is a showing
that they were arrived at arbitrarily or in disregard of the
evidence on record, they may be examined by the
courts. The CA can grant the petition for certiorari if it
finds that the NLRC, in its assailed decision or
resolution, made a factual finding not supported by
substantial evidence. It is within the jurisdiction of the
CA, whose jurisdiction over labor cases has been
expanded to review the findings of the NLRC.12
Here, the LA's factual findings was affirmed by the
NLRC, however, the CA found that the latter's resolution
did not critically examine the facts and rationally assess
the evidence on hand, and thus found that the NLRC
gravely abused its discretion when it sustained the LA's
decision dismissing respondents' complaint for illegal
dismissal on the ground of lack of merit.
The judicial function of the CA in the exercise of its
certiorari jurisdiction over the NLRC extends to the
careful review of the NLRC's evaluation of the evidence
because the factual findings of the NLRC are accorded
great respect and finality only when they rest on
substantial evidence.13 Accordingly, the CA is not to be
restrained from revising or correcting such factual
findings whenever warranted by the circumstances
simply because the NLRC is not infallible. Indeed, to
deny to the CA this power is to diminish its corrective
jurisdiction through the writ of certiorari.14
The main issue for resolution is whether or not an
employer-employee relationship existed between
petitioner and respondents.
At the outset, We reiterate the doctrine that the
existence of an employer-employee relationship is
ultimately a question of fact. Generally, We do not
review errors that raise factual questions. However,
when there is a conflict among the factual findings of the
antecedent deciding bodies like the LA, the NLRC and
the CA, it is proper, in the exercise of Our equity
jurisdiction, to review and re-evaluate the factual issues
and to look into the records of the case and re-examine
the questioned findings. In dealing with factual issues in
labor cases, substantial evidence or that amount of
7
relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion is sufficient.15
In determining the existence of an employer-employee
relationship, the following elements are considered: (1)
the selection and engagement of the workers; (2) the
power to control the worker's conduct; (3) the payment
of wages by whatever means; and (4) the power of
dismissal.16 We find all these elements present in this
case.
It is settled that no particular form of evidence is required
to prove the existence of an employer-employee
relationship. Any competent and relevant evidence to
prove the relationship may be admitted.17
In this case, petitioner contends that it was the piado
who hired respondents, however, it was shown by the
latter's evidence that the employer stated in their Social
Security System (SSS) online inquiry system printouts
was MGTR, which is owned by petitioner. We have gone
over these printouts and found that the date of the SSS
remitted contributions coincided with the date of
respondents' employment with petitioner. Petitioner
failed to rebut such evidence. Thus, the fact that
petitioner had registered the respondents with SSS is
proof that they were indeed his employees. The
coverage of the Social Security Law is predicated on the
existence of an employer-employee relationship.18
Moreover, the records show that the 4% backing
incentive fee which was divided among the fishermen
engaged in the fishing operations approved by petitioner
was paid to respondents after deducting the latter's
respective vale or cash advance.19 Notably, even the
piado's name was written in the backing incentive fee
sheet with the corresponding vale which was deducted
from his incentive fee. If indeed a joint venture was
agreed upon between petitioner and respondents, why
would these fishermen obtain vale or cash advance from
petitioner and not from the piado who allegedly hired and
had control over them.
It was established that petitioner exercised control over
respondents. It should be remembered that the control
test merely calls for the existence of the right to control,
and not necessarily the exercise thereof. It is not
essential that the employer actually supervises the
performance of duties by the employee. It is enough that
the former has a right to wield the power.20
Petitioner admitted in his pleadings that he had contact
with respondents at sea via the former's radio operator
and their checker. He claimed that the use of the radio
was only for the purpose of receiving requisitions for the
needs of the fishermen in the high seas and to receive
reports of fish catch so that they can then send service
boats to haul the same. However, such communication
would establish that he was constantly monitoring or
checking the progress of respondents' fishing operations
throughout the duration thereof, which showed their
control and supervision over respondents' activities.
Consequently, We give more credence to respondents'
allegations in their petition filed with the CA on how such
control was exercised, to wit:
The private respondent (petitioner) controls the entire
fishing operations. For each mother fishing boat, private
respondent assigned a master fisherman (pi ado) and
assistant master fisherman (assistant pi ado), who every
now and then supervise the fishing operations. Private
respondent also assigned a checker and assistant
checker based on the office to monitor and contact every
now and then the crew at sea through radio. The
checker and assistant checker advised then the private
respondent of the condition. Based on the report of the
checker, the private respondent, through radio, will then
instruct the "piado" how to conduct the fishing
operations.21
Such allegations are more in consonance with the fact
that, as the CA found, MGTR had already invested
millions of pesos in its deep-sea fishing industry.
The payment of respondents' wages based on the
percentage share of the fish catch would not be
sufficient to negate the employer-employee relationship
existing between them. As held in Ruga v. NLRC:22
x x x [I]t must be noted that petitioners received
compensation on a percentage commission based on
the gross sale of the fish-catch, i.e., 13% of the proceeds
of the sale if the total proceeds exceeded the cost of the
crude oil consumed during the fishing trip, otherwise,
only 10% of the proceeds of the sale. Such
compensation falls within the scope and meaning of the
term "wage" as defined under Article 97(f) of the Labor
Code, thus:
(f) "Wage" paid to any employee shall mean the
remuneration or earnings, however designated, capable
of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece or commission basis,
or other method of calculating the same, which is
payable by an employer to an employee under a written
or unwritten contract of employment for work done or to
be done, or for services rendered or to be rendered, and
included the fair and reasonable value, as determined by
the Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to the
employee. x x x23
Petitioner wielded the power of dismissal over
respondents when he dismissed them after they refused
to sign the joint fishing venture agreement.
The primary standard for 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.24
Respondents' jobs as fishermen-crew members of FIB
MG 28 were directly related and necessary to
petitioner's deep-sea fishing business and they had
8
been performing their job for more than one year. We
quote with approval what the CA said, to wit:
Indeed, it is not difficult to see the direct linkage or
causal connection between the nature of petitioners'
(now respondents) work visa- vis MGTR's line of
business. In fact, MGTR's line of business could not
possibly exist, let alone flourish without people like the
fishermen crew members of its fishing vessels who
actually undertook the fishing activities in the high
seas.1âwphi1 Petitioners' services to MGTR are so
indispensable and necessary that without them MGTR's
deep-sea fishing industry would not have come to
existence, much less fruition. Thus, We do not see any
reason why the ruling of the Supreme Court in Ruga v.
National Labor Relations Commission should not apply
squarely to the instant case, viz.:
x x x The hiring of petitioners to perform work which is
necessary or desirable in the usual business or trade of
private respondent x x x [qualifies] them as regular
employees within the meaning of Article 28025 of the
Labor Code as they were indeed engaged to perform
activities usually necessary or desirable in the usual
fishing business or occupation of private respondent.26
As respondents were petitioner's regular employees,
they are entitled to security of tenure under Section 3,27
Article XIII of the 1987 Constitution. It is also provided
under Article 279 of the Labor Code, that the right to
security of tenure guarantees the right of employees to
continue in their employment absent a just or authorized
cause for termination. Considering that respondents
were petitioner's regular employees, the latter's act of
asking them to sign the joint fishing venture agreement
which provides that the venture shall be for a period of
one year from the date of the agreement, subject to
renewal upon mutual agreement of the parties, and may
be pre-terminated by any of the parties before the
expiration of the one-year period, is violative of the
former's security of tenure. And respondents' termination
based on their refusal to sign the same, not being shown
to be one of those just causes for termination under
Article 282,28 is, therefore, illegal.
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.29
Respondents who were unjustly dismissed from work
are entitled to reinstatement and backwages, among
others. However, We agree with the CA that since most
(if not all) of the respondents are already employed in
different deep-sea fishing companies, and considering
the strained relations between MGTR and the
respondents, reinstatement is no longer viable. Thus, the
CA correctly ordered the payment to each respondent
his separation pay equivalent to one month for every
year of service reckoned from the time he was hired as
fishermen-crew member of FIB MG-28 by MGTR until
the finality of this judgment.
The CA correctly found that respondents are entitled to
the payment of backwages from the time they were
dismissed until the finality of this decision.
The CA's award of exemplary damages to each
respondent is likewise affirmed. Exemplary damages are
granted by way of example or correction for the public
good if the employer acted in a wanton, fraudulent,
reckless, oppressive or malevolent manners.30
We also agree with the CA that respondents are entitled
to attorney's fees in the amount of 10% of the total
monetary award.1âwphi1 It is settled that where an
employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of
attorney's fees is legally and morally justifiable.31
The legal interest shall be imposed on the monetary
awards herein granted at the rate of six percent (6%) per
annum from the finality of this judgment until fully paid.32
Petitioner's contention that there is no justification to
incorporate in the CA decision the immediate execution
pending appeal of its decision is not persuasive. The
petition for certiorari filed with the CA contained a
general prayer for such other relief and remedies just
and equitable under the premises. And this general
prayer is broad enough to justify extension of a remedy
different from or together with the specific remedy
sought.33 Indeed, a court may grant relief to a party,
even if the party awarded did not pray for it in his
pleadings.34
WHEREFORE, the petition for review on certiorari is
DENIED. The Decision dated October 22, 2010 and the
Resolution dated May 12, 2011 of the Court of Appeals
in CA-G.R. SP No. 55486-MIN are hereby AFFIRMED.
The monetary awards which are herein granted shall
earn legal interest at the rate of six percent (6%) per
annum from the date of the finality of this Decision until
fully paid.
SO ORDERED.
G.R. No. 198782, October 19, 2016
ALLAN BAZAR, , v. CARLOS A. RUIZOL,.
The antecedent facts follow.
Respondent Carlos A. Ruizol (also identified as Carlos
Ruisol in the Complaint, Labor Arbiter's Decision and in
other pleadings) was a mechanic at Norkis Distributors
and assigned at the Surigao City branch. He was
terminated effective 27 March 2002. At the time of his
termination, respondent was receiving a monthly salary
of P2,050.00 and was working from 8:00 a.m. to 5:00
p.m. with a one-hour meal break for six (6) days in a
week. Respondent claimed that petitioner Allan Bazar
9
came from Tandag branch before he was assigned as a
new manager in the Surigao City branch. Respondent
added that he was dismissed by petitioner because the
latter wanted to appoint his protege as a mechanic.
Because of his predicament, respondent filed a
complaint before Regional Arbitration Branch No. XIII of
the National Labor Relations Commission (NLRC) in
Butuan City for illegal dismissal and other monetary
claims. An Amended Complaint was filed on 12 August
2002 changing the name of the petitioner therein from
Norkis Display Center to Norkis Distributors, Inc. (NDI).
Petitioner, on the other hand, alleged that NDI is a
corporation engaged in the sale, wholesale and retail of
Yamaha motorcycle units. Petitioner countered that
respondent is not an employee but a franchised
mechanic of NDI pursuant to a retainership agreement.
Petitioner averred that respondent, being the owner of a
motor repair shop, performed repair warranty service,
back repair of Yamaha units, and ordinary repair at his
own shop. Petitioner maintained that NDI terminated the
retainership contract with respondent because they were
no longer satisfied with the latter's services.
On 8 October 2003,3 Executive Labor Arbiter Noel
Augusto S. Magbanua ruled in favor of respondent
declaring him a regular employee of NDI and that he
was illegally dismissed, to wit:
chanRoblesvirtualLawlibrary
WHEREFORE, judgment is hereby rendered:
Declaring [respondent] a regular employee of [NDI and
petitioner];
Declaring [respondent's] dismissal illegal;
Ordering [NDI] to pay [respondent] Carlos A. Ruisol the
total amount of TWO HUNDRED THREE THOUSAND
FIVE HUNDRED FIFTY ONE PESOS & 33/100
(P203,551.33) representing his monetary award
computed above.
Other claims of [respondent] are dismissed for lack of
merit.4
The Labor Arbiter stressed that an employer-employee
relationship existed in this case. He did not give any
weight to the unsworn contract of retainership based on
the reason that it is a clear circumvention of
respondent's security of tenure.
On appeal, petitioner reiterated that there is no
employer-employee relationship between NDI and
respondent because the latter is only a retainer
mechanic of NDI. Finding merit in the appeal, the NLRC
reversed the ruling of the Labor Arbiter and dismissed
the case for lack of cause of action. The NLRC held that
respondent failed to refute petitioner's allegation that he
personally owns a motor shop offering repair and check-
up services to other customers and that he worked on
the units referred by NDI either at his own motor shop or
at NDI's service shop. The NLRC also ruled that NDI
had no power of control and supervision over the means
and method by which respondent performed job as
mechanic. The NLRC concluded that respondent is
bound to adhere to and respect the retainership contract
wherein he declared and acknowledged that he is not an
employee of NDI.
Respondent filed a petition for certiorari before the Court
of Appeals, submitting that the Labor Arbiter's ruling had
become final with respect to NDI because the latter
failed to appeal the same. · Respondent asserted that
the NLRC erred in ruling that there is no employer-
employee relationship between the parties. Respondent
also prayed for re'i?statement.
On 11 November 2010, the Court of Appeals:granted the
petition. The Court of Appeals ruled that petitioner had
no legal personality to make the appeal for NDI. The
Court of Appeals held that te labor arbiter's decision with
respect to NDI is final. The Court of Appeals found that
there was employer-employee relationship between
respondent and NDI and that respondent was unlawfully
dismissed. Finally, the Court of Appeals awarded
respondent separation pay in lieu of reinstatement.
Petitioner sought reconsideration of the decision but its
motion for reconsideration was denied. Hence, this
petition.
Before this Court, petitioner assigns the following alleged
errors committed by the Court of Appeals:
chanRoblesvirtualLawlibrary
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN GRANTING THE PETITION FOR
CERTIORARI, AND REVERSING THE "DECISION"
AND "RESOLUTION" (ANNEXES "A" AND "B") OF THE
NATIONAL LABOR RELATIONS COMMISSION - FIFTH
DIVISION, CAGAYAN DE ORO CITY, AS THE SAME
ARE NOT IN ACCORDANCE WITH EXISTING LAWS
ANDIOR DECISIONS [PROMULGATED] BY THE
HONORABLE SUPREME COURT.
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN FAILING TO APPLY THE. DECISION OF
THE HONORABLE SUPREME COURT THAT
"JURISDICTION CANNOT BE ACQUIRED OVER THE
DEFENDANT WITHOUT SERVICE OF SUMMONS,
EVEN IF HE KNOWS OF THE CASE AGAINST HIM,
UNLESS HE VOLUNTARILY SUBMITS TO THE
JURISDICTION OF THE COURT BY APPEARING
THEREIN AS THROUGH HIS COUNSEL FILING THE
CORRESPONDING PLEADING IN THE CASE",
PURSUANT TO THE RULING OF THIS HONORABLE
SUPREME COURT IN THE CASE OF "HABANA VS.
VAMENTA, ET AL., L-27091, JUNE 30, 1970."
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN FAILING TO APPLY THE LEGAL
PRINCIPLE THAT "IT IS BASIC THAT A
CORPORATION IS INVESTED BY LAW WITH A
[PERSONALITY] SEPARATE AND DISTINCT FROM
THOSE OF THE PERSONS COMPOSING IT AS WELL
AS FROM THAT OF ANY OTHER LEGAL ENTITY TO
10
WHICH IT MAY BE RELATED.", PURSUANT TO THE
RULING OF THE HONORABLE SUPREME COURT IN
THE CASE OF "ELCEE FARMS, INC. VS. NATIONAL
LABOR RELATIONS COMMISSION, 512 SCRA 602."
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN FAILING TO APPLY THE RULE
REGARDING "DECLARATION AGAINST INTEREST",
PURSUANT TO SECTION 38, RULE 130 ON THE
REVISED RULES ON EVIDENCE.
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN FAILING TO APPLY THE DECISION OF
THE HONORABLE SUPREME COURT THAT "LD.
CARDS WHERE THE WORDS "EMPLOYEE'S NAME"
APPEAR PRINTED THEREIN DO NOT PROVE
EMPLOYER- EMPLOYEE RELATIONSHIP WHERE
SAID I.D. CARDS ARE ISSUED FOR THE PURPOSE
OF ENABLING CERTAIN "CONTRACTORS" SUCH AS
SINGERS AND BAND PERFORMERS, TO ENTER THE
PREMISES OF AN ESTABLISHMENT", PURSUANT TO
THE RULING OF THIS HONORABLE SUPREME
COURT IN THE CASE OF "TSPIC CORPORATION VS.
TSPIC EMPLOYEES UNION (FFE), 545 SCRA 215."
THE HONORABLE COURT OF APPEALS
MANIFESTLY OVERLOOKED CERTAIN RELEVANT
AND UNDISPUTED FACTS THAT, IF PROPERLY
CONSIDERED, WOULD JUSTIFY A DIFFERENT
CONCLUSION.
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN FAILING TO DECLARE THAT "NORKIS
DISTRIBUTORS, INC. IS NOT A PARTY IN THE
INSTANT CASE."
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN FAILING TO DECLARE THAT "THE
DECISION OF THE LABOR ARBITER IS NOT BINDING
UPON NORKIS DISTRIBUTORS, INC."
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN DECLARING THAT, "WITH RESPECT TO
NORKIS DISTRIBUTORS, INC., THE DECISION OF
THE LABOR ARBITER HAD ALREADY BECOME
FINAL", FOR THE REASON THAT NO JURISDICTION
HAD BEEN ACQUIRED OVER NORKIS
DISTRIBUTORS, INC. SINCE THERE WAS NO
PROPER SERVICE OF SUMMONS UPON THE
CORPORATION.
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN SETTING ASIDE THE "DECISION" OF THE
NATIONAL LABOR RELATIONS COMMISSION FIFTH
DIVISION, CAGAYAN DE ORO CITY, AND
REINSTATING THE "DECISION" OF THE LABOR
ARBITER, AS RESPONDENT IS NOT AN EMPLOYEE
OF NORKIS DISTRIBUTORS, INC., BUT ONLY A
"RETAINER MECHANIC", JUST LIKE A RETAINER
LAWYER WHO IS NOT AN EMPLOYEE OF THE
LAWYER'S CLIENT.
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN DECLARING THE : EXISTENCE OF
EMPLOYER-EMPLOYEE RELATIONSHIP, SINCE
THERE IS AN ABSENCE OF EMPLOYER-EMPLOYEE
RELATIONSHIP BETWEEN NORKIS DISTRIBUTORS,
INC. AND RESPONDENT RUIZOL.
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN DISREGARDING THE "MASTERLIST OF
ALL EMPLOYEES" OF NORKIS DISTRIBUTORS, INC.
AS PROOF THAT RESPONDENT RUIZOL IS NOT ITS
EMPLOYEE.
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN AFFIRMING THE "DECISION" OF THE
LABOR ARBITER REGARDING THE AWARD OF 10%
ATTORNEY'S FEES, FOR THE REASON THAT
RESPONDENT WAS, AT THAT TIME, REPRESENTED
BY A PUBLIC LAWYER FROM THE PUBLIC
ATTORNEY'S OFFICE OF BUTUAN CITY.
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN REINSTATING THE "DECISION" OF THE
LABOR ARBITER, WHICH AWARDS BACKWAGES,
SALARY DIFFERENTIAL, 13TH MONTH PAY,
SEPARATION PAY, SERVICE INCENTIVE LEAVE AND
ATTORNEY'S FEES, AS THERE IS NO EMPLOYER-
EMPLOYEE RELATIONSHIP BETWEEN NDI AND
RESPONDENT RUIZOL.5
Petitioner first raises a question of procedure. Petitioner
asserts that no summons was served on NDI. Thus, NDI
had no reason to appeal the adverse decision of the
Labor Arbiter because jurisdiction over its person was
not acquired by the labor tribunal. Considering the
foregoing, petitioner maintains that he cannot be made
personally liable for the monetary awards because he
has a personality separate and distinct from NDI.
We partly grant the petition.
The NLRC, despite ruling against an employer-employee
relationship had nevertheless upheld the jurisdiction of
the Labor Arbiter over NDI. The NLRC ruled and we
agree, thus:
chanRoblesvirtualLawlibrary
Indeed, NDI was impleaded as respondent in this case
as clearly indicated in the amended complaint filed by
[respondent] on August 12, 2002, contrary to the belief
of [NDI and petitioner]. And considering that the
summons and other legal processes issued by the
Regional Arbitration Branch a quo were duly served to
[petitioner] in his capacity as branch manager of NDI, the
Labor Arbiter had validly acquired jurisdiction over the
juridical person of NDI.6
The Court of Appeals correctly added that the Labor
Arbiter's ruling with respect to NDI has become final and
executory for the latter's failure to appeal within the
reglementary period; and that petitioner had no legal
personality to appeal for and/or behalf of the corporation.
11

Interestingly, despite vehemently arguing that NDI was
not bound by the ruling because it was not impleaded as
respondent to the complaint, petitioner in the same
breath admits even if impliedly NDI is covered by the
ruling, arguing that there cannot be any illegal dismissal
because there is no employer-employee relationship
between NDI and respondent. We are not convinced.
We emphasize at the outset that the existence of an
employer- employee relationship is ultimately a question
of fact. Only errors of law are generally reviewed by this
Court. Factual findings of administrative and quasi-
judicial agencies specializing in their respective fields,
especially when affirmed by the Court of Appeals, must
be accorded high respect, if not finality.7 We here see
an exception to the rule on the binding effect on us of the
factual conclusiveness of the quasi-judicial agency. The
findings of the Labor Arbiter are in conflict with that of
the NLRC and Court of Appeals. We can thus look into
the factual issues involved in this case.
The four-fold test used in determining the, existence of
employer- employee relationship are: (a) the selection
and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the
employer's power to control the employee with respect
to the means and. method by which the work is to be
accomplished.8chanrobleslaw
In finding that respondent was an employee of NDI, the
Court of Appeals applied the four-fold test in this wise:
chanRoblesvirtualLawlibrary
x x x First, the services of [respondent] was indisputably
engaged by the [NDI] without the aid of a third party.
Secondly, the fact that the [respondent] was paid a
retainer fee and on a per diem basis does not altogether
negate the existence of an [employer]-employee
relationship. The retainer agreement only provided the
breakdown, of the [respondent's] monthly income. On a
more important note, the [NDI] did not present its payroll,
which it could conveniently do, to disprove the
[respondent's] claim that he was their employee. x x x
Third, the [NDI's] power of dismissal can be [gleaned]
from the termination of the [respondent] although
couched under the guise of the non-renewal of his
contract with the company. Also, the contract alone
showed that the [respondent] provided service to
Yamaha motorbikes brought to the NDI service shop in
accordance with the manual of the unit and subject to
the minimum standards set by the company. Also, tool
kits were furnished to the mechanics which they use in
repairs and checking of the units conducted inside or in
front of the Norkis Display Center.9
Petitioner argues that respondent was not engaged as
an employee but the parties voluntarily executed a
retainership contract where respondent became NDI's
retainer mechanic; that respondent was paid a retainer's
fee similar to that of the services of lawyers; that the
termination of the retainership contract does not
constitute illegal dismissal of the retained mechanic; and
that NDI is only interested in the outcome of
respondent's work. Petitioner further explained that
respondent is free to use his own means and methods
by which his work is to be accomplished and the manual
of the Yamaha motorbike unit is necessary in order to
guide respondent in the repairs of the motorbikes.
At the outset, respondent denied the existence of a
retainership contract. Indeed, the contract presented by
NDI was executed by the latter and a certain Eusequio
Adorable. The name "Carlos Ruizol" was merely added
as a retainer/franchised mechanic and the same was
unsigned. Assuming, however, that such a contract did
exist, its provisions should not bind respondent. We
agree with the Labor Arbiter on the following points:
chanRoblesvirtualLawlibrary
Paragraph 5 and 6 of the unsworned contract of
Retainership between [respondent] and [NDI and
petitioner] dated March 1, 1989 states as
follows:ChanRoblesVirtualawlibrary
"5. That the franchised mechanic, though not an
employee of the NDI agrees to observe and abide by the
rules and regulations by the NDI aims to maintain a good
quality and efficient service to customer.
6.) Franchised mechanic hereby acknowledge that he is
not an employee of NDI, hence, not entitled to Labor
Standard benefits.
It bears stressing that the contents of the unsworn
Contract of Retainership is a clear circumvention of the
security of tenure pursuant to Articles 279 and 280 of the
Labor Code. The agreement embodied in the said
contract is contrary to law. thus [respondent] is not
bound to comply with the
same.10chanroblesvirtuallawlibrary
NDI admitted to have engaged the services of
respondent, although under the guise of a retainership
agreement. The fact of engagement does not exclude
the power ofNDI to hire respondent as its employee.
Assuming that respondent signed the retainership
agreement, it is not indicative of his employment status.
It is the law that defines and governs an employment
relationship, whose terms are not restricted by those
fixed in the written contract, for other factors, like the
nature of the work the employee has been called upon to
perform, are also considered. The law affords protection
to an employee, and does not countenance any attempt
to subvert its spirit and intent. Any stipulation in writing
can be ignored when the employer utilizes the stipulation
to deprive the employee of his security of tenure. The
inequality that characterizes employer-employee
relations generally tips the scales in favor of the
employer, such that the employee is often scarcely
provided real and better options.11chanrobleslaw
Petitioner claims that respondent was receiving
1!2,050.00 as his monthly retainer's fee as of his
12
termination in March 2002. This fee is covered by the
term "wages" and defined as remuneration or earnings,
however designated, capable of being expressed in
terms of money, whether· fixed or ascertained on a time,
task, piece or commission basis, or other method of
calculating the same, which is payable by an employer
to an employee under a written or unwritten contract 'of
employment for work done or to be done, or for service
rendered or to be rendered.12 For services rendered to
NDI, respondent received compensation. NDI could
have easily disproved that respondent was its employee
by presenting the manner by which such compensation
was paid to respondent. NDI did not do so.
That NDI had the power to dismiss respondent was
clearly evidenced by the fact that respondent's services
were terminated.
The control test is the most crucial and determinative
indicator of the presence or absence of an employer-
employee relationship. Under the control test, an
employer-employee relationship exists where the person
for whom the services are performed reserves the right
to control not only the end achieved, but also the manner
and means to be used in reaching that
end.13chanrobleslaw
Petitioner asserts that NDI did not exercise the power of
control over respondent because he is free to use his
own means and methods by which his work is to be
accomplished. The records show the contrary. It was
shown that respondent had to abide by the standards
sets by NDI in conducting repair work on Yamaha
motorbikes done in NDI's service shop. As a matter of
fact, on allegations that respondent failed to live up to
the demands of the work, he was sent several
memoranda14 by NDI. We agree with the Labor Arbiter
that the presence of control is evident thus:
chanRoblesvirtualLawlibrary
This Branch agree with the complainants' contention that
there is no contract and that he is a regular employee as
shown in Annexes "2" & "3" respectively of the
respondents position paper, as
follows:ChanRoblesVirtualawlibrary
"Furthermore, you are directed and advice to religiously
follow orders from your immediate superior x x x
Failure on your part to submit a written explanation will
be construed as a waiver of your right and your case will
be decided based on available information"
The above memo is so worded in a way that it
unmistakably show that it is addressed to the
[respondent] who is an employee of [NDI]. It shows
clearly the presence of the element of "control" by [NDI
and petitioner] over [respondent's] manner of
work.15chanroblesvirtuallawlibrary
Petitioner points out that respondent actually owns a
motor repair shop where he performs repair warranty
service and back job repairs of Yamaha motorcycles for
NDI and other clients. This allegation was
unsubstantiated. We cannot give credit to such claim.
Petitioner argues that the appellate court erred in holding
that respondent is an employee of NDI based on the
identification card issued to him. While it is true that
identification cards do not prove employer- employee
relationship, the application of the four-fold test in this
case proves that an employer-employee relationship did
exist between respondent and NDI.
Since it was sufficiently established that petitioner is an
employee of NDI, he is entitled to security of tenure. He
can only be dismissed for a just or authorized cause.
Petitioner was dismissed through a letter informing him
of termination of contract of retainership which we
construe as a termination notice. For lack of a just or
authorized cause coupled with failure to observe the
twin-notice rule in termination cases, respondent's
dismissal is clearly illegal.
An illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided
are separate and distinct. In instances where
reinstatement is no longer feasible because of strained
relations between the employee and the employer,
separation pay is granted. In effect, an illegally
dismissed employee is entitled to either reinstatement, if
viable, or separation pay if reinstatement is no longer
viable, and backwages.16chanrobleslaw
Based on the foregoing, we affirm that NDI is not only
liable for respondent's illegal dismissal, but that the
Labor Arbiter's decision against it had already become
final and executory.
We now go to the liability of petitioner for payment of the
monetary award. There is solidary liability when the
obligation expressly so states, when the law so provides,
or when the nature of the obligation so requires.17
Settled is the rule that a director or officer shall only be
personally liable for the obligations of the corporation, if
the following conditions concur: (1) the complainant
alleged in the complaint that the director or officer
assented to patently unlawful acts of the corporation, or
that the officer was guilty of gross negligence or bad
faith; and (2) the complainant clearly and convincingly
proved such unlawful acts, negligence or bad
faith.18chanrobleslaw
In the instant case, there is an allegation that petitioner
dismissed respondent because he wanted to hire his
own mechanic. However, this remained to be an
allegation absent sufficient proof of motive behind
respondent's termination. Petitioner may have directly
issued the order to dismiss respondent but respondent
must prove with certainty bad faith on the part of
petitioner. No bad faith can be presumed from the lone
fact that immediately after respondent's termination, a
new mechanic was hired. That the new mechanic was
actually petitioner's protege is a mere allegation with no
13
proof. Therefore, petitioner, as branch manager, cannot
be held solidarily liable with NDI.
WHEREFORE, the instant Petition is PARTLY
GRANTED. The Decision dated 11 November 2010 and
Resolution dated 8 September 2011 of the Court of
Appeals in CA-G.R. SP No. 00937-MIN reinstating the
Decision of the Labor Arbiter declaring respondent
Carlos Ruizol's dismissal as illegal are AFFIRMED.
Petitioner Allan Bazar is however ABSOLVED from the
liability adjudged against Norkis Distributors, Inc.
G.R. No. 208936
HERMA SHIPYARD, INC, and MR. HERMINIO
ESGUERRA vs
DANILO OLIVEROS, et al.
Herma Shipyard is a domestic corporation engaged in
the business of shipbuilding and repair. The respondents
were its employees occupying various positions such as
welder, leadman, pipe fitter, laborer, helper, etc.
On June 17, 2009, the respondents filed before the
Regional Arbitration Branch III, San Fernando City,
Parnpanga a Complaint 3 for illegal dismissal,
regularization, and non-payment of service incentive
leave pay with prayer for the payment of full backwages
and attorney's fees against petitioners. Respondents
alleged that they are Herma Shipyard's regular
employees who have been continuously performing
tasks usually necessary and desirable in its business.
On various dates, however, petitioners dismissed them
from employment.
Respondents further alleged that as a condition to their
continuous and Uninterrupted employment, petitioners
made them sign employment contracts for a fixed period
ranging from one to four months to make it appear that
they were project-based employees. Per respondents,
petitioners resorted to this scheme to defeat their right to
security of tenure, but in truth there was never a time
when they ceased working for Henna Shipyard due to
expiration of project-based employment contracts. In
fact, if they were indeed project employees, petitioners
should have reported to the Department of Labor and
Employment (DOLE) the completion of such project. But
petitioners have never submitted such report to the
DOLE.
For their defense, petitioners argued that respondents
were its project-based employees in its shipbuilding
projects and that the specific project for which they were
hired had already been completed, In support thereof,
Herma Shipyard presented contracts of employment,
some of which are written in the vernacular and
denominated as kasunduang Paglilingkod (Pang-
Proyektong Kawani).4
Ruling of the Labor Arbiter
On May 24, 2010, the Laborer Arbiter rendered a
Decision 5 Dismissing respondents’ Complaint. The
Laborer Arbiter held that respondents were project-
based employees whose services were validly
terminated upon the completion of the specific work for
which they were individually hired. The dispositive
portion of the Labor Arbiter’s Decision reads:
WHEREFORE, premises considered, let the instant
complaint be, as it is hereby ORDERED dismissed for
lack of merit.
AU the money cla.ims as well as moral and exemplary
damages and attorney's fees raised by the complainants
in their complaint are likewise DENIED for lack of merit.
SO ORDERED.6
Respondents thus appealed to the NLRC.
Ruling of the National Labor Relations Commission
On September 7, 2010, the NLRC rendered its
Decision7 denying respondents' appeal and affirming in
toto the Decision of the Labor Arbiter, It sustained the
finding of the Labor Arbiter that based on their
employment contracts, respondents were project-based
employees hired to do a particular project for a specific
period of time.
Respondents moved for reconsideration but the NLRC
denied their Motion for Reconsideration 8 in its
November 11, 2010 Resolution.9
Unfazed, respondents filed a Petition for Certiorari10
before the CA imputing grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of
the labor tribunals in finding that they were project-based
employees and in not awarding them service incentive
leaves. Respondents contended that the labor tribunals
grievously erred in relying on the project employment
contracts which were for a uniform duration of one
month. They argued that if it were true that they were
project-based employees, the duration of their
employment should have coincided with the completion
of the project for which they were hired and not for a
uniform period of one month.
Ruling of the Court of Appeals
On May 30, 2013, the CA rendered its assailed Decision
11 granting respondents’ Petitions for Certiorari and
setting aside the labor tribunals’ Decision. It held that
even if the contracts of employment indicated that
respondents were hired as project-based workers, their
employment status have become regular since: they
were performing tasks that are necessary, desirable, and
vital to the operation of petitioners’ business; petitioners
failed to present proof that respondents were hired for a
specific period or that their employment was
coterminous with specific project; it is not clear from the
contracts of employment presented that the completion
or termination of the project or undertaking was already
determined at the time petitioners engaged the services
14
of respondents; respondents were made to work not only
in one project but also in different projects and were
assigned to different departments of Herma Shipyard;
respondents were repeatedly and successively rehired
as employees of Herma Shipyard; except with regard to
respondent’s last employment, petitioners failed to
represent proof that they reported to the nearest public
employment office the termination of respondents’
previous employment or every time a project or a phase
thereof had been completed; and, petitioners failed to file
as many reports of termination as there were
shipbuilding and repair projects actually completed, The
CA concluded that the project employment contracts
were indeed used as a device to circumvent
respondents’ right to security of tenure. The fallo of the
assailed CA Decision reads:
WHEREFORE, the instant for certiorari is GRANTED.
The assailed decision and resolution of the respondent
National Labor Relations Commission are REVERSED
and SET ASIDE, and a new judgment is hereby
rendered holding petitioners as regular employees and
declaring their dismissal as illegal. According, private
respondents are hereby ordered to REINSTATE
petitioners to their former employment. Should
reinstatement be not possible due to strained relations,
private respondents are ordered to pay petitioners their
separation pay equivalent to one month pay or one-half-
month pay for every year of service. Whichever is
higher, with full backwages computed from the time of
dismissal up to the finality of the decision. For this
purpose, the case is hereby REMANDED to the
respondent NLRC for the computation of the amounts
due petitioners.
SO OREDERED. 12
Petitioners moved for reconsideration. In a Resolution 13
dated August 30, 2013, however, the CA denied their
Motion for Reconsideration. 14
Hence, this Petition for Review on Certiorari assailing
the May 30, 2013 Decision and August 30, 2013
Resolution of the CA, Petitioners anchor their Petition on
the following arguments:
A RULES.15
PREVAIL IN JURISPRUDENCE DICTATES THAT
RESPONDENTS ARE NOT REGULAR EMPLOYEES
OF PETITIONER [HERMA SHIPYARD]. THEY ARE
PROJECT EMPLOYEES WHOSE TERMS OF
EMPLOYMENT WERE VALIDLY TERMINATED UPON
THE EXPIRATION OF THE TERM OF THEIR
PROJECT EMPLOYMENT CONTRACTS.
B that their employment was coterminous therewith. The
THE ASSAILED DECISION AND ASSAILED
RESOLUTION RULED ON ISSUES WHICH WERE
NEITHER DISPUTED IN RESPONDENTS' PETITION
FOR CERTIORARI NOR RAISED IN THE DECISION
OF THE HONORABLE [NLRC].
C
ASA BORNE BY THE PROJECT EMPLOYMENT
CONTRACTS OF RESPONDENTS AND
TERMINATION REPORTS SUBMITTED TO THE
DEPARTMENT OF LABOR AND EMPLOYMENT,
RESPONDENTS UNDOUBTEDLY PROJECTS
EMPLOYEES OF PETITIONER [HERMA SHIPYARD].
D
THE HONORABLE COURT OF APPEALS FAILED TO
CONSIDER THAT RESPONDENTS’ PETITION FOR
CERTIORARI DID NOT RAISE AS AN ISSUE AN ACTS
COMMITTED BY THE HONORABLE [NLRC] WHICH
AMOUNTED TO GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF
JURISDJCTION.
E
BY VIRTUE OF THE DOCTRINE OF SEPARATE
JURIDICAL PERSONALITY, PETITIONER ESGUERRA
SHOULD NOT BE HELD LIABLE IN THE INSTANT
LABOR COMPIAINT.
F
THE HONORABLE COURT OF APPEALS FAILED TO
GIVE WEIGHT AND RESPECT TO THE FACTUAL
FINDINGS OF THE HONORABLE NATIONAL LABOR
RELATIONS COMMISSION AND THE HONORABLE
LABOR ARBITER.
G
THE HONORABLE COURT OF APPEALS DID NOT
ACQUIRE JURISDICTION OVER THE INSTANT CASE
AS THE HONORABLE NLRC'S DECISION AND
RESOLUTION ALREADY BECAUSE EXECUTORY
CONSIDERING THAT RESPONDENTS' PETITION
FOR CERTIORARI WAS FILED BEYOND THE
REGLEMENTARY PERIOD PRESCRIBED BY THE
Petitioners contend, among others, that necessity and
desirability of respondents’ services in Herma Shipyard’s
business are not the only factors to be considered in
determining the nature of respondents; employment.
They assert that the CA should have also taken into
consideration to the contracts of employment signed by
the respondents apprising them to the fact that their
services were engaged for a particular project only and
authenticity and genuineness of said contracts,
according to petitioners, were never disputed by the
respondent during the pendency of the case before the
labor tribunals. It was only in their comment 16 to the
15
instant Petition that respondents disavow said contracts
of employment for allegedly being fictitious.
Petitioners aver that the CA also erred in ruling that he
duration of respondents’ employment depends upon a
progress accomplishment as paragraph 10 of the
employment contract readily shows that the same is
dependent upon the completion of the project indicated
therein.
With regard to the repeated rehiring of the respondents,
petitioners insist that the same will not result in
respondents becoming regular employees because
length of service does not determine employment status.
What is controlling of specific project or undertaking, its
completion having been determined and made known to
the employees at the time of their engagement. Thus,
regardless of the number of projects for which
respondents had been repeatedly hired, they remained
project-based employees because their engagements
were limited to a particular project only. Petitioners
emphasize that Herma Shipyard merely accepts
contracts for shipbuilding and for repair of vessels. It is
not engaged in the continuous production of vessels for
sale which would necessitate the hiring of a large
number of permanent employees.
Respondents, for their part, deny having worked for a
specific projects or undertaking. They insist that the
employment contracts presented by petitioners
purportedly showing that they were project-based
employees are fictitious designed to circumvent the law.
In any case, said contracts are not valid project
employment contracts because the completion of the
project.
Our Ruling
The Petition is impressed by merit.
At the outset, the issue of whether petitioners were
project-based employees is a question of fact that,
generally, cannot be passed and ruled upon by this
Court in a petition for review on certiorari filed under
Rule 45 of the rules of Court. It is settled that the
jurisdiction of this Court in a Rule 45 petition is generally
limited to reviewing errors of law. Nevertheless, in view
of the opposing views of the tribunals below, this Court
shall take cognizance of and resolve the factual issues
involved in this case. 17
Who are project-based employees?
A project employee under Article 280 (now Article
294)18 of the Labor Code, as amended, 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, Thus:
Art, 280. Regular and Casual Employment. –The
provisions of written agreement for the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be
regular where the employee has been engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of the employer,
except where the employment has been fixed for a
specific
Project or undertaking the completion or termination of
which has been determined at the time of the
engagement of the employee or where the work or
service to be performed is seasonal in nature and the
employment is for the duration of the season.
x x x x (Emphasis supplied)
The services of project-based employees are co-
terminous with the project and may be terminated upon
the end or completion of the project or a phase thereof
for which they were hired. 19 The principal test in
determining whether particular employees were engaged
as project-based employees, as distinguished from
regular employees, is whether they were assigned to
carry out a specific project or undertaking, the duration
and scope of which was specified at, and made known
to them, at the time of their engagement. 20 It is crucial
that the employees were informed of their status 8rS
project employees at the time of hiring and that the
period of their employment must be knowingly and
voluntarily agreed upon by the parties, without any force,
duress, or improper pressure being brought to bear upon
the employees or any other circumstances vitiating their
consent. 21
Respondents Knowingly and voluntarily
entered in and signed the project-based
employment contracts.
The records of this case reveal that for each and every
project respondents were hired. They were adequately
informed of their employment status as project-based
employees at least at the time they signed their
employment contracts. They were fully apprised of the
nature and scope of their work whenever they affixed
their signature to their employment contract. Their
contracts of employment (mostly written in the
vernacular) provide in no uncertain terms that they were
hired as project-based employees whose services are
coterminous with the completion date thereof. They also
contain a provision expressly stating that respondents’
employment shall end upon the arrival of the target
completion date or upon the completion of such project.
Except for the underlined portions, the contract of
employment read:
There is no indication that respondents were coerced
into signing their employment contracts or that they
affixed their signature thereto against their will. While
they claim that they signed the said contracts in order to
secure continuous employment, they have not, however
presented sufficient evidence to support the same other
than their bare allegations. It is settled that "[c]ontracts
16
for project employment are valid under the law."23 Thus,
in Jamias vs National Labor Relations Commission, 24
this court upheld the project employment contracts which
were knowingly and voluntarily signed by the employees
for want of proof that the employers employed force,
intimidation, or fraudulently manipulated them into
signing the same. Similarly in this case, by voluntarily
entering into the aforementioned project employment
contracts, respondents are deemed to have understood
that their employment is coterminous with the particular
project indicated therein. They cannot expect to be
employed continuously beyond the completion of such
project because a project employment terminates as
soon as it is completed.
Performance by project-based
Employees of task necessary and
Desirable to the usual business
Operation of the employer will not
automatically result in their
regularization.
In disregarding the projects employment contracts and
ruling that respondents are regular employees, the CA
took into consideration that respondents were
performing tasks necessary and desirable to the
business operation of Herma Shipyard and that they
were repeatedly hired. Thus:
[I]t is significant to note that even if the contracts of
employment indicates that [respondents] were hired as
project workers, they are still considered regular
employees on the ground that as welder, ship fitter, pipe
fitter, expediter and helper, [respondents’] services are
all necessary, desirable and vital to the operation of the
ship building and repair business of [petitioners]. A
confirmation of the necessity and desirability of their
services is the fact that [respondents] were continually
and successively assigned to the different projects of
private respondents even after the completion of a
particular project to which they were previously
assigned. On this score, it cannot be denied that
petitioners were regular employees. 25
It is settled, however, that project-based employees may
or may not be performing tasks usually necessary or
desirable in the usual business or trade of the employer.
The fact that the job is usually necessary or desirable in
the business operation of the employer does not
automatically imply regular employment; neither does it
impair the validity of the project employment contract
stipulating a fixed duration of employment. 26 As this
Court held in ALU-TUCP v. National Labor Regulation
Commission: 27
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 undertaking of the company. Such job or
undertaking begins and ends at determined or
determinable times. The typical example of this first type
of project is a particular construction job or project of a
construction company. A construction company
ordinarily carries out two or more discrete identifiable
construction projects: e,g., a twenty-five-storey hotel in
Makati; a residential condominium building in Baguio
City; and domestic air terminal in Iloilo City. Employees
who are hired for the carrying out of one 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. 28
Here, a meticulous examination of the contracts of
employment reveals that while the tasks assigned to the
respondents were indeed necessary and desirable in the
usual business of Herma Shipyard, the same were
distinct, separate, and identifiable from the other projects
or contracts services. Below is the summary of the
respondents’ employment contracts indicating the
positions they held, the specific projects for which they
were hired, and the duration or expected completion
thereof:
As shown above, respondents were hired for various
projects which are distinct, separate, and identifiable
from each other. The CA thus erred in immediately
concluding that since respondents were performing
tasks necessary, desirable, and vital to Herma
Shipyard's business operation, they are regular
employees.
Repeated rehiring of project employees
to different projects does not ipso facto
make then regular employees.
"[T]he repeated and successive rehiring [of respondents
as project-based employees] does not [also], by and of
itself: qualify them as regular employees. Case law
states that length of service (through rehiring) is not the
controlling determinant of the employment tenure [of
project-based employees but, as earlier mentioned],
whether the employment has been fixed for a specific
project or unde1taking, with its completion having been
determined at the tin1e of [their] engagement." 123
Stated otherwise the rule that employees initially hired
on a temporary basis may become permanent
employees by reason of their length of service is not
applicable to project-based employees. Our ruling in
Villa v. National Labor Relations Commission 124 is
instructive on the matter, viz.:
17
Thus, the fact that petitioners worked for NSC under
different project employment contracts for several years
cannot be made a basis to consider them as regular
employees, for they remain project employees
regardless of the number of projects in which they have
worked. Length of service is not the controlling
determinant of the employment tenure of a project
employee. In the case of Mercado Sr. v. NLRC, this
Court rule that the proviso in the second paragraph of
Article 280, providing that an employee who has served
for at least one year, shall be considered a regular
employee, relates only to casual employees and not to
project employees.
The rationale for the inapplicability of this rule to project-
based employees was discussed in Dacles v. Millennium
Erectors Corporation,, 125 to wit:
x x x While 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, this
standard will not be fair, if applied to the constrn9tion
industry because construction firms cannot guarantee
work and funding for its payrolls beyond the life of each
project as they have no control over the decisions and
resources of project proponents or owners. Thus, once
the project is completed it would be unjust to require the
employer to maintain these employees in their payroll
since this would be tantamount to making the employee
a privileged retainer who collects payment from his
employer for work not done, and amounts to labor
coddling at the expense of management.126
Indeed, if we consider the nature of Henna Shipyard's
business, it is clear that Herma Shipyard only hirG5
workers when it has existing contracts for shipbuilding
and repair. It is not engaged in the business of building
vessels for sale which would require it to continuously
construct vessels for its inventory and consequently hire
a number of permanent employees. In Sandoval
Shipyards, Inc. v. National labor Relations Commission
127 where therein petitioner was engaged in a similar
kind of business this Court opined that:
It is significant to note that the corporation does not
construct vessels for sale or othe1wise which will
demand continuous productions of ships and will need
permanent or regular workers. It merely accepts
contracts for shipbuilding or for repair of vessels from
third parties and, only, on occasion 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.128
The completion of their work or project automatically
terminates their employment, in which case, the
employer is, under the law, only obliged to render a
report on the termination of the employment.
Hence, Herma Shipyard should be allowed '"to reduce
[its] work force into a number suited for the remaining
work to be done upon the completion or proximate
accomplishment of [each particular] project."129 As for
respondents, since they were assigned to a project or a
phase thereof which begins and ends a determined or
determinable times, their services were lawfully
ten11inated upon the completion of such project or
phase thereof 130
Moreover, our examination of the records revealed other
circumstances that convince us that respondents were
and remained project-based employees, albeit
repeatedly rehired. Contrary to their claim, respondents'
employment were neither continuous and uninterrupted
nor for a uniform period of one month; they were
intermittent with varying durations as well as gaps
ranging from a few days to several weeks or months.
These gaps coincide with the completion of a particular
project and the start of a new specific and distinct project
for which they were individually rehired. And for each
completed project, petitioners submitted the required
Establishment Employment Records to the DOLE which
is a clear indicator of project employment. 131 The
records also show that respondents' employment had
never been extended beyond the completion of each
project or phase thereof fix which they had been
engaged.
The project employment contract is not subject to a
condition.
The CA likewise erred in holding that paragraph 10 of
the employment contract allowing the extension of
respondents' employment violates the second requisite
of project employment that the completion or tem1ination
of such project or undertaking be determined at the time
of engagement of the employee. It reads:
10 Ang knsunduang ito maaaring palawigin ng mas
mababang panahon na maaaring kailanganin para sa
matagumpay na pagtatapos ng mga gawn o proyektong
pinagkasunduan; 132
To our mind, paragraph 10 is in harmony with the
agreement of the parties that respondents' employment
is coterminous with the particular project stated in their
contact. It was placed therein to ensure the successful
completion of the specific work fur which respondents
were hired. Thus, in case of delay or where said work is
not finished within the estimated completion,
respondents’ period of employment can be extended
until it is completed. In which case, the duration and
nature of their employment remains the same as
previously determined in the project employment
contract; it is still coterminous with the particular project
for which they were fully apprised of at the time of their
engagement.
As to the requirement that the completion or termination
of the specific project or undertaking for which
respondents were hired should be determined at the
time of their engagement, we rule and so hold that it is
enough that Herma Shipyard gave the approximate or
18
target completion date in the project employment
contract, Given the nature of its business and the scope
of its projects which take months or even years to finish~
we cam1ot expect Henna Shipyard to give a definite and
exact completion date. It can only approximate or
estimate the completion date. What is important is that
the respondents were apprised at the time of their
engagement that their employment is coterminous with
the specific project and that should their employment be
extended by virtue of paragraph 10 the purpose of the
extension is only to complete the same specific project,
and not to keep them employed even after the
completion thereof. Put differently, paragraph l 0 does
not allow the parties to extend the period of respondents'
employment after the co111pletion of the specific project
for which they were hired. Their employment can only be
extended if that particular project, to which their
employment depends, remains unfinished.
In sum, the CA erred in disr9garding the project
employment contracts and in concluding that
respondents have become regular employees because
they were performing tasks necessary and desirable to
the business of Henna Shipyard and were repeatedly
rehired. The Labor, Arbiter and the NLRC, which have
expertise in their specific and specialized jurisdiction, did
not err, much less commit grave abuse of discretion in
holding that respondents were project-based employees.
Their uniform conclusion is supported by substantial
evidence and should, therefore, be accorded not only
respect, but even finality.
WHEREFOR, the instant Petition for Review on
Certiorari is GRANTED. The assailed Decision dated
May 30, 2013 of the Court of Appeals in CA-GR. SP No.
118068 is REVERSED and SETASIDE, The May 24, 20
l 0 Decision of the Labor Arbiter dismissing respondents'
Complaint and affirmed by the National Labor Relations
Commission in its Decision dated September 7, 2010 is
REINSTATED and AFFIRMED.
G.R. No. 184262**
UNIVERSITY OF SANTO TOMAS (UST),
vs.
SAMAHANG MANGGAGAWA NG UST, FERNANDO
PONTESOR,* RODRIGO CLACER, SANTIAGO
BUISA, JR., and JIMMY NAZARETH, Respondents
The instant case stemmed from a complaint 7 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 per-project
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 Decision 11 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 Resolution 15 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
19
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 Resolution 19 dated May 25, 2004.
Dissatisfied, they filed a petition20 for certiorari before
the CA.
The CA Ruling
In a Decision 21 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
caused. 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.1âwphi1 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 certiorari was
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:
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:
The primary standard, therefore, of determining regular
employment is the reasonable connection between the
particular activity performed by the employee in relation
20
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.34 (Emphasis and
underscoring supplied.
In Kimberly Independent Labor Union for Solidarity,
Activism, and Nationalism - Organized Labor Ass 'n. in
Line Industries and Agriculture (KILUSAN-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:
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 "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.38 (Emphases and underscoring supplied)
As aptly held by the CA, Pontesor, et al. could not be
considered as project employees because the specific
undertakings or projects for which they were employed
were not clearly delineated. This is evidenced by the
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
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
Lest it be misunderstood, there are instances when the
validity of project41 or fixed term42 employments were
upheld on the ground that it 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."43
However, if it is apparent from the circumstances of the
case "that periods have been imposed to preclude
acquisition of tenurial security by the employee," such
project or fixed term contracts are disregarded for being
contrary to public policy, 44 as in this case.
21
In view of the foregoing, Pontesor, et al. should, as
discussed earlier, be considered regularized casual
employees who enjoy, inter alia, security of tenure.
Accordingly, they cannot be terminated from
employment without any just and/or authorized cause,
which unfortunately, petitioner was guilty of doing in this
case. Hence, Pontesor, et al. must be reinstated to their
former or equivalent positions, with full backwages and
without loss of seniority rights. As pointed out by the LA,
the NLRC Computation & Examination Unit should be
directed to compute the monetary awards that petitioner
should be ordered to pay Pontesor, et al. as a
consequence of this ruling.
WHEREFORE, the petition is DENIED. The Decision
dated June 12, 2008 and the Resolution dated August
22, 2008 of the Court of Appeals in CA-G.R. SP No.
85464 are hereby AFFIRMED.
G.R. No. 221897, November 07, 2016
ISIDRO QUEBRAL, et al v. ANGBUS
CONSTRUCTION, INC. AND ANGELO BUSTAMANTE
Petitioners alleged that Angbus employed them as
construction workers on various dates from 2008 to
2011. They claimed to be regular employees since they
were engaged to perform tasks which are necessary and
desirable to the usual business of Angbus, and that they
have rendered services to the latter's construction
business for several years already.5 They were,
however, summarily dismissed from work on June 28,
2012 and July 14, 2012 without any just or authorized
cause and due process. Thus, they filed consolidated
cases for illegal dismissal with prayer for reinstatement
and payment of full backwages, salary differential,
ECOLA, 13th month pay, service incentive leave pay,
overtime and holiday pay, including moral and
exemplary damages as well as attorney's fees.6
For their part, respondents maintained that petitioners
were first employed by Angelfe Management and
Consultancy (Angelfe) for a one- time project only. Two
or three years after the completion of the Angelfe
project, they were then hired by Angbus, which is a
separate and distinct business entity from the former.
Thus, petitioners were hired only for two project
employment contracts - one each with Angelfe and
Angbus. Respondents further stated that a long period of
time between the first project employment and the other
intervened, which meant that petitioners were not re-
hired repeatedly and continuously.7
However, respondents failed to present petitioners'
employment contracts, payrolls, and job application
documents either at Angelfe or Angbus. They averred
that these documents were completely damaged by the
flood caused by the "habagat" on August 6 to 12, 2012,
as evinced by a Certification issued by the Chairman of
Barangay Rosario, Pasig City, (Brgy. Rosario
Certification) where Angelfe and later, Angbus
purportedly held offices.8
The LA Ruling
In a Decision9 dated March 27, 2013, the Labor Arbiter
(LA) found that petitioners were not illegally dismissed.
The LA observed that despite the non-submission of the
project employment contracts between the parties
(which were completely damaged by flood as stated in
the Brgy. Rosario Certification), there was still sufficient
basis to support respondents' claim that petitioners were
hired for specific projects with specific durations by two
different companies, i.e., Angbus and Angelfe. In this
relation, the LA gave credence to the Establishment
Employment Reports submitted to the Department of
Labor and Employment (DOLE Reports) which showed
that the cause for petitioners' termination was project
completion. Finally, the LA pointed out that the hiring of
petitioners for a definite period for a certain phase of a
project was an industry practice in the construction
business.10
Separately, however, the LA ordered Angbus and
Angelfe to pay petitioners their salary differentials and
claims for 13th month pay and holiday pay as these
liabilities were admitted by them. Meanwhile, individual
respondent Angelo Bustamante, Jr. (Bustamante) was
relieved of any liability for want of basis.11
Aggrieved, petitioners filed an appeal to the
NLRC.chanroblesvirtuallawlibrary
The NLRC Ruling
In a Decision12 dated December 26, 2013, the NLRC
reversed the LA's ruling and declared that petitioners
were regular employees who were illegally dismissed on
June 14, 2012; hence, they are entitled to reinstatement
and full backwages, including their other monetary
claims.
The NLRC stressed that respondents had control over
the company records but failed to present the project
employment contracts signed by the workers to rebut
petitioners' claim that they were regular employees. The
Brgy. Rosario Certification attempting to justify the
contracts' non- submission was not given credence as
respondents' business address was in Quezon City and
not in Rosario, Pasig. Instead, the NLRC observed that a
certification from the barangay captain of the place
where their business address is located should have
been presented.13
Moreover, the NLRC noted that Angbus hired all the
petitioners almost at the same time in 2012, giving the
impression that these workers were continuously hired in
one project after another and that their employment, first
with Angelfe and then with Angbus, was uninterrupted.
The NLRC did not give any credence to the allegation
that Angbus and Angelfe were separate and distinct
companies considering that they maintained the same
business address, are owned by the same owner, and
are engaged in the same construction business, where
petitioners were continuously employed. Neither did the
22
NLRC give merit to the DOLE Reports as these were not
submitted within 30 days prior to the displacement of the
workers.14
In a Resolution15 dated December 29, 2014, the NLRC
denied the motion for reconsideration filed by Angbus
and Bustamante. On the allegation that petitioners'
appeal was filed out of time, the NLRC pointed out that
the dates appearing on the mailing envelope on record
and on the registry receipt show that the appeal
memorandum was mailed on May 20, 2013, which was
the last day of the reglementary period. It gave credence
to the certification of Postmaster Larry S. Laureta
(Laureta's certification), the custodian of records at the
Philippine Overseas Employment Administration (POEA)
Post Office at the time the mail matter was posted, that
confirmed the said mailing date.16
On the merits, the NLRC still refused to give weight to
the Brgy. Rosario Certification. It added that although the
project site is in Pasig City, the employer is required to
keep employment records in its main office, not in the
temporary project site or extension office. It also upheld
the finding that petitioners were regular employees in
view of Angbus' failure to substantiate its claim that they
were project employees. In examining the entries in the
DOLE Reports, the NLRC deduced that the real reason
for petitioners' termination from work is retrenchment
and not project completion. Thus, Angbus should have
filed a notice of retrenchment to the DOLE thirty (30)
days prior to the employees' actual termination in
observance of procedural due process, failing in which
amounted to illegal dismissal.17
Dissatisfied, respondents elevated their case to the CA
on certiorari.chanroblesvirtuallawlibrary
The CA Ruling
In a Decision18 dated July 27, 2015, the CA held that
the NLRC gravely abused its discretion when it: (a) gave
due course to petitioners' appeal even though it was filed
out of time; and (b) ruled that petitioners were regular
employees of Angbus.
On the timeliness of the appeal's filing, the CA ascribed
no evidentiary value to Registry Receipt No. 2468
(registry receipt) due to the lack of an authenticating
affidavit by the person who mailed it. Petitioners
presented the registry receipt to prove that they filed
their memorandum of appeal together with the appeal
fee on the last day of the reglementary period on May
20, 2013. The CA refused to give weight to Laureta's
certification that the document covered by the registry
return was indeed mailed at the POEA Post Office on
the said date. In so ruling, the CA explained that
Laureta's certification was issued without authority
because it was issued only on February 17, 2014 when
Laureta was no longer assigned at the POEA Office.
Thus, the NLRC erred in considering the registry receipt
as conclusive proof of petitioners' timely filing of their
appeal.19
On the substantive aspect, the CA reinstated the LA's
finding that petitioners were project employees, noting
that the absence of a project employment contract does
not automatically confer regular status to the employees.
It also observed that the Brgy. Rosario Certification
adequately explained the non-submission of the
employment contracts, and that the DOLE Reports
showed petitioners' status as project employees.
Likewise, the CA pointed out that the NLRC erred in
treating Angelfe and Angbus as one and the same entity
just because the two companies have the same
business address, the same owner, and were engaged
in the same construction business. Consequently, it
ordered respondents to return to petitioners whatever
amount the former has received by virtue of the NLRC
Decision.20
Petitioners filed a motion for reconsideration, which was,
however, denied in a Resolution21 dated November 2,
2015; hence, this petition.chanroblesvirtuallawlibrary
The Issue Before the Court
The core issue for the Court's resolution is whether the
CA erred in (a) holding that petitioners' appeal before the
NLRC was filed out of time and (b) declaring petitioners
as project employees of Angbus and consequently,
holding their dismissal to be
valid.chanroblesvirtuallawlibrary
The Court's Ruling
The petition is meritorious.
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 certiorari was 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.22
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.23
In labor cases, grave abuse of discretion may be
ascribed to the NLRC when its findings and conclusions
are not supported by substantial evidence,24 which
refers to that amount of relevant evidence that a
reasonable mind might accept as adequate to justify a
23
conclusion.25 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.26
Viewed from these lenses, the Court finds that the
NLRC's Decision in this case was supported by
substantial evidence and is consistent with law and
jurisprudence as to the issues raised in the petition.
Hence, the CA incorrectly held that the NLRC gravely
abused its discretion in giving due course to petitioners'
appeal filed before it and in declaring that the petitioners
were regular employees of Angbus. Accordingly, the
NLRC's ruling must be reinstated.
On the procedural aspect, the Court notes that the issue
of the timeliness of the filing of the appeal is a factual
issue that requires a review of the evidence presented
on when the appeal was actually filed.27 Thus, it is
generally not covered by a Rule 45 review. In this case,
however, the conflicting findings of the CA and the
NLRC on this matter pave the way for the Court to
review this factual issue even in a Rule 45 review.28
In this case, the CA held that the NLRC should not have
given due course to petitioners' appeal for being filed out
of time. Although both the registry receipt and the date
stamped on the envelope showed that the date of
posting was May 20, 2013 or the last day of the
reglementary period, the CA was not convinced that the
appeal was actually mailed on that date at the POEA
Post Office. The CA held that petitioners should have
submitted, together with the registry receipt, an
authenticating affidavit of the person who mailed the
memorandum of appeal. It also refused to give credence
to Laureta's certification on the ground that it was issued
without authority, having been issued only on February
17, 2014 when Laureta was no longer assigned at the
POEA Post Office. It therefore concluded that the NLRC
erred in considering the registry receipt as conclusive
proof that May 20, 2013 is the date of filing the appeal.
After reviewing the evidence on record, the Court
disagrees with the CA that the appeal was not timely
filed.
Section 3, Rule 13 of the Rules of Court provides that
where pleadings are filed by registered mail, the date of
mailing as shown by the post office stamp on the
envelope or the registry receipt shall be considered as
the date of filing. Based on this provision, the date of
filing is determinable from two sources: (1) from the post
office stamp on the envelope or (2) from the registry
receipt, either of which may suffice to prove the
timeliness of the filing of the pleadings.29
The Court previously ruled that if the date stamped on
one is earlier than the other, the former may be accepted
as the date of filing.30 This presupposes, however, that
the envelope or registry receipt and the dates appearing
thereon are duly authenticated before the tribunal where
they are presented.31 When the photocopy of a registry
receipt bears an earlier date but is not authenticated, the
Court held that the later date stamped on the envelope
shall be considered as the date of filing.32
In the present case, the petitioners submitted these
pieces of evidence to show the timeliness of their
appeal: (a) the registry receipt; (b) a copy of the
envelope that contained the memorandum of appeal and
appeal fee; and (c) Laureta's certification. As the CA
noted, all three documents indicate May 20, 2013 as the
date of mailing at the POEA Post Office in Mandaluyong
City. Considering that there is no variance in the dates
stated on these documents, there is no reason for the
Court to mark another date as the date of mailing.
Laureta's certification corroborates the date of filing
specified in the registry receipt and on the envelope. The
Court recognizes that, ideally, the incumbent postmaster
in the POEA Post Office should be the one to certify the
date of mailing based on the post office records,
considering that he or she is the person duly authorized
to do so. Nevertheless, the Court finds that Laureta's
certification as the postmaster at the time of mailing,
together with the pieces of evidence earlier mentioned,
constitutes substantial compliance with the
authentication requirement.
On the substantive aspect, Article 29533 of the Labor
Code,34 as amended, distinguishes a project employee
from a regular employee, to
wit: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.
x x x x (Emphasis and underscoring supplied)
A project-based employee is assigned to a project which
begins and ends at determined or determinable times.35
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.36
To safeguard the rights of workers against the arbitrary
use of the word "project" to preclude them from attaining
regular status, jurisprudence provides that employers
claiming that their workers are project-based employees
have the burden to prove that these two requisites
concur: (a) the employees were assigned to carry out a
specific project or undertaking; and (b) the duration and
24
scope of which were specified at the time they were
engaged for such project.37
In this case, Angbus failed to discharge this burden.
Notably, Angbus did not state the specific project or
undertaking assigned to petitioners. As to the second
requisite, not only was Angbus unable to produce
petitioners' employment contracts, it also failed to
present other evidence to show that it informed
petitioners of the duration and scope of their work.
The Court previously ruled that although the absence of
a written contract does not by itself grant regular status
to the employees, it is evidence that they were informed
of the duration and scope of their work and their status
as project employees at the start of their engagement.38
When no other evidence is offered, the absence of
employment contracts raises a serious question of
whether the employees were sufficiently apprised at the
start of their employment of their status as project
employees.39 Absent such proof, it is presumed that
they are regular employees, thus, can only be dismissed
for just or authorized causes upon compliance with
procedural due process.40
The Court agrees with the NLRC that the Brgy. Rosario
Certification cannot be given credence as it was issued
by the barangay captain in Rosario, Pasig City rather
than in Quezon City.
Section 11, Rule X, Book III of the Omnibus Rules
Implementing the Labor Code41 (Rules) requires the
employer to keep all employment records in the main or
branch office where the employees are assigned. It also
prohibits the keeping of employees' records elsewhere.
In the present case, Angbus has consistently declared in
its pleadings, in its General Information Sheet, and the
DOLE Reports that its main office is located at 16 Pratt
Street, Filinvest 2, Batasan Hills, Quezon City. As aptly
ruled by the NLRC, the extension office in the project
site in Brgy. Rosario, Pasig City is not a branch office
contemplated by the Rules where employees' records
may be kept but merely a temporary office. Hence, the
Brgy. Rosario Certification, stating that petitioners'
employment records were destroyed by flood, does not
justify the non-presentation of the employment contracts.
Besides, Angbus could still have presented other
evidence to prove project employment but it did not do
so, relying on the convenient excuse that the documents
were destroyed by flood.42
The Court further observes that the CA placed
unwarranted emphasis on the DOLE Reports or
termination reports submitted by Angbus as basis to rule
that petitioners were project employees.
Section 2.2 of Department Order No. 19, Series of 1993,
entitled "Guidelines Governing the Employment of
Workers in the Construction industry," issued by the
DOLE, provides that:chanRoblesvirtualLawlibrary
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.
(Emphases supplied)
Based on the foregoing, it is clear that the submission of
the termination report to the DOLE "may be considered"
only as an indicator of project employment. By the
provision's tenor, the submission of this report, by and of
itself, is therefore not conclusive to confirm the status of
the terminated employees as project employees,
especially in this case where there is a glaring absence
of evidence to prove that petitioners were assigned to
carry out a specific project or undertaking, and that they
were informed of the duration and scope of their
supposed project engagement, which are, in fact,
attendant to the first two (2) indicators of project
employment in the same DOLE issuance above-cited.
All told, since Angbus failed to discharge its burden to
prove that petitioners were project employees, the NLRC
correctly ruled that they should be considered as regular
employees. Thus, the termination of petitioners'
employment should have been for a just or authorized
cause, the lack of which, as in this case, amounts to
illegal dismissal.
As a final point, it may not be amiss to state that
petitioners' entitlement to their monetary claims, such as
salary differentials, thirteenth month pay, and holiday
pay,43 was not contested further by the parties. Neither
did they question the NLRC's computation of the
monetary awards due to petitioners. Hence, the Court
finds no reason to disturb it.
WHEREFORE, the petition is GRANTED. The Decision
dated July 27, 2015 and the Resolution dated November
25
2, 2015 of the Court of Appeals in CA-G.R. SP No.
138885 are hereby REVERSED and SET ASIDE. The
Decision dated December 26, 2013 and the Resolution
dated December 29, 2014 of the National Labor
Relations Commission in NLRC Case Nos. 07-10288-12,
07-10636-12, 07-10708-12 and 07-10992-12 are
REINSTATED.
G.R. Nos. 190015 & 190019, September 14, 2016
GERALDINE MICHELLE B. FALLARME AND
ANDREA MARTINEZ-GACOS, Petitioners, v. SAN
JUAN DE DIOS EDUCATIONAL FOUNDATION, INC.,
et al
Petitioners were hired by San Juan de Dios Educational
Foundation, Inc. (respondent college), for full-time
teaching positions.5chanrobleslaw
The appointment of petitioner Fallarme was effective at
the start of the first semester of School Year (SY) 2003-
20046 as signified by a memorandum7 issued by the
school informing her that she had been hired. The
memorandum did not specify whether she was being
employed on a regular or a probationary status. Aside
from being appointed to a faculty position, she was also
appointed to perform administrative work for the school
as personnel officer8 and to serve as head of the Human
Development Counseling Services.9chanrobleslaw
Despite having served as a faculty member since SY
2003-2004, Fallarme was asked only on 1 March 2006
to sign and submit to respondent Chona M. Hernandez,
dean of general education, a written contract on the
nature of the former's employment and corresponding
obligations.10 The contract was denominated as
"Appointment and Contract for Faculty on Probation"
(appointment contract),11 and its effectivity period
covered the second semester of SY 2005-2006 -
specifically from 4 November 2005 to 18 March 2006.12
The appointment contract specified the status of
Fallarme as a probationary faculty member.
After the expiration of the contract, respondent college
informed her that it would not be renewed for the first
semester of SY 2006-2007.13 When she asked on what
basis her contract would not be renewed, she was
informed that it was the school's "administrative
prerogative."14chanrobleslaw
Petitioner Martinez-Gacos taught at respondent college
from the start of SY 2003-2004 and continued to do so
for a total of six semesters and one summer.15 Her
engagement as a faculty member was signified by a
memorandum16 issued by the school, which informed
her that she had been hired. The memorandum, which
was similar to that issued to Fallarme, did not specify
whether Martinez-Gacos was being employed on a
regular or a probationary status.
Like Fallarme, even though Martinez-Gacos had been
employed as a faculty member since SY 2003-2004, it
was only on 1 March 2006 that the latter was ordered by
respondent Valeriano Alejandro III to sign and submit a
written contract on the nature of her employment and
corresponding obligations.17 The terms of the contract
were similar to those in the contract signed by Fallarme.
It was also denominated as "Appointment and Contract
for Faculty on Probation,"18 and its effectivity period
also covered the second semester of SY 2005-2006 -
specifically from 4 November 2005 to 18 March 2006.19
Under the appointment contract, the probationary status
of Martinez-Gacos was likewise specified for the first
time.
After the lapse of the contract's effectivity, she was
similarly informed that her contract would not be
renewed for the first semester of SY 2006-2007. She
was also told that the nonrenewal of her contract was
made on the basis of "administrative
prerogative."20chanrobleslaw
Petitioners submitted a letter to respondent
Hernandez,21 questioning the nonrenewal of their
respective employment contracts. Not satisfied with the
reply,22 they filed a Complaint against respondents for
illegal dismissal, reinstatement, back wages, and
damages before the labor arbiter.23chanrobleslaw
In their defense, respondents claimed that petitioners
had been remiss in their duties. Specifically, both of
them reportedly sold computerized final examination
sheets to their students without prior school approval.
Allegedly, Fallarme also sold sociology books to
students, while Martinez-Gacos served as part-time
faculty in another school and organized out-of-campus
activities, all without the permission of respondent
college.24 These infractions supposedly prevented it
from considering their services satisfactory.
THE LABOR ARBITER'S DECISION
The labor arbiter ruled that petitioners were regular
employees who were entitled to security of
tenure.25cralawred The former cited the 1992 Manual of
Regulations for Private Schools (1992 Manual), which
provides that regularization must be given to a teacher
who (i) is employed as a full-time teacher; (ii) has
rendered three consecutive years of service; and (iii) has
performed satisfactorily within that period.26 The labor
arbiter held that petitioners had complied with these
requisites for their regularization and, contrary to
respondents' contention, performed satisfactorily within
the years of their probationary employment. Thus, the
labor arbiter ordered respondent college to reinstate
petitioners and pay them their back wages as well as
their 13th month pay.27chanrobleslaw
THE NLRC'S RULING
Upon respondents' appeal, the NLRC reversed the
Decision of the labor arbiter.28 It held that petitioners
had failed to meet the third requirement for regularization
as prescribed by the 1992 Manual; that is, they had not
served respondent college satisfactorily. The NLRC
26
found that certain actions they had done without the
requisite approval of respondent college brought about
their unsatisfactory performance during their
probationary period. However, given the failure of
respondent to observe due process, the NLRC ordered it
to pay them P20,000 each as indemnity. Upon the denial
of their Motion for Reconsideration,29 petitioners
proceeded to the CA.
THE CA RULING
The CA affirmed the NLRC Decision.30 It upheld
respondent college's administrative prerogative to
determine whether or not petitioners were entitled to
regularization on the basis of respondents' academic
freedom.31 Furthermore, the award of P20,000 as
indemnity to each of the petitioners was upheld.
Upon the denial by the CA of their Motion for
Reconsideration,32 petitioners have now come before
this Court via this Petition.
THE ISSUES
We cull the issues as
follows:ChanRoblesVirtualawlibrary
Were petitioners regular employees of respondent
college?
Was petitioners' dismissal for a valid cause?
If the dismissal of petitioners was for a valid cause, was
the proper dismissal procedure observed?
OUR RULING
We deny the Petition. While we agree with petitioners
that they were regular employees of the college, we
differ on the basis they invoke for their regularization.
Nevertheless, we agree with respondents that as regular
employees, petitioners were dismissed for a valid cause.
But due to respondents' failure to observe the proper
procedure, petitioners are entitled to nominal damages.
The case calls for a review of questions of fact.
At the outset, we note the general rule that a petition for
review on certiorari under Rule 45 is limited to questions
of law. However, an exception to this rule arises when
the findings of the CA conflict with those of the labor
authorities, in which case this Court will not hesitate to
review the evidence on record.33chanrobleslaw
In this case, the labor arbiter's factual findings differ from
those of the NLRC and the CA. The labor arbiter found
that the satisfactory service rendered by petitioners
during their probationary period warranted their
regularization, while the NLRC and the CA found
otherwise. These conflicting findings of fact provide
sufficient justification for our review of the facts involved.
We now proceed to the merits of the case.
Petitioners are deemed regular employees.
While the parties did not contest the allegation that
petitioners were employed as probationary employees, a
review of the records will show that they were
considered regular employees since Day One of their
employment.
It is established that while the Labor Code provides
general rules as to probationary employment, these
rules are supplemented by the Manual of Regulations for
Private Schools with respect to the period of
probationary employment of private school
teachers.34chanrobleslaw
As prescribed by the 1992 Manual, a teacher must
satisfy the following requisites to be entitled to regular
faculty status: (1) must be a full-time teacher; (2) must
have rendered three years of service (or six consecutive
semesters of service for teachers on the tertiary level);
and (3) that service must have been
satisfactory.35chanrobleslaw
In this case, the first two requisites for regularization
under the 1992 Manual - full-time faculty status and
completion of the probationary period - are conceded in
favor of petitioners. However, the parties disagree on the
fulfillment of the third requisite:36 whether petitioners'
performance within the probationary period was
satisfactory.
It is with respect to the determination of whether
petitioners' performance was satisfactory that
respondent college invokes its "administrative
prerogative." As argued by respondents in their
Comment before this Court, the exercise of their
administrative prerogative not to renew the contracts
was prompted by their dissatisfaction with the way
petitioners conducted themselves in school.37
Specifically, respondent college asserts that appellants
were remiss in their fiduciary duty to the school when
they engaged in various acts like selling books and
exam materials, as well as organizing extracurricular
activities with students without its permission.38 It
contends that its administrative prerogative is part of its
academic freedom under the
Constitution.39chanrobleslaw
These contentions are misplaced.
Indeed, the determination of whether the performance of
probationary teaching personnel has been sufficiently
satisfactory as to warrant their regularization lies in the
hands of the school40 pursuant to its administrative
prerogative, which is an extension of its academic
freedom under Section 5(2), Article XIV41 of the
Constitution. Academic freedom gives the school the
discretion and the prerogative to impose standards on its
teachers and to determine whether these have been met
upon the conclusion of the probationary
period.42chanrobleslaw
27
It must be pointed out that the school's exercise of
administrative prerogative in this respect is not plenary
as respondents would like us to believe. The exercise of
that prerogative is still subject to the limitations imposed
by the Labor Code and jurisprudence on valid
probationary employment.43chanrobleslaw
In Abbott Laboratories v. Alcaraz,44 this Court explained
that valid probationary employment under Art. 281
presupposes the concurrence of two requirements: (1)
the employer must have made known to the
probationary employee the reasonable standard that the
latter must comply with to qualify as a regular employee;
and (2) the employer must have informed the
probationary employee of the applicable performance
standard at the time of the latter's engagement. Failing
in one or both, the employee, even if initially hired as a
probationary employee, shall be considered a regular
employee.45chanrobleslaw
With respect to the regularization of probationary
teachers, the standards laid down in Abbott Laboratories
apply to the third requisite under the 1992 Manual: that
they must have rendered satisfactory service. As
observed by this Court in Colegio del Santisimo Rosario
v. Rojo,46 the use of the term satisfactory "necessarily
connotes the requirement for schools to set reasonable
standards to be followed by teachers on probationary
employment. For how else can one determine if
probationary teachers have satisfactorily completed the
probationary period if standards therefor are not
provided?" Therefore, applying Article 281 of the Labor
Code, a school must not only set reasonable standards
that will determine whether a probationary teacher
rendered satisfactory service and is qualified for regular
status; it must also communicate these standards to the
teacher at the start of the probationary period. Should it
fail to do so, the teacher shall be deemed a regular
employee from Day One.47chanrobleslaw
However, the records lack evidence that respondent
college clearly and directly communicated to petitioners,
at the time they were hired, what reasonable standards
they must meet for the school to consider their
performance satisfactory and for it to grant them
regularization as a result.
Respondents claim that the standards were provided in
the appointment contracts signed by petitioners. Each of
the contracts supposedly provided that it "incorporates
by reference the school policies, regulations, operational
procedures and guidelines provided for in the Manual of
Operations of the School xxx."48 However, this claim
defeats respondents' own defense, because the
appointment contracts invoked were signed by
petitioners only at the start of the second semester of SY
2005-2006.49chanrobleslaw
Nonetheless, it is clear and undisputed that petitioners
were hired by respondent college as early as 2003, but
were required to sign appointment contracts for the first
time only in 2005. An examination of the records will
show that when they were hired in 2003, they each
signed a mere memorandum informing them that they
had passed the qualifying examinations for faculty
members, and that they were being hired effective first
semester of SY 2003-2004.50 The memorandum did not
indicate their status as probationary employees, the
specific period of effectivity of their status as such, and
the reasonable standards they needed to comply with to
be granted regular status. The failure to inform them of
these matters was in violation of the requirements of
valid probationary employment. It also violated Section
91 of the 1992 Manual, which provides as
follows:ChanRoblesVirtualawlibrary
Every contract of employment shall specify the
designation, qualification, salary rate, the period and
nature of service and its date of effectivity, and such
other terms and conditions of employment as may be
consistent with laws and the rules, regulations and
standards of the school. A copy of the contract shall be
furnished the personnel concerned. (Emphasis supplied)
The appointment contracts invoked by respondents
appear to be an afterthought, as they asked petitioners
to sign the contracts only when the latter's three-year
probationary period was about to expire. Apparently, this
act was an effort to put a stamp of validity on
respondents' refusal to renew petitioners' contracts.
Respondents were clearly remiss in their duty under the
Labor Code to inform petitioners of the standards for the
latter's regularization. Consequently, petitioners ought to
be considered as regular employees of respondent
college right from the start.
Petitioners' dismissal was for a valid cause.
Now that petitioners' regular status has been settled, it is
time to examine whether their contracts' nonrenewal,
which was effectively their dismissal, was valid.
Dismissals have two facets: the legality of the act of
dismissal, which constitutes substantive due process;
and the legality of the manner of dismissal, which
constitutes procedural due process.51chanrobleslaw
With respect to substantive due process, insubordination
or willful disobedience is one of the just causes of
dismissal under Article 282 of the Labor Code. For there
to be a valid cause, two elements must concur: (1) the
employee's assailed conduct must have been willful, that
is, characterized by a wrongful and perverse attitude;
and (2) the order violated must have been reasonable,
lawful, made known to the employee, and pertinent to
the duties that the employee has been engaged to
discharge.52chanrobleslaw
Moreover, to be considered as a valid cause analogous
to that specified in the law, it is simply required that the
cause must be due to the voluntary or willful act or
omission of the employee.53chanrobleslaw
Furthermore, under the 1992 Manual, the following has
also been enumerated as one of the valid causes for
28
termination, in addition to those found in the Labor
Code:ChanRoblesVirtualawlibrary
(f) The sale of tickets or the collection of any
contributions in any form or for any purpose of project
whatsoever, whether voluntary or otherwise, from pupils,
students and school personnel xxx.
In this case, the records bear out the following
misdemeanors of petitioners:
chanRoblesvirtualLawlibrary
(1)
Both petitioners were remiss in their obligation to secure
respondent college's consent before they sold
computerized final examination sheets to their
students.54 They failed to do so despite the prior advice
of their subject area coordinator that the dean's approval
must first be secured before examination sheets could
be sold.55
(2)
Petitioner Fallarme failed to secure respondent college's
consent before selling sociology textbooks to her
students during the second semester of SY 2005-
2006.56 This rule was violated even after it had been
clearly discussed during their department's general
meeting held at the opening of SY 2005-2006. The
teachers were then told that they were prohibited from
transacting business with any publishing house or
collecting any payment without informing their respective
area chairs.57
(3)
Petitioner Martinez-Gacos organized out-of-campus
activities with students, again without respondent
college's permission and in violation of the school's
Student Handbook.58
The above infractions imputed by respondent college to
petitioners were admitted by the latter in their letters to
respondents59 and in their Petition before this Court.60
They made that admission in conjunction with their
defense that the supposed infractions did not cause
serious damage to respondents and were but a part of
their academic freedom and freedom of expression,
among others.
We find that these infractions committed by petitioners in
connection with their jobs have been established by
substantial evidence61 and constitute willful
disobedience or conduct analogous thereto.
First, the act of selling computerized final examination
sheets to students without respondent college's
permission, despite the prior advice of their subject area
coordinator, indicated a knowing disregard by petitioners
of their superior's express order not to do so. We find
that order to be lawful as well as reasonable. Clearly, the
school was not prohibiting the sale of those sheets per
se, but was only requiring that its permission be secured
first. This order was made in consideration of the
supervision and control that the school was expected to
exercise over all matters relevant to its students and
personnel.62 The order was also pertinent to their duties
as teachers, as the sheets were used in examinations
administered in their classes.
Furthermore, it is significant that petitioners' act of
collecting money from their students falls under one of
the valid causes for termination under the 1992 Manual
as enumerated above.
There is no merit in the defense that petitioners were not
aware of the policy regarding the examination sheets.63
In their letters to respondent college, they in fact
apologized and recognized the fault they committed
when they did not inform school authorities before selling
the computerized sheets.64 The apologies of petitioners
indicate their awareness of this requirement.
Second, when petitioner Fallarme sold textbooks to her
students without permission, even after the act had been
clearly prohibited in a general meeting, her act also
indicated her willful disregard of a school policy. That
policy, which was made known to her beforehand, was
lawful in light of the recognized authority exercised by
schools over their students and
personnel.65chanrobleslaw
Moreover, we consider that policy to be in line with the
fiduciary relationship between the school and its
professors, teachers, and instructors. They are merely
the school's agents in providing the education it has
contracted to deliver to its students.66 As such, they
have an obligation to avoid any conflict of interest with
the school as their principal.67 Here, by selling
textbooks without the school's authorization, petitioners
were harboring a conflict of interest, inasmuch as it was
commonplace for a school itself - not its individual
teachers - to sell the textbooks, to its students.
Furthermore, the order was reasonable. As with the sale
of examination sheets, the sale of books was not being
prohibited by the school, as it was only requiring
teachers to first secure its authorization. That such order
was related to the duties of petitioner Fallarmeas a
teacher can be easily discerned from the fact that the
focus of the policy was the textbooks used in the
classroom.
It is noteworthy that this misdemeanor was substantiated
by the letters of Fallarme's students attesting to the fact
before the school authorities.68 While she raised before
the labor arbiter the defense that some of the students
had confided to her that they had written the letters
involuntarily, she failed to substantiate this self-serving
claim with any proof.69chanrobleslaw
Third, petitioner Martinez-Gacos' act of organizing out-
of-campus activities without the consent of respondent
college and in violation of its Student Handbook likewise
shows traces of insubordination or acts analogous
thereto. Martinez-Gacos undertook the activities
complained of in 2005,70 or two years after she was
hired. Her awareness of the Student Handbook's
provisions, which she cavalierly disregarded, can
29
therefore be reasonable expected. It is notable that she
never disputed or debunked the existence of the Student
Handbook provisions invoked by the Dean of Student
Services.
We find the defense invoked by petitioner — that the
questioned activity was a personal trip71 - insufficient to
dispute an established fact. Specifically, while she was
the publications adviser of the school paper, she went on
two out-of-town trips with several students, whose
stories later on appeared in that
publication.72chanrobleslaw
It must be stressed that the rules and policies that were
disobeyed by petitioners are necessary incidents of the
supervision and control schools exercise over teachers
as well as students.73 The exercise of such supervision
has been declared to be an obligation of schools.74 In
Miriam College Foundation v. Court of Appeals,75 this
Court recognized that the establishment of an
educational institution requires rules and regulations
necessary for the maintenance of an orderly educational
program and the creation of an educational environment
conducive to learning. These rules and regulations are
also necessary for the protection of the students, faculty,
and property. Therefore, to disobey school rules and
regulations, as petitioners did in this case, is to go
against this recognized mandate.
All told, not just one but three infractions show that the
continued service of petitioners in respondent college
was inimical to its interest, as their actions indicated lack
of respect for the school authorities. It is settled that an
employer has the right to dismiss its erring employees as
a measure of self-protection against acts inimical to its
interest.76 With respect to schools, this right must be
seen in light of their recognized prerogative to set high
standards of efficiency for its teachers. The exercise of
that prerogative is pursuant to the mandate of the
Constitution for schools to provide quality education77
and its recognition of their academic freedom to choose
who should teach pursuant to reasonable standards.78
We find those standards to be present in this case.
Therefore, respondent college cannot be faulted for
finding the performance of petitioners inimical to its
interest as a school after the cited infractions. As
correctly pointed out by the NLRC, petitioners were
teachers who handled in their classrooms women and
men at an impressionable age, not mere inanimate and
repeatable objects as in the manufacturing sector.
Therefore, teachers stand as role models for living out
basic values, which include respect for authority.79
Because of the failure of petitioners to live up to that
standard, this Court finds that their dismissal was for a
valid cause.
Respondents failed to observe the proper procedure in
petitioners' dismissal.
Although the dismissal of petitioner was for a valid
cause, we nevertheless find that respondent college
failed to comply with the proper procedure for their
dismissal in violation of procedural due process.
For termination based on a just cause, as in this case,
the law requires two written notices before the
termination of employment: (1) a written notice served by
the employer on the employee specifying the ground for
termination and giving a reasonable opportunity for that
employee to explain the latter's side; and (2) a written
notice of termination served by the employer on the
employee indicating that upon due consideration of all
the circumstances, grounds have been established to
justify the latter's termination.80chanrobleslaw
We find a complete deviation from the two-notice rule in
this case. The records show that respondent college
effectively dismissed petitioners by sending them a
written notice informing them that the school would no
longer renew their contracts for the forthcoming
semester.81 We find that the letters were abruptly sent
and lacked any specification of the grounds for their
termination. Neither did the letters give petitioners the
opportunity to explain their side. To aggravate the
matter, upon their inquiry into the reason behind their
termination, all that respondent college cited was its
supposed "administrative prerogative," which was
misplaced as discussed earlier.
In Agabon v. National Labor Relations Commission,82
this Court held that if the dismissal was for a valid cause,
failure to comply with the proper procedural
requirements shall not nullify the dismissal, but shall only
warrant the payment of indemnity in the form of nominal
damages. The amount of damages is addressed to the
sound discretion of the Court, taking into account the
relevant circumstances. Since Agabon, this Court has
consistently pegged the award of nominal damages at
P30,000 in cases where the employee's right to
procedural due process has been violated.83 It was held
that the amount of nominal damages awarded is not
intended to enrich the employee, but to deter the
employer from future violations of the procedural due
process rights of the former.84 Considering the
circumstances in the present case and in compliance
with prevailing jurisprudence,85 we deem it appropriate
for respondent college to pay petitioners P30,000 each.
This amount is in lieu of the P20,000 awarded to each
petitioner by the NLRC and the CA.
WHEREFORE, the Petition for Review on Certiorari is
DENIED. The Court of Appeals Decision dated 31 July
2009 and Resolution dated 20 October 2009 in CA-G.R.
SP Nos. 105355 and 105361 are hereby AFFIRMED
with MODIFICATIONS, in that petitioners are each
awarded nominal damages of P30,000 for the violation
of their right to procedural due process. Legal interest at
the rate of 6% per annum is imposed on the award of
damages from the finality of this Decision until full
payment.
30
 G.R. No. 186439 January 15, 2014
UNIVERSAL ROBINA SUGAR MILLING
CORPORATION vs.
FERDINAND ACIBO, et al
URSUMCO is a domestic corporation engaged in the
sugar cane milling business; Cabati is URSUMCO’s
Business Unit General Manager.
The complainants were employees of URSUMCO. They
were hired on various dates (between February 1988
and April 1996) and on different capacities,8 i.e., drivers,
crane operators, bucket hookers, welders, mechanics,
laboratory attendants and aides, steel workers, laborers,
carpenters and masons, among others. At the start of
their respective engagements, the complainants signed
contracts of employment for a period of one (1) month or
for a given season. URSUMCO repeatedly hired the
complainants to perform the same duties and, for every
engagement, required the latter to sign new employment
contracts for the same duration of one month or a given
season.
On August 23, 2002,9 the complainants filed before the
LA complaints for regularization, entitlement to the
benefits under the existing Collective Bargaining
Agreement (CBA),and attorney’s fees.
In the decision10 dated October 9, 2002, the LA
dismissed the complaint for lack of merit. The LA held
that the complainants were seasonal or project workers
and not regular employees of URSUMCO. The LA
pointed out that the complainants were required to
perform, for a definite period, phases of URSUMCO’s
several projects that were not at all directly related to the
latter’s main operations. As the complainants were
project employees, they could not be regularized since
their respective employments were coterminous with the
phase of the work or special project to which they were
assigned and which employments end upon the
completion of each project. Accordingly, the
complainants were not entitled to the benefits granted
under the CBA that, as provided, covered only the
regular employees of URSUMCO.
Of the twenty-two original complainants before the LA,
seven appealed the LA’s ruling before the NLRC,
namely: respondents Ferdinand Acibo, Eddie Baldoza,
Andy Banjao, Dionisio Bendijo, Jr., Rodger Ramirez,
Diocito Palagtiw, Danny Kadusale and Allyrobyl Olpus.
The Ruling of the NLRC
In its decision11 of July 22, 2005, the NLRC reversed
the LA’s ruling; it declared the complainants as regular
URSUMCO employees and granted their monetary
claims under the CBA. The NLRC pointed out that the
complainants performed activities which were usually
necessary and desirable in the usual trade or business
of URSUMCO, and had been repeatedly hired for the
same undertaking every season. Thus, pursuant to
Article 280 of the Labor Code, the NLRC declared that
the complainants were regular employees. As regular
employees, the NLRC held that the complainants were
entitled to the benefits granted, under the CBA, to the
regular URSUMCO employees.
The petitioners moved to reconsider this NLRC ruling
which the NLRC denied in its April 28, 2006
resolution.12 The petitioners elevated the case to the CA
via a petition for certiorari.13
The Ruling of the CA
In its November 29, 2007 decision,14 the CA granted in
part the petition; it affirmed the NLRC’s ruling finding the
complainants to be regular employees of URSUMCO,
but deleted the grant of monetary benefits under the
CBA.
The CA pointed out that the primary standard for
determining regular employment is the reasonable
connection between a particular activity performed by
the employee vis-à-vis the usual trade or business of the
employer. This connection, in turn, can be determined by
considering the nature of the work performed and the
relation of this work to the business or trade of the
employer in its entirety.
In this regard, the CA held that the various activities that
the complainants were tasked to do were necessary, if
not indispensable, to the nature of URSUMCO’s
business. As the complainants had been performing
their respective tasks for at least one year, the CA held
that this repeated and continuing need for the
complainants’ performance of these same tasks,
regardless of whether the performance was continuous
or intermittent, constitutes sufficient evidence of the
necessity, if not indispensability, of the activity to
URSUMCO’s business.
Further, the CA noted that the petitioners failed to prove
that they gave the complainants opportunity to work
elsewhere during the off-season, which opportunity
could have qualified the latter as seasonal workers. Still,
the CA pointed out that even during this off-season
period, seasonal workers are not separated from the
service but are simply considered on leave until they are
re-employed. Thus, the CA concluded that the
complainants were regular employees with respect to
the activity that they had been performing and while the
activity continued.
On the claim for CBA benefits, the CA, however, ruled
that the complainants were not entitled to receive them.
The CA pointed out that while the complainants were
considered regular, albeit seasonal, workers, the CBA-
covered regular employees of URSUMCO were
performing tasks needed by the latter for the entire year
with no regard to the changing sugar milling season.
Hence, the complainants did not belong to and could not
be grouped together with the regular employees of
URSUMCO, for collective bargaining purposes; they
constitute a bargaining unit separate and distinct from
31
the regular employees. Consequently, the CA declared
that the complainants could not be covered by the CBA.
The petitioners filed the present petition after the CA
denied their motion for partial reconsideration15 in the
CA’s January 22, 2009 resolution.16
The Issues
The petition essentially presents the following issues for
the Court’s resolution: (1) whether the respondents are
regular employees of URSUMCO; and (2) whether
affirmative relief can be given to the fifteen (15) of the
complainants who did not appeal the LA’s decision.17
The Court’s Ruling
We resolve to partially GRANT the petition.
On the issue of the status of the respondents’
employment
The petitioners maintain that the respondents are
contractual or project/seasonal workers and not regular
employees of URSUMCO. They thus argue that the CA
erred in applying the legal parameters and guidelines for
regular employment to the respondents’ case. They
contend that the legal standards – length of the
employee’s engagement and the desirability or necessity
of the employee’s work in the usual trade or business of
the employer – apply only to regular employees under
paragraph 1, Article 280 of the Labor Code, and, under
paragraph 2 of the same article, to casual employees
who are deemed regular by their length of service.
The respondents, the petitioners point out, were
specifically engaged for a fixed and predetermined
duration of, on the average, one (1) month at a time that
coincides with a particular phase of the company’s
business operations or sugar milling season. By the
nature of their engagement, the respondents’
employment legally ends upon the end of the
predetermined period; thus, URSUMCO was under no
legal obligation to rehire the respondents.
In their comment,18 the respondents maintain that they
are regular employees of URSUMCO. Relying on the
NLRC and the CA rulings, they point out that they have
been continuously working for URSUMCO for more than
one year, performing tasks which were necessary and
desirable to URSUMCO’s business. Hence, under the
above-stated legal parameters, they are regular
employees.
We disagree with the petitioners’ position.1âwphi1 We
find the respondents to be regular seasonal employees
of URSUMCO.
As the CA has explained in its challenged decision,
Article 280 of the Labor Code provides for three kinds of
employment arrangements, namely: regular,
project/seasonal and casual. Regular employment refers
to that arrangement whereby the employee "has been
engaged to perform activities which are usually
necessary or desirable in the usual business or trade of
the employer[.]"19 Under the definition, the primary
standard that determines regular employment is the
reasonable connection between the particular activity
performed by the employee and the usual business or
trade of the employer;20 the emphasis is on the
necessity or desirability of the employee’s activity. Thus,
when the employee performs activities considered
necessary and desirable to the overall business scheme
of the employer, the law regards the employee as
regular.
By way of an exception, paragraph 2, Article 280 of the
Labor Code also considers regular a casual employment
arrangement when the casual employee’s engagement
has lasted for at least one year, regardless of the
engagement’s continuity. The controlling test in this
arrangement is the length of time during which the
employee is engaged.
A project employment, on the other hand, contemplates
on arrangement whereby "the employment has been
fixed for a specific project or undertaking whose
completion or termination has been determined at the
time of the engagement of the employee[.]"21 Two
requirements, therefore, clearly need to be satisfied to
remove the engagement from the presumption of
regularity of employment, namely: (1) designation of a
specific project or undertaking for which the employee is
hired; and (2) clear determination of the completion or
termination of the project at the time of the employee’s
engagement.22 The services of the project employees
are legally and automatically terminated upon the end or
completion of the project as the employee’s services are
coterminous with the project.
Unlike in a regular employment under Article 280 of the
Labor Code, however, the length of time of the asserted
"project" employee’s engagement is not controlling as
the employment may, in fact, last for more than a year,
depending on the needs or circumstances of the project.
Nevertheless, this length of time (or the continuous
rehiring of the employee even after the cessation of the
project) may serve as a badge of regular employment
when the activities performed by the purported "project"
employee are necessary and indispensable to the usual
business or trade of the employer.23 In this latter case,
the law will regard the arrangement as regular
employment.24
Seasonal employment operates much in the same way
as project employment, albeit it involves work or service
that is seasonal in nature or lasting for the duration of
the season.25 As with project employment, although the
seasonal employment arrangement involves work that is
seasonal or periodic in nature, the employment itself is
not automatically considered seasonal so as to prevent
the employee from attaining regular status. To exclude
the asserted "seasonal" employee from those classified
as regular employees, the employer must show that: (1)
32
the employee must be performing work or services that
are seasonal in nature; and (2) he had been employed
for the duration of the season.26 Hence, when the
"seasonal" workers are continuously and repeatedly
hired to perform the same tasks or activities for several
seasons or even after the cessation of the season, this
length of time may likewise serve as badge of regular
employment.27 In fact, even though denominated as
"seasonal workers," if these workers are called to work
from time to time and are only temporarily laid off during
the off-season, the law does not consider them
separated from the service during the off-season period.
The law simply considers these seasonal workers on
leave until re-employed.28
Casual employment, the third kind of employment
arrangement, refers to any other employment
arrangement that does not fall under any of the first two
categories, i.e., regular or project/seasonal.
Interestingly, the Labor Code does not mention another
employment arrangement – contractual or fixed term
employment (or employment for a term) – which, if not
for the fixed term, should fall under the category of
regular employment in view of the nature of the
employee’s engagement, which is to perform an activity
usually necessary or desirable in the employer’s
business.
In Brent School, Inc. v. Zamora,29 the Court, for the first
time, recognized and resolved the anomaly created by a
narrow and literal interpretation of Article 280 of the
Labor Code that appears to restrict the employee’s right
to freely stipulate with his employer on the duration of his
engagement. In this case, the Court upheld the validity
of the fixed-term employment agreed upon by the
employer, Brent School, Inc., and the employee, Dorotio
Alegre, declaring that the restrictive clause in Article 280
"should be construed to refer to the substantive evil that
the Code itself x x x singled out: agreements entered
into precisely to circumvent security of tenure. It should
have no application to instances where [the] fixed period
of employment was agreed upon knowingly and
voluntarily by the parties x x x absent any x x x
circumstances vitiating [the employee’s] consent, or
where [the facts satisfactorily show] that the employer
and [the] employee dealt with each other on more or less
equal terms[.]"30 The indispensability or desirability of
the activity performed by the employee will not preclude
the parties from entering into an otherwise valid fixed
term employment agreement; a definite period of
employment does not essentially contradict the nature of
the employees duties31 as necessary and desirable to
the usual business or trade of the employer.
Nevertheless, "where the circumstances evidently show
that the employer imposed the period precisely to
preclude the employee from acquiring tenurial security,
the law and this Court will not hesitate to strike down or
disregard the period as contrary to public policy, morals,
etc."32 In such a case, the general restrictive rule under
Article 280 of the Labor Code will apply and the
employee shall be deemed regular.
Clearly, therefore, the nature of the employment does
not depend solely on the will or word of the employer or
on the procedure for hiring and the manner of
designating the employee. Rather, the nature of the
employment depends on the nature of the activities to be
performed by the employee, considering the nature of
the employer’s business, the duration and scope to be
done,33 and, in some cases, even the length of time of
the performance and its continued existence.
In light of the above legal parameters laid down by the
law and applicable jurisprudence, the respondents are
neither project, seasonal nor fixed-term employees, but
regular seasonal workers of URSUMCO. The following
factual considerations from the records support this
conclusion:
First, the respondents were made to perform various
tasks that did not at all pertain to any specific phase of
URSUMCO’s strict milling operations that would
ultimately cease upon completion of a particular phase in
the milling of sugar; rather, they were tasked to perform
duties regularly and habitually needed in URSUMCO’s
operations during the milling season. The respondents’
duties as loader operators, hookers, crane operators and
drivers were necessary to haul and transport the
sugarcane from the plantation to the mill; laboratory
attendants, workers and laborers to mill the sugar; and
welders, carpenters and utility workers to ensure the
smooth and continuous operation of the mill for the
duration of the milling season, as distinguished from the
production of the sugarcane which involves the planting
and raising of the sugarcane until it ripens for milling.
The production of sugarcane, it must be emphasized,
requires a different set of workers who are experienced
in farm or agricultural work. Needless to say, they
perform the activities that are necessary and desirable in
sugarcane production. As in the milling of sugarcane, the
plantation workers perform their duties only during the
planting season.
Second, the respondents were regularly and repeatedly
hired to perform the same tasks year after year. This
regular and repeated hiring of the same workers (two
different sets) for two separate seasons has put in place,
principally through jurisprudence, the system of regular
seasonal employment in the sugar industry and other
industries with a similar nature of operations.
Under the system, the plantation workers or the mill
employees do not work continuously for one whole year
but only for the duration of the growing of the sugarcane
or the milling season. Their seasonal work, however,
does not detract from considering them in regular
employment since in a litany of cases, this Court has
already settled that seasonal workers who are called to
work from time to time and are temporarily laid off during
the off-season are not separated from the service in said
period, but are merely considered on leave until re-
33
employment.34 Be this as it may, regular seasonal
employees, like the respondents in this case, should not
be confused with the regular employees of the sugar mill
such as the administrative or office personnel who
perform their tasks for the entire year regardless of the
season. The NLRC, therefore, gravely erred when it
declared the respondents regular employees of
URSUMCO without qualification and that they were
entitled to the benefits granted, under the CBA, to
URSUMCO’S regular employees.
Third, while the petitioners assert that the respondents
were free to work elsewhere during the off-season, the
records do not support this assertion. There is no
evidence on record showing that after the completion of
their tasks at URSUMCO, the respondents sought and
obtained employment elsewhere.
Contrary to the petitioners’ position, Mercado, Sr. v.
NLRC, 3rd Div.35 is not applicable to the respondents as
this case was resolved based on different factual
considerations. In Mercado, the workers were hired to
perform phases of the agricultural work in their
employer’s farm for a definite period of time; afterwards,
they were free to offer their services to any other farm
owner. The workers were not hired regularly and
repeatedly for the same phase(s) of agricultural work,
but only intermittently for any single phase. And, more
importantly, the employer in Mercado sufficiently proved
these factual circumstances. The Court reiterated these
same observations in Hda. Fatima v. Nat’l Fed. of
Sugarcane Workers-Food and Gen. Trade36 and
Hacienda Bino/Hortencia Starke, Inc. v. Cuenca.37
At this point, we reiterate the settled rule that in this
jurisdiction, only questions of law are allowed in a
petition for review on certiorari.38 This Court’s power of
review in a Rule 45 petition is limited to resolving matters
pertaining to any perceived legal errors, which the CA
may have committed in issuing the assailed decision.39
In reviewing the legal correctness of the CA’s Rule 65
decision in a labor case, we examine the CA decision in
the context that it determined, i.e., the presence or
absence of grave abuse of discretion in the NLRC
decision before it and not on the basis of whether the
NLRC decision on the merits of the case was correct.40
In other words, we have to be keenly aware that the CA
undertook a Rule 65 review, not a review on appeal, of
the NLRC decision challenged before it.41
Viewed in this light, we find the need to place the CA’s
affirmation, albeit with modification, of the NLRC
decision of July 22, 2005 in perspective. To recall, the
NLRC declared the respondents as regular employees
of URSUMCO.42 With such a declaration, the NLRC in
effect granted the respondents’ prayer for regularization
and, concomitantly, their prayer for the grant of monetary
benefits under the CBA for URSUMCO’s regular
employees. In its challenged ruling, the CA concurred
with the NLRC finding, but with the respondents
characterized as regular seasonal employees of
URSUMCO.
The CA misappreciated the real import of the NLRC
ruling. The labor agency did not declare the respondents
as regular seasonal employees, but as regular
employees. This is the only conclusion that can be
drawn from the NLRC decision’s dispositive portion,
thus:
WHEREFORE, premises considered, the appeal is
hereby GRANTED. Complainants are declared regular
employees of respondent.1âwphi1 As such, they are
entitled to the monetary benefits granted to regular
employees of respondent company based on the CBA,
reckoned three (3) years back from the filing of the
above-entitled case on 23 August 2002 up to the present
or to their entire service with respondent after the date of
filing of the said complaint if they are no longer
connected with respondent company.43
It is, therefore, clear that the issue brought to the CA for
resolution is whether the NLRC gravely abused its
discretion in declaring the respondents regular
employees of URSUMCO and, as such, entitled to the
benefits under the CBA for the regular employees.
Based on the established facts, we find that the CA
grossly misread the NLRC ruling and missed the
implications of the respondents’ regularization. To
reiterate, the respondents are regular seasonal
employees, as the CA itself opined when it declared that
"private respondents who are regular workers with
respect to their seasonal tasks or activities and while
such activities exist, cannot automatically be governed
by the CBA between petitioner URSUMCO and the
authorized bargaining representative of the regular and
permanent employees."44 Citing jurisprudential
standards,45 it then proceeded to explain that the
respondents cannot be lumped with the regular
employees due to the differences in the nature of their
duties and the duration of their work vis-a-vis the
operations of the company.
The NLRC was well aware of these distinctions as it
acknowledged that the respondents worked only during
the milling season, yet it ignored the distinctions and
declared them regular employees, a marked departure
from existing jurisprudence. This, to us, is grave abuse
of discretion, as it gave no reason for disturbing the
system of regular seasonal employment already in place
in the sugar industry and other industries with similar
seasonal operations. For upholding the NLRC’s flawed
decision on the respondents’ employment status, the CA
committed a reversible error of judgment.
In sum, we find the complaint to be devoid of merit. The
issue of granting affirmative relief to the complainants
who did not appeal the CA ruling has become academic.
WHEREFORE, premises considered, the petition is
PARTIALLY GRANTED. Except for the denial of the
respondents' claim for CBA benefits, the November 29,
2007 decision and the January 22, 2009 resolution of the
34
Court of Appeals are SET ASIDE. The complaint is
DISMISSED for lack of merit.
G.R. No. 179640, March 18, 2015
HACIENDA CATAYWA/MANUEL VILLANUEVA, , v.
ROSARIO LOREZO
On October 22, 2002, respondent Rosario Lorezo
received, upon inquiry, a letter from the Social Security
System (SSS) Western Visayas Group informing her that
she cannot avail of their retirement benefits since per
their record she has only paid 16 months. Such is 104
months short of the minimum requirement of 120 months
payment to be entitle to the benefit. She was also
informed that their investigation of her alleged
employment under employer Hda. Cataywa could not be
confirmed because Manuel Villanueva was permanently
residing in Manila and Joemarie Villanueva denied
having managed the farm. She was also advised of her
options: continue paying contributions as voluntary
member; request for refund; leave her contributions in-
trust with the System, or file a petition before the Social
Security Commission (SSC) so that liabilities, if any, of
her employer may be determined.3cralawred
Aggrieved, respondent then filed her Amended Petition
dated September 30, 2003, before the SSC. She alleged
that she was employed as laborer in Hda. Cataywa
managed by Jose Marie Villanueva in 1970 but was
reported to the SSS only in 1978. She alleged that SSS
contributions were deducted from her wages from 1970
to 1995, but not all were remitted to the SSS which,
subsequently, caused the rejection of her claim. She
also impleaded Talisay Farms, Inc. by virtue of its
Investment Agreement with Mancy and Sons
Enterprises. She also prayed that the veil of corporate
fiction be pierced since she alleged that Mancy and
Sons Enterprises and Manuel and Jose Marie Villanueva
are one and the same.4cralawred
Petitioners Manuel and Jose Villanueva refuted in their
answer, the allegation that not all contributions of
respondent were remitted. Petitioners alleged that all
farm workers of Hda. Cataywa were reported a^id their
contributions were duly paid and remitted to SSS. It was
the late Domingo Lizares, Jr. who managed and
administered the hacienda.5 While, Talisay Farms, Inc.
filed a motion to dismiss on the ground of lack of cause
of action in the absence of an allegation that there was
an employer-employee relationship between Talisay
Farms and respondent.6cralawred
Consequently, the SSC rendered its Resolution dated
October 12, 2005, thus:chanRoblesvirtualLawlibrary
WHEREFORE, PREMISES CONSIDERED, this
Commission finds, and so holds, that Rosario M. Lorezo
was a regular employee subject to compulsory coverage
of Hda. Cataywa/Manuel Villanueva/ Mancy and Sons
Enterprises, Inc. within the period of 1970 to February
25, 1990. In view thereof, the aforenamed respondents
are hereby ordered to pay jointly and severally, within
thirty (30) days from receipt hereof, all delinquent
contributions within the proven employment period
computed in accordance with the then prevailing
minimum wage (at 11 months per year) in the amount of
P8,293.90, the 3% per month penalty on the delayed
payment of contributions in the amount of P59,786.10
(computed as of September 9, 2005), pursuant to
Section 22 of the SS Law and the damages in the
amount of P32,356.21 for misrepresentation of the real
date of employment, pursuant to Section 24 (b) of the
said statute.
The SSS, on the other hand, is ordered to pay (subject
to existing rules and regulations) petitioner Rosario M.
Lorezo her retirement benefit, upon the filing of the claim
therefor, and to inform this Commission of its compliance
herewith.
SO ORDERED.7cralawred
cralawlawlibrary
The SSC denied petitioners' Motion for Reconsideration.
The petitioner, then, elevated the case before the CA
where the case was dismissed outrightly due to
technicalities, thus:chanRoblesvirtualLawlibrary
The Court Resolved to DISMISS the instant petition on
the basis of the following observations:
Signatory to the Verification failed to attach his authority
to sign for and [in] behalf of the other Petitioners.
(Violation of Section 5, Rule 43 of the Rules of Court, in
relation to Section 7, Rule 45 of the Rules of Court)
Certified true copies of pleadings and documents
relevant and pertinent to the petition are incomplete, to
wit:
-Petitioner failed to attach the following:
- Petition/Amended Petition filed before the SSS of
Makati City
- Respondents' Answer filed before the SSS of Makati
City
- Parties' respective position paper filed before the SSS
of Makati City
- Parties' respective memorandum of appeal filed before
the Commission
(Violation of Section 6, Rule 43 of the Rules of Court, in
relation to Section 7, Rule 43 of the Rules of
Court)8cralawred
cralawlawlibrary
Following the denial of petitioners' Motion for
Reconsideration of the CA, petitioner filed with this Court
the present petition stating the following
grounds:chanRoblesvirtualLawlibrary
1) THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR IN STRICTLY
AND RIGIDLY APPLYING THE TECHNICAL RULES OF
PROCEDURE AND DISMISSING THE CASE ON
TECHNICALITY WITHOUT EVALUATING THE MERITS
OF THE CASE;ChanRoblesVirtualawlibrary
35

2) THE [SSC] COMMITTED REVERSIBLE ERROR IN
MAKING CONCLUSIONS FOUNDED ON
SPECULATIONS AND SURMISES NOT
CONFORMING TO EVIDENCE ON RECORD, MAKING
MANIFESTLY MISTAKEN INFERENCES, AND
RENDERING JUDGMENT BASED ON
MISAPPREHENSION OF FACTS AND
MISAPPLICATION OF THE LAW, RULING AND
RENDERING JUDGMENT THAT:
a) RESPONDENT WORKED FROM 1970 TO
FEBRUARY 25,1990
b) PETITIONERS ARE LIABLE FOR DELINQUENT
CONTRIBUTIONS
c) PETITIONERS ARE LIABLE FOR 3% PER MONTH
PENALTY
d) PETITIONERS ARE LIABLE FOR DAMAGES DUE
TO MISREPRESENTATION
e) MANCY & SONS ENTERPRISES, INC. AND
MANUEL VILLANUEVA ARE ONE AND THE SAME.9
cralawlawlibrary
The petition is partially meritorious.
Petitioners argues that the CA has been too rigid in the
application of the rules of procedure in dismissing the
appeal without evaluation of the merits.
This Court has emphasized that procedural rules should
be treated with utmost respect and due regard, since
they are designed to facilitate the adjudication of cases
to remedy the worsening problem of delay in the
resolution of rival claims and in the administration of
justice. However, this Court has recognized exceptions
to the Rules, but only for the most compelling reasons
where stubborn obedience to the Rules would defeat
rather than serve the ends of justice.10cralawred
As in the case of Obut v. Court of Appeals,11 this Court
held that "judicial orders are issued to be obeyed,
nonetheless a non-compliance is to be dealt with as the
circumstances attending the case may warrant. What
should guide judicial action is the principle that a party-
litigant is to be given the fullest opportunity to establish
the merits of his complaint of defense rather than for him
to lose life, liberty, honor or property on
technicalities."12cralawred
When the CA dismisses a petition outright and the
petitioner files a motion for the reconsideration of such
dismissal, appending thereto the requisite pleadings,
documents or order/resolution, this would constitute
substantial compliance with the Revised Rules of
Court.13 Thus, in the present case, there was
substantial compliance when in their Motion for
Reconsideration, they attached a secretary certificate
giving Joemarie's authority to sign on behalf of the
corporation. Petitioners also included the necessary
attachment.14cralawred
At the outset, it is settled that this Court is not a trier of
facts and will not weigh evidence all over again.15
However, considering the issues raised which can be
resolved on the basis of the pleadings and documents
filed, and the fact that respondent herself has asked this
Court for early resolution, this Court deems it more
practical and in the greater interest of justice not to
remand the case to the CA but, instead, to resolve the
controversy once and for all.
Petitioners are of the opinion that the SSC committed
reversible error in making conclusions founded on
speculations and surmises that respondent worked from
1970 to February 25, 1990. Petitioners argue that the
SSC did not give credence nor weight at all to the
existing SSS Form R-1A and farm bookkeeper Wilfredo
Ibalobor. Petitioners insist that after thirty long years, all
the records of the farm were already destroyed by
termites and elements, thus, they relied on the SSS
Form R-1A as the only remaining source of information
available. Petitioners also alleged that respondent was a
very casual worker.
This Court disagrees.
It was settled that there is no particular form of evidence
required to Drove the existence of the employer-
employee relationship. Any competent and relevant
evidence to prove such relationship may be admitted.
This may entirely be testimonial.16 If only documentary
evidence would be required to demonstrate the
relationship, no scheming employer would be brought
before the bar of justice.17 Petitioners erred in insisting
that, due to passage of time, SSS Form R-1A is the only
remaining source of information available to prove when
respondent started working for them. However, such
form merely reflected the time in which the petitioners
reported the respondent for coverage of the SSS benefit.
They failed to substantiate their claim that it was only in
1978 that respondent reported for work.
The records are bereft of any showing that Demetria
Denaga and Susano Jugue harbored any ill will against
the petitioners prompting them to execute false affidavit.
There lies no reason for this Court not to afford full faith
and credit to their testimonies. Denaga, in her Joint
Affidavit with Jugue, stated that she and respondent
started working in Hda. Cataywa in 1970 and like her,
she was reported to the SSS on December 19, 1978.18
It was also revealed in the records that the SSC found
that Denaga was employed by Manuel Villanueva at
Hda. Cataywa from 1970 to December
1987.19cralawred
Jurisprudence has identified the three types of
employees mentioned in the provision20 of the Labor
Code: (1) regular employees or those who have been
engaged to perform activities that are usually necessary
or desirable in the usual business or trade of the
employer; (2) project employees or those whose
employment has been fixed for a specific project or
undertaking, the completion or termination of which has
been determined at the time of their engagement, or
those whose work or service is seasonal in nature and is
36
performed for the duration of the season; and (3) casual
employees or those who are neither regular nor project
employees.21cralawred
Farm workers generally fall under the definition of
seasonal employees.22 It was also consistently held that
seasonal employees may be considered as regular
employees when they are called to work from time to
time.23 They are in regular employment because of the
nature of the job, and not because of the length of time
they have worked. However, seasonal workers who
have worked for one season only may not be considered
regular employees.24cralawred
The nature of the services performed and not the
duration thereof, is determinative of coverage under the
law.25 To be exempted on the basis of casual
employment, the services must not merely be irregular,
temporary or intermittent, but the same must not also be
in connection with the business or occupation of the
employer.26 Thus, it is erroneous for the petitioners to
conclude that the respondent was a very casual worker
simply because the SSS form revealed that she had 16
months of contributions. It does not, in any way, prove
that the respondent performed a job which is not in
connection with the business or occupation of the
employer to be considered as casual employee.
The test for regular employees to be considered as such
has been thoroughly explained in De Leon v.
NLRC,27viz.:chanRoblesvirtualLawlibrary
The primary standard, therefore, of determining a regular
employment is the reasonable connection between the
particular activity performed by the employee in relation
to the usual business or trade of the employer. The test
is whether the former is usually necessary or desirable in
the usual business or trade of the employer. The
connection can be determined by considering the nature
of the work performed and its relation to the scheme of
the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least one
year, even if the performance is not continuous or
merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient
evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is also
considered regular, but only with respect to such activity
and while such activity exists.28cralawred
cralawlawlibrary
A reading of the records would reveal that petitioners
failed to dispute the allegation that the respondent
performed hacienda work, such as planting sugarcane
point, fertilizing, weeding, replanting dead sugarcane
fields and routine miscellaneous hacienda work.29 They
merely alleged that respondent was a very casual
worker because she only rendered work for 16
months.30 Thus, respondent is considered a regular
seasonal worker and not a casual worker as the
petitioners alleged.
Petitioners also assert that the sugarcane cultivation
covers only a period of six months, thus, disproving the
allegation of the respondent that she worked for 11
months a year for 25 years. This Court has classified
farm workers as regular seasonal employees who are
called to work from time to time and the nature of their
relationship with the employer is such that during the off
season, they are temporarily laid off; but reemployed
during the summer season or when their services may
be needed.31 Respondent, therefore, as a farm worker
is only a seasonal employee. Since petitioners provided
that the cultivation of sugarcane is only for six] months,
respondent cannot be considered as regular employee
during the months when there is no cultivation.
Based on the foregoing facts and evidence on record,
petitioners are liable for delinquent contributions. It being
proven by sufficient evidence that respondent started
working for the hacienda in 1970, it follows that
petitioners are liable for deficiency in the SSS
contributions.
The imposition upon and payment by the delinquent
employer of the three percent (3%) penalty for the late
remittance of premium contributions is mandatory and
cannot be waived by the System. The law merely gives
to the Commission the power to prescribe the manner of
paying the premiums. Thus, the power to remit or
condone the penalty for late remittance of premium
contributions is not embraced therein.32 Petitioners
erred in alleging that the imposition of penalty is not
proper.
Petitioners also insist that the award of damages for
misrepresentation is without basis. This Court disagrees.
The law provides that should the employer misrepresent
the true date of the employment of the employee
member, such employer shall pay to the SSS damages
equivalent to the difference between the amount of
benefit to which the employee member or his beneficiary
is entitled had the proper contributions been remitted to
the SSS and the amount payable on the basis of the
contributions actually remitted. However, should the
employee member or his beneficiary is entitled to
pension benefits, the damages shall be equivalent to the
accumulated pension due as of the date of settlement of
the claim or to the five years' pension, whichever is
higher, including the dependent's pension.33cralawred
Lastly, petitioners aver that there is no legal basis to
pierce the veil of corporation entity.
It was held in Rivera v. United Laboratories, Inc.34 that -
While a corporation may exist for any lawful purpose, the
law will regard it as an association of persons or, in case
of two corporations, merge them into one, when its
corporate legal entity is used as a cloak for fraud or
illegality. This is the doctrine of piercing the veil of
corporate fiction. The doctrine applies only when such
corporate fiction is used to defeat public convenience,
37
justify wrong, protect fraud, or defend crime, or when it is
made as a shield to confuse the legitimate issues, or
where a corporation is the mere alter ego or business
conduit of a person, or where the corporation is so
organized and controlled and its affairs are so conducted
as to make it merely an instrumentality, agency, conduit
or adjunct of another corporation. To disregard the
separate juridical personality of a corporation, the
wrongdoing must be established clearly and
convincingly. It cannot be presumed.35cralawlawlibrary

This Court has cautioned against the inordinate

application of this doctrine, reiterating the basic rule that
"the corporate veil may be pierced only if it becomes a
shield for fraud, illegality or inequity committed against a
third person.36cralawred

The Court has expressed the language of piercing

doctrine when applied to alter ego cases, as follows:
Where the stock of a corporation is owned by one
person whereby the corporation functions only for the
benefit of such individual owner, the corporation and the
individual should be deemed the same.37cralawred

This Court agrees with the petitioners that there is no

need to pierce the corporate veil. Respondent failed to
substantiate her claim that Mancy and Sons Enterprises,
Inc. and Manuel and Jose Marie Villanueva are one and
the same. She based her claim on the SSS form wherein
Manuel Villanueva appeared as employer. However, this
does not prove, in any way, that the corporation is used
to defeat public convenience, justify wrong, protect
fraud, or defend crime, or when it is made as a shield to
confuse the legitimate issues, warranting that its
separate and distinct personality be set aside. Also, it
was not alleged nor proven that Mancy and Sons
Enterprises, Inc. functions only for the benefit of Manuel
Villanueva, thus, one cannot be an alter ego of the other.

WHEREFORE, the petition for review on certiorari dated

September 28, 2007 of petitioners Hda. Cataywa,
Manuel Villanueva, et al. is hereby DENIED.
Consequently, the resolution by the Social Security
Commission is hereby AFFIRMED with
MODIFICATIONS that the delinquent contributions
should be computed as six months per year of service,
and the case against Manuel and Jose Marie Villanueva
be DISMISSED.

38